Name of listed company: Tianjin Jingwei Huikai Optoelectronic Co.Ltd(300120) stock abbreviation: Tianjin Jingwei Huikai Optoelectronic Co.Ltd(300120) listing place: Shenzhen Stock Exchange Stock Code: Tianjin Jingwei Huikai Optoelectronic Co.Ltd(300120) Tianjin Jingwei Huikai Optoelectronic Co.Ltd(300120)
Issue A-Shares to specific objects in 2020
Scheme demonstration and analysis report (three revised drafts)
March, 2002
Tianjin Jingwei Huikai Optoelectronic Co.Ltd(300120)
Demonstration and analysis report on the scheme of issuing A-Shares to specific objects in 2020 (three revised drafts)
Tianjin Jingwei Huikai Optoelectronic Co.Ltd(300120) (hereinafter referred to as ” Tianjin Jingwei Huikai Optoelectronic Co.Ltd(300120) ” or “company”) is a company listed on the gem of Shenzhen Stock Exchange. In order to meet the capital needs of the company’s development and enhance the company’s comprehensive competitiveness, the company, in combination with its actual situation, according to the company law of the people’s Republic of China (hereinafter referred to as the “company law”) and the securities law of the people’s Republic of China (hereinafter referred to as the “Securities Law”) According to the provisions of relevant laws, regulations and normative documents such as the measures for the administration of securities issuance and registration of companies listed on the gem (for Trial Implementation) (hereinafter referred to as the “measures for Administration (for Trial Implementation)”), it is planned to issue no more than 139320354 shares (including this number) to specific objects, and the total amount of funds raised shall not exceed 1031128800 yuan, After deducting the issuance expenses, it will be used for RF front-end module project and supplement working capital.
(unless otherwise specified in this demonstration and analysis report, relevant terms have the same meaning as in the plan for issuing A-Shares to specific objects in Tianjin Jingwei Huikai Optoelectronic Co.Ltd(300120) 2020 (Revised Version).)
1、 Background and purpose of this issuance
(I) background of this issuance
1. The scale of semiconductor industry continues to grow
In recent years, although the sales growth of the global semiconductor market has fluctuated, thanks to the arrival of 5g era, the rise of AI technology and other industrial upgrading and rapid development, the global semiconductor market has warmed up and the upward cycle of the industry is coming. According to the statistics of WSTS, the global semiconductor market scale increased from US $291.6 billion in 2012 to US $409 billion in 2019, with an average annual compound growth rate of 4.95%. Driven by the expanding market scale of smart phones, automotive electronics and the Internet of things, it is expected that the global semiconductor market will reach US $521.5 billion in 2024, with an average annual growth of 4.98%. Among them, the scale of integrated circuit market accounts for about 80%, which is the main part of the global semiconductor market.
Data source: WSTS
2. The development of integrated circuit industry has been strongly supported by national policies
As one of the basic and core industries of information technology industry, integrated circuit industry is a basic, leading and strategic industry related to the overall situation of national economic and social development. It plays an extensive and important role in promoting national economic development, social progress, improving people’s living standards and ensuring national security. The state attaches great importance to the development of integrated circuit industry. Since 2000, Several policies for encouraging the development of software industry and integrated circuit industry, several policies for further encouraging the development of software industry and integrated circuit industry, the 12th Five Year Plan for the development of integrated circuit industry, the notice on Further Encouraging the development of enterprise income tax policies for software enterprises and integrated circuit industry, and the National Outline for promoting the development of integrated circuit industry have been issued successively And other policy documents, vigorously support China’s integrated circuit industry from the aspects of policies and funds, and promote the rapid development of China’s integrated circuit industry.
Driven by the market and supported by policies, China’s integrated circuit industry has developed rapidly in recent years, its overall strength has been significantly improved, the gap between its integrated circuit design and manufacturing capacity and the international advanced level has been continuously narrowed, the packaging and testing technology has gradually approached the international advanced level, and some key equipment and materials have been adopted by production lines outside China, A number of backbone enterprises with certain international competitiveness have emerged, and the industrial agglomeration effect is becoming more and more obvious.
According to the data released by China Semiconductor Industry Association, the sales scale of the IC industry in Chinese mainland in 2013 was 250 billion 850 million yuan, and the sales scale in 2018 was 653 billion 200 million yuan, up 20.71% from the same period last year, and the sales volume in 2019 was 756 billion 230 million yuan, up 15.77% over the same period last year. China’s China mobile phone Internet plus policy and the popularity of consumer electronics such as smart phones have increased the annual growth rate of the integrated circuit industry in Chinese mainland from 2013 to 2019, 17.29%, and developed rapidly in the period from 2019 to 2019. It is predicted that by 2024, the scale of China’s integrated circuit market will exceed 150 billion yuan.
Data source: China Semiconductor Association
However, the current situation that China’s IC core technology is controlled by others has not fundamentally changed. The industry is still at the medium and low-end level. High end chip products mainly rely on imports, which has seriously affected the transformation and upgrading of the industry and national security. Therefore, vigorously developing integrated circuits is a national key strategy to optimize the industrial structure, improve the quality of industrial development, implement the innovation driven strategy and change the driving force of economic growth, so as to achieve high-quality development.
3. Sino US trade disputes escalated, and “neck” technology once again attracted attention
In 2018, science and technology daily summarized and reported 35 key technologies that were “stuck”, including 6 key technologies related to chips, namely: lithography machine, chip, photoresist, RF chip, ultra precision polishing process and core industrial software. “RF chip” technology ranks seventh among the 35 “neck” technologies, which is a key technology to be broken through in China.
Since 2018, the trade conflict between China and the United States has been escalating. The United States has used its core technology to launch sanctions and restrictive measures against Chinese enterprises. On September 15, 2020, the second phase of the U.S. ban on Huawei officially took effect. MgO, Samsung, Hynix and TSMC confirmed to cut off the supply chain relationship with Huawei. China’s high-end industries and “Star” enterprises were “stuck” by foreign technology, which attracted unprecedented attention.
4. The market demand of RF front-end is growing rapidly
According to the statistics of qyr Electronics Research Center, from 2011 to 2018, the global RF front-end market grew at a compound annual growth rate of 13.10%, reaching US $14.91 billion in 2018. Influenced by the commercial construction of 5g network, the global RF front-end market will usher in rapid growth since 2020. From 2018 to 2023, the scale of the global RF front-end market is expected to continue to grow at a CAGR of 16.00%, close to US $31.31 billion in 2023.
Source: qyr, Huaxi Securities Co.Ltd(002926) Research Institute
5. RF front-end chips tend to be modular
RF front-end module integrates two or more discrete devices such as RF switch, low-noise amplifier, filter, duplexer and power amplifier into one module, so as to improve the integration and performance and miniaturize the volume. According to different integration modes, it can be divided into module combinations such as difem (integrated RF switch and filter), lfem (integrated RF switch, low noise amplifier and filter), femid (integrated RF switch, filter and duplexer), pamid (integrated multi-mode and multi band PA and femid).
The contradiction between the increasing number of RF front-end devices and the tightening usable area of PCB board promotes the development of RF front-end modularization. More and more discrete RF front-end chips are encapsulated in the same large chip through SIP technology. From the perspective of Broadcom’s development, from 2007 to 2010, it was mainly discrete RF front-end devices. From 2011 to 2013, it was a single PA module. Since 2014, it has been continuously upgraded and multi band PA module integration has been realized. Meanwhile, skyworks, qorvo, Murata, Qualcomm and other large RF front-end chip manufacturers have launched a variety of RF front-end module products.
According to the statistics and prediction of yole development, discrete devices and RF modules share the whole RF front-end market. In 2018, the RF module market reached US $10.5 billion. It is estimated that by 2025, the RF module market will reach US $17.7 billion, and the average annual compound growth rate is expected to reach 8%. In 2018, the market scale of discrete devices is US $4.5 billion. It is estimated that the market scale of discrete devices will reach US $8.1 billion by 2025.
Source: yole, Huaxi Securities Co.Ltd(002926) Institute
6. The popularity of 5g communication technology promotes the rapid development of RF front-end market
With the continuous advancement of the commercialization of 5g communication technology, 5g smart phones and 5g base stations provide a broad market space for the RF module industry.
In 2019, the market is in the transition stage from 4G to 5g, while 2020 will be the first year of large-scale shipment of 5g mobile phones, and the smartphone market will usher in a wave of switching. In the first half of 2020, the cumulative shipment of 5g mobile phones in the Chinese market was 63.597 million.
Source: China Academy of information technology
In addition, China is accelerating the construction of 5g base stations. From the perspective of 5g base station construction plans of the three major operators in China, in 2019, China Mobile, China Telecom Corporation Limited(601728) , China United Network Communications Limited(600050) respectively completed the construction of 68000, 35000 and 330005g base stations, and the number of new 5g base stations is planned to reach 640000 in 2020. It is predicted that under the background of 5g commercial, the total number of 5g base stations in China will exceed 5.4 million.
Data source: public data sorting
(II) purpose of this issuance
1. Seize 5g development opportunities and enhance the profitability of the company
In 2019, China’s 5g officially began commercial use. With the acceleration of 5g communication construction, a number of policies to encourage high-tech industries have been issued to vigorously promote the development and progress of communication RF industry. On the one hand, the popularity of 5g communication technology, the support of MIMO and carrier aggregation, and the promotion of wireless technologies such as Wi Fi, Bluetooth and GPs have led to the rapid growth of the demand for RF front-end modules. At the same time, with the continuous development of mobile communication technology and the popularity of high-end applications, the demand for RF front-end modules tends to be complex, high-end and modular. On the other hand, with the emergence of 5g new spectrum and the application of massive MIMO, communication base stations need to integrate more frequency bands, expand greater bandwidth and increase output power. 5g communication system will bring great development opportunities to communication base stations and RF front-end industry. With the continuous expansion of the construction scale of communication base stations, the continuous enrichment of base station forms and the improvement of performance requirements, RF device providers need to comply with the development trend and provide RF device products that meet the requirements of high frequency, high-end and high efficiency.
On the one hand, the implementation of this raised investment project can meet the growing demand of the market in the future, on the other hand, it also brings a new growth point to the company’s performance growth and opens a new market space for the company. The implementation of the company’s fund-raising and investment project will take mass production of RF front-end modules as a breakthrough to realize the extension to the RF front-end module industry. After the project is completed, it is expected to effectively improve the profitability of the company.
2. Grasp the trend of domestic replacement of RF front-end core components and further improve the industrial layout
RF front-end module is a technology intensive manufacturing industry with high difficulty in design, development and manufacturing process. At present, American and Japanese enterprises represented by Broadcom, Qualcomm, Murata and qorvo occupy the main share of the global market and master the core technology and advanced process of the industry, with high market concentration.
China is a big consumer of RF front-end modules. Subject to the late start of China’s development, backward R & D technology and other factors, the overall strength of Chinese manufacturers is weak, the market voice is limited, the output and performance of products can not fully meet China’s needs, and the Chinese market depends on imports for a long time. As one of the key technologies that need to be developed urgently in our country, it is imperative to gradually realize the localization and substitution of RF front-end module. At present, RF front-end devices suitable for high-frequency communication have been widely used in important fields such as national defense, aerospace and military industry. The independent research and development and production of core parts are of great significance to the field of national security.
The fund-raising investment project will help the company realize the layout in the RF front-end module industry, realize the localization and substitution of RF front-end modules, and lay a solid foundation for the sustainable development of the company.
3. Enhance the company’s capital strength and meet the company’s working capital needs
By optimizing the stock issuance structure, the company’s ability to resist the risks of specific assets and liabilities from the market can be improved. With the rapid development of the company’s own business, it is difficult to meet the needs of the company’s sustainable development only by relying on its own funds and bank credit. Some of the funds raised from the issuance of shares to specific objects are intended to supplement working capital, provide certain working capital support for the company’s operation and development, alleviate the fund gap that the company may face due to sustainable business development, and improve the company’s financial situation. After the funds raised this time are in place, it can consolidate the foundation of sustainable development for the company in business layout, market development, talent reserve, financial ability, long-term strategy and other aspects, and create good conditions for leapfrog development in the future.
To sum up, the issuance of shares to specific objects can meet the capital needs of the company’s operation, which is conducive to the company’s rational layout of business segments, full integration of advantageous resources, accelerating large-scale development and improving comprehensive strength, so as to achieve the company’s strategic objectives and meet the interests of all shareholders.
2、 Necessity of selection of securities issued this time
(I) types of securities issued this time
The type of shares issued to specific objects this time is domestic
