On October 17, Fuller (301297. SZ) resumption of trading one-word limit. On the evening of the previous day, Fuller issued a major asset restructuring plan, planning to acquire 100% of the shares of Fullerhua, another semiconductor asset in China under the indirect controlling shareholder FERROTEC Group (6890.T, hereinafter referred to as "Japan Magnetron"). During this year, the IPO of a number of semiconductor companies in China under the jurisdiction of Japan Magnetron has not been smooth, and its assets are in urgent need of landing in the domestic capital market.

Japan's magnetron integrates semiconductor assets in China

According to the plan, the transaction includes two parts: issuing shares, purchasing assets with convertible bonds and raising matching funds. Fuller intends to purchase 100% of the shares of Fuller held by 59 counterparties including Shanghai Shenhe through the issuance of shares and convertible bonds, and after the completion of the transaction, the latter will become a wholly-owned subsidiary of the former. At the same time, Fuller intends to issue shares to no more than 35 specific investors by way of inquiry to raise matching funds, and the total amount of funds raised does not exceed the price of this transaction, and the matching funds are intended to be used to supplement liquidity, repay debts, build the target company's project and pay for the relevant taxes and intermediary fees of the transaction, etc., and the proportion of funds used for the first two funds does not exceed 25% of the transaction price.

In terms of transaction price, as of the disclosure date of the plan, the audit and evaluation work of Fuller has not been completed, and the transaction price has not yet been determined. However, according to the preliminary calculation of relevant data, this transaction is expected to meet the relevant standards and constitute a major asset restructuring of the listed company. At the same time, this transaction constitutes a connected transaction. Among the counterparties, Shanghai Shenhe, which holds 55.11% of the shares of the target company, is also the controlling shareholder of Fuller. Japan Magnetron has a 100% stake in Shanghai Shenhe.

Regarding the purpose of the transaction, Fuller said that the target company Fuller is a world-leading manufacturer of power semiconductor copper-clad ceramic substrates, and the acquisition will help the listed company integrate high-quality semiconductor resources within the group and promote the introduction of high-quality semiconductor parts manufacturing business.

Fuller is a pan-semiconductor equipment precision cleaning service provider, for semiconductor and display panel manufacturers to provide equipment precision cleaning and its derivative value-added services, before the acquisition, Fuller has been through the establishment of Sino-Japanese joint ventures, acquisitions and other ways in the field of semiconductor parts manufacturing upgrade layout.

At the same time, Fullerhua has developed and mass-produced the ceramic materials required for production, breaking the dependence on imports of raw materials and high-reliability copper-clad ceramic substrates for some products, realizing domestic substitution and exporting overseas, and solving the problem of "stuck neck" of key materials for power semiconductors.

Fuller also mentioned that as a high-quality semiconductor asset under Japan Magnetron, Fuller's main customers include STMicroelectronics, Infineon, BorgWarner, Fuji Electric, BYD, Silan Micro, CRRC Times, etc. Silver Persimmon Finance noticed that compared with Fuller, the acquisition target has a larger revenue scale and stronger profitability in recent years, and this acquisition is also regarded as a "snake swallowing an elephant" transaction. In 2022, 2023 and the first half of 2024, Fullerhua's operating income will be 1.107 billion yuan, 1.692 billion yuan and 899 million yuan respectively, and its net profit will reach 261 million yuan, 354 million yuan and 128 million yuan respectively (all unaudited). During the aforementioned period, the total revenue of Fuller was about 1.5 billion yuan, and the total net profit attributable to the parent company was about 200 million yuan.

The IPO of two companies under Japan Magnetron may "fail" one after another

As Fullert said, this transaction may be an integration of semiconductor assets within the group by indirect shareholder Japan Magnetron. Japan Magnetron is an internationally renowned semiconductor manufacturer, widely involved in various fields such as semiconductor equipment parts and semiconductor materials, and has laid out a number of semiconductor companies in China through Shanghai Shenhe. According to the investigation, Fuller is the only listed platform of Japan magnetron in China 300731. SZ) holds 0.83%.

In recent years, Japan Magnetron has successively spun off its business entities in the Chinese market and tried to list on the ChiNext Board, the Science and Technology Innovation Board and the Shenzhen Main Board. The acquiree, Fuller, had previously sought an IPO. According to public information, Fuller completed the share reform in November 2021, signed a listing counseling agreement with Huatai United Securities in February 2022, and disclosed the progress of the fifth phase of listing counseling in March 2023. The acquisition plan may mean that Fullerhua will be transferred from planning to IPO to being acquired.

It is worth mentioning that not only Fullerhua, but also a number of semiconductor companies under Japan Magnetron have tried unsuccessfully to sprint to A-share IPOs. For example, Zhongxin Wafer, which is engaged in the semiconductor wafer business, its IPO application draft was accepted on August 29, 2022, and from 2022 to 2023, Zhongxin Wafer replied to the review inquiry letter of the Shanghai Stock Exchange three times, and in July this year, the Shanghai Stock Exchange announced that it would terminate the review of the issuance and listing of Zhongxin Wafer on the Science and Technology Innovation Board because its financial information had expired and had not been updated for three months.

According to the data, Zhongxin Wafer is one of the very few semiconductor material companies in China that can mass-produce 12-inch large silicon wafers, and in July 2023, it will be selected into the list of the fifth batch of national-level specialized, special and new "little giant" enterprises, however, from 2019 to 2021, Zhongxin Wafer has lost money for three consecutive years, with a total net loss of more than 900 million yuan attributable to the parent company. At the same time, the market position of Zhongxin Wafer in the semiconductor wafer market is not high, and the market share of the top three Shin-Etsu Chemical, SUMCO and Global Wafer exceeds 60% as a whole, while the market share of Zhongxin Wafer in the global silicon wafer field is only about 0.91%, which is lower than that of Shanghai Silicon Industry (688126. SH), Lion Micro (605358. SH) and so on.

Japan In June 2023, the application for listing on the main board of the Shenzhen Stock Exchange was accepted, and in December of the same year and March 2024, Dunyuan Juxin replied to the IPO inquiry letter of the Shenzhen Stock Exchange twice. On September 30 this year, the official website of the Shenzhen Stock Exchange disclosed that the financial information recorded in the IPO application documents of Dunyuan Juxin had expired and needed to be supplemented. At present, the audit status of Dunyuan Juxin is "suspended".

In the prospectus, Dunyuan Juxin said that the company has grown into a leading supplier of semiconductor parts and materials in China, and its products are mainly provided to well-known semiconductor companies at home and abroad, but compared with major overseas competitors, the company's overall production capacity and output scale are still at a disadvantage, and the brand awareness is relatively weak, "Therefore, the company intends to obtain long-term financial support to enhance scientific and technological innovation and enhance comprehensive strength through this listing, and enhance brand awareness and comprehensive competitiveness in the global market. Promote the company to become one of the leading enterprises in the domestic semiconductor industry".