Xinlian Integrated Circuit Manufacturing Co., Ltd. (stock abbreviation: Xinlian Integration; stock code: 688469. SH) has disclosed its first annual report after the listing of the Science and Technology Innovation Edition. The company's losses will increase significantly in 2023, and the actual losses far exceed the forecast in the prospectus, and the stock price has been broken for more than 7 months.
Source: Photo.com
The loss of Xinlian Integration increased significantly, and the stock price continued to break
In March 2018, SINIC was jointly funded and established by Shaoxing Yuecheng District Integrated Circuit Industry Fund Partnership (Limited Partnership) (hereinafter referred to as Yuecheng Fund), SMIC International Holdings Co., Ltd. (hereinafter referred to as SMIC) and Shaoxing Shengyang Electric Appliance Co., Ltd. (hereinafter referred to as Shengyang Electric), of which SMIC accounted for 23.47%. Up to now, the largest shareholder of Silint is Yuecheng Fund, holding 16.35% of the shares, and the second largest shareholder is SMIC, holding 14.10% of the shares. SINOLINK has no controlling shareholder and actual controller.
The company's products mainly include core chips and modules used in power control, power drive, sensing signal chain and other aspects of automotive, industrial control and high-end consumer fields.
From 2020 to 2022, the operating income of Xinlian Integration will be 739 million yuan, 2.024 billion yuan, and 4.606 billion yuan respectively, and the net profit will be -1.366 billion yuan, -1.407 billion yuan, and -1.595 billion yuan respectively.
It is worth noting that SMIC, as the second largest shareholder of SINIC, also holds 100% of the shares of SMIC (688981. SH）。 SMIC is mainly engaged in integrated circuit foundry business based on a variety of technology nodes and technology platforms, and provides design services, IP support, photomask manufacturing and other supporting services.
At the same time, according to the reply to the feedback implementation letter of Chiplink, most of the directors, supervisors and senior executives of Chiplink are from SMIC, and SMIC has transferred assets to Chiplink, and there are licensed technologies, procurement and processing, etc., and SMIC has the right to unilaterally terminate the technology license agreement, and the licensed technology-related revenue involved in 2019-2021 and January-June 2022 accounted for 88.73%, 73.44%, 46.07% and 29.60% respectively.
The Shanghai Stock Exchange has asked Siliant to start from the "worst-case principle" and calculate the impact on the company's product production and estimated time to achieve profitability if SMIC unilaterally terminates the licensed technology.
Innolink said that starting from the "worst-case principle", if SMIC unilaterally terminates the licensed technology, the company will achieve profitability in its main business in 2025, and it is estimated that the main business income in 2023 will be 6.945 billion yuan and the net profit will be -1.294 billion yuan.
However, according to the 2023 annual report disclosed by Innolink, in 2023, Innolink will achieve an operating income of 532,400 yuan, a year-on-year increase of 15.59%, but a net profit loss of 2.941 billion yuan. It is worth noting that the actual loss of SINOLINK in 2023 is more than double the estimate based on the "worst-case principle".
In addition, in response to the "main business profitability will be achieved in 2025" mentioned by Xinlian Integration, at present, CITIC Securities, Great Wall Securities and other institutions predict that Xinlian Integration will still be in a state of loss in 2025.
On the investor interactive platform, Xinlian has repeatedly stated that the company adopts a depreciation policy of rapid depreciation, and depreciation has a greater impact on costs, thus affecting the company's profit performance.
The rapid depreciation method, also known as the accelerated depreciation method, includes the sum of years method and the double declining balance method. This type of depreciation policy is characterized by more depreciation in the early use of fixed assets and less depreciation in the later stage, so as to speed up the depreciation rate. However, according to the annual report and prospectus, the depreciation method of fixed assets adopted by SINOLINK is the average life method, which does not belong to the rapid depreciation method, and there is no situation where the depreciation expense is more in the early stage and the later provision is less. It also seems that the disclosure of information related to performance is not rigorous enough.
At present, it seems that the actual performance of Xinlian Integration is quite different from the performance measured during its planning for listing, and the performance is closely related to the stock price.
In terms of stock price, Innosilicon will land on the Science and Technology Innovation Edition on May 10, 2023, planning to raise 12.5 billion yuan, with an initial price of 5.69 yuan per share, which will be broken in the second month of listing, and then the company's stock price has repeatedly hit new lows, as of April 2, 2024, the closing price of Innolink Integration stock (before the right to reset) is 4.86 yuan / share, which has been broken for more than 7 months.
The quality of the letter may be questionable
In fact, in addition to performance, there are also doubts about the information disclosure of fundraising and investment projects, non-operating expenses, patents, major energy procurement, etc.
In terms of fundraising projects, in order to improve the company's manufacturing process and expand production capacity in the field of power devices and MEMS chips, Innosilicon has established Innosilicon Yuezhou Integrated Circuit Manufacturing (Shaoxing) Co., Ltd. (hereinafter referred to as "Innosilicon Yuezhou") as the main body of the implementation of the fundraising project "Phase II Wafer Manufacturing Project", and plans to build a silicon-based 8-inch wafer foundry production line with a monthly output of 70,000 pieces to engage in wafer foundry business in the fields of MEMS power devices.
The total investment of the "Phase II Wafer Manufacturing Project" is 11 billion yuan, and Xinlian originally planned to invest 6.66 billion yuan through raised funds. In May 2023, Innosilicon announced that the company intends to reduce the amount of the "Phase II Wafer Manufacturing Project" by 2.21 billion yuan using the raised funds, and use the amount of such reduction to increase the capital of its subsidiary Innosilicon Pioneer Integrated Circuit Manufacturing (Shaoxing) Co., Ltd. (hereinafter referred to as "Innolink") to add the new fundraising project "SMIC Shaoxing Phase III 12-inch Characteristic Process Wafer Manufacturing Pilot Line Project".
The "SMIC Shaoxing Phase III 12-inch Characteristic Process Wafer Manufacturing Pilot Line Project" was filed with the EIA in November 2022, and the 2023 annual report shows that the project will reach the scheduled usable state on September 30, 2023. According to the Accounting Standards for Business Enterprises, when the construction in progress reaches the intended usable state, it should be transferred to fixed assets according to the actual cost of the project. Therefore, at the end of 2022, INSILICON should add a new construction in progress related to the fundraising project compared with the end of 2021, and the relevant construction in progress should be transferred to fixed assets in September 2023.
According to the audit report disclosed by Innosilicon in March 2023, the new construction projects related to its subsidiary Sinic Pioneer in 2022 are only "SMIC Pioneer equipment to be installed", however, as of the end of 2023, there is still 822 million yuan in the book balance of the project under construction.
In terms of non-operating expenses, in the "Social Responsibility Work" section of the 2023 annual report, Innolink disclosed that the company will donate about 250,000 yuan in 2023, and the company's labor union will spend a total of about 322,100 yuan through various forms of public welfare activities, totaling 572,100 yuan, but the non-operating expenses in the income statement of Innolink Integration are only 165,400 yuan.
In terms of patents, at the end of 2023, SINOSILICON has 142 invention patents, no patents will expire in 2023, and 35 new invention patents will be added. According to this conversion, at the end of 2022, Silint should have 107 invention patents, but the prospectus shows that at the end of 2022, Silintech has 115 invention patents.
In terms of major energy procurement, according to the conversion of the main energy procurement amount and unit price disclosed in the prospectus, Xinlian will purchase 194,000,400 kWh of electricity in 2021. However, according to the 2023 corporate social responsibility report disclosed by Innolink, the company only purchased 163,967,200 kWh of electricity in 2021.