Source: Wealth Investment Network

Abstract: The backdoor listing of Shanghai Microelectronics with a valuation of 600 billion yuan is expected to stimulate a market investment boom. In October 2024, Shanghai Microelectronics abruptly withdrew its initial public offering (IPO) listing counseling filing. Whether to re-apply or adopt a backdoor listing in the future has attracted attention from the industry. With the expectation of backdoor listing and mergers and acquisitions of Shanghai Microelectronics, it is worth analyzing whether relevant listed companies have become "objects". According to market analysts, Power Xinke (600841), which was once affiliated to Shanghai Electric (Rights Protection) Holding Group, is worth paying attention to, because the current chairman of Shanghai Microelectronics is from SAIC and has worked in SAIC for decades, and Power Xinke (600841) happens to be a listed company controlled by SAIC Group. In fact, recently, six listed companies under Shanghai Electric Holding Group, the controlling shareholder of Shanghai Microelectronics, have also been used as potential backdoor targets, and their stock prices have risen. Compared with Shanghai Microelectronics, which is valued at 600 billion yuan, once it is successfully listed on the backdoor, there is huge room for reshaping the valuation of listed companies with low market capitalization.

Recently, the A-share market mergers and acquisitions of the concept of stocks after a short period of overall stock price fluctuations after the active again, this week the concentration of mergers and acquisitions of the concept of stock speculation has increased significantly, especially around the Shanghai microelectronics backdoor listing under the strong expectation of investment opportunities, has become the main line of the concept of mergers and acquisitions since this week. Judging from today's list of gainers, Shanghai Electric (601727), Electric Wind Power (688660), Highly (600619), Yinghe Technology (Rights Protection) (300457), Huajian Group (600629), Zhangjiang Hi-Tech (600895) and many other varieties that only involve the expected concept of Shanghai Microelectronics' backdoor listing, mergers and acquisitions, and reorganization are closed at the limit or rose by more than 10%! Among them, Shanghai Electric (601727) as a typical representative of the previous stage of mergers and acquisitions, the stock price has experienced a wave of continuous rapid and violent upward trend, in the past two days in the market around the Shanghai Microelectronics backdoor listing under the strong expectation of speculation, its share price has returned to the rising channel, and has been closed in the daily limit for two consecutive trading days; Electric Wind Power (688660) and Zhangjiang Hi-Tech (600895) both recorded 3 daily limits in the past 4 trading days; Highly shares (600619) are two consecutive trading days of the stock price limit; Huajian Group (600629) has recorded 4 daily limits in the past 5 trading days.

Analysis of the expectation of backdoor listing of leading semiconductor companies: almost most of the 6 listed companies under the holding group have a daily limit, and in addition to these 6, there is also a "pro-son" that has not been tapped

In the field of semiconductor manufacturing, lithography machine is regarded as a vital core equipment, especially for enterprises that pursue high-precision and high-performance chip production, its position is irreplaceable, and it can be called the "heart" of the entire production process. The equipment is not only an important weapon for China's science and technology industry to break through the international monopoly and achieve technological independence and control, but also a key pillar to support the rise of China's science and technology.

After hard work in recent years, China has made remarkable progress in lithography machine technology, and in 2024, China's science and technology field will usher in a major historical breakthrough in the localization of the whole process of lithography machine. This news caused a huge shock in the world, broke the monopoly of European and American countries in lithography machine technology, and injected a strong impetus into the development of China's high-tech industry.

It should be said that the most representative enterprise in the field of lithography machine in China is Shanghai Microelectronics Equipment (Group) Co., Ltd. Shanghai Microelectronics was established in March 2002 and is positioned as a "market-oriented company endowed with a national mission". It is the only high-end lithography machine supplier in China with multi-field and multi-variety production line applications.

According to the company's official website, Shanghai Microelectronics Equipment (Group) Co., Ltd. (hereinafter referred to as "SMEE", hereinafter referred to as "Shanghai Microelectronics") is mainly committed to the development, design, manufacturing, sales and technical services of semiconductor equipment, pan-semiconductor equipment and high-end intelligent equipment. The company's equipment is widely used in integrated circuit front-end, advanced packaging, FPD panels, MEMS, LED, Power Devices and other manufacturing fields.

In recent years, Shanghai Microelectronics' performance in the semiconductor field has been very eye-catching, and its technical strength has been steadily improved. They have accumulated rich experience in R&D of integrated circuits and have a number of core technologies with independent intellectual property rights. Recently, Shanghai Microelectronics announced a number of new core patents for lithography machines, covering "substrate heating bearing device and semiconductor machine", precise temperature control, laying the cornerstone of efficient production; "Projection objective lens and lithography machine", the optical accuracy has reached a new peak, depicting a nano-scale miracle; "Exposure projection objective lens and lithography machine", every exposure is a challenge and transcendence of technical limits. These patents not only strengthen the technical barriers of Shanghai Microelectronics in the field of high-end lithography equipment, but also inject strong momentum into the global semiconductor industry chain. Shanghai Microelectronics, with scientific and technological innovation as the wing, continues to promote the iterative upgrading of lithography technology, and joins hands with the industry to draw a blueprint for the future of semiconductors, so that "Made in China" shines on the world stage!

And all this has laid a solid foundation for the listing of Shanghai Microelectronics.

According to public information, Shanghai Microelectronics has started the listing counseling process since 2017, with China Securities as the counseling agency. The counseling report pointed out that the company has established a relatively standardized corporate governance structure and internal control system, but it still needs to be improved in terms of financial standardization, fundraising project plans and capital demand calculations.

However, in October 2024, Shanghai Microelectronics abruptly withdrew its initial public offering (IPO) listing counseling filing. Whether to re-apply or adopt a backdoor listing in the future has attracted attention from the industry.

This week, the concentration of the hype of the M&A and restructuring concept stocks has increased significantly, especially the investment opportunities triggered by the strong expectation of the backdoor listing of Shanghai Microelectronics, a domestic lithography machine giant, are worthy of investors' attention. According to public information, the controlling shareholder of Shanghai Microelectronics is Shanghai Electric Holding Group Co., Ltd., which holds 63.3125% of the shares of Shanghai Microelectronics.

Judging from today's list of gainers, Shanghai Electric (601727), Electric Wind Power (688660), Highly (600619), Yinghe Technology (300457), Huajian Group (600629), Zhangjiang Hi-Tech (600895) and many other varieties that only involve the expected concept of Shanghai Microelectronics' backdoor listing, mergers and acquisitions, and restructuring are closed at the limit or up by more than 10%! Among them, Shanghai Electric (601727) as a typical representative of the previous stage of mergers and acquisitions, the stock price has experienced a wave of continuous price limit, in the past two days in the market around the Shanghai Microelectronics backdoor listing of the strong expectation of speculation, its stock price back to the rising channel, and has been closed in the limit for two consecutive trading days; Electric Wind Power (688660) and Zhangjiang Hi-Tech (600895) both recorded 3 daily limits in the past 4 trading days; Highly shares (600619) are two consecutive trading days of the stock price limit; Huajian Group (600629) has recorded 4 daily limits in the past 5 trading days.

Analysis of potential backdoor targets

From the figure below, we can see that under the current situation that Shanghai Microelectronics is expected to be a backdoor listing, the potential targets of the backdoor listing involved are at a glance:

But as the share prices of these companies continue to rise, some potentially undervalued listed companies have come to the fore.

According to public information, Power Xinke (600841) was renamed from "Shangchai Co., Ltd." in March 2022, and Shangchai Co., Ltd. (600841) had been affiliated to Shanghai Electric Holding Group until 2008, which means that Power Xinke (600841), which is now renamed from Shangchai Co., Ltd., has actually been under Shanghai Electric Holding Group until 2008. At the same time, industry insiders revealed that the two major heads of Shanghai Microelectronics and Shanghai Electric Holding Group, the controlling shareholder of Shanghai Microelectronics and Shanghai Microelectronics, Gan Pin, chairman of Shanghai Microelectronics, and Wu Lei, chairman of Shanghai Electric Holding Group, are "SAIC people" who have worked in the SAIC system for decades. As a senior "SAIC man", Gan Pin, chairman of Shanghai Microelectronics, and Wu Lei, chairman of Shanghai Electric Holding Group, were transferred to Shanghai Electric Holding Group in the past two years, and served as vice chairman of Shanghai Electric (601727) and chairman of Shanghai Electric Holding Group and Shanghai Electric (601727) respectively, of which Gan Pin also served as the chairman of Shanghai Microelectronics. Therefore, in this context, with the expected market heat of Shanghai Microelectronics' backdoor listing, mergers and acquisitions, and in the context of the two senior "SAIC people" or leading capital operation work of Shanghai Microelectronics Chairman Gan Pin and Shanghai Electric Holding Group Chairman Wu Lei, Power New Technology (600841) may not become a target.

According to past information, Shanghai Electric Group Co., Ltd., the original controlling shareholder of Shanghai Diesel Engines (600841), signed a Share Transfer Agreement with SAIC Motor in Shanghai on December 29, 2007, under which SAIC acquired 50.32% of the shares of Shanghai Electric Group (600841), and Shanghai Electric Group no longer holds any shares of Shanghai Diesel Engines (600841).

SAIC said that the purpose of the acquisition is to expand the market space of Shanghai Diesel Fuel (600841), enhance the core competitiveness of Shanghai Diesel Fuel (600841), and further enhance SAIC's strength in the field of commercial vehicles. After half a year, SAIC's acquisition of Shangchai Co., Ltd. (600841) was approved by the Ministry of Commerce in June 2008.

In other words, the power new technology (600841), which is now renamed from Shanghai Diesel Co., Ltd., was in fact affiliated to Shanghai Electric Holding Group until 2008 until 2008. In fact, six listed companies under Shanghai Electric Holding Group, the controlling shareholder of Shanghai Microelectronics, may be known to the market as potential backdoor targets, but companies with historical connections such as Power Xinke (600841) may not be an option.

According to public information, the current party secretary and chairman of Shanghai Microelectronics Equipment (Group) Co., Ltd. started his career at SAIC, and is the earliest person in charge of the new energy business of the "giant" automobile manufacturer, a firm supporter, participant and promoter of the development of hydrogen fuel cells, and a key gentleman to jointly promote the successful demonstration of the Olympics and the World Expo with Shanghai Combustion Power. Gan Pin graduated from Shanghai Jiao Tong University, and served as Secretary of the Party Committee and Manager of the Second Automobile Plant of Shanghai Volkswagen Automobile Co., Ltd., General Manager of Shanghai Bus Manufacturing Co., Ltd., Secretary of the Party Committee and Executive Deputy General Manager of Shanghai Sunwin Bus Co., Ltd., Deputy General Manager of SAIC Motor Manufacturing Co., Ltd., Vice President of Automotive Engineering Research Institute of SAIC Motor Group Co., Ltd., General Manager of Fuel Cell Vehicle Division, General Manager of New Energy Vehicle Division, Executive Director of New Energy and Technology Management Department, Deputy Director of Shanghai Science and Technology Commission, Inspector I. As the current secretary of the Party Committee and chairman of Shanghai Microelectronics, Ganpin also serves as the vice chairman of Shanghai Electric Holding Group.

Wu Lei, another leader in the listing of Shanghai Microelectronics, as the current party secretary and chairman of Shanghai Electric Holding Group and Shanghai Electric (601727), undoubtedly shoulders an important responsibility in the future capital operation of the company. Wu Lei graduated from Tongji University and is currently the Secretary of the Party Committee and Chairman of Shanghai Electric Holding Group. Like Gan Pin, the current party secretary and chairman of Shanghai Microelectronics, Wu Lei's career also began at SAIC. Wu Lei served as Deputy General Manager of SAIC Motor Manufacturing Co., Ltd., Assistant to the Chairman of SAIC Motor Group Co., Ltd., Deputy General Manager of Volkswagen Transmission (Shanghai) Co., Ltd., Executive Director of Finance Department of SAIC Automotive Industry (Group) Corporation, Member of the Commission for Discipline Inspection and Chief Financial Officer of SAIC Motor Industry (Group) Corporation, Vice President of SAIC Motor Group Co., Ltd., Deputy Director General of the Planning Department of the Ministry of Industry and Information Technology of the People's Republic of China (temporary post), and Deputy Director of the Shanghai Municipal Commission of Economy and Information Technology. Director of the Shanghai Municipal Office of Science, Technology and Industry for National Defense, Executive Deputy Director of the Office of the Civil-Military Integration Development Committee of the Shanghai Municipal Party Committee (Director level).

Moreover, Gan Pin, chairman of Shanghai Microelectronics, and Wu Lei, chairman of Shanghai Electric Holding Group, as senior "SAIC people", were also transferred to Shanghai Electric Holding Group in the past two years, and served as vice chairman of Shanghai Electric (601727) and chairman of Shanghai Electric Holding Group and Shanghai Electric (601727), of which Gan Pin also served as the chairman of Shanghai Microelectronics.

At present, whether the power new technology (600841) with high shell pressure can "return" to Shanghai Electric Group has aroused heated discussions

Power Xinke (600841) has been affiliated to Shanghai Electric Group before 2008, after the transfer of controlling stake to SAIC in 2008, it has also experienced the dividend period of rapid development of the automotive industry, but with the transformation of the entire automotive industry trend to new energy in recent years, the company's main business as the traditional fuel power direction has gradually been marginalized by the group and has recently lost money for more than two consecutive years, and the pressure on the shell is very urgent!

In 2021, Power New Technology (600841) completed a major asset restructuring with SAIC, Chongqing Electromechanical Holding (Group) Company and other trading parties. As an important restructuring target, SAIC Hongyan became a wholly-owned subsidiary of Dongli Xinke after the completion of the restructuring.

In 2021, the year when the restructuring was completed, Power Xinke (600841) achieved an operating income of about 24.4 billion yuan, of which the revenue of the heavy truck business accounted for 74%, about 18.08 billion yuan. Benefiting from the injection of assets, the net profit attributable to the parent company of Power Xinke (600841) in 2021 was about 693 million yuan, a significant increase of 87.48% year-on-year.

However, success is also a "heavy truck", and defeat is also a "heavy truck". Affected by industry fluctuations, the net profit attributable to the parent company of Power Xinke (600841) in 2022 will turn from profit to loss, with a loss of 1.611 billion yuan, a year-on-year decrease of 332.54%. In 2023, although the industry is recovering rapidly, the company has not yet found a solution, and the heavy truck business will continue to be sluggish, which will further widen the loss.

The decline in sales of heavy trucks and poor operating performance have made performance promises like a "blank check". According to the performance commitment at the time of the restructuring, as one of the performance commitment assets, the 61.48% equity of SAIC Hongyan directly and indirectly held by SAIC Group shall not be less than 145 million yuan, 213 million yuan and 198 million yuan respectively from 2021 to 2023.

However, according to the disclosure of Power New Technology (600841), from 2022 to 2023, SAIC Hongyan's actual profit (after deducting non-profits) will be -1.094 billion yuan and -1.523 billion yuan respectively. In other words, during the performance commitment period, except for 2021, when the line was crossed, the remaining two years ended in failure.

Moreover, entering 2024, the situation of the collapse of the performance of Power New Technology (600841) has not been improved. The company's report for the first three quarters of 2024 shows that the company's net profit loss in the first three quarters of this year is as high as 1.263 billion yuan.

It can be seen that in recent years, plagued by the restructuring and the price war of heavy trucks, the dual main business of "heavy truck + diesel engine" that Power Xinke (600841) has made great efforts to lay out seems to be gradually moving away from the expectations at that time.

At present, the main business of Powertech (600841) is the production and manufacture of diesel engines and heavy-duty trucks. Among them, the diesel engines produced and manufactured by the company are mainly used by domestic commercial vehicle enterprises, construction machinery enterprises, ships and generator sets and other manufacturing enterprises, and the company's wholly-owned subsidiary, SAIC Hongyan, is mainly engaged in the production, manufacturing and sales of commercial heavy-duty vehicles.

As an important segment of Power Xinke (600841), the heavy-duty truck business carried by its subsidiary SAIC Hongyan will perform dismally in 2023. According to the data, SAIC Hongyan only achieved 9,090 heavy truck sales last year, a year-on-year decrease of 30.7%, weaker than the industry average.

In this regard, the power of the new branch (600841) explained that the domestic heavy truck industry has experienced huge fluctuations in prosperity, the "price war" is increasing day by day, the switch between the old and new tracks is accelerating, and the fierce market competition continues to intensify. The main business loss and the provision of various impairment provisions and other impacts, the heavy truck sector incurred a large loss.

However, judging from the overall performance of domestic commercial vehicles in 2023, it has become a consensus that the industry will continue to recover. According to the China Association of Automobile Manufacturers, commercial vehicle production and sales in 2023 will reach 4.037 million units and 4.031 million units, up 26.8% and 22.1% y/y, respectively.

The company said frankly that although SAIC Hongyan is speeding up the recovery of accounts receivable, due to the aging of some accounts receivable, if the recoverability is reduced due to the financial situation of customers in the future and changes in the company's collection policy, there is still a risk of increasing impairment provision and difficulty in recovering receivables.

All kinds of signs have shown that the power of Xinke (600841), which has suffered substantial losses for nearly three consecutive years, is currently facing greater pressure to protect the shell, and it can even be said that it is urgent! In the context that SAIC's current strategic focus has obviously shifted to the new energy track, Power Xinke (600841), as a traditional fuel sector business, will gradually be marginalized. Therefore, for the current power of Xinke (600841), which has fallen into the quagmire of continuous losses, it is imperative to start a new round of asset restructuring as soon as possible to restore the normal profitability of listed companies!

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