According to the Shanghai Stock Exchange, the Science and Technology Innovation Board Listing Committee is scheduled to review the initial public offering application of Shanghai Weice Semiconductor Technology Co., Ltd. (hereinafter referred to as Weice Technology) on May 26.
weice Technology is a domestic third-party integrated circuit testing service enterprise. Its main business includes wafer testing, chip finished product testing and supporting services related to integrated circuit testing. Its products are mainly used in communications, computers, automotive electronics, industrial control, consumer electronics and other fields. In this IPO, Weice Technology plans to raise 612 million yuan.
’s main customers cover domestic well-known chip design, manufacturing, packaging and other companies such as Unigroup Zhanrui, Jingchen Semiconductor, Shenzhen ZTE Microelectronics Technology Co., Ltd., and other companies. The other side of Weice Technology, which has a halo on its head, hides many risks.
liabilities soar. The production equipment of IPO fundraising projects has been mortgaged. According to the prospectus, Weice Technology's performance grew rapidly during the reporting period. From 2019 to 2021, its operating income increased from 77.9332 million yuan to 493 million yuan, with an average annual compound growth rate of more than 100%; net profit after deducting non-operating items was 10.5386 million yuan, 32.6015 million yuan, and 128 million yuan, respectively, and the gross profit margins of the main business remained at 52.24%, 51.75%, and 51.17%, respectively.
However, there are also company debts that are growing rapidly. From 2019 to 2021, Weice Technology's total liabilities at the end of each year were 137 million yuan, 289 million yuan and 670 million yuan, respectively, with a debt growth rate of 110.70% and 131.87%; during the reporting period, Weice Technology's asset-liability ratio was 40.71%, 33.77% and 42.72%, showing an overall upward trend.
(Weicai Technology's equity structure screenshot from prospectus)
Weicai Technology's main business entities are the parent company Shanghai Weice Technology and its subsidiary Wuxi Weice. According to the industrial and commercial information displayed by Tianyancha, from July 2019 to November 2020, Shanghai Weice Technology mortgaged the company's production equipment for 11 times, and the collateral included 6 integrated circuit probe stations and multiple production equipment.
For this IPO, Weice Technology plans to use nearly 500 million yuan of funds to use the subsidiary Wuxi Weice Integrated Circuit Testing Capacity Construction Project; inquiry of the industrial and commercial information displayed by Tianyancha, it can be found that in October 2020, Wuxi Weice has mortgaged its integrated circuit test machine, with a mortgage amount of 26.5893 million yuan.
another wholly-owned subsidiary of Weice Technology, Nanjing Weice Semiconductor Technology Co., Ltd. was in a loss during the reporting period, with a net profit of -329,300 yuan in 2021.
(screenshot from prospectus)
From the perspective of the company's main customers, from 2019 to 2021, the operating income of Weice Technology's top five customers accounted for 42.47%, 37.76% and 45.22% of the company's operating income, respectively, with a high customer concentration.
It is worth noting that through the information of Weice Technology's top five customers, TCL Ace Electrical Appliances (Huizhou) Co., Ltd., a shareholder of Jingchen Semiconductor, was forced to execute RMB 2.03 million by the Qingdao Intermediate People's Court in August 2021 due to failure to fulfill its legal obligations on time; in January 2021, the 2.75 million equity of Jiangsu Leneng Battery Co., Ltd., held by another shareholder of Jingchen Semiconductor, Shenzhen Skyworth Venture Capital Co., Ltd., was frozen by the Nantong Intermediate People's Court of Jiangsu Province.
Shenzhen Skyworth Venture Capital Co., Ltd. is also one of the top five Weice Technology and a shareholder of Shanghai Anlu Information Technology Co., Ltd.
In addition, one of Weice Technology's top five customers, ZTE, a major shareholder of Shenzhen ZTE Microelectronics Technology Co., Ltd., had a market value of 1.865 billion yuan, pledged by its shareholder ZTE New Communications Co., Ltd. in March 2020.
5 only have 8 employees with a master's degree or above. The sponsor is an indirect shareholder
According to the equity structure disclosed in the prospectus, Pian Wensheng, chairman and general manager of Weice Technology, holds 51.54% of the shares of Ruice Semiconductor, the controlling shareholder of Weice Technology, and controls 41.33% of the shares of Weice Technology through Ruice Semiconductor. Therefore, Pian Wensheng is the actual controller of Weice Technology. Pianwensheng has worked in Motorola (China) Electronics Co., Ltd. and Sun Moonlight Packaging and Testing (Shanghai) Co., Ltd.
Integrated circuit industry is an intellectually intensive industry, and talent is the most critical element of integrated circuit companies. In its prospectus, Weice Technology stated that its strong technical R&D team guaranteed the company's leading position in technology. As of the end of the reporting period, the company's R&D and technical personnel accounted for more than 20%, and the average working years of major R&D personnel were more than 5 years.
However, among the comparable companies in the same industry, compared with the three domestic leading independent third-party testing companies, Jingyuan Electronics, Xinquan and Sigel, Weice Technology is clearly in the second echelon, and its operating income and net profit are far from those of Jingyuan Electronics, Xinquan and Sigel. For example, in 2021, Weice Technology's operating income was 15 times different from Jingyuan Electronics, and Weice Technology's net profit was 10 times different from Jingyuan Electronics. In terms of R&D investment in
, from 2019 to 2021, Weice Technology's R&D investment was RMB 13 million, RMB 21 million, and RMB 48 million, respectively, which is also obvious with the three companies, Jingyuan Electronics, Xinquan, and Sigel. For example, during the same period, Jingyuan Electronics' R&D investment was RMB 241 million, RMB 281 million, and RMB 267 million, respectively.
(screenshot from prospectus)
From the perspective of employee education, among the employees of Weice Technology, there are only 8 people with master's degree or above, accounting for only 0.86% of the total number of employees.
In addition to the market competitiveness, Weice Technology's multiple relationships and related transactions have also attracted the attention of external investors.
The first thing that aroused doubts is that Weice Technology’s sponsor is an indirect shareholder of Weice Technology.
According to the prospectus, the sponsor and lead underwriter of Weice Technology's IPO is Ping An Securities. After the shareholders penetrate, it can be seen that Ping An Securities indirectly holds 0.0039% of Weice Technology's shares, and Ping An Securities' controlling shareholder China Ping An Insurance (Group) Co., Ltd. indirectly holds 1.46% of Weice Technology's shares.
In this regard, some investment bank legal professionals pointed out that when the sponsor holds the issuer's shares, in order to ensure the fairness and independence of the IPO, the issuer should set up a joint sponsor and lead underwriter. However, Weice Technology does not have a joint sponsor or lead underwriter.
Secondly, among Weice Technology's top five customers during the reporting period, the figure of Weice Technology's major shareholders flashed.
For example, Shenzhen Nanhai holds 8.15% of Weice Technology's equity, Shenzhen Nanhai also holds 8.03% of Weice Technology's main customer Puran Semiconductor, and appointed Chen Kai as directors of Weice Technology and Puran Semiconductor; and Chen Kai, director of Weice Technology, holds 0.17% of Puran Semiconductor.
Jiangsu Tengquan holds 8.11% of Weice Technology's equity, and Jiangsu Tengquan also holds 2.88% of Weice Technology's customer Yongsi Electronics.
Another major shareholder of Weice Technology, Xinchao Group, was once the controlling shareholder of Changdian Technology, an important customer of Weice Technology.
It is worth noting that during the reporting period, that is, from 2019 to 2021, Weice Technology sold goods or services to Puran Semiconductor to 9.9692 million yuan, 17.9774 million yuan, and 16.2402 million yuan respectively; at the same time, it sold goods or services to Changdian Technology and its subsidiaries of 13.7101 million yuan, 8.8326 million yuan, and 593,200 yuan respectively, with a large amount of related transactions.
In addition, in the related transactions between Weice Technology and Changdian Technology and its subsidiaries, in 2020 and 2021, Weice Technology also leased the testing equipment of Changdian Technology and its subsidiaries, with the rent reaching RMB 4.9169 million and RMB 25.51 million respectively.
92 related guarantees hidden risks of listing and explosion
At the end of each period of the reporting period, the total amount of short-term loans and long-term loans of Weice Technology (including long-term loans due within one year) were RMB 17.1162 million, RMB 50.7891 million and RMB 326 million, respectively, with a rapid growth; at the same time, Weice Technology's accounts receivable were RMB 31.4288 million, RMB 64.2738 million and RMB 131 million, respectively, mainly for customers' payments receivable.
It is worth noting that Weice Technology's total asset turnover rate is lower than the average level of comparable companies in the same industry.The prospectus disclosed that from 2019 to 2021, the average total asset turnover rates of five comparable companies in the same industry, namely Liyang Chip, Hualing Co., Ltd., Jingyuan Electronics, Sigel and Xinquan, were 0.44, 0.43, and 0.47 respectively, while the total asset turnover rates of Weice Technology were 0.31, 0.27, and 0.41 respectively.
Weice Technology's accounts receivable turnover rate is also lower than the average level of comparable companies in the same industry. From 2019 to 2021, the average accounts receivable turnover rates of the aforementioned five comparable companies in the same industry, including Liyang Chip, were 4.55, 4.65, and 5.12 respectively, while the accounts receivable turnover rates of Weice Technology were 3.01, 3.20, and 4.81. In terms of debt repayment ability, during the reporting period, Weice Technology's current ratio and quick ratio were both lower than the average level of comparable companies.
(screenshot from prospectus)
current ratio and quick ratio are relatively low, indicating that Weice Technology's current liabilities such as short-term loans, accounts payable and non-current liabilities due within one year are relatively large, and the company's liquidity is relatively tight.
During the reporting period, Weice Technology still had irregular financial internal control. For example, in 2020, Weice Technology invested a total of 70 million yuan in six companies, including the controlling shareholder Shanghai Ruice Semiconductor Technology Co., Ltd., shareholder Sumintou Junxin (Shanghai) Industrial Upgrade and Technology Innovation Equity Investment Partnership (Limited Partnership), and the third-party Guangdong Xingyi Decoration Group Co., Ltd.
In addition, the actual controller of Weice Technology, Pian Wensheng and his spouse Qin Junmei and other controlling shareholders and major executives provided Weice Technology with a total of up to 92 related guarantees from 2017 to 2021, with the amount of each guarantee ranging from millions of yuan to more than billion yuan. In this regard, some investment bankers pointed out that Weice Technology's listing with a large number of related guarantees will undoubtedly hide the risk of explosion.
