The fixed increase was terminated, and Zong Yanmin transferred to Hong Kong stocks.

Recently, Tianyue Advanced (688234. SH) announced that the application materials for the filing of overseas listed shares (H shares) have been accepted by the China Securities Regulatory Commission. Previously, on February 24, the company had submitted the form to the Hong Kong Stock Exchange.

Zong Yanmin is a serial entrepreneur. The factory that had worked for 15 years closed down, and Zong Yanmin, who was 38 years old at the time, had no choice but to start a business and entered the field of construction machinery. By chance, he started his second business and crossed over into the semiconductor materials industry. Overtaking in corners, Zong Yanmin promoted Tianyue Advanced to break the monopoly in the field of silicon carbide substrates and rank among the forefront of the global industry.

Tianyue Advanced is known as a unicorn by the market, and Huawei, SAIC, CATL, GAC Capital, Xpeng Motors and other capitals have successively invested in the shares.

After two consecutive years of losses, in 2024, Tianyue Advanced will finally turn around its losses and make a profit of 180 million yuan.

However, the company is under great pressure to develop. Insufficient funds, insufficient R&D investment, high customer concentration, and many hidden risks of Tianyue Advanced.

Compared with international giants, Tianyue Advanced still has a long way to go, and it is also facing the risk of changing its technical route.

Tianyue Advanced A-share listing, Zong Yanmin became the richest man in Jinan, but his wealth has shrunk by about 5 billion yuan in the past two years. If the H-share listing is successful, can Zong Yanmin continue to write the legend of wealth?

The second venture became the richest man in Jinan

After 23 years of deep cultivation of enterprises, Zong Yanmin can be regarded as an entrepreneur.

Zong Yanmin has a lot of dazzling halos, and is a senior engineer, an expert enjoying special allowances from the State Council, a national model worker, and a distinguished professor of Qilu University of Technology...... In fact, he was a laid-off worker.

According to public information, Zong Yanmin was born in November 1964, a native of Jinan, Shandong, and graduated from Shandong Institute of Light Industry (now Qilu University of Technology) majoring in silicate engineering. After graduating from university, Zong Yanmin was assigned to work in Jinan Bulb Factory as a process engineer in the technical department. After 15 years of work, the Jinan light bulb factory closed down, and he also became a laid-off worker.

In 2002, 38-year-old Zong Yanmin decided to start a business. He established Jinan Tianye Construction Machinery Co., Ltd. (hereinafter referred to as "Jinan Tianye"), which mainly acts as an agent for Volvo brand excavators and other construction equipment business. The shrewd Zong Yanmin gradually showed his business talent and entrepreneurial characteristics. His business is getting bigger and bigger, and the agent of Volvo excavators is no longer limited to Shandong. After several years of hard work, Zong Yanmin has become the leader of the construction machinery sales industry in Shandong Province.

It is reported that Zong Yanmin once revealed that Jinan Tianye had achieved a scale of "annual sales revenue of more than 3 billion yuan and profits of one or two hundred million yuan".

Tianyancha shows that Jinan Tianye is in a state of existence, with more than 330 employees, 200 technical service engineers, 36 sales and service outlets, and large-scale exhibition venues, maintenance workshops, spare parts warehouses, recycling centers, training centers, used car trading centers, etc. At present, Zong Yanmin is still the actual controller and serves as the chairman.

Eight years after starting his first business, Zong Yanmin, who earned the first pot of gold in his life, launched his second business plan.

According to media reports, in 2010, Zong Yanmin accidentally learned that Jiang Minhua, an academician of the Chinese Academy of Sciences and a professor at Shandong University, had successfully cultivated silicon carbide monocrystalline in the laboratory after 10 years of hard work, but until his death in 2011, he failed to industrialize.

Zong Yanmin, who graduated from the silicate major, knows more about the value of silicon carbide single crystal than others. He quickly decided to make a move, and he finally bought the research results.

46-year-old Zong Yanmin founded Tianyue Advanced, loaded the above research results, continued to promote research and development, transformation of achievements, realized mass production of materials, and broke the monopoly.

In 2015, Tianyue's advanced 4-inch silicon carbide substrate completed mass production, and in 2017, it achieved mass production of 6-inch silicon carbide substrate. In 2019, Tianyue's advanced semi-insulating silicon carbide substrate products had a global market share of 18%, and rose to 30% a year later, ranking third in the world after the international leaders Erlu and Cree.

On January 12, 2022, Zong Yanmin promoted Tianyue Advanced to successfully land on the A-share market and be listed on the Science and Technology Innovation Board, and the company's market value once approached 60 billion yuan.

With the advanced listing of Tianyue, in 2022, Zong Yanmin will be on the rich list and win the position of the richest man in Jinan with a wealth of 13 billion yuan.

Unicorns sought after by capital from all walks of life

Zong Yanmin quickly became the richest man in Jinan after Tianyue Advanced was listed, which is related to the pursuit of capital.

According to public information, silicon carbide single crystal substrate material is a wide bandgap semiconductor material, which is at the front end of the wide bandgap semiconductor industry chain, and is the core key material of the frontier and foundation, which has more excellent physical properties than traditional materials, can effectively improve the power density and overall performance of downstream devices, and has a wide range of application prospects in the field of power electronics and microwave electronics.

Since 2019, the up-and-coming Tianyue Advanced has received extensive attention and popularity from capital.

In August 2019, Hubble Investment, an investment arm of Huawei, invested 111 million yuan in Tianyue Advanced at a price of 12.23 yuan per registered capital, holding 7.05% of the shares before listing. As of January 27 this year, Hubble Investment has not reduced its holdings, with a shareholding ratio of 6.34%, ranking as the third largest shareholder.

At the time of Tianyue Advanced's IPO, a number of leading enterprises in the industry participated in Tianyue Advanced's strategic placement.

According to the prospectus, CATL, SAIC, GAC Group, Xpeng Motors, Guotai Junan, Haitong Securities, etc. all directly and indirectly participated in the strategic placement of Tianyue Advanced, becoming shareholders of Tianyue Advanced, a unicorn, and sharing its IPO listing feast.

At that time, Tianyue Advanced IPO raised 3.558 billion yuan, overraising 1.203 billion yuan. The IPO was over-raised, which shows that the funds are seeking for Tianyue's advanced.

After Tianyue Advanced landed on the A-share market and became the first silicon carbide stock in China, Zong Yanmin promoted its active layout in technology, market and other aspects.

According to the disclosure, the company has carried out intensive tests in core technology fields such as defect control of crystal growth, constantly breaking through technical bottlenecks and improving product quality. The company pioneered the use of liquid phase method to prepare low-defect 8-inch crystals, breaking through the problems of high-quality growth interface control and defect control of silicon carbide single crystals.

As of the end of June 2024, Tianyue Advanced has realized the batch supply of 8-inch conductive substrates, 6-inch conductive substrates, 6-inch semi-insulating substrates, 4-inch semi-insulating substrates and other products.

As of June 2024, Tianyue Advanced and its subsidiaries have obtained a total of 181 invention patents and 302 utility model patents, including 14 overseas invention patents.

Under his leadership, Tianyue has overcome a series of problems such as raw material purification, silicon carbide material growth and defect control, substrate processing, etc., mastered the core key technology of silicon carbide semiconductor material industrialization, and realized the independent and controllable national core strategic materials.

Zong Yanmin's new challenges

Only three years after the A-share listing, Zong Yanmin promoted Tianyue Advanced to hit the Hong Kong stock market, causing market doubts.

On April 12, 2024, Tianyue Advanced disclosed the proposal to issue shares to specific targets through simplified procedures, and planned to raise no more than 300 million yuan for the 8-inch automotive-grade silicon carbide substrate preparation technology improvement project.

When it was listed in 2022, it over-raised more than 1.2 billion yuan, why did it raise more funds after only 2 years?

Tianyue's advanced business performance is not ideal. From 2019 to 2021 before listing, the company's operating income was 269 million yuan, 425 million yuan, and 494 million yuan respectively, and the non-net profit was 5.2291 million yuan, 22.6878 million yuan, and 12.9739 million yuan respectively, and it continued to make profits.

In 2022 and 2023, after listing, the company's operating income will be 417 million yuan and 1.251 billion yuan respectively, a year-on-year change of -15.56% and 199.90%, and the revenue will grow explosively in 2023; The corresponding non-net profit was -258 million yuan and -113 million yuan respectively, with continuous losses.

In 2024, the company will finally turn losses into profits after two consecutive losses, and according to the performance report, the operating income will be 1.768 billion yuan, a year-on-year increase of 41.37%; The net profit was 180 million yuan, a year-on-year turnaround, and the non-net profit was 158 million yuan, a year-on-year increase of 239.82%.

The company explained that it has realized the batch supply of 4-8 inch substrate products, the capacity utilization rate has gradually improved, the production and sales volume has continued to grow, the scale effect has gradually emerged, the cost has been gradually optimized, and the high-quality conductive silicon carbide substrate products have accelerated to "go to sea". Operating income and gross profit of products increased significantly compared with the same period last year.

In the first three quarters of 2024, the sales volume of Tianyue's advanced silicon carbide substrates was 251,500 pieces, exceeding the full year of 2023, and the sales revenue was 1.053 billion yuan, close to the whole year of 2023.

According to this calculation, the average selling price of the company's silicon carbide substrate is 4,185 yuan, which is lower than the price in 2022 and 2023.

In the future, there is uncertainty about whether Tianyue Advanced can continue to make profits and whether the number of profits can continue to grow.

After 8 months of planning, the fixed increase was terminated, and Zong Yanmin promoted Tianyue Advanced to be listed in Hong Kong, which shows that Tianyue Advanced has an urgent need for funds.

Some analysts told the Yangtze River Business Daily reporter that Zong Yanmin faces at least three challenges. First, compared with international giants such as Wolfspeed and STMicroelectronics, Tianyue Advanced still has room for improvement in terms of technology and product penetration; Second, the customer concentration is high, the top five customers contribute more than 50% of the revenue, and the main customers are international manufacturers such as Infineon and Bosch. Third, the intensification of competition in the industry and the influx of new players have led to a "false boom" in the industry.

Under the triple challenge, how will Zong Yanmin break through?

The first time he started his business, Zong Yanmin seized the dividends of China's infrastructure, and the second time he started a business, Zong Yanmin broke the monopoly.