Abstract: On April 12, the leading manufacturer of domestic RF front-end PA modules, Weijie Chuangxin (688153.SH), officially landed on the Science and Technology Innovation Board. The company's stock issue price was 66.6 yuan / share, today's opening encountered a break, the opening price directly lower 30%, as of the noon close, Weijie Chuangxin stock price fell 36.29%, closed at 42.43 yuan / share.
On April 12, the leading manufacturer of domestic RF front-end PA modules, Weijie Chuangxin (688153.SH), officially landed on the science and technology innovation board. The company's stock issue price was 66.6 yuan / share, today's opening encountered a break, the opening price directly lower 30%, as of the noon close, Weijie Chuangxin stock price fell 36.29%, closed at 42.43 yuan / share.
According to the prospectus, Weijie Chuangxin's initial public offering of shares on the Science and Technology Innovation Board intends to raise 2.487 billion yuan, and the funds raised will be invested in the following projects after deducting the issuance costs: 1.308 billion yuan is intended to be used for integrated circuit production and testing projects; 679 million yuan was used for the construction of R&D center; 500 million yuan was used for supplementary working capital projects.
According to the announcement, Weijie Chuangxin is an integrated circuit design enterprise focusing on the research and development, design and sales of RF front-end chips, mainly providing customers with RF power amplifier module products, while supplying INTEGRATED circuit products such as RF switch chips, Wi-Fi RF front-end modules and receiver modules, which are widely used in various terminal products with wireless communication functions such as smart phones, tablet computers, wireless routers, and smart wearable devices.
Among the domestic RF front-end integrated circuit design enterprises, the richness of the company's product line is more prominent, and it has opened a deep cooperation mode with many well-known downstream manufacturers. At present, the company has developed and designed a variety of high-performance, high-reliability PA modules, RF switches, receiver modules and RF front-end products that meet Wi-Fi 6 covering 2G-5G communication technology, and has a variety of medium-integration PA module design and mass production capabilities, and has achieved high-integration L-PAMiF and other modules in large quantities.
Among them, in terms of radio frequency power amplifier (PA) products, the company belongs to one of the 65 integrated circuit design enterprises with market growth, product representativeness and technology scarcity, and the shipment volume of 4G rf power amplifier ranks first in China. The company has the ability to provide 5G RF front-end solutions, launched a 5G PA module in 2019 and mass production and sales in 2020, the company's 5G RF front-end products have been applied to the high-end products of well-known end customers, the cumulative shipment of more than 100 million in the first half of 2018-2021, has covered Xiaomi, OPPO, vivo and other mainstream mobile phone brand manufacturers and Huaqin Communications, Longqi Technology, Wingtech Technology and other well-known mobile terminal equipment ODM manufacturers in the industry.
Independently develop and design PA module products, and establish long-term and stable cooperation with upstream suppliers in the industrial chain. Among the PA modules designed and sold by the company, only the LTCC filter in the SMD and highly integrated modules are directly purchased supporting devices, and the integrated chip dies and substrates are designed by the company and commissioned to suppliers. The company has established cooperative relations with cutting-edge suppliers in the upstream of the industrial chain such as Wenmao, TSMC, GROMFOND and other wafer supplier leaders, substrate suppliers such as Zhuhai Yueya, SMD raw material suppliers such as Murata and well-known packaging manufacturers such as Changdian Technology and Yongsi Electronics, which has reduced the impact of production capacity fluctuations on the company's delivery timeliness.
From the perspective of revenue and profit, the operating income of Weijie Chuangxin from January to June, 2020, 2019 and 2018 was 1701.8918 million yuan, 1810.4470 million yuan, 581.4227 million yuan and 284.0163 million yuan, respectively. Net profit was CNY 4,258,600, CNY -77.7291 million, CNY -29.9941 million and CNY -33.8588 million, respectively. Overall, Weijie Chuangxin's revenue has grown rapidly, but its net profit has been continuously lost in the past three years from 2018 to 2020.
From the perspective of revenue proportion, as of June 2021, 97.27% of Weijie Chuangxin's revenue comes from PA modules, and the proportion of RF switches, WiFi RF front-end modules, and receiving-end modules is only 0.9%, 1.61%, and 0.22% respectively.
In terms of R&D investment, the prospectus shows that in 2018-2020 and January-June 2021, the proportion of the company's R&D expenditure was 21.45%, 15.79%, 12.14% and 12.49% respectively, although the proportion of R&D in 2018-2019 was leading comparable companies, but then with the rapid growth of the company's revenue scale, the proportion of R&D expenditure gradually declined and was located in the middle of comparable companies.
As of June 30, 2021, the issuer had 171 R&D personnel, accounting for 53.11% of the total number of employees of the issuer. It has 23 invention patents1, all of which are used in the main business of the issuer, and more than 5 invention patents have formed the main business income.
From the perspective of equity structure, as of June 30, 2021, Gaintech, a wholly-owned controlling entity of MediaTek, is the largest shareholder of Weijie Chuangxin, holding 28.12% of the shares. However, Rong Xiuli directly holds 14.80% of the company's shares and indirectly controls a total of 9.39% of the company's shares through Tianjin Yujie and Tianjin Yuteng; Sun Yijun directly holds 3.05% of the company's shares, and indirectly controls 11.05% of the company's shares through Beijing Yuyue and Tianjin Yushang, and the two signed the "Agreement on Concerted Action" in January 2019 to maintain consistency in the decision-making and voting of major matters of the company and continue to jointly control the company. As of the date of signing of this prospectus, the total proportion of shares in the company directly held and indirectly controlled by Rong Xiuli and Sun Yijun reached 38.29%, exceeding Gaintech's 28.12%, that is, the actual controllers of the company are Rong Xiuli and Sun Yijun.
In addition, for the purpose of long-term financial investment, in order to ensure the stability of control of the company, MediaTek and its wholly-owned controlling entity Gaintech jointly undertake not to seek control of the company, and to make specific special commitments not to expand the proportion of shares and voting rights, limit the number of directors to nominate, etc., which are permanent and shall not be revoked, withdrawn or modified under any circumstances, and also undertake to perform remedial, corrective and binding measures related to the non-pursuit of control, If there is a violation, it will bear the corresponding legal responsibility. If the actual controllers, Rong Xiuli and Sun Yijun, disagree in the future on the company's major matters decision-making, and fail to resolve the dispute and reach a consensus in accordance with the provisions of the Concerted Action Agreement, it may reduce the efficiency of the company's decision-making on major matters and weaken the continuity and effectiveness of joint control; if MediaTek and Gaintech violate the above commitments and fail to take effective measures to remedy and correct them in a timely manner, their shareholding position may affect the stability of corporate governance and corporate control.
It is worth mentioning that Huawei's Hubble Investment, OPPO, and Xiaomi Yangtze River Industry Fund are also shareholders of Weijie Chuangxin, of which Hubble Investment holds 3.57%, OPPO Mobile holds 3.39%, and Xiaomi Fund holds 1.74%.
Editor: Xin ZhiXun - Langke Sword