After this stock issuance, it is planned to be listed on the science and innovation board market, which has high investment risk. Kechuang board company has R & D experience
With the characteristics of large investment, high operation risk, unstable performance and high delisting risk, investors are facing greater market risks. throw
Investors should fully understand the investment risks of the science and innovation board market and the risk factors disclosed by the company, and make investment decisions prudently. Sitway (Shanghai) Electronic Technology Co., Ltd. (room 612, floor 6, building 3, No. 111, Xiangke Road, China (Shanghai) pilot Free Trade Zone) made an initial public offering of shares and was listed on the science and innovation board
Prospectus
The company’s application for issuance and listing shall be subject to the corresponding procedures of Shanghai Stock Exchange and China Securities Regulatory Commission. This Prospectus has no legal effect on the issuance of shares and is only for pre disclosure. Investors shall take the full text of the officially announced prospectus as the basis for making investment decisions.
Sponsor (lead underwriter)
Building 66, Li’an Road, Chaoyang District, Beijing
Any decision or opinion made by the CSRC and the exchange on this issuance does not indicate that they guarantee the authenticity, accuracy and completeness of the registration application documents and the information disclosed, nor do they indicate that they make substantive judgment or guarantee on the profitability, investment value of the issuer or the income of investors. Any statement to the contrary is a false statement.
According to the provisions of the securities law, the issuer shall be responsible for the changes in the operation and income of the issuer after the shares are issued according to law; Investors independently judge the investment value of the issuer, make investment decisions independently, and bear the investment risks caused by the changes in the operation and income of the issuer or the changes in the stock price after the shares are issued according to law.
Issue overview
Type of shares issued: RMB ordinary shares (A shares)
The number of shares to be issued shall not exceed 49.1 million, the shareholders of the company shall not offer shares to the public, and the new shares to be issued to the public shall not be less than 10% of the total share capital after this issuance
The par value of each share is RMB 1.00
The issue price per share is [] yuan
Expected issue date: mm / DD / yyyy
Stock exchanges and sectors to be listed Shanghai Stock Exchange Kechuang board
The total share capital after issuance shall not exceed 409.1 million shares
Sponsor (lead underwriter) China Securities Co.Ltd(601066)
Signing date of prospectus: mm / DD / yyyy
Statement and commitment
The issuer and all directors, supervisors and senior managers promise that there are no false records, misleading statements or major omissions in the prospectus and other information disclosure materials, and bear individual and joint legal liabilities for their authenticity, accuracy and completeness.
The controlling shareholder and actual controller of the issuer promise that there are no false records, misleading statements or major omissions in this prospectus, and bear individual and joint legal liabilities for its authenticity, accuracy and completeness. The person in charge of the company, the person in charge of accounting and the person in charge of the accounting agency shall ensure that the financial and accounting materials in the prospectus are true and complete.
The issuer and all directors, supervisors, senior managers, controlling shareholders, actual controllers, sponsors and underwriting securities companies promise to compensate investors for losses in securities issuance and trading due to false records, misleading statements or major omissions in the issuer’s prospectus and other information disclosure materials.
The sponsor and the securities service institution promise to compensate the investors for the losses caused to the investors due to the false records, misleading statements or major omissions in the documents prepared and issued for the issuer’s public offering.
Tips on major issues
The company specially reminds investors to pay full attention to the following major matters and carefully read the text of this prospectus. 1、 In particular, investors are reminded to pay attention to the following risks in the “risk factors”
The company reminds investors to pay special attention to the following risks in the “risk factors” and carefully read all the contents in “section IV Risk Factors” of this prospectus. (I) technical iteration risk
The product technology iteration speed of integrated circuit design industry is fast, and the upgrading and new application scenarios of CMOS image sensors emerge one after another. The company must maintain continuous R & D and innovation, and continue product iteration according to the latest technology development trend and market demand, otherwise it may lead to lower prices, lower gross profit margin and worse customer experience. On the other hand, the development direction of integrated circuit products is uncertain. Design enterprises must maintain a high sensitivity to the mainstream technology iteration trend and the market space of scenario application, so as to grasp the general direction of technology development in time. If the company cannot comply with the latest trend of technological development and adjust its strategy in time, it will cause a great waste of human cost, capital cost and time cost, and also cause the company to lose key opportunities for development. (II) the high concentration of suppliers and the risk of periodic fluctuation of capacity utilization
As an integrated circuit design enterprise, the company needs to complete the main production processes such as wafer manufacturing and packaging in the foundry. At the same time, due to the high threshold of wafer manufacturing and packaging in the integrated circuit industry, the number of wafer manufacturing and packaging suppliers that meet the company’s technical and production requirements is limited worldwide. During the reporting period, the company maintained a stable procurement relationship with major suppliers. In 2018, 2019, 2020 and January September 2021, the procurement amount of the company’s top five suppliers was 304941 million yuan, 4981364 million yuan, 13747957 million yuan and 1423406 million yuan respectively, accounting for 99.58%, 97.66%, 92.11% and 85.89% of the total procurement amount respectively. The supplier concentration is high.
During the reporting period, the global wafer and package test capacity generally entered a relatively tight cycle. At present, the capacity utilization rate of the company’s main wafer and sealing and testing service providers is high. The company has obtained part of the capacity guarantee through prepayment, which has maintained the stability of the supply chain to a certain extent, but the large amount of prepayment also occupies the company’s working capital and improves the liquidity risk. If the price of wafer and packaging rises sharply, or the company’s product production is affected due to the shortage of wafer supply and packaging capacity, it will have an adverse impact on the company’s profitability and the stability of product supply. (III) risk of high customer concentration
The company adopts the sales mode of direct selling and distribution. Due to the large market demand for the company’s products and the strict management of customers, direct sales customers generally choose well-known terminal brand customers in the industry, while other terminal customers provide goods and services through well-known distributors in the industry.
This strategy will make the company’s customer concentration account for a relatively high proportion. During the reporting period, the company maintained a stable sales relationship with its main customers. In 2018, 2019, 2020 and January September 2021, the sales amount of the company’s top five customers were 314196900 yuan, Bondex Supply Chain Management Co.Ltd(603836) 200 yuan, 1209567800 yuan and 1607900500 yuan respectively, accounting for 96.79%, 88.91%, 79.20% and 78.72% of the total sales amount respectively. The sales proportion to main customers was high.
Due to the high concentration of customers, if a customer with a high proportion of sales fluctuates in cooperation with the company due to geopolitics, their own operation, cooperation disputes, tight production capacity and other risks, and the company needs a certain period to expand new customers, it may lead to the passive decline of the company’s sales scale and the inability to guarantee the sales return, which will have an adverse impact on the company’s performance in the short term. (IV) risk that the expansion speed of product application field is lower than expected
According to the market demand and its own technical characteristics, the company continues to expand the field of product application and help the continuous growth of the company’s performance. During the reporting period, the company’s operating revenue mainly came from the field of security monitoring. From the perspective of product revenue, the proportion of revenue from the field of security monitoring was 98.44%, 92.62%, 82.13% and 72.82% respectively, and continued to expand to the field of machine vision, smart vehicle electronics, smart phones and other fields. In the field of security monitoring and machine vision, although the company has occupied a certain market position, its brand influence and market share still have room to improve compared with foreign high-end manufacturers; In the field of smart car electronics and smart phones, as a new entrant to the market, the company has certain disadvantages in product verification and mass production experience, customer relationship, brand recognition, product variety and so on. The above factors will affect the expansion progress of the company’s business in various application fields.
If the business expansion speed of the company in various downstream application fields is lower than expected, it will have an adverse impact on the growth of the company’s operating performance. (V) risks of Sino US trade frictions
In recent years, the uncertainty of international trade environment has increased, and the United States has issued several rounds of trade protection measures to hinder the development of China Hi-Tech Group Co.Ltd(600730) technology enterprises. In the field of semiconductors, the United States revised the Wassenaar agreement, tightened semiconductor export controls, and included a number of Chinese technology leading enterprises and institutions in the “entity list” of U.S. export controls, which brought risks to the upstream and downstream business cooperation of the company.
In terms of upstream supply chain, the company cooperates with upstream suppliers including Eastern high tech, TSMC, kingya technology and other overseas wafer factories. If the trade friction between China and the United States further escalates, and the company’s main suppliers are required to restrict the use of U.S. patented technology or the production of chips for domestic customers, it will affect the stability of the company’s supply chain and the normal operation of the company.
In the downstream application field, the United States has listed a number of well-known enterprises in the field of security monitoring and machine vision in China, suppressing the normal development of relevant industries in China. As the main application field of the company’s products, the geopolitical pressure experienced by the terminals in the security monitoring and machine vision industry will affect the stable sales and market expansion of the company’s CIS products, thus bringing some uncertainty to the company’s business development.
To sum up, if the trade friction between relevant countries and China continues to escalate, the company may face the risk of unable to continue cooperation with limited upstream and downstream partners, which will have a certain adverse impact on the company’s operation and development. (VI) risks of intellectual property disputes
The integrated circuit industry is a technology intensive industry. In order to maintain technical advantages and core competitiveness, industry participants need to protect their R & D achievements through intellectual property barriers. Technology leading enterprises will build intellectual property barriers through patent applications, crack down on competitors through patent rights protection and intellectual property litigation, and consolidate their leading advantages.
The company has always paid attention to the declaration and protection of its own intellectual property rights, while avoiding infringement of others’ intellectual property rights. The company has encountered patent litigation in history, which ended with the withdrawal of the lawsuit and the rejection of the plaintiff’s claim. However, in the future, it does not rule out the possibility that competitors or third parties adopt the strategy of malicious litigation to block the company’s market expansion, nor does it rule out the possibility of other intellectual property disputes between the company and competitors or third parties. The company’s registration of some intellectual property rights abroad may also lead to differences in the interpretation and identification of the scope of intellectual property rights due to different countries and legal systems. If it fails to deeply understand its connotation, it may also lead to disputes and litigation. In addition, the operation of upstream and downstream suppliers and customers in the industrial chain may also be affected by intellectual property disputes, litigation and other factors. In short, disputes over intellectual property rights may directly or indirectly affect the normal production and operation of the company.
(VII) fluctuation risk of gross profit margin
The company’s main products are high-performance CMOS image sensors. In 2018, 2019, 2020 and January September 2021, the company’s comprehensive gross profit margin is 12.73%, 18.14%, 20.88% and 29.76% respectively. The gross profit margin of the company’s main products is mainly affected by downstream demand, product price, product structure, raw materials, packaging and testing costs and the company’s technical level. If the above factors change, the company’s gross profit margin may fluctuate, This will affect the profitability and performance of the company. 2、 Important commitments made by relevant entities of this issuance
The specific contents of various important commitments made by the issuer, shareholders, actual controllers, directors, supervisors, senior managers, core technicians of the issuer, sponsors and securities service institutions of this offering and binding measures for failure to fulfill the commitments are detailed in “VI. important commitments” of “section 10 investor protection” of this prospectus. The company reminds investors to carefully read all contents of this chapter. 3、 Arrangement of profit distribution policy
Please refer to “II. Dividend distribution policy” in “section 10 investor protection” of this prospectus. 4、 Special corporate governance structure of the issuer with special voting rights
On July 3, 2020, all shareholders of sitway Co., Ltd. signed the articles of association of sitway (Shanghai) Electronic Technology Co., Ltd., which set the excess voting right, and agreed that Xu Chen and his wholly-owned or controlled shareholders would exercise the voting right of 5 times of their subscribed capital contribution.
On December 15, 2020, the issuer held the founding meeting and the first general meeting of shareholders. All shareholders attended the meeting. The meeting unanimously deliberated and adopted the proposal on the establishment of special voting shares in sitway (Shanghai) Electronic Technology Co., Ltd., formulated the articles of association and set up the arrangement of special voting shares. Unless the special voting right arrangement is terminated by the resolution of the general meeting of shareholders of the issuer, the special voting right setting of the issuer will continue and operate for a long time. According to the arrangement of special voting rights, the capital stock of the issuer consists of class A shares and class B ordinary shares with special voting rights. Except that the number of voting rights corresponding to class A shares and class B shares is the same in considering specific matters, the number of voting rights per share of class A shares held by the controlling shareholder and actual controller Xu Chen is 5 times that of class B shares held by other shareholders (including the object of this public offering).
As of the signing date of this prospectus, Xu Chen, the actual controller, directly holds 15.23% of the shares of the issuer. Through the special voting right setting, the voting right proportion of the issuer controlled by Xu Chen and Mo Yaowu, who acted in concert, is 51.46%.
The issuer has the corporate governance risk of running for a short time since the establishment of special voting rights.
Under the special voting mechanism, Xu Chen, the controlling shareholder and actual controller of the issuer, can decide the general meeting of shareholders of the issuer
