On April 13, saiweidian (688325. SH) will log on the science and innovation board, and plans to publicly issue 20 million shares and raise 809 million yuan.
As another analog chip enterprise listed on the science and innovation board, the scale of saiweidian is not large in the industry. Its operating revenue exceeded 100 million and its net profit leaped from one million to ten million in 2020. In addition, the company has only more than 170 product series, which is not rich enough compared with the number of thousands of products of peer enterprises.
In addition, saiweidian adopts the fabless (fabless chip design enterprise) mode commonly used in the industry, which is highly dependent on external processing plants and customers are more concentrated.
But the gross profit margin is smaller than that of peers
Saiweidian’s main business is the R & D and sales of analog chips. Its main products take battery management chips as the core and extend to more kinds of power management chips, including battery safety chips, battery metering chips, charging management and other chips.
The company’s end customers include many well-known ODM manufacturers ( Goertek Inc(002241) , Wanmo acoustics, Wingtech Technology Co.Ltd(600745) , Renbao computer, etc.), and the products are widely used in the end products of well-known brands in the industry such as notebook computers and tablet computers, smart wearable devices (TWS headphones, etc.), electric tools, charging products (mobile power supply, etc.), light electric vehicles, cordless appliances (vacuum cleaners, etc.), smart phones, UAVs, etc.
In terms of performance, from 2018 to 2020, saiweidian achieved operating revenue of 672625 million yuan, 887361 million yuan and 180 million yuan respectively, with a compound growth rate of 63.64%; The net profit attributable to the parent company was 3.4167 million yuan, 3.6795 million yuan and 324586 million yuan. It can be seen that 2020 is a year for saiweidian to achieve a leap in performance, with revenue exceeding 100 million for the first time and net profit rising from one million to ten million.
However, the reporter of “daily economic news” noted that the business scale of saiweidian is at a low level in the industry. According to the prospectus, the income scale of Chinese comparable listed companies Sg Micro Corp(300661) and other enterprises in 2020 is between 500 million yuan and 1.2 billion yuan. In the same period, the operating income scale of foreign listed companies such as Ti and maxim is 10 billion yuan to nearly 100 billion yuanP align = “center” picture of business scale of comparable companies of saiweidian source: screenshot of saiweidian’s prospectus
In terms of product quantity, foreign manufacturers Ti (Texas Instruments) and maxim (Meixin) occupy the main market share, have a relatively complete product line and many kinds of products. For example, Ti has more than 80000 products. Although there is a big gap between Chinese analog chip companies and foreign manufacturers, they have formed a certain product scale. For example, listed companies Sg Micro Corp(300661) and 3Peak Incorporated(688536) have more than 1600 and 1200 products. Saiweidian said that at this stage, the company has a small business scale and relatively few product series, with more than 170 kinds. It mainly focuses on the field of battery management chips, which can basically meet the needs of customers. However, the richness still lags behind the large-scale analog chip company. The company urgently needs to speed up the research and development of new products, enrich the product line, expand the business scale and increase the anti risk ability.
However, in terms of gross profit margin, saiweidian is better than its Chinese counterparts. Among the comparable Chinese listed companies listed in the prospectus, the gross profit margins of bump technology, Sg Micro Corp(300661) , Sino Wealth Electronic Ltd(300327) , 3Peak Incorporated(688536) , Wuxi Etek Microelectronics Co.Ltd(688601) , Fuman electronics in the first half of 2021 were 51.53%, 51.22%, 44.80%, 59.89%, 35.21% and 51.99% respectively, with an average of 49.11%, while the gross profit margin of saiweidian in the same period could reach 62.72%.
For the reasons why the gross profit margin is higher than the average of comparable listed companies in the same industry, saiweidian analyzed the reasons. First, relying on the company’s experience in the field of battery management chips, the company has few market competitors in some products, such as battery metering chips. The company’s main competitors are Texas Instruments and Meixin; Second, the company is in the growth stage and focuses its limited resources on products with high gross profit and high-tech threshold; Third, there are differences in the positioning of subdivided products between the company and comparable companies in China. The company’s products focus on battery management chips. The technical threshold in this field is high, and the degree of Chinese enterprises participating in competition is low. The products of comparable companies in the same industry also include signal chain products, MCU and other power management chips. Therefore, there are some differences in gross profit margin.
R & D investment in the past three years accounted for more than 26%, and customers and suppliers were concentrated
This time, we choose to be listed on the sci-tech innovation board. One of the requirements that saiweidian chooses to meet the attributes of sci-tech innovation is R & D investment – the company has invested 892283 million yuan in R & D in the last three years, and the cumulative operating revenue in the last three years is 336 million yuan. The cumulative R & D investment in the last three years accounts for 26.55% of the cumulative operating revenue in the last three years, meeting the requirement of more than 5%P align = “center” Image Source: screenshot of saiweidian prospectus
In this listing, saiweishan will raise 809 million yuan for R & D and industrialization projects of consumer electronics battery management and power management chips, R & D and industrialization projects of battery management and power management chips in industrial fields, R & D projects of new energy battery management chips and supplementary working capital projects.
However, just like most smaller chip design enterprises, the problem of supplier and customer dependence is also more prominent. Due to the particularity of the IC industry, wafer factories and packaging and testing factories belong to heavy asset enterprises, with high market concentration and fewer manufacturers mastering advanced technology. A single IC design company often only selects individual wafer factories and packaging and testing factories for cooperation due to the consideration of process stability and batch procurement cost advantage, resulting in the concentration of suppliers; In terms of sales, chip design enterprises with small scale and fewer product categories concentrate advantageous resources and customers are relatively concentrated.
First of all, in terms of suppliers, saiweidian is a typical IC design enterprise. It adopts the fabless mode to hand over the wafer production, sealing and testing and other processes to the outsourcing manufacturers. Among them, the wafer foundry is mainly entrusted to Huahong Hongli and tower, and the packaging test is mainly entrusted to Tianshui Huatian Technology Co.Ltd(002185) and Jcet Group Co.Ltd(600584) . During the reporting period, the purchase amount of saiweidian’s top five suppliers accounted for 99.87%, 99.93%, 99.84% and 99.94% respectively, with a high concentration of suppliers.
Saiweidian said that since 2020, IC design enterprises have generally faced a shortage of wafer supply and tight production capacity of outsourcing factories such as packaging and testing. If the capacity shortage of the outsourcing factory continues or further intensifies, the company has the potential risk of insufficient supply or delayed supply or rising supply price due to the tight production schedule of the outsourcing factory, or the products do not meet the company’s requirements due to the production process control problems of the outsourcing factory, which will have a certain adverse impact on the company’s operating performance.
Second, in terms of customers, the sales mode of saiweidian is the distribution mode. The total sales revenue of the top five dealers accounts for 66.96%, 72.04%, 62.94% and 67.61% of the current operating revenue respectively. The concentration is relatively high, which is in line with the business characteristics of the industry. The company said that if there are major changes in the operation and procurement strategy of the company’s main customers in the future, or the loss of main customers due to the company’s product quality and other reasons, or there are major adverse changes in the operation and credit status of current main customers, it will have an adverse impact on the company’s operation.
For the company’s future expansion of scale, increase of product lines and solving the problems of supplier and customer dependence, the reporter tried to interview saiweidian and sent an interview email. As of the time of publication, no reply was received.
