digital economy , the demand for data processing is growing exponentially, and traditional memory is difficult to meet. Enterprises are launching attacks on the higher-performance memory chip .
Today, a billion-dollar giant that has been deeply involved in storage for 23 years is about to start subscription, and the market calls are rising. Shenzhen Jiangbolong Electronics Co., Ltd. (referred to as "Jiangbolong") focuses on the research and development, design and sales of Flash and DRAM memory. plans to log in to the GEM, and CITIC Securities and HSBC Qianhai are the joint lead underwriters.
issuance price of this time, with a corresponding issue price-to-earnings ratio of 24.76 times, and the market value of is about 23 billion yuan. In terms of 's valuation level, it is slightly lower than the average static price-to-earnings ratio of the industry released by CSI Index Co., Ltd. in the past month (27.6 times), and also lower than the average static price-to-earnings ratio of comparable companies after deducting non-recurring items (40 times). On the first day of Jiangbolong's listing, some may have a premium to , but given that its issuance price is not low, the room for to increase is relatively limited.
01 From trade to OEM to independent research and development
Unlike most A-share chairman who has a background in prestigious schools, Jiang Bolong's head Cai Huabo only has a high school education.
htmlIn the mid-1990s, Shenzhen rose to become the largest semiconductor distribution and distribution center in in China with its geographical advantages of being adjacent to Hong Kong. , a newcomer Cai Huabo started his sales business and worked as a salesperson at Shenzhen Oceanwang Investment Development Co., Ltd. for three years. During this period, he was exposed to discrete components such as resistors, capacitors, , diodes, transistors, , and transistors, .In 1999, Cai Huabo, who was only 23 years old, resolutely resigned and started his business with the encouragement of his brother, founded Jiang Bolong, and started the trade of storage semiconductors. "Jiang Bolong" was taken from the combination of his and his twin sister Cai Lijiang and the zodiac birth year of the dragon.
prospectus shows that Cai Huabo and Cai Lijiang hold 66.33% of the company's shares directly and indirectly, and are the actual controllers of Jiang Bolong. Among them, Cai Huabo's direct shareholding ratio is 43.68% and is the controlling shareholder of the company. In addition, National Integrated Circuit Fund (referred to as "big fund") spent 600 million yuan in 2019, invested at a high price of 140 yuan per share, holding 6.93% of the company's shares, ranked second largest shareholder of Jiang Bolong.
Interestingly, if it weren't for a crisis, Jiang Bolong would probably be just an ordinary trader among many semiconductor counters in Huaqiangbei.
In 2002, the company mistakenly bought a batch of bargains from Renesas, Japan. It was thought that it would make a fortune, but it didn't expect that what I bought was not universal materials, but the seller refused to return the goods. Seeing that he had accumulated funds on so many goods, he had to find a way to cash in. So after thinking for a long time, Cai Huabo decided to apply this batch of raw materials to the USB flash drive.
He found a Hong Kong company to customize USB controller chips and developed a USB disk product based on AND-NAND flash memory. At that time, Apple's iPod began to use NAND flash memory to replace micro hard drives, resulting in a serious out of stock in the market. Jiang Bolong became a hot spot in the market because of the cheap alternative . successfully attracted many customers. Just by accident, the company successfully cleared out its inventory and survived the crisis.
It is precisely because of this misunderstanding that Cai Huabo tasted the sweetness of independent innovation and hired a large number of technical personnel. is determined to develop a storage OEM business. soon, the company has brought about business scale expansion by successfully developing integrated USB disk modules (UDP) and SSD modules (MiniSDP), and has accumulated a certain popularity in the industry.
Around 2010, domestic smartphones rose rapidly, and Jiang Bolong began to independently develop technical products with . took large-capacity storage eMMC that can be used in smartphones and tablets as the entry point, and founded the Foresee brand.
In August 2017, Jiang Bolong announced that officially acquired and operated the Lexar brand trademark under Micron Technology . has become one of the few companies in the mainland that have high-end consumer storage brands.
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Company product development history, prospectus
02 Facing challenges in upstream and downstream industrial chain
Semiconductor storage is the core branch of the global integrated circuit industry. The market size of is about US$100 billion, However, due to continuous breakthroughs in storage wafer process, unit storage cost has shown a unilateral downward trend, and the overall market size has generally maintained a long-term growth trend in short-term fluctuations.
Benefiting from the industry's prosperity, Jiangbolong's operating performance has rapidly climbed. achieved revenue of 5.721 billion yuan, 7.276 billion yuan and 9.749 billion yuan from 2019 to 2021, with an average annual compound growth rate of 30.54%. The net profit attributable to shareholders during the same period was 128 million yuan, 276 million yuan and 1.013 billion yuan, and the compound annual growth rate of reached 182.42%.
In the first quarter of 2021, the price of main control chip soared. In addition, the downstream demand is strong, and the overall market price of storage products is on the rise, bringing a large increase to the company's performance. is affected by the high base, and the company expects revenue in the first half of 2022 to be 4.7 billion yuan to 5.1 billion yuan, a year-on-year decrease of 11.35% to 3.8%; net profit attributable to shareholders was 360 million yuan to 410 million yuan, a year-on-year decrease of 39.9% to 31.31%.
gross profit margin, from 2019 to 2021, Jiang Bolong's comprehensive gross profit margin increased from 10.71% to 19.97%. The trend is basically the same as the industry, but not as the average level of comparable companies. is mainly because the company has adopted the corresponding market operation strategy in order to accelerate market development and gain more market share.
From the upstream perspective, the main raw material of the company's products is storage wafers, accounting for nearly 90% of the total cost. The purchase price of wafer is usually affected by global foundry production capacity. Because mainland storage wafers are still in the early stages of development, companies have a high proportion of overseas procurement, and remains above 85% during the reporting period, of which 's purchases from the top five suppliers account for more than 70%.
It is worth mentioning that in order to ensure the stability of raw material supply, the company needs relatively sufficient stocking, so the book value of inventory has increased year by year, and the proportion of current assets has increased from 52.53% in 2019 to 72.39% in 2021. has caused the company's net cash flow to fluctuations, and is negative in 2021. shows that Jiang Bolong is facing certain pressure of shortage of funds.
From the downstream perspective, the prosperity of the storage industry is closely related to the storage demand in the terminal market, while the demand for terminal fluctuates significantly with macroeconomic . During the reporting period of , the company's main customers include China Power Information, Shenzhen Huaqiang, Dalianda and other distribution customers, as well as direct sales customers such as Amazon and Motorola . The sales revenue from the top five customers of remained above 30%.
mentioned earlier that because Shenzhen is adjacent to Hong Kong, it has become an important semiconductor trading hub in China, and Hong Kong has become an important distribution center for semiconductor products around the world. Therefore, Jiang Bolong's sales activities are mostly concentrated in overseas regions dominated by Hong Kong. During each period of the reporting period, its overseas sales of accounted for more than 80%.
Generally speaking, Jiang Bolong's performance is highly linked to the supply and demand relationship between the upstream and downstream industrial chains, causing the market price of storage products to fluctuate certainly, resulting in uncertainty in the company's profit level. Furthermore, under the current unpredictable international situation, Jiang Bolong's supply and sales are both overly dependent on overseas activities, and also brings uncontrollable risks to the company's business development to a certain extent.
03 Low market share
Since Jiang Bolong's transformation, it has formed four major product lines: embedded storage, solid-state hard disk , mobile storage and memory sticks. In terms of sales structure, more than 90% of the company's products are NAND Flash, and , among which embedded storage is the company's main source of revenue, and accounts for nearly 50% of its revenue in 2021.
semiconductor memory brief classification, prospectus
NAND Flash is one of the mainstream semiconductor memory, and the global market is highly concentrated. Samsung Electronics , Kioxia, Western Data , Micron Technology, SK Hynix , and Intel dominates, among which Samsung Electronics' global market share exceeds 30%, ranking first, With SK Hynix's acquisition of Intel NAND Flash business in 2021, the global NAND Flash market will be further concentrated.
Although Jiang Bolong's subdivided products have certain advantages in the mainland, still clearly lacks voice in the international market. If wants to gain more living space in the competitive landscape of giants, the importance of R&D investment is self-evident.
During the reporting period, Jiang Bolong introduced a large number of R&D personnel. The company's R&D personnel surged from 299 at the end of 2019 to 800 at the end of 2021. accounted for 53.94% of the total number of employees in 2021. 's R&D expense ratio during the same period also increased from 1.57% to 3.31%, and exceeded the average level of comparable companies in the same industry.
Currently, the company is engaged in a total of 21 R&D projects, most of which are industrial and automotive memory research and development. From the fundraising and use, it can also be seen that Jiang Bolong's storage product matrix will be extended from consumer to industrial and enterprise level, trying to layout diversified application scenarios to enhance market influence.
04 Conclusion
Under the digital economy, the storage market contains a blue ocean. Jiang Bolong has a certain first-mover advantage, but it is undeniable that the company still has a certain gap with industry giants in terms of core competitiveness. At present, only by continuously overcoming technical barriers and broadening downstream application fields can we gain a foothold in the domestic market and develop a layout in the international market.
This article is from Gelonghui New Stock
