Source: Yicaixin
Author: Zhao Shuhan
On January 19, Junwei Electronic Technology Co., Ltd. (hereinafter referred to as "Junwei Electronics") passed the IPO of the Growth Enterprise Market (GEM). Since entering the inquiry stage in November 2022, Junwei Electronics has been preparing for the meeting for 14 months, and under a total of three rounds of inquiry, Junwei Electronics has still exposed some problems.
The development history of subsidiaries is a mystery, and the analysis of customer sales is contradictory
Founded on January 13, 2014, Junwei Electronics has been focusing on the R&D, production and sales of current sensing precision resistors and wafer chip fuse products since its establishment. During the reporting period of this IPO, Junwei Electronics carried out two asset restructurings, both of which were mergers under the same control, and the company's asset scale and revenue scale were further expanded.
However, there are doubts about the development history of one of the overseas subsidiaries that Junwei Electronics merged in the acquisition.
FROM DECEMBER 2021, JUNWEI ELECTRONICS COMPLETED THE ACQUISITION OF 100% EQUITY OF THIN FILM TECHNOLOGY CORPORATION LIMITED (HEREINAFTER REFERRED TO AS "TFT HK"), AN ENTERPRISE UNDER THE SAME CONTROL, IN TWO STEPS, MAKING IT A WHOLLY-OWNED SUBSIDIARY. According to the prospectus, TFT HK was established on December 19, 2013, and was originally an overseas sales entity controlled by the actual controller, and was mainly responsible for the sale of current sensing precision resistor products produced by Junwei Electronics before the acquisition. In addition, TFT HK also includes its wholly-owned subsidiaries WALTER ELECTRONIC TECHNOLOGY LIMITED, Thin Film Technology Corporation (hereinafter referred to as "TFT US"), YED, and Junwei Electronics retrospectively adjusted the above companies to be included in the consolidation scope of financial statements since the beginning of the reporting period (2019).
Judging from the official website of Junwei Electronics, the enterprise territory part lists the introductions and official website addresses of five companies, including Junwei Electronics. On the homepage of the official website of TFT US, TFT US has a history of more than 40 years and has become a part of Junwei Electronics. In the timeline of the company's development, the official website announced that TFT US was founded in 1979 in North Mankato, Minnesota, USA, and began to produce film products, in 2009 it underwent a management merger, in 2013 it cooperated with EiG Group to expand its manufacturing capacity in Asia, and in March 2016, it was officially merged into EiG Group.
(Screenshot from TFT US official website)
However, Junwei Electronics' prospectus disclosed that TFT US was established in 2009, 30 years later than the establishment time disclosed on its official website.
TFT US was part of the EiG Group before it was controlled by TFT HK. Junwei Electronics' application materials do not mention the company, so where is EiG Group?
Peeling back the cocoon, "Yicaixin" found a trace of connection from the official website of Suzhou Walter Electronic Co., Ltd. (hereinafter referred to as "Suzhou Walter", English name: Suzhou Walter Electronic Co., Ltd.), another subsidiary of Junwei Electronics.
Suzhou Huade was established on May 24, 2000, and in 2019, the controlling shareholder of Junwei Electronics increased its capital to Junwei Electronics at a price of US$8.7 million for 100% equity of Suzhou Huade. In the development process of Suzhou Huade's official website, it acquired TFT US in 2016. Combined with the disclosure information on the official websites of the two companies, are EiG Group and Suzhou Huade the same company?
In addition, it was learned from the official website of the State Intellectual Property Office that Suzhou Huade had applied for the registration of the trademark "EiG GROUP" (application number 41199312) on September 23, 2019, but it was not approved. If it is not the same company, according to the close relationship between TFT US and EiG Group, is there any relationship between EiG Group and Junwei Electronics, and is there a competitive relationship between EiG Group and Junwei Electronics?
In addition to the confusing development history of overseas subsidiaries, Junwei Electronics also has discrepancies in the disclosure of the sales of major customers.
According to the prospectus and the first round of inquiry response documents, the top five customers of Junwei Electronics in the first half of 2023 are all direct sales customers, and the revenue is direct sales income. In the reply to the first round of inquiries, Junwei Electronics disclosed the direct sales customers according to the sales amount, of which the number of direct sales customers with a sales amount of 10 million yuan or more was 4, and the total sales revenue was 62.9283 million yuan. According to the top four customers in the first half of 2023 disclosed in the prospectus, the total sales amount counted by Yicai Xin is 62.9874 million yuan, which is 59,100 yuan more than the data in the inquiry response.
(Screenshot from the prospectus)
(Screenshot from the first round of inquiry responses)
The fundraising project involves new products, and you lost the watermelon and picked up sesame seeds?
In this IPO, Junwei Electronics plans to raise 1.127 billion yuan, of which more than 900 million yuan will be used to expand the production capacity of existing products. Due to the severe decline in the capacity utilization rate of Junwei Electronics' products from 2022, and the capacity utilization rate of some products is less than 50%, some media have questioned the rationality of Junwei Electronics' fundraising and expansion.
In addition, Junwei Electronics has also invested in the research direction of the fundraising project to the products that have not been involved.
According to the prospectus, Junwei Electronics plans to use 82.6548 million yuan to build the construction project of Junwei Zhuhai R&D Center. The R&D direction of this project is the application of high-power current sensing components and thick film technology in sensing and protection components, including the application of new materials, core process improvement, product conductivity and fusing characteristics research, core product technology upgrade, etc.
In the resistor market, according to the production process, the products are mainly divided into four categories: thick film, thin film, alloy and metal plate process. The main function of thick film process resistors is current limiting, the main functions of thin film process resistors are current limiting and voltage division, and the main functions of alloy and metal plate process resistors are current value detection, which are often combined and referred to as "current sensing precision resistors". At present, the resistors produced by Junwei Electronics involve alloy and metal processes, and do not cover thick film and thin film processes.
From 2020 to January to June 2023, the current sensing precision resistors produced by Junwei Electronics accounted for 5 to 60% of the main business revenue, which is the company's flagship product. The gross profit margin of each period was 62.84%, 62.21%, 61.34% and 54.97% respectively, which remained at a high level. Junwei Electronics' current sensing precision resistor products are mainly used in communications, computers, automotive electronics, and other high-end manufacturing fields, compared with the traditional chip resistors, thin films, and thick film resistors of companies in the same industry, the technical difficulty and technical added value are higher. Compared with companies in the same industry, the comprehensive gross profit margin of Junwei Electronics is higher.
However, under the condition that the production capacity of Junwei Electronics' high gross margin resistor products is not saturated and continues to expand, it has turned its attention to thick film and thin film resistors. Junwei Electronics plans to further increase the development and industrialization of thick film products after the implementation of the construction project of Junwei Zhuhai R&D Center. Under what circumstances did Junwei Electronics make up its mind? Is the time ripe for multi-line development for Junwei Electronics at that time?
According to the reply to the first round of inquiries, in the current resistor market, the market size of thick film process accounts for about 50%, the proportion of thin film process is about 20%, and the proportion of current sensing precision resistance is about 18%. Thick film process resistors dominate the market, and this market share is coveted.
The respective market prospects, growth scale and corresponding technology change speed of the four process resistors, Junwei Electronics did not disclose in the application materials, only in the field of current sensing precision resistors accumulated in the field of technical experience can be applied to thick film resistor products and firm determination to promote new products.
Junwei Electronics said in the application materials that the current sensing precision resistance industry has high brand barriers and customer certification barriers. At present, Yageo, Qiankun, Guangjie Technology and other industries have occupied a certain market share in the thick film and film process, and whether Junwei Electronics, as a latecomer, can tear a bite is only verified by time after the implementation of the project.