SMIC gave up Changdian Technology, and China Resources achieved "dual-core" development
Artist: Ding Yi
Producer: Global Finance
After 5 days of suspension, JCET (600584. SH) has ushered in significant progress in the transfer of shares.
What does the successful acquisition of China Resources mean?
The love is broken, and China Resources is in charge
Let's take a look at the announcement first.
On the evening of March 26, Changdian Technology announced that Panshi Hong Kong intends to acquire 22.54% of the equity for 6.636 billion yuan, and the actual controller of the company will be changed to China Resources.
The fund intends to transfer 174 million shares of the company (accounting for 9.74% of the company's total share capital) to Panshi Hong Kong or its affiliates at a price of 29 yuan per share through agreement transfer, and Xindian Semiconductor intends to transfer 228 million shares of the company (accounting for 12.79% of the company's total share capital) to Panshi Hong Kong or its affiliates at a price of 29 yuan per share.
After the successful transaction, the shareholding ratio of Changdian Technology's former largest shareholder will be reduced to 3.5%, and the second largest shareholder, Xindian Semiconductor, will no longer hold the equity of the listed company.
As of March 18, Changdian Technology's share price closed at 28.25 yuan per share, with a total market value of 50.534 billion yuan, a significant decrease from the high in 2020.
In fact, when Changdian Technology issued a suspension announcement on March 19, there was a lot of speculation in the market about who would take over the big fund and become the company's major shareholder.
At that time, more voices were called for SMIC. After all, SMIC and JCET have known each other for many years, and since 2017 they have been the single largest shareholder except for the big funds.
Looking back at 2014, JCET planned a "snake swallowing elephant" acquisition that shocked the market, planning to acquire the world's fourth-largest packaging and testing manufacturer Singapore Xingke Jinpeng (except for the Taiwan subsidiary) that was listed for sale by the largest shareholder, Temasek Holding Group.
Although it is difficult for Xingke Jinpeng to turn losses into profits, at that time, Xingke Jinpeng's operating income was equivalent to twice that of JCET, and if it can be successfully acquired, JCET Technology will rank among the top three in the global packaging and testing industry.
That's a big temptation, but funding is a big problem. The first company's own funds are thin, with only 869 million yuan of monetary funds at the end of 2013, and the asset-liability ratio is relatively high; the second company's equity is relatively dispersed, and it is difficult to raise 4.5 billion yuan.
At that time, the big fund had just been established, Ding Wenwu was the president, and JCET hired CICC to build the main structure of the acquisition, and jointly established a three-level structure of "JCET - JCET - Singapore JCET - JCET.
Changdian Technology only contributed one-third of the funds to get 5% of the equity of Xingke Jinpeng.
In the first layer of JCET's new technology structure, JCET Technology, Industrial Fund and Silicon Semiconductor all contributed in cash. That is, JCET invested US$260 million, holding 50.98% of JCET's equity, Big Fund invested US$150 million, holding 29.41% of JCET's equity, and Silicon Semiconductor invested US$100 million, holding 19.61% of JCET's equity.
In the second-tier Changdian Xinpeng structure, Changdian Xinke and the industrial fund plan to invest a total of 520 million US dollars in the same amount of RMB, of which Changdian Xinke will invest 510 million US dollars, accounting for 98.08%, and the large fund will contribute 100 million US dollars, accounting for 1.92%. In addition, the fund will also provide a shareholder loan of US$140 million equivalent to Changdian Xinpeng, which can be converted into shares according to the agreement of both parties.
In the third tier structure, JCET will contribute US$660 million to JCET Singapore, which implements the offer, and the remaining purchase price will be obtained by JCET Singapore through bank loans. At this time, JCET has obtained a loan commitment letter of US$120 million issued by Bank of China Wuxi Branch.
As can be seen from the above figure, Changdian Technology controls Changdian Xinke, and through Changdian Xinke, it controls Changdian Xinpeng and controls the main control.
The entire acquisition process was known as "the first shot of the 100 billion industrial fund" at that time. This has also formed an indissoluble bond between JCET and large funds and SMIC.
The big fund and Xindian Semiconductor specifically arranged the exit clauses through the "Equity Sale Agreement" and the "Debt-to-Equity Swap Agreement" signed with Xinchao Group, the controlling shareholder of Changdian Technology, and then finally completed the debt-to-equity swap through the private placement of listed companies.
As of the end of 2017, chip semiconductors held 14.28% of the shares of Changdian Technology, Xinchao Group held 13.57% of the shares, and large funds held 9.54% of the shares. Since then, with the private placement, the proportion of large funds holding shares has increased to 19%.
The layout of advanced packaging has its own troubles
With the anti-corruption storm of large funds and the long holding time, it is expected that large funds will gradually withdraw from the equity change of Changdian Technology, but SMIC's resolute abandonment is something that the market and most investors never expected.
It is also this case-worthy acquisition that has allowed JCET to further expand its overseas market and maintain its position as the third largest in the world, second only to Taiwan's ASE and Amkor in the United States.
Based on the data of 2022, the market share of the top three is 27.11%, 14.08%, and 10.71% respectively, which is a big gap with the fourth place Tongfu Microelectronics.
In terms of performance, in 2014, 2015 (including the financial data of Xingke Jinpeng for 5 months from August to December), and 2016, the operating income of Changdian Technology was 6.428 billion yuan, 10.807 billion yuan, and 19.155 billion yuan respectively, and by 2022, the operating income of Changdian Technology will reach 33.762 billion yuan.
However, due to the weakness of the global end market, JCET's performance in 2023 is not ideal. According to the performance reduction announcement in January, the attributable net profit in 2023 is expected to be 1.322 billion to 1.616 billion yuan, a year-on-year decrease of 49.99%-59.08%, and the non-attributable net profit is 1.092 billion to 1.335 billion yuan, a year-on-year decrease of 52.83%-61.41%.
However, at this time, Changdian Technology is very different from 2014. As of the end of the third quarter of 2023, its monetary funds have reached 4.678 billion yuan.
In March 2024, JCET Management Co., Ltd., a wholly-owned subsidiary of JCET, intends to acquire 80% of the equity of Shengdi Semiconductor in cash for a consideration of approximately US$624 million, or approximately RMB4.5 billion.
The parent company of Shengdie Semiconductor is Western Digital, the world's leading memory manufacturer, and is currently engaged in the packaging and testing of advanced flash memory storage products. In 2022, Shengdi Semiconductor's revenue will be 3.498 billion yuan and its net profit will be 357 million yuan.
Changdian Technology said that Shengdi Semiconductor's factory is highly automated, has high production efficiency, and is a "lighthouse factory" that has won many awards in terms of quality, operation, and sustainable development.
This is also another big move by JCET in the field of mergers and acquisitions after the acquisition of Xingke Jinpeng.
According to the latest research report of brokerage institutions, driven by the vigorous development of AI, wafer factories and packaging and testing factories have expanded production to cope with the growth of demand, and increased capital expenditure in the field of advanced packaging.
According to SEMI data, the test equipment, assembly, and packaging equipment segments are expected to grow by 13.9% and 24.3%, respectively, in 2024. The back-end market is expected to continue to grow in 2025, with test equipment sales up 17% and packaging equipment sales up 20%.
It is worth noting that under the structure of China Resources Group, which has been acquired this time, it has 8 Hong Kong listed companies, including China Resources Beer, China Resources Power, China Resources Sanjiu, and China Resources Shuanghe, and 9 mainland listed companies.
At present, China Resources Group mainly focuses on six major areas: large consumption, integrated energy, urban construction and operation, big health, industrial finance, technology and emerging industries. Among them, in terms of technology and emerging industries, China Resources Group is a subsidiary of China Resources Micro (688396. SH), China Resources is the actual controller.
CR Micro is a supplier of power semiconductor and intelligent sensor products and solutions, operating in an IDM (integrated design and manufacturing) model, and its business covers integrated circuit design, mask manufacturing, wafer manufacturing, packaging and testing, and discrete devices.
Some people believe that there is potential competition between China Resources Micro and Changdian Technology, but in fact, it is not.
As of the end of the first half of 2023, CR Micro's main subsidiaries include 4 packaging and testing companies, compared to 3 at the end of 2022. In 2022 and the first half of 2023, CR Micro's revenue from the packaging and testing segment will be 1.479 billion yuan and 630 million yuan, respectively.
Some industry insiders have said that "advanced packaging will be an important lever to leverage the semiconductor industry to continue to move forward", including TSMC, Samsung, Intel and other industry giants have entered the advanced packaging.
For China Resources Micro, it is naturally easier to acquire with the backing of China Resources Group's big tree. Changdian Technology ranks third in the world, and Xingke Jinpeng has gradually turned losses into profits, so it is a good deal at present.
However, there are also some hidden risks. For example, in 2022, for example, JCET's overseas revenue accounted for nearly 75% of its total revenue, and for example, the chief technology officer of JCET has not been replaced in the past six months since he switched to Intel in November 2023.
And China Resources Micro itself has a lot of trouble.
Coincidentally, on the evening of March 26, CR Micro received a regulatory work letter from the Shanghai Stock Exchange, involving listed companies, directors, supervisors, senior managers, controlling shareholders and actual controllers, intermediaries and their related personnel.
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