Reporter | Liang Yi
Recently, Xingchen Technology Co., Ltd. (hereinafter referred to as "Xingchen Technology") was accepted to break through the GEM, with CICC as the main underwriter and Jinyuan as the joint lead underwriter.
The main business of Xingchen Technology is the research and development and sales of video surveillance chips, and the products are mainly used in intelligent security, video intercom, intelligent vehicle and other fields.
In this IPO, Xingchen Technology intends to raise 3.046 billion yuan, of which 1.62 billion yuan is used for the research and development and industrialization of a new generation of AI ultra-high-definition IPC SoC chips, 576 million yuan is used for a new generation of AI processor IP research and development projects, and the remaining 850 million yuan is used to supplement working capital.
Xingchen Technology has been established for more than 4 years, and its pre-listing valuation has reached 4.5 billion. What kind of company is this? Why is it favored by capital?
The three-year valuation rose 15 times to 4.5 billion
The predecessor of the company, StarShare Limited, was established by SigmaStar on December 4, 2017 with a registered capital of US$2 million.
Since May 2019, Xingchen Technology has experienced multiple rounds of financing, and its value has risen. As of the C round of financing, the company's valuation reached 4.5 billion yuan, up nearly 15 times in three years.
As of press time, Xingchen Technology's competitor Fuhanwei (300613.SZ) has a total value of nearly 20 billion yuan, and the dynamic price-earnings ratio is floating at 48 times.
At the end of 2021, the monetary funds of Xingchen Technology were 442 million yuan and the trading financial assets were 305 million yuan.
Backed by MediaTek
Before the IPO, there were many external shareholders of Xingchen Technology, and there was no actual controller in the company, the largest shareholder, SigmaStar (Cayman), held 31.98% of the shares, while SigmaStar (Cayman) was indirectly controlled by MediaTek 100%.
The interface news reporter noted that many of the company's directors, supervisors and core personnel are from Morningstar Software Research and Development (Shenzhen) Co., Ltd., which is controlled by MediaTek, as follows:
MediaTek is one of the world's largest suppliers of smart phone chips, according to CINNO Research data, in the first quarter of 2022, MediaTek's share of China's smartphone SoC market was about 41.2%, an increase of about 7% year-on-year, ranking first, Qualcomm accounted for about 35.9%, an increase of about 4% year-on-year, ranking second.
There are certain related party transactions between Xingchen Technology and MediaTek. In terms of recurring related party procurement, during the reporting period, the Company purchased product development services, products and EDA usage services from MediaTek and its holding subsidiaries; The occasional related party transaction was the purchase of 4.6362 million yuan of related patents, 11.6 million yuan of inventory and 1.6386 million yuan of fixed assets from MediaTek and its holding subsidiaries in 2019.
Among them, the initial team is still in the process of being established, MediaTek and its holding subsidiaries also provide non-core product development services for Star Technology, and the amount of product development services purchased by the company from 2019 to 2021 is 50.8 million yuan, 38.45 million yuan and 30.308 million yuan, accounting for 29%, 14.31% and 6.68% of the current research and development expenses, respectively.
Overall, during the reporting period, the R&D expenses of Xingchen Technology were 175 million yuan, 269 million yuan and 454 million yuan respectively, accounting for 24.64%, 22.53% and 16.90% of the operating income in the same period; At the end of 2021, there will be a total of 469 R&D personnel, accounting for 76.51% of the total number of employees.
In addition, In 2021, Xingchen Technology was also rated as "National Key Integrated Circuit Design Enterprise" by the National Development and Reform Commission of the People's Republic of China.
Distribution revenue accounted for 90%.
From 2019 to 2021, the company's total operating income was 711 million yuan, 1.193 billion yuan and 2.686 billion yuan, and the net profit was 63.1492 million yuan, 217 million yuan and 754 million yuan, respectively, of which intelligent security chips contributed half of the country, and the revenue of video intercom chips increased rapidly.
The security monitoring system mainly includes two parts, the front end is the network camera (IPC), which is mainly composed of lens, sensor and video surveillance chip (IPC SoC); The back end is a network video recorder (NVR) or hybrid video recorder (XVR), equipped with NVR/XVR SoC and surveillance hard disk.
It is reported that in the field of intelligent security, the current global IPC SoC, NVR SoC market is showing a high degree of concentration, the former includes Xingchen Technology, Fuhan Micro, Beijing Junzheng, Lianyong Technology several major manufacturers, the latter covers Xingchen Technology, Fuhan Micro, Huawei HiSilicon, Lianyong Technology and other major manufacturers.
According to Frost & Sullivan data, in terms of shipment caliber, the top five suppliers in the global IPC SoC market share in 2021 will collectively occupy 85.5% of the market share, and Xingchen Technology ranks first with 36.5%, far exceeding the second Fuhan Micro by 15 percentage points; In 2021, the top four suppliers in the global NVR SoC market share accounted for a total of 97.7% of the market share, and Xingchen Technology still ranked first with 38.7%, far exceeding the second Fuhan Micro by more than 10 percentage points.
In addition, in the field of video intercom and intelligent vehicle, Xingchen Technology is also in the forefront. Frost & Sullivan data shows that in terms of shipment caliber, the company's share of the global USB video conferencing camera chip market in 2021 will be 51.8%, ranking first, while the second link technology is only 14.4%; In 2021, the company's share of China's driving recorder chip market was 24%, ranking second, second only to the first Linkcom Technology by 1 percentage point.
However, the interface news reporter noted that Xingchen Technology lacked credit in terms of chip production capacity and output, the production capacity of chips was unknown, and chip production and sales in various application fields were mixed together.
In addition, Xingchen Technology is mainly based on the distribution model, and the distribution revenue during the reporting period was 645 million yuan, 1.03 billion yuan and 2.386 billion yuan, accounting for 91.26%, 87.16% and 90.01% respectively, so the specific information of the end customer cannot be learned from the prospectus.
From the perspective of the industrial chain, Xingchen Technology adopts the Formulas model, that is, outsourcing the production links such as wafer manufacturing and packaging and testing to the foundry, which also constitutes the largest cost expenditure. During the reporting period, the company mainly purchased wafers from South Asia Technology Co., Ltd., UMC, TSMC and Winbond Electronics, and purchased packaging and testing services from Riyueguang Investment Holdings Co., Ltd., and the top five suppliers purchased 392 million yuan, 624 million yuan and 1.539 billion yuan respectively, accounting for 84.09%, 79.43% and 77.92% respectively.
In 2021, the global semiconductor supply chain is tight, and the prices of some fabs and some packaging processes have risen significantly, but the downstream demand is strong and the price increase of products and the high-end, the company's comprehensive gross profit margin increased from 42.83% in 2020 to 46.73% in 2021, and the rival Fuhan Micro increased from 39.69% to 42.45%.