Nanxin Technology's annual report disclosed information "fighting", and the net profit margin declined for two consecutive years

Shanghai Nanxin Semiconductor Technology Co., Ltd. (stock abbreviation: Nanxin Technology; stock code: 688484. SH) has published its 2023 annual report. In 2023, Nanxin Technology will achieve an operating income of 1.78 billion yuan, a year-on-year increase of 36.87%, and a net profit attributable to the parent company of 261 million yuan, a year-on-year increase of 6.15%. However, our research found that the information of R&D personnel, production and sales data disclosed in Nanxin Technology's annual report seems to be contradictory, and large external donations are also omitted. In addition, there seems to be a contradiction between the information disclosed in Nanxin's annual report and the interim report.

Source: Photo.com

There are many contradictions in the information disclosed, and the quality of information disclosure seems to need to be improved

According to the "Management Discussion and Analysis" section of Nanxin Technology's 2023 annual report, at the end of 2023, Nanxin Technology had 378 R&D personnel, of which 55.56% had a master's degree or above. However, according to the "R&D personnel" section of the annual report, at the end of 2023, among the 378 R&D personnel of Nanxin Technology, 5 are doctoral students and 204 are master's students. In other words, by the end of 2023, there will be a total of 209 R&D personnel with a master's degree or above. According to this calculation, by the end of 2023, the proportion of R&D personnel with a master's degree or above in Nanxin Technology should be 55.29%, rather than 55.56%.

Nanxin's main products are integrated circuits. According to the "Production and Sales Analysis Table" of the annual report, at the end of 2023, Nanxin Technology's integrated circuit inventory will be 141.2775 million, an increase of 114% from the end of 2022. According to this calculation, by the end of 2022, the inventory of integrated circuits of Nanxin Technology should be 66.0175 million.

The department also said that in 2023, the output and sales of integrated circuits of Nanxin Technology will be 968,267,700 and 817,050,600 respectively. According to the calculation that the inventory of integrated circuits of Nanxin Technology at the end of 2022 is 66.0175 million, the output in 2023 will be 968.2677 million, and the sales volume will be 817.0506 million, and at the end of 2023, the inventory of integrated circuits of Nanxin Technology seems to be 217.2347 million, which is significantly higher than the 141.2775 million disclosed in the annual report.

In addition, there seems to be a contradiction between the information disclosed in Nanxin's 2023 annual report and the 2023 semi-annual report. Nanxin Technology's 2023 semi-annual report shows that in the first half of 2023, Nanxin Technology's "cash payment related to other financing activities" was 70.722 million yuan, including 102,000 yuan of financing service fees. However, the annual report shows that for the whole year of 2023, Nanxin Technology's "cash payment related to other financing activities" will only be 45.5986 million yuan, which is lower than the amount in the first half of the year. Among them, the financing service fee paid by Nanxin Technology in 2023 is 0 yuan.

In addition to the above problems, the annual report said that in 2023, Nanxin Technology's "non-operating expenses - external donations" will be 0 yuan. However, according to the article published by the Fudan University Education Development Foundation and the Zhihu account of Nanxin Technology, in May 2023, Nanxin Technology donated 5 million yuan to Fudan University for the establishment of the Nanxin Talent Fund of the School of Microelectronics of Fudan University.

In May 2023, the website of Fudan University Education Development Foundation published an article "On the eve of the school anniversary, a joint donation ceremony is coming!They also exchanged how to promote the high-quality development of the university with scientific and technological innovation", the article shows that Ruan Chenjie, chairman and general manager of Nanxin Technology, participated in the joint donation ceremony and the symposium on scientific and technological innovation to promote the high-quality development of the university as a donation representative, and was awarded a donation plaque and a certificate of appreciation. Nanxin Technology has set up the "Nanxin Talent Fund" to support the cultivation of leading talents, backbone talents and outstanding young talents in Fudan integrated circuit discipline through the method of named professors/young scholars.

According to the article "Ruan Chenjie of Nanxin Technology was invited to attend the 118th anniversary presidential symposium of Fudan University, participated in the joint donation ceremony and established the Nanxin Talent Fund" published by the Zhihu account of Nanxin Technology, Ruan Chenjie, chairman of Nanxin Technology, was a 2006 graduate of Fudan University, and Ruan Chenjie and Liang Yingzhen, secretary of the board of directors, were invited to attend the symposium and set up the "Nanxin Talent Fund" for their alma mater on behalf of Nanxin Technology. According to the photo of the donation certificate released by "Nanxin Semiconductor", Nanxin Technology donated 5 million yuan for the establishment of the Nanxin Talent Fund of the School of Microelectronics of Fudan University.

Net profit margin declined for the second year in a row

In 2023, Nanxin Technology will achieve operating income of 1.78 billion yuan, a year-on-year increase of 36.87%, and net profit attributable to the parent company of 261 million yuan, an increase of only 6.15% year-on-year, which is significantly lower than the growth rate of its operating income. According to the statistics of Choice Terminal, from 2021 to 2023, Nanxin Technology's net profit margin will be 24.80%, 18.93%, and 14.68% respectively, declining year by year.

According to the "Production and Sales Analysis Table" of Nanxin Technology's 2023 annual report, in 2023, Nanxin Technology will sell 817,050,600 integrated circuits, an increase of 71.72% over 2022. According to this calculation, Nanxin Technology's integrated circuit sales in 2022 will be 475,804,000.

According to the annual report "Main Business by Industry, by Product, by Region, and by Sales Model", in 2023, Nanxin Technology's integrated circuit industry business will achieve operating income of 1.78 billion yuan, a year-on-year increase of 36.96%. According to this calculation, in 2022, Nanxin Technology's integrated circuit industry business will achieve operating income of 1.30 billion yuan.

According to the calculation of the above sales volume and operating income, in 2022 and 2023, the average sales price of Nanxin Technology's integrated circuit products will be 2.73 yuan/piece and 2.18 yuan/piece respectively, and the average sales price in 2023 will decline significantly compared with 2022.

In terms of inventory, according to the statistics of Choice Terminal, from 2021 to 2023, Nanxin Technology's inventory turnover days will be 78.15 days, 133.89 days, and 150.86 days respectively, which will be longer year by year.

At the end of 2022 and the end of 2023, Nanxin Technology's inventory book balance was 548.5461 million yuan and 363.988 million yuan respectively, and the inventory book balance at the end of 2023 was significantly higher than that at the end of 2022. The inventory of Nanxin Technology is mainly raw materials, inventory commodities and commissioned processing materials, of which the raw materials are mainly wafers that have not yet entered the packaging and testing process, the inventory commodities are mainly finished products that have not yet been sold, and the entrusted processing materials are mainly the work-in-progress processed by the entrusted packaging and testing factory.

In terms of details, at the end of 2022, the book balances of raw materials, inventory commodities and commissioned processing materials of Nanxin Technology were 221.6575 million yuan, 60.6291 million yuan and 81.472 million yuan respectively, and at the end of 2023, the book balances of raw materials, inventory commodities and commissioned processing materials of Nanxin Technology were 138.5169 million yuan, 160.8102 million yuan and 249.219 million yuan respectively. In other words, at the end of 2023, Nanxin Technology's increased inventory is mainly inventory goods and commissioned processing materials.

The annual report shows that at the end of 2022, Nanxin Technology made a provision for inventory price decline of 22.9337 million yuan for inventory commodities of 60.6291 million yuan/impairment provision for contract performance costs, and the ratio of price decline provision to book balance was 37.83%. At the end of 2023, Nanxin Technology only made a provision for inventory price decline of 14.5879 million yuan/impairment provision for contract performance costs for 160.8102 million yuan of inventory goods, and the ratio of price decline provision to book balance was only 9.07%.

In terms of stock price performance, the issue price of Nanxin Technology was 39.99 yuan per share, and after listing, the share price of Nanxin Technology touched as low as 22.1 yuan per share, down 44.7% from its issue price. On April 3, the closing price of Nanxin Technology's stock was 30.28 yuan per share, down 24.3% from its issue price.

According to the announcement, Nanxin Technology originally planned to raise 1.658 billion yuan through IPO, but the actual total amount of funds raised was 2.541 billion yuan, the actual net amount of funds raised was 2.375 billion yuan, and the amount of over-raised funds was 717 million yuan. The sponsor and lead underwriter of Nanxin's IPO is China Securities Co., Ltd. (stock abbreviation: CSC; stock code: 601066.SH), and the sponsor and underwriting fees (excluding VAT) paid by Nanxin Technology are 142 million yuan. In May 2023, Nanxin Technology announced that it would use 210 million yuan of over-raised funds to permanently replenish liquidity.