The full text is 4153 words, and it takes about 12 minutes to read

Highlight the point

01Jingfeng Mingyuan, a leading domestic LED lighting driver chip company, released its financial report for the third quarter of 2024, with a net loss of 54.3 million yuan in the first three quarters, and announced a major asset restructuring at the same time.

02Jingfeng Mingyuan intends to purchase the control of Sichuan Yichong Technology Co., Ltd. by issuing shares, issuing directional convertible bonds and paying cash, which involves semiconductor integrated circuit chips and other businesses.

03 As the transaction is still in the planning stage and there is uncertainty, Jingfeng Mingyuan shares will be suspended from the opening of the market on October 22, and the suspension is expected to last no more than 5 trading days.

04 The actual controller of Sichuan Yichong is Pan Siming, a post-85 generation, whose team has a diverse background, and cultural integration has become a challenge.

In 052023, the semiconductor industry picked up, and Jingfeng Mingyuan lost 54.3 million yuan in the first three quarters, and this merger and acquisition is expected to help the company get out of the haze of losses.

The above content is generated by Tencent's hybrid model and is for reference only

Can mergers and acquisitions help Jingfeng Mingyuan get out of the haze of losses?

Written by Wu Lijuan

Editor丨Gao Yan

Source: Bronco Finance

In the fields of smartphones, wearable devices, automotive electronics, and computing power, chip design is an extremely important part. As the pinnacle of the technology field, semiconductors are the undisputed highland of talent, and examples of strong alliances are not uncommon.

On October 21, Jingfeng Mingyuan, a leading domestic LED lighting driver chip company, released its financial report for the third quarter of 2024, with a net loss of 54.3 million yuan in the first three quarters, and announced a major asset restructuring.

Jingfeng Mingyuan(688368. SH) plans to purchase the control of Sichuan Yichong Technology Co., Ltd. ("Sichuan Yichong") by issuing shares, issuing directional convertible bonds and paying cash. In view of the fact that the matter is still in the planning stage and there are uncertainties, in order to ensure fair information disclosure, Jingfeng Mingyuan applied for the suspension of trading of the shares from the opening of the market on October 22, and the suspension is expected to last no more than 5 trading days.

The target company, Sichuan Yichong, is involved in semiconductor integrated circuit chips and other businesses, which is the same as Jingfeng Mingyuan, which was born in the "Zhejiang University Department", and the founder is the "Tsinghua Department" team.

Before the disclosure of the restructuring news, Jingfeng Mingyuan's share price rose sharply in advance, with a cumulative increase of 32.87% in two trading days. On October 21, there was a 20% daily limit, as of the close, it closed at 104.82 yuan / share, an increase of 10.72%, and hit the highest point of the year at 113.6 yuan / share, with a total market value of 9.206 billion yuan.

Jingfeng Mingyuan is a professional supplier of power management and control driver chips, focusing on the R&D and sales of power management and motor control chips. At the 2023 Chip Semiconductor Roundtable Dialogue, Chairman Hu Liqiang said: "The Science and Technology Innovation Board has given scientific and technological innovation enterprises a higher tolerance and supported them to challenge the right and difficult things. ”

The semiconductor industry is picking up this year, and the overall market demand is recovering. Since 2022, Jingfeng Mingyuan has suffered continuous losses, can this merger and acquisition help it get out of the haze of losses?

After 15 rounds of funding

Manufacturers of wireless charging chips will be acquired

Jingfeng Mingyuan is a leading analog and mixed-signal chip leader in China, the company's business is mainly divided into two categories of power management chips and control driver chips, including LED lighting power management chips, motor drive and control chips, AC/DC (AC to DC power converter) power management chips and DC/DC (AC to DC power converter) power management chips four major product lines. The company's products cover LED lighting, home appliances, mobile phones, personal computers, servers, base stations, networking, automobiles, industrial control and other fields.

Sichuan Yichong, which was acquired and acquired, was established in February 2016, and the company's business scope includes: semiconductor integrated circuit chips, computer software and hardware research and development, design, sales, technical consulting, and technical services; R&D and sales of intelligent electronic products, etc. From the perspective of the business scope of the two companies, there is synergy in business.

The specific transaction method and transaction plan of the transaction have not been disclosed. According to the announcement, the counterparties include the top three shareholders of Sichuan Yichong, and have signed the "Equity Acquisition Intent Agreement". The acquisition will be completed through the issuance of shares, the issuance of convertible bonds and the payment of cash, and at the same time it is planned to raise matching funds, and the transaction is expected to constitute a major asset restructuring.

Source: Canned Gallery

Speaking of the history of China's domestic chips, it is inevitable to avoid the "Tsinghua Department". It can be said that the "Tsinghua system" supports half of China's semiconductors.

The actual controller of Sichuan Yichong is Pan Siming (chairman and general manager), a post-85 generation who graduated from Tsinghua University with a bachelor's degree and a master's degree from Missouri University of Science and Technology.

In August 2014, Pan founded Yichong Wireless in Silicon Valley, California, United States, providing the world's leading wireless charging chips and solutions. In 2016, Pan Siming was invited by the Energy Internet Research Institute of Tsinghua University to visit Chengdu. After that, he started a business with 5 Tsinghua team members who returned from abroad and founded Sichuan Yichong.

Sichuan Yichong can be described as a star project in the primary market, and Tianyancha shows that it has completed 15 rounds of financing. The most recent financing was in December 2023, and investors include Zhongkai Investment, Zhongqing Fund, CCB Trust, Shenzhen Capital Group, Weihao Chuangxin, etc. In the previous rounds of investment, CICC Capital, Hefei Construction Investment, SAIC Investment, NIO Capital and other investors were gathered.

As of December 2023, Sichuan Yichong has accumulated more than 150 international and domestic core patents, accounting for about 70% of domestic wireless charging patents. Sichuan Yichong's main customers include many well-known enterprises from Europe, the United States, Japan, South Korea and China, and its wireless charging solutions have been adopted by Toyota, Google, Microsoft, Sony, Zebao, Haier and other companies.

In March 2023, the official account of the Sichuan Tianfu New Area Management Committee, "Tianfu Release", disclosed that at that time, Sichuan Yichong was planning to list on the Science and Technology Innovation Board.

In the context of the introduction of the "six mergers and acquisitions" policy, many industries have ushered in a wave of mergers and acquisitions. This major asset restructuring has industrial synergy and meets the requirements of regulatory support for the transformation and upgrading of listed companies in the direction of new quality productivity. However, Jingfeng Mingyuan said that the transaction is still in the planning stage, and the parties to the transaction have not yet signed a formal transaction agreement, and the specific transaction plan is still under discussion and verification, and there is still great uncertainty. At the same time, the transaction is subject to the company's board of directors, shareholders' general meeting for deliberation and regulatory approval.

However, some shareholders pointed out that in this merger and acquisition, Jingfeng Mingyuan took a fancy to the technical strength of Sichuan Yichong, but the integration is not small, after all, the team has a diverse background, and cultural integration is a challenge.

"Zhejiang University alumni" husband and wife entrepreneurship

A net worth of 6.3 billion is on the "Hurun Rich List".

Hu Liqiang, the founder and chairman of Jingfeng Mingyuan, was born in January 1976 and entered the electrical department of Zhejiang University in 1994. After graduating from Shanghai Jiao Tong University with a master's degree in microelectronics, he chose to work in the field of chip design for research and development after graduation.

Liu Jieqian was born in August 1976 and graduated from Zhejiang University with a bachelor's degree in electrical engineering. Hu Liqiang and Liu Jieqian, who also graduated from Zhejiang University, entered the palace of marriage.

In 2008, the two started a business together and established Jingfeng Mingyuan, with Hu Liqiang as chairman and general manager. Since September 2009, Liu Jieqian has served as deputy general manager and director. Since 2014, Jingfeng Mingyuan has begun to lead the global market of LED lighting driver chips, and has become a supplier of Philips, Opple Lighting and many other enterprises.

In October 2019, Jingfeng Mingyuan was officially listed on the Science and Technology Innovation Board. And Hu Liqiang has a deep fate with Zhejiang University. At the beginning of Jingfeng Mingyuan's listing, there were a total of five people in the core team, in addition to Hu Liqiang and Liu Jieqian, two others also graduated from Zhejiang University, and many employees were also from Zhejiang University. At present, Hu Liqiang holds 24.4% of the shares, making him the largest shareholder.

Jingfeng Mingyuan LED lighting driver chips have a very rapid growth from 2019 to 2021, and the turnover has risen rapidly from 813 million yuan to 2.122 billion yuan. As the absolute leader in the LED lighting driver chip industry, the company's market share in 2020 is close to 30%.

In 2022, Hu Liqiang and Liu Jieqian ranked 3207th on the "Hurun Global Rich List" with a wealth of 6.3 billion.

In recent years, Jingfeng Mingyuan has carried out a series of industrial mergers and acquisitions around relevant strategic planning, focusing on automotive power supply chips and DC/DC (DC to DC power converter) power supply chips, and has successively taken Shanghai Laishi Semiconductor, Shanghai Xinfei Semiconductor, Lingou Chuangxin Electronics, etc., into its arms, and expanded its business territory through acquisitions and investments.

In 2020 and 2021, Jingfeng Mingyuan acquired the shares of two semiconductor companies, Shanghai Laishi and Shanghai Xinfei, respectively.

In 2021, Jingfeng Mingyuan planned to purchase 95.75% of the shares held by Lingou Chuangxin from 14 shareholders including Li Peng of Nanjing Lingou Chuangxin Electronics Co., Ltd. (hereinafter referred to as "Lingou Chuangxin") by issuing shares and paying cash, but ultimately failed. However, in 2023, it will acquire 38.87% of the shares of Lingou Chuangxin with its own funds and become its controlling shareholder.

Lingou Chuangxin focuses on the field of motor control, and its core products are MCU (microcontrollers), and the end market is for electric vehicles, household appliances, industrial control, etc. Through the acquisition of Lingou Chuangxin, Jingfeng Mingyuan has expanded its technical capabilities in the field of motor control chips and expanded its product portfolio.

In the first half of the year, the prosperity of the semiconductor industry gradually showed a recovery trend. At the same time, the semiconductor industry has become the main track for mergers and acquisitions of listed companies. Through industrial integration, we will increase industrial synergies and develop new tracks. For example, JCET (600584. SH), Changchuan Technology (300604. SZ), Guangzhi Technology (300489. SZ) and many other listed semiconductor companies have issued mergers and acquisitions plans.

Galaxy Securities research report believes that under the current policy cycle, mergers and acquisitions, as an important tool in the capital market, has the important significance of improving the efficiency of resource allocation, promoting industrial upgrading and production capacity clearance, optimizing market value management and promoting the development of equity finance, especially in the field of scientific and technological innovation. In the primary market, the exit channels of equity investment are affected, and when IPO is no longer a viable option, mergers and acquisitions have become an important alternative way of capital exit. Enterprises also indirectly achieve the goal of listing through mergers and acquisitions, which further enhances the vitality and adaptability of the capital market.

The loss in the first three quarters was 54.3 million

The global semiconductor market is picking up

In 2022, the growth of downstream terminal demand, including plant lighting, outdoor lighting, etc., will be sluggish, resulting in a decline in the performance of LED driver chip companies, and Jingfeng Mingyuan will not be spared, and the related business will plummet to 932 million yuan and 949 million yuan in 2021 and 2022.

After nearly two years of downturn, the semiconductor industry has finally recovered strongly this year. According to data from the Semiconductor Industry Association (SIA), the cumulative sales of the global semiconductor industry in the second quarter of 2024 reached US$149.9 billion, an increase of 6.5% quarter-on-quarter and 18.3% year-on-year. This data shows that the semiconductor industry is showing strong growth momentum in the post-pandemic market recovery phase.

Zhang Yi, CEO and chief analyst of iiMedia Consulting, said that the semiconductor industry as a whole is still in a strong recovery situation. In 2023, the prosperity of the global semiconductor market will be relatively low. However, in the first half of this year, the industry as a whole was destocking. Especially this year, under the strong technological innovation of artificial intelligence, the consumer electronics industry has achieved a rapid development momentum, the price of memory chips has soared, and the global semiconductor sales volume has bottomed out. In the Chinese market, semiconductor sales in the first two quarters showed relatively strong growth, which also reflects China's position in the huge consumption and industrial chain demand of the semiconductor industry.

According to incomplete statistics from the observer network, as of October 22, 18 A-share semiconductor companies have announced their third quarterly reports, and only Jingfeng Mingyuan has lost money. In the first three quarters of 2022, 2023 and 2024, the company will achieve attributable net profit losses of 206 million yuan, 91.26 million yuan and 54.3011 million yuan respectively.

Jingfeng Mingyuan said that the increase in the company's sales revenue in 2024 is due to the optimization of the product structure, but the change in share-based payment expenses has led to changes in the company's net profit attributable to shareholders of listed companies in the reporting period and from the beginning of the year to the end of the reporting period, and the net profit attributable to shareholders of listed companies after deducting non-recurring gains and losses.

From the perspective of product structure, the company's LED lighting power chip revenue accounts for about 6 percent, and the decline in performance is also caused by the decline in the price of LED lighting products.

Jingfeng Mingyuan said at the investor relations conference that the price of lighting products is still declining as a whole, mainly due to the superposition of several factors such as the recovery of market prosperity and the changeable competition pattern of the industry. However, due to the continuous adjustment and optimization of product structure, the continuous growth of revenue from smart lighting products, and the comprehensive application of a new generation of technology, the product cost has been reduced considerably, and the gross profit margin of LED lighting products has been continuously restored during the reporting period.

Source: pixabay

Zhang Yi believes that Jingfeng Mingyuan, as the leader of LED lighting driver chips, has been losing money for a period of time, which has a great relationship with the market cost, competition pattern, channels and products faced by the company. But it does not necessarily mean that the overall field of lighting driver chips is not good, and there will still be a relatively large demand for this piece. Therefore, for Jingfeng Mingyuan, it is important to be self-driven through product innovation, industrial mergers and acquisitions, and management system reform.

In terms of customer progress, the sales revenue of Jingfeng Mingyuan intelligent LED lighting products continued to grow, and the high-performance lighting product line achieved breakthroughs for two international customers, and the market share continued to increase.

Jingfeng Mingyuan said that while consolidating the market share of LED lighting power chips, the company is also actively developing the second growth curve, and continues to increase the proportion of AC/DC (AC to DC power converter) power chips and motor control drive chips in the overall business; At the same time, based on the successful mass production of the 40V BCD process platform, the sales revenue of DC/DC (DC-to-DC power converter) power chips has been gradually increased.

In July last year, Jingfeng Mingyuan launched a plan to issue convertible corporate bonds to unspecified objects, and the final raised funds were adjusted to 661 million yuan, which was used to invest in high-end power management chip industrialization projects, R&D center construction projects and supplement the company's working capital. According to the announcement, the development of this R&D project will further expand the company's power management chip business scale and deepen its business layout in the fields of AC/DC and DC/DC.

In 2020, Jingfeng Mingyuan established the AC/DC business department, focusing on the layout of built-in AC-DC power chips used in home appliances and external AC/DC power supplies used in chargers and adapters.

As a new entrant in the AC-DC track, Jingfeng Mingyuan's acquisition of Sichuan Yichong in the field of wireless charging is also its strategy to further extend its industrial layout.

What are the factors for the recovery of the semiconductor industry? Zhang Yi believes that first of all, the demand in the downstream market is showing a rapid recovery. One is artificial intelligence, and the other is the growth of demand for consumer electronics; Second, the technological progress of the semiconductor industry and the launch of new products are closely related to the new consumer market, especially the application of AI. Third, the close cooperation between the international and domestic markets. The Chinese government has continuous policy support for the semiconductor industry, whether it is in the research and development of products, taxes, and the industry environment, etc., have given an excellent and good external environment.

Do you know the LED lighting power supply industry? Are you optimistic about the merger and reorganization of Jingfeng Mingyuan? Leave a message and let's chat!

View original image 553K