Wuxi ETEK Microelectronics Co.,Ltd.
(Address: No.8 Xinhui Ring Road, wuxi new district)
Initial public offering and listing in science and technology innovation board
prospectus
Sponsor (lead underwriter)
(Address: No.1508 Xinzha Road, Jing ‘an District, Shanghai)
The company has the characteristics of large investment in R&D, high operational risk, unstable performance and high risk of delisting, and investors face greater market risks. Investors should fully understand the investment risks in science and technology innovation board market and our company.
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It is stated that any decision or opinion made by the China Securities Regulatory Commission and the Exchange on this offering does not indicate that it guarantees the authenticity, accuracy and completeness of the registration application documents and the information disclosed, nor does it indicate that it makes substantive judgments or guarantees on the issuer’s profitability, investment value or investors’ income. Any statement to the contrary is a false statement. According to the provisions of the Securities Law, after the shares are issued according to law, the issuer shall be responsible for the changes in its operation and income; Investors independently judge the issuer’s investment value, make investment decisions independently, and bear the investment risks caused by the issuer’s operation and income changes or stock price changes after the stock is issued according to law. 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 responsibilities 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 responsibilities for its authenticity, accuracy and completeness. The person in charge of the company, the person in charge of accounting work and the person in charge of the accounting institution guarantee that the financial and accounting information in the prospectus is true and complete. The issuer and all directors, supervisors, senior managers, controlling shareholders, actual controllers, sponsors and underwriting securities companies of the issuer promise that there are false records, misleading statements or major omissions in the issuer’s prospectus and other information disclosure materials.致使投资者在证券发行和交易中遭受损失的，将依法赔偿投资者损失。保荐人及证券服务机构承诺因其为发行人本次公开发行制作、出具的文件有虚假记载、误导性陈述或者重大遗漏，给投资者造成损失的，将依法赔偿投资者损失。
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本次发行概况
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重大事项提示
本公司特别提请投资者注意，在作出投资决策之前，特别关注以下重大事项提示，并认真阅读本招股说明书正文内容。
一、特别风险提示
请投资者认真阅读本招股说明书“第四节 风险因素”的全部内容，并特别关注其中的以下风险因素：
(A) market competition risk
The company’s products are mainly used in mobile phones, wearable devices and other fields. The market scale is large, the downstream products are updated quickly, and the market competition is fierce. The company’s marketing strategy is mainly targeted at well-known downstream customers. While new customers develop and maintain the cooperative relationship with existing customers and maintain product shipments and new product promotion, they also face competition from domestic and foreign competitors.
In the international market, the company directly competes with world-renowned IC design companies such as TI, ON Semi, DIODES and Richtek in specific fields, but there is a certain gap in market position, overall technical strength, sales scale and product range. In the domestic market, the development of consumer electronics market in recent years has attracted the participation of many excellent IC design companies in China, and also generated certain market competition. The comparison between the company and domestic and foreign competitors in terms of market position, business scale and product quantity is as follows:
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Note: The data in the above table is the data of 2019, in which the data of domestic and foreign competitors come from public information inquiry.
If the company fails to accurately grasp the development trend of the market and industry, continuously and rapidly develop technology and products, and fails to make full use of customer resources to convert technology into products and continuously improve its market position, its competitive advantage may be weakened, thus adversely affecting the company’s operating performance.
(B) Customer concentration risk
The company focuses on the research and development and sales of analog chips, and its products are mainly used in consumer electronics fields such as mobile phones and wearable devices. According to IDC data, in 2020, the shipments of Samsung, Huawei, Apple, Xiaomi and VIVO, the top five brands of global smartphones, accounted for 71.3% of the global smartphone shipments, and the shipments of Apple, Xiaomi, Samsung, Huawei and Fitbit, the top five brands of global wearable devices, accounted for 67.1% of the total market share. The highly concentrated market structure of downstream mobile phones and wearable devices made the company’s customers more concentrated.
In each period of the reporting period, the sales of the top five customers of the company accounted for 87.35%, 82.35% and 77.26% respectively. Among them, the company’s sales to Samsung Electronics were 253.3072 million yuan, 281.1211 million yuan and 252.0942 million yuan, accounting for 73.56%, 59.24% and 46.44% respectively. Changes in the issuer’s revenue scale and performance during the reporting period are closely related to changes in sales to major customers such as Samsung Electronics. If major adverse changes occur in the operating conditions of major customers, the purchasing demand drops sharply or the purchasing strategy is adjusted, the company’s orders may drop sharply, which will adversely affect the company’s operating performance.
In addition, among the top five customers of the company, except for the long cooperation with Samsung Electronics, other customers are mainly those who have only passed the certification or supplied in large quantities in recent years. If the company fails to develop new products according to customers’ needs in time, and a number of new products fail to pass the certification, it may affect the cooperation foundation or lead to the loss of customers, thus adversely affecting the company’s operating performance.
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(3) Risk of overseas sales
The company’s customers are mainly Samsung Electronics, customer A, Xiaomi, LG and other international consumer electronics brands. According to customer requirements, the company’s products are exported to China, Hongkong, South Korea, Vietnam and other regions, which makes the company’s export accounts for a relatively high proportion. During the reporting period, the company’s export income was 268,221,800 yuan, 361,175,400 yuan and 379,114,100 yuan respectively, accounting for 78.14%, 76.24% and 69.95% of the main business income respectively.
In recent years, the international trade friction has been escalating. Although the company has not been affected by the policy of increasing tariffs in the United States, if the trade friction continues to escalate in the future, the regulatory policies and trade policies of the countries or regions where overseas customers such as Samsung and LG and some domestic brand customers’ overseas factories are located will be adversely changed, which will increase tariffs or restrict transactions on domestically exported chips, which will adversely affect the company’s business.
(D) The risk that the product is greatly affected by the prosperity of the consumer electronics industry.
The company’s products mainly include power management chips such as power conversion chips, power protection chips and display drive circuits, as well as other chips such as intelligent networking delay management unit, high-precision Hall chips and signal chain chips. In addition to the intelligent networking delay management unit, the company’s products are mainly used in the consumer electronics field represented by mobile phones and wearable devices. Products in the field of mobile phones and wearable devices are oriented to the public, which are greatly influenced by macroeconomic development, industrial technology evolution, product iterative updating and other factors. According to IDC data, the global smart shipments in 2017-2020 are 1.462 billion, 1.405 billion, 1.371 billion and 1.292 billion respectively, and the shipments of wearable devices are 115 million, 172 million and 392 million respectively. If the prosperity of downstream mobile phones, wearables and other consumer electronics fields declines in the future, the market demand of downstream mobile phones and wearable devices may fluctuate, which will adversely affect the sales of the company’s products.
（五）产品迭代风险
随着下游应用领域的扩大及应用场景的变化，公司需要根据技术发展趋势和客户需求变化持续进行研发和创新，通过产品和技术的先进性来保持竞争力。目前，公司的产品从研发、客户认证到批量供应大约需要6-12个月的时间，批量后产品大约可维持3-4年的销售期。报告期内，新产品的批量化销售通常会成为公司后续年度营业收入持续增长的重要推动力。如果公司无法持续进行技术创新和产品开发，将无法保持产品的正常迭代，将影响公司的市场竞争力，继而影响
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Sustained growth in performance.
(VI) Risk of R&D failure
R&D innovation is one of the most important business activities of integrated circuit enterprises. In order to maintain its core competitiveness, the company needs to fully combine the cutting-edge trends of industry technology and the needs of downstream fields such as mobile phones and wearable devices for continuous research and development. During the reporting period, the company’s R&D expenditure was RMB27,452,000, RMB35,590,600 and RMB38,981,800 respectively, accounting for 7.97%, 7.50% and 7.18% of the operating income respectively, which remained relatively stable. With the expansion of business scale and application fields, the company will carry out the application and research and development of power management chips and other chips (such as intelligent networking delay management unit, signal chain chip, etc.) in more fields, and the investment in research and development may continue to increase. However, because product research and development needs to invest a lot of money and manpower, it takes a long time and there are certain uncertainties. If the company’s product research and development fails to meet expectations or the developed new products are not competitive and poorly promoted, the company will face the risk that the previous R&D investment cannot be recovered and its sustainable competitiveness will be weakened.
(VII) Risk of inventory depreciation
The company mainly makes purchasing and production plans according to customers’ expected demand, upstream production capacity and company inventory, and dynamically adjusts the stocking level according to market changes. Due to the long production cycle of chips and the concentration of upstream suppliers, companies usually increase their stocking under the condition of expanding business scale and tight upstream production capacity, so that the inventory balance increases with the continuous expansion of business scale. At the end of each reporting period, the book value of the company’s inventory was 76,697,600 yuan, 92,822,600 yuan and 91,543,100 yuan respectively, accounting for 24.59%, 25.48% and 23.10% of current assets, and the inventory depreciation reserve ratio was 19.10%, 16.50% and 18.07% respectively. Because the downstream application fields of the company’s products are mainly mobile phones, wearable devices and other application fields, the terminal electronic products change rapidly. If the company’s inventory can’t be sold smoothly in the future due to changes in customer demand and the company’s failure to accurately judge the downstream demand, or the market competition intensifies and the company’s product performance lacks competitive advantages, the product price will drop sharply, and there will be a risk of further provision for inventory impairment.
(eight) the risk of unsustainable tax incentives and government subsidies.
According to the Notice on Further Encouraging the Development of Enterprise Income Tax Policies in Software Industry and Integrated Circuit Industry (Caishui [2012] No.27) and the Notice on Relevant Issues Concerning Enterprise Income Tax Preferential Policies in Software and Integrated Circuit Industry (Caishui [2016] No.49), the company is a key integrated circuit design in the national planning layout.
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Enterprises can pay enterprise income tax at a reduced rate of 10%. During the reporting period, the company enjoyed income tax concessions of 1,577,500 yuan, 3,509,000 yuan and 6,844,100 yuan respectively, accounting for 6.04%, 8.29% and 9.75% of the total profits. If the company cannot meet the requirements of preferential tax policies in the future or the above preferential tax policies change, it may have a certain impact on the company’s profitability.
In each period of the reporting period, the amount of government subsidies included in the current profit and loss of the company was 7,669,900 yuan, 5,423,900 yuan and 9,493,200 yuan respectively, accounting for 30.22% and 13.30% of the net profit attributable to shareholders of the parent company respectively.
14.18%。 If the state’s support for the integrated circuit industry and R&D innovation is weakened in the future, the reduction of government subsidies will have a certain impact on the company’s profit level.
(9) Investment risks of raised funds
The funds raised by the company this time are mainly used for R&D and industrialization projects of high-performance power conversion and driver chips, R&D and industrialization projects of high-performance power protection chips, R&D center construction projects and development reserve projects, with a total investment of 178,899,600 yuan, 170,361,700 yuan, 84,035,600 yuan and 180,000 yuan respectively, of which fixed assets and intangible assets totaled 130,000,000 yuan. After the implementation of this fund-raising investment project, the depreciation of fixed assets and amortization of intangible assets will increase, and the R&D expenditure investment during the project implementation will also increase rapidly. Among them, the total amount of fixed assets purchased by fundraising projects is 109,020,700 yuan. According to the implementation progress of fundraising projects and considering the categories of fixed assets involved and the depreciation policies of fixed assets, the depreciation amounts of new fixed assets in the next five years are 7,560,800 yuan, 18,031,900 yuan, 21,687,000 yuan, 16,380,400 yuan and 80,000 yuan respectively.
Unit: 10,000 yuan
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Note 1: According to the purchase schedule of fixed assets, it is assumed that the purchase is completed at the end of the first half of the year and depreciation is started; Note 2: The fixed assets purchased by fundraising projects are mainly electronic equipment. According to the company’s accounting policy, the estimated economic service life of electronic equipment is 3 years, and the estimated net salvage value rate is 5%.
Therefore, the company needs to expand the sales scale and gross profit to offset the cost increase caused by depreciation and amortization, R&D investment, etc. However, if the downstream market environment changes adversely, the fundraising project fails to successfully develop new products, and the issuer’s market development is weak, the gross profit generated by the new sales scale cannot offset the depreciation, amortization and R&D expenses during the construction period of the fundraising project, which will adversely affect the company’s profitability.
2. The company is jointly controlled by eight natural persons.
The actual controllers of the company are Yuan Minmin, Mao Chenglie, Zhou Baoming, Wa Donghui, Sean, Tang Dayong, Wang Dong and Wang Fang. The above eight people hold 84.30% of the equity of Yijing Investment and indirectly hold 48.70% of the equity of the company through Yijing Investment. The above-mentioned actual controller works in the company or the controlling shareholder Yijing Investment, which can have a significant impact on the major decisions and management activities of the board of directors and the general manager’s office, and jointly control the company.
The above eight people jointly signed the Agreement on Concerted Action of Wuxi Lixin Microelectronics Co., Ltd. on October 15, 2015. All parties agreed to take concerted action on the voting of Lixin Micro-management decision in Yijing Investment through the arrangement of the Agreement on Concerted Action, and clarified the resolution mechanism in case of differences. The agreement is valid until 36 months after the date of the company’s initial public offering and listing.
III. Major financial information and operating conditions after the deadline for auditing financial reports
(a) the main financial information after the audit deadline
From the closing date of the audit of the company’s financial report (i.e. December 31st, 2020) to the signing date of this prospectus, the issuer’s business model, the purchase scale and price of major raw materials, the production and sales of major products.
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There have been no other major changes in the scale and sales price, the composition of major customers and suppliers, tax policies and other major issues that may affect investors’ judgment.
The company’s merger and parent company’s balance sheet on March 31st, 2021, merger and parent company’s income statement from January to March, 2020, merger and parent company’s cash flow statement and notes to financial statements have not been audited, but they have been reviewed by Rongcheng Club and issued the Review Report [2021] No.230Z1647. As of March 31, 2021, the company’s assets and liabilities were in good condition, with total assets of 431,502,800 yuan, an increase of 3.08% compared with the end of last year, and the equity attributable to the owners of the parent company was 347,174,200 yuan, an increase of 7.46% compared with the end of last year.
From January to March 2021, the issuer realized an operating income of 166,257,800 yuan, a year-on-year increase of 45.10%; The net profit attributable to the owners of the parent company was 24,107,500 yuan, a year-on-year increase of 30.55%; After deducting non-recurring gains and losses, the net profit attributable to owners of the parent company was 21,388,800 yuan, a year-on-year increase of 47.48%. In the first quarter of 2021, the company’s profitability increased by a large margin, mainly benefiting from the increasing market demand of the integrated circuit industry in the current period. With its profound technical accumulation, excellent R&D and innovation capabilities and excellent product performance, the company gained high recognition from the market, maintained good cooperation with customers, and its operating income and profitability showed a rapid growth trend.
From January to March, 2021, the net cash flow generated by the company’s operating activities was-8,810,900 yuan, a significant year-on-year decline, mainly due to the company’s appropriate increase in stocking according to the expected increase in customer demand and the increase in cash paid for stocking.
For details of the company’s main financial information from January to March, 2021, please refer to Section VIII Financial Accounting Information and Management Analysis in this prospectus, "XV. Main Financial Information and Operating Status after the Audit Deadline of Financial Reports".
(II) The expected performance from January to June 2021.
Based on the company’s reviewed financial statements in January-March 2021, realized data in April 2021, current orders in hand and customers’ expected demand, the company expects to realize operating income of 320 million yuan to 350 million yuan from January to June 2021, with a year-on-year change of 42.61% to 55.98%. It is estimated that the net profit attributable to the owners of the parent company is 45 million yuan to 50 million yuan, a year-on-year change of 50.24% to 66.93%; It is estimated that the net profit attributable to the owners of the parent company after deducting non-recurring gains and losses is 40 million yuan to 45 million yuan, a year-on-year increase.
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Change from 59.61% to 79.56%.
The above-mentioned performance forecast of the company from January to June 2021 has not been audited or reviewed by accountants, and does not constitute the company’s profit forecast or performance commitment.
Iv. Important commitments made by relevant entities in this offering.
The Company reminds investors to carefully read the important commitments made by the Company, shareholders, actual controllers, directors, supervisors, senior management personnel, core technicians, sponsors and securities service institutions of this offering, and the binding measures for failing to fulfill the commitments. For details, please refer to "VI. Important Commitments of Relevant Institutions or Personnel of this offering" in Section X of the Prospectus on Investor Protection.
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catalogue
Shengming ….. 1
Overview of this issue ….. 2
Tips on major issues ….. 3
I. Special risk warning ….. 3
II. The Company is jointly controlled by eight natural persons ………..
III. Major financial information and operating conditions after the deadline for auditing financial reports ……
Iv. Important commitments made by relevant entities in this offering ….. 10
Contents ….. 11
Section 1 Interpretation ….. 16
I. General definitions 16
II. Professional Interpretation 19
Section II Overview 22
I. Basic information about the issuer and the intermediary institutions of this offering ……..
II. Overview of this offering ……….
III. Major financial data and financial indicators during the reporting period 24
Iv. Main business of the issuer ….. 25
V. The issuer’s technological advancement, industrialization of R&D technology and future development strategy …….
VI. Specific listing criteria selected by the issuer ……
VII. Special arrangements for corporate governance 27
VIII. Use of raised funds 27
Section III Overview of the Issuance ……….
I. Basic information about this offering ……………….
Ii. Relevant parties to this offering ………………
Iii. Relationship between the Issuer and the Intermediaries Related to the Issuance ….. 31
Iv. Important date of this issuance and listing ….. 31
V. Strategic Placement of the Issuance ………………………………………………
Section 4 Risk Factors ……………………
1-1-12 I. Operational risks 35
II. Technical Risks 39
Iii. Financial risks 41
Iv. Internal control risks ……………………..
V. Risks of failure in issuance …………………………………………………………………..
VI. Investment Risks of Raised Funds ….. 44
Section 5 Basic Information of the Issuer ….. 46
I. Basic information of the issuer 46
II. The restructuring and establishment of the issuer ….. 46
III. Basic information about the issuer’s shareholding structure, subsidiaries, major shareholders holding more than 5% of shares and actual controllers ……
Iv. Information about the issuer’s share capital ….. 69
V. Brief information on the directors, supervisors, senior managers and core technical personnel of the issuer ….. 77
Vi. Important agreements signed by the issuer with directors, supervisors, senior management personnel and core technical personnel 87
VII. Changes of the directors, supervisors, senior managers and core technicians of the issuer in the last two years ….. 87
VIII. Information on the shares of the issuer held by the directors, supervisors, senior managers, core technicians and their close relatives ……
IX. Foreign investment of directors, supervisors, senior managers and core technicians of the issuer ….. 89
X. Remuneration, equity incentive and related arrangements of directors, supervisors, senior managers and core technicians of the issuer ….. 90
XI. Staff of the Issuer ….. 91
Section 6 Business and Technology ….. 94
I. Main business and main products of the company ….. 94
II. Basic information about the industry in which the company is located ….. 107
Iii. Analysis of the Issuer’s Industry Status and Industry Competition ….. 129
Iv. Production and sales of main products and procurement of raw materials ….. 141
V. Major fixed assets and intangible assets and other resource elements ….. 154
1-1-13 VI. Research and Development of Issuer’s Technology …… 161
VII. The issuer’s information on whether it meets the relevant matters stipulated in the Interim Provisions of Shanghai Stock Exchange on Reporting and Recommending the Listing of Enterprises in science and technology innovation board ….. 170
VIII. Overseas operation of the issuer ….. 173
Section 7 Corporate Governance and Independence ….. 174
I. Establishment, perfection and operation of the system of shareholders’ meeting, board of directors, board of supervisors, independent directors and secretary of the board of directors ……
II. Information on the issuer’s shares with special voting rights ….. 176
Iii. The control framework of the issuer’s agreement ….. 177
Iv. Internal control system ….. 177
V. Violation of laws and regulations 177
VI. Capital occupation and external guarantee during the reporting period ….. 178
VII. The ability of the issuer to operate independently and continuously ….. 178
Viii. Horizontal Competition ….. 180
IX. Related parties, related relationships and related transactions ….. 180
Section 8 Financial Accounting Information and Management Analysis ….. 189
I. Financial statements 189
II. Audit Opinions and Key Audit Matters ….. 193
III. Criteria for judging major events or importance levels related to financial accounting information ….. 195
IV. Basis of preparation of financial statements, statement of compliance with accounting standards for enterprises, scope and changes of consolidated financial statements ……
V. Major accounting policies and accounting estimates 199
VI. List of non-recurring gains and losses verified by certified public accountants ….. 250
VII. Tax rates of major taxes and major preferential tax policies enjoyed ….. 251
VIII. Major financial indicators during the reporting period 254
IX. Division Information 255
X. Analysis of Operating Results ….. 256
XI. Asset Quality Analysis ….. 291
1-1-14 XII. Analysis of solvency, liquidity and going concern ….. 311
XIII. Major investment, capital expenditure, major asset business restructuring or equity acquisition and merger ….. 327 XIV. Future events of assets and liabilities, contingencies and other important events ……
XV. Major financial information and operating conditions after the deadline for auditing financial reports ….. 328
XVI. Profit Forecast ….. 331
Section 9 Utilization of Raised Funds and Future Development Planning ….. 332
I. Overview of investment projects with raised funds ….. 332
II. Specific information on investment projects with raised funds ………….
III. Future Development Plan 348
Section 10 Investor Protection ….. 351
I. Main arrangements for investor management ….. 351
II. Dividend distribution policy and actual distribution ….. 352
Iii. Distribution arrangement of accumulated profits before this issuance ….. 355
Iv. Establishment of the voting mechanism of the issuer’s shareholders ….. 355
V. Measures taken in case of special voting rights, agreement control framework or similar special arrangements ….. 356
Vi. Important commitments of relevant institutions or personnel in this offering ….. 356
Section 11 Other Important Matters ….. 377
I. Major contracts 377
II. External guarantee ….. 379
III. Major litigation or arbitration matters 380
Iv. Directors, supervisors, senior managers and core technicians involved in administrative punishment, being placed on file for investigation by judicial organs, and being placed on file for investigation by China Securities Regulatory Commission ……
V. Major violations of laws by controlling shareholders and actual controllers during the reporting period ….. 380
Section 12 Statement ….. 381
I. Statements of all directors, supervisors and senior managers of the issuer ….. 381
II. Statements of the controlling shareholder and actual controller of the issuer ….. 382
III. Statement of the sponsor institution (lead underwriter) ….. 383
Statement by the president of the sponsor institution (lead underwriter) ….. 384
1-1-15 Statement by the Chairman of the Sponsor (Lead Underwriter) …… 385
IV. Statement by the issuer’s lawyer ….. 386
V. Statement of accounting firm ….. 387
VI. Statement of the asset appraisal institution ….. 388
VII. Statement of the capital verification and review institution ….. 391
Section XIII Annex … 394
I. List of documents 394
Ii. Time and place for consulting documents ………………………………………………………………….
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Section 1 Interpretation
In this prospectus, unless the context otherwise requires, the following abbreviations and terms have the following meanings:
I. General Interpretation
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Second, professional interpretation
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Note: In this prospectus, if some totals do not match the sum and mantissa of each sub-item, it is due to rounding.
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Section II Overview This overview is only a brief reminder of the full text of the prospectus. Investors should read the full text of the prospectus carefully before making investment decisions.
I. Basic information about the issuer and the intermediary institutions of this issuance.
II. Overview of this offering
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III. Major financial data and financial indicators during the reporting period
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Iv. main business of the issuer
The issuer is committed to the research and development and sales of analog chips, mainly providing customers with efficient power management solutions through high-performance and high-reliability power management chips, and actively developing and promoting other types of products such as intelligent networking delay management units and signal chain chips. At present, the company has become one of the main suppliers of power management chips in the consumer electronics market based on its dominant position in the application fields such as mobile phones and wearable devices, and continues to lay out in the fields of household appliances, Internet of Things, automotive electronics and network communication.
Over the years, the company has accurately grasped the changing trend of the market, and accumulated a good brand reputation by virtue of its profound technical accumulation, excellent R&D innovation ability and products with outstanding performance and reliable quality. At present, the company has passed the rigorous certification process of many world-renowned consumer electronics customers, and has formed a high-quality terminal customer base including Samsung, Customer A, Xiaomi, LG and Wentai, which has been highly recognized by customers. The company adopts Fabless business model typical of integrated circuit industry, focusing on chip R&D and sales, while wafer manufacturing and packaging testing are mainly carried out by external suppliers.
During the reporting period, the composition of the company’s main business income is as follows:
Unit: 10,000 yuan
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Five, the issuer’s technological advancement, research and development technology industrialization and future development strategy.
(a) the company’s technological advancement and industrialization of R&D technology
The company has been deeply involved in the field of power management for nearly 20 years, and around the development trend of power management chips such as low noise, high efficiency, miniaturization and integration, it has formed an advanced and mature technical system based on rich core technologies and functional modules IP, covering various design platforms such as power conversion and power protection.
Driven by the above technical system, the company has developed and formed more than 500 models of products, covering mainstream power management chips such as power conversion chips, power protection chips and display drive circuits, and finally formed a large number of product series with low noise, high PSRR and low power consumption, realizing the deep integration of scientific and technological achievements and industry.
Taking the application of the mobile phone market as an example, the company timely and accurately grasped the opportunity of the booming mobile phone market, and with years of technical accumulation and R&D experience, continuously improved the performance of power conversion chips such as LDO, formed a series of products such as low-noise high-performance LDO, high-current LDO, high-performance charging management chip, etc., and developed power protection chips suitable for the field of mobile phone port protection first or earlier in China. By virtue of high-quality product quality, quick-response R&D system and differentiated services, the issuer has competed with world-renowned IC design companies such as TI, ON Semi, DIODES, Richtek, etc. in specific fields, and the performance indicators of some products have reached or exceeded the bidding products of international brands.
(2) Future development strategy
In the future, based on the market position in the field of consumer electronics applications such as mobile phones, the company will continue to develop a full range of high-quality power management chips, and continue to lay out the signal chain chip market, and strive to build a leading power management chip technology platform, and eventually become a world-class analog chip supplier.
VI. Specific listing criteria selected by the issuer
According to Article 22 of the Audit Rules of science and technology innovation board Stock Issuance and Listing of Shanghai Stock Exchange, the specific listing criteria selected by the issuer are "(1) The estimated market value is not less than RMB 1 billion, and the net profit in the last two years.
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Runjun is positive and the accumulated net profit is not less than RMB 50 million, or the estimated market value is not less than RMB 1 billion, and the net profit in the most recent year is positive and the operating income is not less than RMB 100 million. "
VII. Special arrangements for corporate governance
As of the signing date of this prospectus, the issuer has no important matters related to special arrangements for corporate governance.
VIII. Use of raised funds
The investment project of the raised funds has been reviewed and approved by the third extraordinary general meeting of shareholders in 2020 and the second extraordinary general meeting of shareholders in 2021. The net amount of the raised funds after deducting the issuance expenses is used for the main business-related projects of the company, as follows:
Unit: 10,000 yuan
The main implementers of this fundraising project are Wuxi Lixin Microelectronics Co., Ltd..
If the net amount of funds raised in this issuance is lower than the investment amount of the above-mentioned fundraising projects, the insufficient part will be solved by self-financing; If the net raised funds exceed the investment amount of the above-mentioned fundraising projects, the excess will be used in accordance with the relevant regulations of China Securities Regulatory Commission and Shanghai Stock Exchange. Before the raised funds are put in place, the company will invest in advance through its own funds according to the actual progress of the project. After the raised funds are put in place, the previously invested funds will be replaced with the raised funds.
For details of the use of the raised funds, please refer to "Section IX Use of Raised Funds and Future Development Plan" in this prospectus.
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Section III Overview of the Issuance
I. Basic information about this offering
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Second, the relevant parties to this offering
(1) Sponsor (lead underwriter)
(2) Law firms
(3) Accounting firms
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(4) Asset appraisal institutions
(5) capital verification and review institutions
(6) the stock registration institution
(7) Receiving bank
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(8) Stock exchanges applying for listing.
Iii. the relationship between the issuer and the intermediary institutions related to this offering.
As of the signing date of this prospectus, there is no direct or indirect equity relationship and other rights and interests relationship between the issuer and the intermediary institutions issued this time, and the responsible persons, senior managers and managers of the intermediary institutions do not hold shares in the company, and there is no other rights and interests relationship with the company.
Iv. Important date of this offering and listing
V. Strategic placement of this offering
The issuer publicly issued 16 million shares this time, accounting for 25.00% of the total shares of the company after this public offering, all of which are new shares, and the shareholders of the company do not publicly offer shares. In this issuance, the initial number of strategic placement issues is 2.4 million shares, accounting for 15.00% of this issuance. The final number of strategic placements is 2.4 billion shares, accounting for 15.00% of the total number of this issue.
The strategic placement of this issue consists of a special asset management plan set up by the related subsidiaries of the sponsor and the senior management and core employees of the issuer, in which the investor is Everbright Fuzun Investment Co., Ltd. and the senior management and core employees of the issuer participate in the establishment of this strategic placement.
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The special asset management plan of is Huatai Lixin Weijiayuan No.1 science and technology innovation board Employee Stock Ownership Collective Asset Management Plan (hereinafter referred to as "Lixin Micro Employee Asset Management Plan").
(I) The issuer’s senior management and core employees intend to participate in the strategic placement. On May 13, 2021, the issuer convened the fifth meeting of the fifth board of directors to review and approve the Proposal on Senior Management and Core Employees Participating in the Strategic Placement of the Company’s Initial Public Offering, and agreed that some senior management and core employees of the issuer should set up special asset management plans to participate in the issuer’s strategic placement. The number of shares allocated to the above-mentioned special asset management plan is 10% of the number of initial public offering shares, and the restricted period of the shares promised to be allocated this time is 12 months, starting from the date of listing of the publicly offered shares on the Shanghai Stock Exchange.
The basic situation of Lixin Micro Employee Asset Management Plan is as follows:
Specific Name: Huatai Lixin Weijiayuan No.1 science and technology innovation board Employee Stock Ownership Collective Asset Management Plan Establishment Time: May 20, 2021 Filing Time: May 25, 2021 Filing Code: SQQ704 Scale of raised funds: 112 million yuan (including economic commission for new share placement) Manager: Name of the participants in the asset management plan of Huatai Securities (Shanghai) Asset Management Co., Ltd. Position? The subscription amount of the asset management plan and the participation ratio of the corresponding asset management plan are as follows:
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Note 1: The difference between the total and the number of parts and the mantissa is caused by rounding.
Lixin Micro’s employee asset management plan has paid the subscription funds and the corresponding brokerage commission for new share placement in full and on time. The number of shares issued this time is 1.6 million, with the allocated amount of 58.368 million yuan and the brokerage commission for new share placement of 291.8 million yuan. Among the above-mentioned participants, Yuan Minmin, Mao Chenglie, Wang Dong, Sean, Zhou Baoming and Dong Hong are senior managers of the issuer, while others are core personnel of the issuer.
(2) The relevant subsidiaries of the sponsor institution intend to participate in the strategic placement.
The sponsor will arrange for Everbright Fuzun Investment Co., Ltd., an alternative investment subsidiary legally established and existing by the sponsor, to participate in the strategic placement of this offering. Everbright Fuzun Investment Co., Ltd. will be based on Shanghai Securities
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Article 18 of the Guidelines for science and technology innovation board Stock Issuance and Underwriting Business of the Exchange stipulates that the number of rights issues won this time is
800,000 shares, accounting for 5% of the total number of shares issued, and the investment amount is 29.184 million yuan. Everbright Fuzun Investment Co., Ltd. has a restricted sale period of 24 months, and the restricted sale period starts from the date of listing of this public offering on the Shanghai Stock Exchange.
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The fourth quarter risk factors
Investors should carefully consider the following risk factors in addition to other information disclosed in this prospectus when evaluating the company’s current stock issue. The following risks are mainly ranked according to the principle of importance or the degree that may affect investment decisions, but this ranking does not mean that risk factors will occur in turn.
I. Operational risks
(A) market competition risk
The company’s products are mainly used in mobile phones, wearable devices and other fields. The market scale is large, the downstream products are updated quickly, and the market competition is fierce. The company’s marketing strategy is mainly targeted at well-known downstream customers. While new customers develop and maintain the cooperative relationship with existing customers and maintain product shipments and new product promotion, they also face competition from domestic and foreign competitors.
In the international market, the company directly competes with world-renowned IC design companies such as TI, ON Semi, DIODES and Richtek in specific fields, but there is a certain gap in market position, overall technical strength, sales scale and product range. In the domestic market, the development of consumer electronics market in recent years has attracted the participation of many excellent IC design companies in China, and also generated certain market competition. The comparison between the company and domestic and foreign competitors in terms of market position, business scale and product quantity is as follows:
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Note: The data in the above table is the data of 2019, in which the data of domestic and foreign competitors come from public information inquiry.
If the company fails to accurately grasp the development trend of the market and industry, continuously and rapidly develop technology and products, and fails to make full use of customer resources to convert technology into products and continuously improve its market position, its competitive advantage may be weakened, thus adversely affecting the company’s operating performance.
(B) Customer concentration risk
The company focuses on the research and development and sales of analog chips, and its products are mainly used in consumer electronics fields such as mobile phones and wearable devices. According to IDC data, in 2020, the shipments of Samsung, Huawei, Apple, Xiaomi and VIVO, the top five brands of global smartphones, accounted for 71.3% of the global smartphone shipments, and the shipments of Apple, Xiaomi, Samsung, Huawei and Fitbit, the top five brands of global wearable devices, accounted for 67.1% of the total market share. The highly concentrated market structure of downstream mobile phones and wearable devices made the company’s customers more concentrated.
In each period of the reporting period, the sales of the top five customers of the company accounted for 87.35%, 82.35% and 77.26% respectively. Among them, the company’s sales to Samsung Electronics were 253.3072 million yuan, 281.1211 million yuan and 252.0942 million yuan, accounting for 73.56%, 59.24% and 46.44% respectively. Changes in the issuer’s revenue scale and performance during the reporting period are closely related to changes in sales to major customers such as Samsung Electronics. If major adverse changes occur in the operating conditions of major customers, the purchasing demand drops sharply or the purchasing strategy is adjusted, the company’s orders may drop sharply, which will adversely affect the company’s operating performance.
In addition, among the top five customers of the company, except for the long cooperation with Samsung Electronics, other customers are mainly those who have only passed the certification or supplied in large quantities in recent years. If the company fails to develop new products according to customers’ needs in time, and a number of new products fail to pass the certification, it may affect the cooperation foundation or lead to the loss of customers, thus adversely affecting the company’s operating performance.
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(3) Risk of overseas sales
The company’s customers are mainly Samsung Electronics, customer A, Xiaomi, LG and other international consumer electronics brands. According to customer requirements, the company’s products are exported to China, Hongkong, South Korea, Vietnam and other regions, which makes the company’s export accounts for a relatively high proportion. During the reporting period, the company’s export income was 268,221,800 yuan, 361,175,400 yuan and 379,114,100 yuan respectively, accounting for 78.14%, 76.24% and 69.95% of the main business income respectively.
In recent years, the international trade friction has been escalating. Although the company has not been affected by the policy of increasing tariffs in the United States, if the trade friction continues to escalate in the future, the regulatory policies and trade policies of the countries or regions where overseas customers such as Samsung and LG and some domestic brand customers’ overseas factories are located will be adversely changed, which will increase tariffs or restrict transactions on domestically exported chips, which will adversely affect the company’s business.
(D) The risk that the product is greatly affected by the prosperity of the consumer electronics industry.
The company’s products mainly include power management chips such as power conversion chips, power protection chips and display drive circuits, as well as other chips such as intelligent networking delay management unit, high-precision Hall chips and signal chain chips. In addition to the intelligent networking delay management unit, the company’s products are mainly used in the consumer electronics field represented by mobile phones and wearable devices. Products in the field of mobile phones and wearable devices are oriented to the public, which are greatly influenced by macroeconomic development, industrial technology evolution, product iterative updating and other factors. According to IDC data, the global smart shipments in 2017-2020 are 1.462 billion, 1.405 billion, 1.371 billion and 1.292 billion respectively, and the shipments of wearable devices are 115 million, 172 million and 392 million respectively. If the prosperity of downstream mobile phones, wearables and other consumer electronics fields declines in the future, the market demand of downstream mobile phones and wearable devices may fluctuate, which will adversely affect the sales of the company’s products.
(V) Sales risks of related products that may be caused by business adjustment of key customers.
During the reporting period, Samsung Electronics and LG were the top ten customers of the company. According to public reports, due to the poor market performance of NOTE series mobile phones in recent years and the coincidence with the market positioning of S series, Samsung Electronics may abandon NOTE series mobile phones and introduce foldable models with more market prospects. At present, the company has a total of three models of products used in Samsung NOTE series mobile phones, and the sales volume and sales amount account for a relatively small proportion. On the other hand, in order to strengthen the overall competitiveness, LG decided to give up the mobile phone business. During the reporting period, the sales amount of products used by the company in the field of LG mobile phones was 2,501,100 yuan, 5,686,900 yuan and 5,716,600 yuan respectively, accounting for the public.
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The proportion of the company’s total sales is 0.73%, 1.20% and 1.05% respectively, and the rest products are mainly used in the field of household appliances with rapid growth in LG demand.
In the case that the demand of Samsung NOTE series mobile phones and LG mobile phones for the issuer’s products is reduced, if the issuer’s products fail to meet the purchasing demand of other models and other terminal intelligent products of the above customers in time, it may affect the growth of sales to the above customers, which may adversely affect the company’s short-term operating performance.
(VI) Risk of product quality control
Integrated circuits play an important role in the performance and safety of downstream products. Customers usually verify and repeatedly test the stability and reliability of products before purchasing, and take the reliability level of products as an important evaluation index for suppliers. The company is mainly engaged in the research and development and sales of power management chips, and its products serve well-known consumer electronics brands at home and abroad. The technology and customer entry threshold of the industry are high, but the requirements for quality control are relatively high. Usually, companies in the industry use a lot of testing, verification and data monitoring to reduce design defects and strictly control quality defects, but they still can’t guarantee to identify all quality problems. If unexpected quality problems occur in the R&D and production process of the company’s products, which affect the application of end customers or fail to meet the quality requirements of customers, quality disputes may occur, which may adversely affect the company’s brand and reputation, and may even lead to the loss of customers, thus affecting the company’s operating performance.
(VII) Concentration of risks of suppliers
During the reporting period, the company adopted Fabless mode commonly used in IC design industry, and the production links were mainly carried out by wafer manufacturing and packaging testing enterprises. Due to the large initial investment, high technology and capital threshold and high industry concentration in wafer manufacturing and packaging testing industry, the company’s suppliers are relatively concentrated. In each period of the reporting period, the purchase amount of the company from the top five suppliers and their related parties accounted for 79.46% of the total purchase amount in the current period, respectively.
75.37% and 74.57%.
Influenced by the relative concentration of optional suppliers in the industry, chip design companies in Fabless mode need to have a certain scale and brand reputation in order to obtain sufficient production capacity from upstream wafer manufacturing, packaging and testing enterprises in time. In case of large shipment in the chip market, it may lead to capacity shortage of upstream suppliers, which will correspondingly increase the raw material procurement cost and packaging and testing processing cost of chips. In addition, if the production capacity of major suppliers is limited or even unable to supply due to natural disasters, major accidents and other emergencies, it may affect chip manufacturing and scheduled delivery.
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(VIII) Risk of international trade friction
In recent years, international trade frictions have been constant, and some countries have tried to restrict the development of China’s semiconductor industry by means of trade protection. The company’s industry is chip design industry. Most of the existing suppliers use American equipment or technology, and the products are mainly exported. If the international trade friction intensifies, suppliers will be unable to supply, customers’ procurement will be restricted, or the company’s sales will be restricted, which will have an adverse impact on the company’s operating performance.
(nine) the risk of novel coronavirus epidemic affecting business performance.
Since January, 2020, there have been outbreaks of novel coronavirus (hereinafter referred to as "the epidemic") all over the world. After the outbreak, countries have taken measures to prevent and control the epidemic, but the epidemic is still spreading in some overseas countries and regions, and it is difficult to completely eliminate it in the short term. At present, the epidemic situation in South Korea, where the company’s overseas customers are located, such as Samsung Electronics and LG, is generally controllable. However, in addition to South Korea, the company also exports to Vietnam, India, Hong Kong and other overseas factories or distribution centers according to the customer’s designation. If the epidemic situation adversely affects the production capacity of customers in overseas factories, or affects logistics and transportation, it may lead to the staged delay of downstream customers’ production, thus affecting the purchasing demand of the company. In addition, if the epidemic has a significant adverse impact on the global economy, there may be a shrinking demand in the consumer electronics industry, which will cause major customers to reduce or cancel purchase orders, thus adversely affecting the company’s future operating performance.
Second, technical risks
(A) product iteration risk
With the expansion of downstream application fields and the change of application scenarios, the company needs to continuously carry out research and development and innovation according to the development trend of technology and the change of customer demand, and maintain its competitiveness through the advanced products and technologies. At present, it takes about 6-12 months for the company’s products from research and development, customer certification to mass supply, and the sales period of products after mass production can last about 3-4 years. During the reporting period, the batch sales of new products will usually become an important driving force for the company’s continuous growth of operating income in subsequent years. If the company cannot continue to carry out technological innovation and product development, it will not be able to maintain the normal iteration of products, which will affect the company’s market competitiveness and then affect the sustained growth of performance.
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(B) R&D failure risk
R&D innovation is one of the most important business activities of integrated circuit enterprises. In order to maintain its core competitiveness, the company needs to fully combine the cutting-edge trends of industry technology and the needs of downstream fields such as mobile phones and wearable devices for continuous research and development. During the reporting period, the company’s R&D expenditure was RMB27,452,000, RMB35,590,600 and RMB38,981,800 respectively, accounting for 7.97%, 7.50% and 7.18% of the operating income respectively, which remained relatively stable. With the expansion of business scale and application fields, the company will carry out the application and research and development of power management chips and other chips (such as intelligent networking delay management unit, signal chain chip, etc.) in more fields, and the investment in research and development may continue to increase. However, because product research and development needs to invest a lot of money and manpower, it takes a long time and there are certain uncertainties. If the company’s product research and development fails to meet expectations or the developed new products are not competitive and poorly promoted, the company will face the risk that the previous R&D investment cannot be recovered and its sustainable competitiveness will be weakened.
(C) R&D talent shortage and the risk of loss
Analog chip design has high entry threshold and few auxiliary tools, and it depends more on the accumulation of enterprise technology and the rich experience of R&D personnel. However, excellent R&D personnel should not only have solid multidisciplinary basic knowledge, but also have mature topological structure design and layout and wiring ability, and the training period is long. Especially with the rapid development of integrated circuit design industry, the competition for R&D talents is more intense. At present, the company is in the stage of rapid development, and its business scale is constantly expanding. Especially in the implementation of this fund-raising investment project, a large number of R&D personnel are needed. However, compared with domestic and foreign competitors, there is still a certain gap in the number of R&D personnel.
Note: TI, ON Semi, DIODES and Richtek did not disclose the number of their R&D personnel.
If the company does not invest enough in the training and introduction of R&D talents in the future, it will aggravate the shortage of R&D talents and even lead to the loss of existing backbone technicians, which will adversely affect the company’s production and operation.
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(D) Risk of leakage of key technologies
Adhering to the route of independent innovation, the company has formed a series of functional modules IP and corresponding proprietary technologies suitable for products such as power management chips and applications such as mobile phones and wearable devices through continuous investment in research and development, timely upgrading of technologies and updating of products. For some proprietary technologies, the company applied for a number of intellectual property rights, such as invention patents, utility model patents and the exclusive right to layout design of integrated circuits, to protect them. However, the IP of functional modules and key technologies are protected by confidentiality measures formulated by the company. Because the core R&D personnel will call the functional module IP and use related technologies in the design process, they also need to provide relevant data to wafer manufacturing and sealing and testing companies in the production process. If there are reasons such as improper storage or the loss of core technicians, there may be risks that the core technologies will be leaked or stolen by others.
Third, financial risks
(A) the risk of inventory depreciation
The company mainly makes purchasing and production plans according to customers’ expected demand, upstream production capacity and company inventory, and dynamically adjusts the stocking level according to market changes. Due to the long production cycle of chips and the concentration of upstream suppliers, companies usually increase their stocking under the condition of expanding business scale and tight upstream production capacity, so that the inventory balance increases with the continuous expansion of business scale. At the end of each reporting period, the book value of the company’s inventory was 76,697,600 yuan, 92,822,600 yuan and 91,543,100 yuan respectively, accounting for 24.59%, 25.48% and 23.10% of current assets, and the inventory depreciation reserve ratio was 19.10%, 16.50% and 18.07% respectively. Because the downstream application fields of the company’s products are mainly mobile phones, wearable devices and other application fields, the terminal electronic products change rapidly. If the company’s inventory can’t be sold smoothly in the future due to changes in customer demand and the company’s failure to accurately judge the downstream demand, or the market competition intensifies and the company’s product performance lacks competitive advantages, the product price will drop sharply, and there will be a risk of further provision for inventory impairment.
(2) Risk of fluctuation of gross profit margin
In each period of the reporting period, the gross profit margin of the company’s main business was 25.45%, 25.98% and 29.33% respectively, with certain fluctuations. Products in the integrated circuit industry are updated quickly. Usually, products with performance advantages and competitive advantages can get higher gross profit margin when they are launched into the market. With the passage of time and market competition, their gross profit margin space is gradually compressed and remains stable after being reduced to a certain extent. Therefore, chip design companies need to accurately grasp.
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Market changes and customers’ personalized needs, through continuous R&D and innovation, new product promotion to increase the sales proportion of high-margin products, in order to maintain a stable or high comprehensive gross profit margin level. If the company fails to upgrade or develop products in time according to market changes, the products are not competitive or in an unfavorable situation in market competition, the selling price of products may drop, which may cause the gross profit margin level to fluctuate; In addition, if the company’s marketing is not effective, the decline in the proportion of sales of high-margin products will also lead to fluctuations in the company’s comprehensive gross profit margin, which will adversely affect the company’s operating performance.
(C) Risk of exchange rate fluctuations
During the reporting period, the company’s business was mainly exported, and the proportion of foreign sales revenue to the main business income was as follows
78.14%, 76.24% and 69.95%, because the export business is mainly settled in US dollars, the company holds more US dollar bank deposits and accounts receivable. In each period of the reporting period, the company’s exchange gains due to the exchange rate fluctuation of the settlement currency were-1,846,600 yuan, 2,546,900 yuan and-10,986,600 yuan respectively, accounting for -7.07%, 6.02% and -15.65% of the total profits in the same period respectively. With the expansion of the company’s business scale, the export amount may further expand. If the exchange rate fluctuation of the US dollar against the RMB increases due to domestic and international political and economic factors, the company will face certain exchange rate fluctuation risks, which will adversely affect its operating performance.
(D) The risk that tax incentives and government subsidies cannot be sustained.
According to the Notice on Further Encouraging the Development of Enterprise Income Tax Policies in Software Industry and Integrated Circuit Industry (Caishui [2012] No.27) and the Notice on Relevant Issues Concerning Preferential Policies for Enterprise Income Tax in Software and Integrated Circuit Industry (Caishui [2016] No.49), the company, as a key integrated circuit design enterprise in the national planning layout, can pay enterprise income tax at a reduced rate of 10%. During the reporting period, the company enjoyed income tax concessions of 1,577,500 yuan, 3,509,000 yuan and 6,844,100 yuan respectively, accounting for 6.04%, 8.29% and 9.75% of the total profits. If the company cannot meet the requirements of preferential tax policies in the future or the above preferential tax policies change, it may have a certain impact on the company’s profitability. In each period of the reporting period, the amount of government subsidies included in the current profit and loss of the company was 7,669,900 yuan, 5,423,900 yuan and 9,493,200 yuan respectively, accounting for 30.22% and 13.30% of the net profit attributable to shareholders of the parent company respectively.
14.18%。 If the state’s support for the integrated circuit industry and R&D innovation is weakened in the future, the reduction of government subsidies will have a certain impact on the company’s profit level.
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Iv. internal control risks
(1) The risk of impairment of goodwill caused by the failure to achieve the purpose of the acquisition of Siriwei
In order to strengthen the layout of the AC/DC product line, the company acquired a 45.39% equity of Siriwei, which has a certain technical accumulation in AC/DC research and development, at the end of 2018 for a consideration of 6.1279 million yuan, and controlled the voting rights corresponding to the 5.45% equity through a concerted action agreement to realize the control of Siriwei. After the completion of this acquisition, the company’s book formed a goodwill of 3,660,800 yuan, accounting for 8.65% of the total profit in 2019. After the acquisition, Siruiwei made a strategic transformation, focusing on the implementation of new product research and development in line with the company’s planning. Due to the weakening of the promotion of old products in the transition period, the sales scale has decreased compared with the same period, while the research and development and mass sales of new products take a certain period of time. In 2019 and 2020, the operating income of Xiruiwei was 8,029,900 yuan and 7,196,000 yuan respectively, and the income scale has decreased. In the future, if the R&D or product promotion fails and the R&D capability is significantly lower than expected, and the impairment of goodwill is accrued, it will have an adverse impact on the company’s operating performance.
(B) Management risks brought by the company’s scale expansion
With the continuous expansion of business scale and the gradual implementation of fund-raising investment projects, the company’s asset scale, procurement and sales scale will increase substantially, and it is necessary to increase management personnel accordingly to maintain refined management and quality control; In addition, with the expansion of business scale, on the one hand, the company needs to expand R&D and technical personnel to meet the upgrading and development of existing power management chips. In order to maintain market competitiveness, it also needs to introduce corresponding professionals to carry out multi-product and multi-field R&D work. The expansion of personnel will make the company’s organizational structure and management system more complicated, and put forward higher requirements for the company’s management mode, human resources, marketing, internal control and other aspects. If the company can’t improve its management ability in time and enrich and train relevant high-quality management talents to adapt to the company’s growth and changes in the market environment, it will affect the company’s operating efficiency and development efficiency and bring certain management risks to the company.
(3) The risk of the change of the issuer’s control over Siriwei.
In order to further strengthen the layout of AC/DC, the company has fully investigated the R&D experience, technology accumulation and other aspects, combined with the development stage of Siruiwei products, the original shareholder’s investment cost and appeal, acquisition cost and other factors, and adopted a step-by-step acquisition of equity and concerted action to control the 50.84% equity pair of Siruiwei.
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Should vote.
The memorandum signed by the issuer and the minority shareholders of Xiruiwei stipulates in principle the disposal of minority shareholders’ rights and interests in different situations, but the specific scheme, valuation, payment method and other acquisition conditions are based on subsequent consensus. In the case that the third party is willing to acquire the control right of Siriwei, and the issuer waives the preemptive right and all parties reach an agreement through consultation, it may lead to the transfer of control right of Siriwei, which may lead to the risk that the issuer’s control right of Siriwei will change.
V. Risk of failure in issuance
The company’s application for initial public offering and listing in science and technology innovation board will be influenced by many internal and external factors, such as the domestic and international macroeconomic environment, the overall situation of the securities market, the degree of investors’ recognition of the company’s stock issuance price and the judgment of the future trend of the stock price. Therefore, there may be a risk that the issuance will be terminated due to the fact that the number of investors who have effectively quoted or subscribed offline is insufficient to meet the legal requirements, or the total market value at the time of issuance fails to meet the listing conditions of the expected market value. If the issuer’s suspension of the listing review procedure exceeds the time limit stipulated by the exchange, or the suspension of the issuance registration procedure has not been resumed for more than 3 months, or there are other unfavorable circumstances that affect the issuance, there may be a risk of failure in the issuance.
VI. Investment Risks of Raised Funds
The funds raised by the company this time are mainly used for R&D and industrialization projects of high-performance power conversion and driver chips, R&D and industrialization projects of high-performance power protection chips, R&D center construction projects and development reserve projects, with a total investment of 178,899,600 yuan, 170,361,700 yuan, 84,035,600 yuan and 180,000 yuan respectively, of which fixed assets and intangible assets totaled 130,000,000 yuan. After the implementation of this fund-raising investment project, the depreciation of fixed assets and amortization of intangible assets will increase, and the R&D expenditure investment during the project implementation will also increase rapidly. Among them, the total amount of fixed assets purchased by fundraising projects is 109,020,700 yuan. According to the implementation progress of fundraising projects and considering the categories of fixed assets involved and the depreciation policies of fixed assets, the depreciation amounts of new fixed assets in the next five years are 7,560,800 yuan, 18,031,900 yuan, 21,687,000 yuan, 16,380,400 yuan and 80,000 yuan respectively.
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Unit: 10,000 yuan
Note 1: According to the purchase schedule of fixed assets, it is assumed that the purchase is completed at the end of the first half of the year and depreciation is started; Note 2: The fixed assets purchased by fundraising projects are mainly electronic equipment. According to the company’s accounting policy, the estimated economic service life of electronic equipment is 3 years, and the estimated net salvage value rate is 5%.
Therefore, the company needs to expand the sales scale and gross profit to offset the cost increase caused by depreciation and amortization, R&D investment, etc. However, if the downstream market environment changes adversely, the fundraising project fails to successfully develop new products, and the issuer’s market development is weak, the gross profit generated by the new sales scale cannot offset the depreciation, amortization and R&D expenses during the construction period of the fundraising project, which will adversely affect the company’s profitability.
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Section 5 Basic Information of the Issuer
I. Basic information of the issuer
Second, the issuer restructuring and establishment.
(a) the establishment of a limited company
In May 2002, Liao Yong, Wuxi Venture Capital and Keda Venture Capital jointly invested 6 million yuan to set up Lixin Micro Co., Ltd.. Among them, Liao Yong contributed RMB 1.2 million in cash, accounting for 20% of the contribution; Wuxi Venture Capital contributed RMB 3 million in cash, accounting for 50% of the capital contribution; Keda Venture Capital contributed RMB 1.8 million in cash, accounting for 30% of the capital contribution.
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This contribution has been verified by the Capital Verification Report issued by Wuxi Puxin Certified Public Accountants Co., Ltd.
On May 28th, 2002, Wuxi Administration for Industry and Commerce of Jiangsu Province issued the Business License for Enterprise as a Legal Person to Lixin Micro Co., Ltd..
When a limited company is established, the shareholding structure of the company is as follows:
(II) Establishment of a joint-stock company
On November 15th, 2008, Lixin Micro Limited held a shareholders’ meeting and agreed to change the company as a whole into a joint stock limited company, with all shareholders as sponsors. Based on the audited net assets of 53,363,229.42 yuan as of October 31st, 2008, it was converted into a total of 48 million shares at a ratio of 1.112:1, with the remaining net assets of 53,300.
Verified by the Capital Verification Report issued by Daxin Certified Public Accountants Co., Ltd., the registered capital of the company has been paid in full by October 31, 2008. On June 24, 2016, Huapu Tianjian Certified Public Accountants (special general partnership) issued the Review Report on Capital Verification (Hui Yan Zi [2016] No.2388) to review the changes in share capital since the establishment of the issuer.
On December 31st, 2008, Wuxi Administration for Industry and Commerce of Jiangsu Province approved the above-mentioned change registration.
When a joint-stock company is established, the shareholding structure of the company is as follows:
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(3) Changes in share capital and shareholders during the reporting period.
On March 25th, 2020, the company held a general meeting of shareholders, and agreed that Yijing Investment would transfer its 2.92% equity (corresponding to 1.4 million shares) to Juyuan Juxin for RMB 32.2 million, and its 181% equity (corresponding to 870,000 shares) to Su Min Toujunxin for RMB 20.01 million. It is agreed that Wenna LaSalle will transfer its 2.02% equity of the company (corresponding to 970,000 shares) to Pingyang Wenyuan at a price of 19.4 million yuan.
Yijing Investment signed the Share Transfer Agreement with Juyuan Juxin and Su Min Toujunxin respectively on the above-mentioned related share transfer matters; Wenna LaSalle and Pingyang Wenyuan signed the Equity Transfer Contract on the above related share transfer matters.
After this equity transfer, the company’s equity structure is as follows:
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(four) the issuer’s major asset restructuring during the reporting period.
During the reporting period, the company did not have any major asset restructuring. In 2018, the company acquired 4,539,200 shares of Siriwei held by Gu Yaokui, Wang Weihua, Pan Weigang and Wuxi Siriwei Management Consulting Partnership (Limited Partnership) for 6,127,900 yuan. After the acquisition, the company directly held 45.39% of the shares of Siriwei, and controlled the voting rights corresponding to 5.45% of the shares through a concerted action agreement, thus realizing the control of Siriwei. The details are as follows:
1. Background of the acquisition of Siliwei
AC/DC converter is a widely used power conversion chip. Over the years, the company has continuously expanded its product range in the field of power management through independent development. However, due to the energy limitation of the R&D team, the company invested less R&D power in converters (AC/DC) before 2018, and intends to strengthen the layout of AC/DC through outreach mergers and acquisitions.
Originally listed on the New Third Board (code: 832957.OC), Xirui Micro is a Fabless design company mainly engaged in the design and sales of integrated circuits such as AC/DC driven by LED lighting sources. Si Ruiwei’s technical team, mainly Yu Mingfan, has formed patents such as inductance and current control technology of switching power supply in years of research and development, and has certain technical accumulation in AC/DC research and development. From 2015 to 2017, the main financial situations of Xiruiwei are as follows:
Note: The financial data of Xi Ruiwei has been audited by Beijing CSI Tiantong Certified Public Accountants (special general partnership) and Zhongxi Certified Public Accountants (special general partnership).
After investigating and fully evaluating the R&D experience, R&D stage and technology accumulation of Si Ruiwei on AC/DC, the company believes that the R&D team mainly composed of Yu Mingfan has certain positive R&D capabilities and can bring supplements to the company’s product line and R&D.. In addition, the company has accumulated rich customer resources in the fields of small household appliances and lighting for many years, and has cooperated with mainstream wafer manufacturing with leading global rankings, advanced technology and high maturity.
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Packaging and testing enterprises have maintained a long-term and stable cooperative relationship, and can effectively connect existing customer and supplier resources after the R&D breakthrough of Siruiwei. Based on the above reasons, in 2018, the company reached an intention with Yu Mingfan and others to acquire Xiruiwei, which has a reasonable business background.
2. The main process of acquiring Silicon Micro.
During the negotiation process, the company fully considered the development stage of Siruiwei products, the actual situation of the original shareholders, the acquisition cost and other factors, and adopted a step-by-step acquisition of controlling shares and concerted action to implement control. In 2018, the company acquired 4,539,200 shares of Siriwei held by Gu Yaokui, Wang Weihua, Pan Weigang and Wuxi Siriwei Management Consulting Partnership (Limited Partnership) for 6,127,900 yuan. After the acquisition, the company directly held 45.39% of the shares of Siriwei, and controlled the voting rights corresponding to 5.45% of the shares through a concerted action agreement, thus realizing the control of Siriwei. The specific process is as follows:
Unit: ten thousand shares, ten thousand yuan.
(1) Acquisition of 21.70% equity held by Gu Yaokui, Wang Weihua, Pan Weigang and Wuxi Xiruiwei Management Consulting Partnership (Limited Partnership).
In the first half of 2018, Gu Yaokui, Wang Weihua and Pan Weigang held the positions of directors and senior managers of Xiruiwei. According to the requirements of the Business Guide for Restricted Sale and Lifting of Restricted Sale of Listed Companies, the transfer ratio of the above three persons during their tenure shall not exceed 25% of their shares in Xiruiwei. After discussion by all parties, Lixin Micro first acquired part of the shares held by the above three people, and the remaining shares were acquired after the expiration of the six-month period of the above three people’s resignation.
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On May 4, 2018, the company held the second meeting of the fourth board of directors. The meeting agreed to acquire 789,718 shares of Siriwei held by Gu Yaokui, Wang Weihua and Pan Weigang (that is, 25% of the shares held by the above three people) and 1,380,298 shares of Siriwei held by Wuxi Siriwei Management Consulting Partnership (Limited Partnership); On June 7, 2018, the company signed an equity transfer contract with Gu Yaokui, Wang Weihua and Pan Weigang, and then acquired the shares of Si Ruiwei held by Gu Yaokui, Wang Weihua and Pan Weigang through call auction, and paid the corresponding consideration. On the same day, the company signed an equity transfer contract with Wuxi Xiruiwei Management Consulting Partnership (Limited Partnership), and the equity transfer payment was paid on October 29, 2018.
After the above matters are completed, the company directly holds 21.70% equity of Siruiwei.
(2) Acquisition of 23.69% equity held by Gu Yaokui, Wang Weihua and Pan Weigang.
On June 8, 2018, Gu Yaokui, Wang Weihua and Pan Weigang resigned from their positions as directors and senior managers of Si Ruiwei. According to the requirements of the Business Guide for Restricted Sale of Listed Companies, the restricted sale period of shares will be until December 8, 2018.
On November 1, 2018, the company held the third meeting of the fourth board of directors, at which it agreed to acquire the remaining 2,369,157 shares held by Gu Yaokui, Wang Weihua and Pan Weigang. On December 11, 2018, the company signed an equity transfer contract with the above counterparty, and completed the delivery of the equity transfer price in the middle and late December.
After the completion of the above matters, the company directly held 45.39% equity of Siruiwei, becoming the largest shareholder of Siruiwei.
(3) signing a concerted action agreement with Zhu Feng.
On December 31st, 2018, the company signed a concerted action agreement with Zhu Feng to control the voting rights corresponding to the 5.45% equity held by Zhu Feng.
After the completion of the above matters, the company directly and through concerted action agreement controls 50.84% of the voting rights corresponding to Siriwei, and can control the financial and business decisions of Siriwei, enjoy the corresponding benefits and bear the corresponding risks.
3. Other arrangements between the company and the minority shareholders’ rights of Xiruiwei.
Other shareholders of Xiruiwei are mainly the original founder or original management team of Xiruiwei, financial investors and issuers.
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There is no relationship between the controlling shareholder, actual controller or directors, supervisors and senior managers, as follows:
(1) Arrangements between the Company and the minority shareholders of Xiruiwei on minority shareholders’ rights and interests
Although the company recognizes the R&D capability of Siliwei in AC/DC products, due to certain risks in product development, in order to effectively control the acquisition cost, the company adopted the method of acquiring part of the equity to implement control; As for the equity held by minority shareholders of Siruiwei, the company plans to implement the acquisition when the product development of Siruiwei is successful and the profit prospect is clearer, which can effectively reduce the acquisition risk. Other arrangements between the Company and the minority shareholders’ rights and interests of Siruiwei are as follows:
① The specific contents of the agreement on the disposal of minority shareholders’ rights and interests in Xiruiwei.
According to the acquisition memorandum signed by all parties during the acquisition of Siriwei, different situations concerning the disposal of minority shareholders’ rights and interests of Siriwei were agreed in principle, and the specific contents of the agreement are as follows:
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Note 1: After signing the memorandum in May 2018, Wuxi Siruiwei Management Consulting Partnership (Limited Partnership) (Party B 1) signed an equity transfer contract with the issuer on June 7, 2018, and the equity transfer payment was paid on October 29, 2018; The follow-up does not involve the future disposal of the equity of Xiruiwei held by Wuxi Xiruiwei Management Consulting Partnership (Limited Partnership).
Note 2: Acquisition by equity refers to the payment practice of acquisition by listed companies, and refers to the way in which listed companies issue shares to purchase assets.
As can be seen from the above table, the agreement on the future disposal of minority shareholders’ rights and interests is a framework agreement from the aspects of strengthening cooperation, acquisition method, valuation method and partial withdrawal method, and the scheme selection and details involved in the agreement need to be determined through subsequent consultations. Three years after the parties choose to complete the acquisition, based on the progress of product research and development, marketing and other aspects of Siruiwei, the follow-up treatment plan for minority equity will be negotiated separately. The future situations about equity disposal are as follows:
A. If the issuer goes public within 3 years (before 2022) from the completion date of acquisition.
A. Memorandum agreement: As the parties consider that the issuer is more likely to continue the acquisition, the scope of valuation or possible payment methods should be agreed accordingly, but the specific valuation, specific payment methods and other acquisition conditions are based on subsequent consensus; Especially for the management shareholders, in order to encourage them to improve the operating performance of Siliwei, the acquisition valuation range (8-10PE of net profit) is agreed to protect the interests of the issuer, but the specific purchase method and purchase price still need to be negotiated separately.
B. In addition to the above agreement in the Memorandum, all parties can negotiate the treatment plan for the subsequent minority equity according to the negotiation results of all parties at that time and their own judgments, and the issuer can choose to sell or maintain the equity held by the issuer.
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Current equity ratio.
B. If the issuer is not listed within 3 years (before 2022) from the date of completion of the acquisition, a. The memorandum stipulates that minority shareholders need to keep a reasonable exit channel considering that the issuer’s acquisition ability or willingness may be weaker than after listing; Based on the above reasons, the parties negotiated and agreed on the terms that all parties can jointly sell to a third party if the issuer is not listed within three years (before 2022) from the completion date of acquisition. However, the implementation of this clause is still based on the subsequent consensus of all parties, and the issuer may choose to continue to retain the control right of Siliwei.
B. In addition to the above-mentioned agreement in the Memorandum, all parties can negotiate the treatment plan for the subsequent minority equity according to the future development and their own judgment. The issuer can choose to acquire the minority equity held by minority shareholders in cash or equity or maintain the current equity ratio.
Therefore, whether the issuer is listed or not within 3 years (before 2022) from the date of completion of the acquisition, the determination and implementation of the subsequent specific disposal plan is based on the subsequent consensus of all parties.
(2) the influence of different listing results on the control of silicon micro
According to the relevant memorandum and interviews with relevant shareholders of Siriwei, it is confirmed that the memorandum is only a principled agreement on the disposal of minority shareholders’ rights and interests of Siriwei in different scenarios, but the choice of actual scheme and the determination of transaction details must be based on the consensus of all parties in the future, and different listing results are not preconditions for the issuer to continue to acquire or lose control of Siriwei. In addition, the parties have not yet reached a clear consensus on the subsequent specific acquisition or disposal of control rights, which will not affect the stability of equity during the review period. Specific instructions are as follows:
According to the agreement in the above-mentioned acquisition memorandum, the disposal method of minority shareholders’ rights and interests of Siriwei under different scenarios and the influence of the issuer on the control of Siriwei are as follows:
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Note: If the issuer chooses to acquire the minority shareholders’ equity of Siruiwei or jointly sell the equity of Siruiwei, and Zhu Feng no longer holds the equity of Siruiwei after implementation, the relationship of concerted action between Zhu Feng and the issuer will be automatically dissolved; If Zhu Feng still holds the equity of Siriwei in the future, Zhu Feng will still maintain a concerted action relationship with the issuer. As can be seen from the above table, whether the issuer goes public within 3 years (before 2022) from the completion date of acquisition or not, with the consent of the issuer and consensus with all parties, it is possible to continue the acquisition, transfer control rights or maintain the status quo, and different listing results are not preconditions that affect the change of control rights of Siruiwei; However, regardless of whether it is listed or not, the issuer has obtained the control right of Siriwei, and can continue to acquire minority shareholders’ rights and interests to enhance the control right after the parties reach a consensus on the acquisition conditions. In addition, as of the signing date of the prospectus, the issuer and the minority shareholders of Siruiwei have not yet conducted further consultations on the follow-up treatment plan for minority shares, and there are no further plans or arrangements, which need to be further negotiated by all parties according to the follow-up situation, and can only be implemented after being reviewed and approved by the board of directors, shareholders’ meeting and other corresponding decision-making bodies in combination with the issuer’s internal system. The arrangement between the issuer and the minority shareholders of Xiruiwei regarding the future minority shares has not changed from the intention of all parties when the original acquisition negotiation was held.
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To sum up, the agreement on the disposal of minority shareholders’ rights and interests in the acquisition memorandum is an agreement in principle, and the determination of its specific plan and transaction details must be based on the consensus of all parties in the future; Different listing results are not preconditions that affect the change of control rights of Siruiwei; Regardless of whether it is listed or not, the issuer can choose to maintain control over Siriwei or continue to acquire minority shareholders’ rights and interests after all conditions are agreed.
(2) Other arrangements between the company and the minority shareholders of Xiruiwei.
According to the memorandum signed by the company with Yu Mingfan, Zhu Feng and other external shareholders, Yu Mingfan and Zhu Feng promised that their shares in Siruiwei would be locked for at least three years; And promised that the service period agreed with Siruiwei should be no less than 5 years. Any special investment terms such as performance betting and repurchase signed between Si Ruiwei, Yu Mingfan and Zhu Feng and other shareholders and investors will not be transferred due to the change of control right of Si Ruiwei, and Si Ruiwei and the issuer need not undertake any obligations or responsibilities for the above terms.
To sum up, other shareholders of Xiruiwei are not related to the controlling shareholders, actual controllers or directors, supervisors and senior managers of the issuer; The company has reached an agreement with the minority shareholders of Xiruiwei on the future treatment of minority shareholders’ rights and interests, which is conducive to reducing the company’s acquisition risk. Except for the above-mentioned agreement, other shareholders of Siriwei have no other interest arrangements with the issuer and the actual controller of the issuer.
4. Subsequent integration and management and its impact on the issuer.
(1) Subsequent integration and management.
At the level of personnel and management, Yuan Minmin, the chairman of the company, is currently the chairman of Xiruiwei, responsible for market and product planning, and gradually docking small household appliances customers such as Haier and Hisense to tap the demand for AD/DC products in the small household appliances market; Sean, deputy general manager of the company, is the director and general manager of Siruiwei, responsible for purchasing; Yu Mingfan is responsible for research and development, and carries out research and development work according to product planning; On the financial management level, the issuer’s finance department conducts overall management of Siruiwei Finance. Therefore, the new and old teams have realized the effective integration of Silicon Micro, and implemented collaborative management from market, procurement, product planning, finance and other aspects.
(2) The impact of the acquisition of Silicon Micro on the issuer.
The issuer and Siliwei are both integrated circuit design enterprises in Fabless mode, and their business is highly correlated. According to the relevant provisions of Accounting Standards for Business Enterprises No.20-Business Combination and Accounting Standards for Business Enterprises No.33-Consolidated Financial Statements, if the parties involved in the merger are not ultimately controlled by the same party or parties before and after the merger, it is a business combination under different control. Prior to this acquisition, the company had no connection with Xiruiwei.
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Relationship, this acquisition is a business combination under different control. The long-term accumulation of AC/DC products and technologies has improved the company’s current situation of insufficient R&D reserves in AC/DC direction to a certain extent, and provided good technical support for the company’s future layout of AC/DC product lines; In addition, both the company and Silicon Micro are power management chip design companies adopting Fabless mode, which can achieve effective collaborative management in research and development direction, suppliers and customers. The company completed the acquisition at the end of 2018. Before and after the acquisition, the main financial data of Xiruiwei accounted for a small proportion of the issuer’s corresponding projects, and the company’s main business did not change significantly, as follows:
Unit: 10,000 yuan
Note: The financial data of Xi Ruiwei has been audited by Beijing CSI Tiantong Certified Public Accountants (special general partnership) and Rongcheng Certified Public Accountants; 2019 and 2020 are fair value adjusted data. To sum up, the acquired Siliwei is highly correlated with the issuer’s business before reorganization, which is conducive to supplementing the company’s product line and research and development capabilities in AC/DC. After the completion of this acquisition, the company’s management and actual controllers have not changed, and it has not had a significant impact on the company’s financial data.
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(5) Listing/listing of the issuer in other securities markets.
During the reporting period, there was no listing or listing of the issuer in other securities markets.
III. Basic information on the issuer’s shareholding structure, subsidiaries, major shareholders holding more than 5% of shares and actual controllers.
(a) the issuer’s equity structure.
As of the signing date of this prospectus, the issuer’s equity structure chart is as follows:
(2) Brief information of the issuer’s subsidiary controlling (participating) shares.
As of the signing date of this prospectus, the issuer has one wholly-owned subsidiary and two holding subsidiaries, the basic information of which is as follows:
1. Zhongshengchang, a wholly-owned subsidiary.
Force core micro
Songyin Wealth Juyuan Juxin Haijie Huifu Yongxing Da Venture Capital Company Wuxi Venture Capital Yijing Investment
Pingyang wenyuan
Guotai junan shenyi phase 1
Su Min voted for your letter
Pingyang aipeng
Haijie zhuoyue
Wenna lianhang
袁敏民
Mao Chenglie
Zhou baoming
Ji donghui
Sean
Tang Dayong
Wang Dong
Wang Fang, Dong Hong and other 20 natural persons
25.60%9.84%
9.84%
9.12%8.56%8.04%7.14%6.16%
15.70%
57.77%12.75%8.08%4.17%4.13%2.92%
2.08%
2.02%1.88%
1.81%
1.04%0.83%0.52%
Zhong sheng Chang Xi Rui Wei
100.00%
45.39%
actual controller
Sai mi ken tuo
51.00%
name of the company
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Note: The financial data of Zhongshengchang has been audited by Rongcheng Certified Public Accountants.
2. Holding subsidiary Xiruiwei
The company directly holds 45.39% of the shares of Siriwei, and controls 5.45% of the shares of Siriwei through the Concerted Action Agreement signed with Zhu Feng, and controls 50.84% of the shares in total.
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Note 1: A subsidiary of Sirui Microsystems held by the end of 2018. Note 2: The financial data of Xiruiwei has been audited by Rongcheng Certified Public Accountants.
3. Holding subsidiary Semir Kentuo
In order to broaden the application fields and improve the chip design ability combined with the Internet of Things technology, the company set up a holding subsidiary, Semikentuo, holding 51% of its shares.
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Note 1: Li Guohong, Shi Chengmiao and Yang Yefei, other shareholders of Semikentuo, are senior technical talents in the fields of control chip, algorithm and architecture design, software design and simulation module design, respectively, with strong design capabilities.
(3) Basic information of major shareholders and actual controllers holding more than 5% of the shares.
1. Basic information of controlling shareholders
As of the signing date of this prospectus, the company’s total share capital is 48 million shares, of which Yijing Investment holds 27.73 million shares, accounting for 57.77% of the company’s total share capital before this issuance, and is the controlling shareholder of the company. The basic situation of Yijing investment is as follows:
Note: The financial data of Yijing Investment has been audited by Wuxi Taihu Certified Public Accountants Co., Ltd.
As of the signing date of this prospectus, the equity structure of Yijing Investment is shown in the following table:
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The shareholders of Yijing Investment include the actual controller and some employees. At present, Yijing Investment mainly conducts internal equity management through articles of association and equity management mechanism according to the company law. The entry and exit of relevant personnel, internal circulation of equity and management mechanism are as follows:
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(1) personnel enter and exit
According to the equity management mechanism of Yijing Investment, people who can become shareholders of Yijing Investment include:
① Senior managers who are of great value to the development of Lixin Micro or its subsidiaries at present and in the future;
② Middle managers, core business personnel and technical backbones of R&D, operation, marketing and management departments of Lixin Micro and its subsidiaries at present and in the future;
③ Other personnel or organizations recognized by the board of directors of Yijing Investment.
Upon the resolution of the shareholders’ meeting of Yijing Investment, the above qualified personnel can become shareholders of Yijing Investment by increasing capital or transferring the original shareholders’ equity.
(2) Internal circulation of equity and equity management mechanism.
① indirectly held Lixin micro-equity: the lock-up period is within 36 months after the initial public offering and listing of Lixin micro-equity held by Yijing Investment. During the lock-up period, shareholders may not require Yijing Investment to transfer the micro-equity held by Lixin.
② Directly held equity of Yijing Investment: After the promised lock-up period expires, all shareholders of Yijing Investment can transfer their equity of Yijing Investment, but the relevant transfer shall comply with the Articles of Association, the relevant regulations of China Securities Regulatory Commission and Stock Exchange, and the voluntary commitment of shareholders to lock in and reduce their shares. In addition, with the resolution of the shareholders’ meeting of Yijing Investment, shareholders can apply for withdrawal through directional capital reduction.
As of the signing date of this prospectus, Yijing Investment does not limit the object of equity transfer to internal employees, which is not in line with the "closed-loop principle" stipulated in the Question and Answer of science and technology innovation board Stock Exchange.
2. Basic information of the actual controller
The actual controllers of the issuer are Yuan Minmin, Mao Chenglie, Zhou Baoming, Wa Donghui, Sean, Tang Dayong, Wang Dong and Wang Fang, and the actual controllers have not changed during the reporting period. As of the signing date of this prospectus, the above eight persons hold 84.30% of the equity of Yijing Investment in total, and indirectly hold 48.70% of the equity of the issuer through Yijing Investment.
The above-mentioned actual controllers jointly signed the Concerted Action Agreement on Wuxi Lixin Microelectronics Co., Ltd. (hereinafter referred to as the Concerted Action Agreement or the Agreement) on October 15, 2015, each of which
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Party A agrees to take concerted action on the voting of Lixin Micro-management decision in Yijing Investment through the arrangement of concerted action agreement, so as to jointly expand the number of voting rights that each party can control.
(1) The specific contents of the Agreement on Concerted Action and the solutions in case of differences.
(1) the agreement on matters of concerted action
The parties to this agreement promise that when the shareholders’ meeting of Yijing Investment votes on matters related to the decision-making of Lixin Micro-management, including but not limited to the following matters (hereinafter referred to as "concerted actions"), all parties must keep the consistency of voting:
A. Decide on Lixin Micro-business policy and investment plan;
B. Elect and replace directors and supervisors who are non-employee representatives of Lixin Micro, and decide on the remuneration of directors and supervisors;
C. Review the annual financial budget plan and final accounts plan of Lixin Micro;
D. Review the profit distribution plan and loss compensation plan of Lixin Micro;
E. Make resolutions on the slight increase or decrease of registered capital of Lixin;
F. Make resolutions on Lixin Micro-issuance of corporate bonds;
G. To make resolutions on matters such as the merger, division, dissolution, liquidation or change of corporate form of Lixin Micro-Company;
H. Amend the constitution of Lixin Micro-organization;
I. Make resolutions on the employment and dismissal of accounting firms by Lixin Micro;
J. Decide on matters such as Lixin Micro’s foreign investment, acquisition and sale of assets, asset mortgage, external guarantee, entrusted wealth management, related party transactions, etc.
K decide to stop operating the existing business of Lixin Micro-business, or make major changes or adjustments to the nature of Lixin Micro-business;
L. submit other matters decided by Lixin micro-shareholders.
With the consent of more than half of the voting rights held by all parties to this agreement, matters of concerted action may be added separately; But not by
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The parties to this agreement agree that the matters of concerted action shall not be deleted.
② Procedures and methods
Within 5 days from the date of receiving the notice of the meeting of the board of directors or shareholders’ meeting of Lixin Micro, Mr. Yuan Minmin will call all parties to hold a meeting of concerted parties by on-site meeting or other means of communication (hereinafter referred to as "meeting of concerted parties").
③ Resolution mechanism when there are differences.
According to Yuan Minmin, Mao Chenglie, Zhou Baoming, Wa Donghui, Sean, Tang Dayong, Wang Dong and Wang Fang (hereinafter referred to as:
The "Concerted Action Agreement" signed by the "Concerted Action Party", and the specific dispute resolution mechanism is as follows:
A. Resolution mechanism for differences on voting opinions: The voting opinions held by more than half of the voting rights held by all parties to this agreement are taken as the common voting opinions of all parties at the meeting of concerted parties (hereinafter referred to as "common opinions"); In the case that the number of voting rights obtained by the two voting opinions is equal, the voting opinion held by Mr. Yuan Minmin shall be taken as the common opinion.
B. Dispute settlement mechanism of concerted action agreement: Any dispute arising from this agreement, related to this agreement, or related to the conclusion, performance, dissolution, termination or invalidity of this agreement, if it cannot be resolved through friendly negotiation between the parties, either party has the right to bring a lawsuit to a court with jurisdiction. During the unresolved period of the dispute, except for the disputed matters, each party shall continue to exercise and perform its other rights and obligations under this Agreement.
(2) Relevant information of the actual controller
The relevant information of the actual controller is shown in the following table:
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Yuan Minmin, male, born in February 1965, China nationality, without permanent residency abroad, master, senior engineer. From July 1989 to January 2000, he served as the design engineer and deputy director of the research office of the Central Research Institute of China Huajing Electronics Group Corporation; From January 2000 to February 2002, he served as deputy general manager of Wuxi Huajing Silicon Microelectronics Co., Ltd. He worked in the company in May 2002, and now he is the chairman and general manager of the company. He is also the chairman of the controlling shareholder Yijing Investment, the wholly-owned subsidiary Zhongshengchang and the holding subsidiary Xiruiwei. Mao Chenglie, male, born in November 1970, China nationality, without permanent residency abroad, master, senior engineer. From August 1992 to January 2000, he served as a design engineer of China Huajing Electronics Group Company; From January 2000 to February 2002, he served as the design manager of Wuxi Huajing Silicon Microelectronics Co., Ltd. He worked in the company in May 2002, and now he is the director, deputy general manager and secretary of the board of directors of the company, and he is a director of Yijing Investment, the controlling shareholder. Zhou Baoming, male, born in February 1962, China nationality, without permanent residency abroad, bachelor, senior engineer. From September 1983 to January 2000, he served as an engineer of China Huajing Electronics Group Company; From January 2000 to March 2003, he served as the sales minister of Wuxi Huajing Silicon Microelectronics Co., Ltd. He worked in the company in March 2003, and now he is the deputy general manager of the company. He is a director of Yijing Investment, the controlling shareholder, and a director and general manager of Zhongshengchang, a wholly-owned subsidiary.
Yan Donghui, male, born in February 1967, China nationality, without permanent residency abroad, bachelor, engineer. From September 1983 to January 2000, he served as an engineer of China Huajing Electronics Group Company; From January 2000 to February 2002, he served as the head of the application group of Wuxi Huajing Silicon Microelectronics Co., Ltd. He worked in the company in May 2002, and now he is the sales manager of the company. He is also a director of Yijing Investment, the controlling shareholder, and a supervisor of Shengchang, a wholly-owned subsidiary.
Sean, male, born in February 1967, China nationality, without permanent residency abroad, bachelor, senior engineer. From September 1989 to January 2000, he served as an engineer of China Huajing Electronics Group Company; From January 2000 to January 2002, he served as a senior engineer of Wuxi Huajing Silicon Microelectronics Co., Ltd. He worked in the company in May 2002, and now he is the deputy general manager of the company. He is a director of Yijing Investment, the controlling shareholder, and a director and manager of Xiruiwei, the holding subsidiary.
Tang Dayong, male, born in March, 1971, China nationality, without permanent residency abroad, master, senior engineer. From July 1992 to May 2000, he served as design manager of China Huajing Electronics Group Company; From May 2000 to February 2002, he served as the design manager of Wuxi Huajing Silicon Microelectronics Co., Ltd. May 2002
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Worked in the company, and now serves as the chief engineer of the company, and serves as a director of Yijing Investment, the controlling shareholder.
Wang Dong, male, born in August, 1975, China nationality, without permanent residency abroad, master’s degree. From July 1996 to January 2000, he served as design manager of China Huajing Electronics Group Company; From January 2000 to May 2002, he served as the design manager of Wuxi Huajing Silicon Microelectronics Co., Ltd. He worked in the company in May 2002, and now he is the deputy general manager and director of the design institute, and he is a director of Yijing Investment, the controlling shareholder.
Wang Fang, female, born in March, 1976, China nationality, without permanent residency abroad, bachelor’s degree. From July 1995 to January 2000, he served as a test engineer of China Huajing Electronics Group Company; From January 2000 to January 2002, he worked as a test engineer in Wuxi Huajing Silicon Microelectronics Co., Ltd. He worked in the company in May 2002, and now he is the supervisor of Yijing Investment, the controlling shareholder.
3. Basic information of major shareholders holding more than 5% of shares
As of the signing date of this prospectus, the details of shareholders Yijing Investment, Wuxi Venture Capital and Gaoxin Venture Capital holding more than 5% shares of the issuer are as follows:
(1) Wuxi Yijing Investment Co., Ltd.
For details of Yijing Investment, please refer to "1. Basic Information of Controlling Shareholders" in "Section V Basic Information of Issuer" in "III. Basic Information of Issuer’s Ownership Structure, Subsidiaries, Major Shareholders and Actual Controllers Holding More than 5%".
(2) Wuxi Venture Capital Group Co., Ltd
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Note: On September 23, 2020, Wuxi Industrial Development Group Co., Ltd., the shareholder of Wuxi Venture Capital, was changed to Wuxi Chanfa Jinfu Group Co., Ltd., which was a wholly-owned subsidiary of Wuxi Industrial Development Group Co., Ltd. Before and after the change, the actual controller of Wuxi Venture Capital was the State-owned Assets Supervision and Administration Commission of Wuxi Municipal People’s Government, and there was no change.
(3) Wuxi Hi-tech Venture Capital Co., Ltd.
(4) The shares of the issuer directly or indirectly held by the controlling shareholder or actual controller are pledged or other controversial circumstances.
As of the signing date of this prospectus, there is no pledge or other controversial situation of the company’s shares directly or indirectly held by the controlling shareholder and actual controller of the company.
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Iv. information about the issuer’s share capital
(I) The total share capital before this issuance, the shares issued this time, and the proportion of the shares issued this time to the total share capital after the issuance. The total share capital of the company before this issuance was 48 million shares, and 16 million RMB ordinary shares were publicly issued this time. The changes of the company’s share capital structure before and after issuance are as follows:
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(II) The information of the top ten shareholders before this issuance.
Before this issuance, the top ten shareholders of the issuer are as follows:
(three) the top ten natural person shareholders and their positions in the issuer.
As of the signing date of this prospectus, there are no natural person shareholders among the shareholders of the issuer.
(four) the state-owned shares and foreign shares
1. State-owned shares
As of the signing date of this prospectus, the shares held by the issuer’s state-owned shareholders are as follows:
The State-owned Assets Supervision and Administration Commission of Jiangsu Provincial Government issued the Reply on the Management of State-owned Shareholders’ Logos of Wuxi Lixin Microelectronics Co., Ltd. (Su Guo Zi Fu [2020] No.30), confirming the issuer’s total share capital of 48 million shares, of which Wuxi Venture Capital holds 6.12 million shares, accounting for 12.75% of the total share capital; tall
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The new venture capital holds 3.88 million shares, accounting for 8.08% of the total share capital. The shareholders are all state-owned shareholders, and their securities accounts registered with the Securities Depository and Clearing Corporation should be marked with "SS" logo.
2. Foreign shares
As of the signing date of this prospectus, the issuer has no foreign shares.
(5) Information on new shareholders in the last year.
1, the new shares.
On March 25th, 2020, the company held a general meeting of shareholders, and agreed that Yijing Investment would transfer its 2.92% equity (corresponding to 1.4 million shares) to Juyuan Juxin for RMB 32.2 million, and its 181% equity (corresponding to 870,000 shares) to Su Min Toujunxin for RMB 20.01 million. It is agreed that Wenna LaSalle will transfer its 2.02% equity of the company (corresponding to 970,000 shares) to Pingyang Wenyuan at a price of 19.4 million yuan.
Among the newly-increased shareholders, Juyuan Juxin and Su Min Toujunxin’s shares in the company are mainly financial investments based on the IC design industry and the company’s good development prospects, while Pingyang Wenyuan and Wenna LaSalle’s executive partners are both Lin Zhibao, and the two parties transfer the shares after consultation for their own reasons. The specific acquisition method, acquisition time, transfer price and pricing basis are as follows:
2. Basic information about new shareholders in the last year.
The basic information of new shareholders in the last year is as follows:
(1) Gathering sources and cores
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The general partner of Juyuan Juxin Shanghai Zhaoxin Investment Management Center (Limited Partnership) is as follows:
(2) Pingyang wenyuan
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Basic information of Lin Zhibao, the general partner of Pingyang Wenyuan, is as follows:
(3) Su Min voted for your letter.
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Note: Shanghai Guofang Parent Fund Phase I Equity Investment Partnership (Limited Partnership) was renamed as "Shanghai Guofang Parent Fund Phase I Venture Capital Partnership (Limited Partnership)" and Shanghai Guofang Parent Fund Phase II Venture Capital Partnership (Limited Partnership) was renamed as "Shanghai Guofang Parent Fund Phase II Venture Capital Partnership". The general partners of Su Min Toujunxin are Junxin (Shanghai) Equity Investment Fund Management Co., Ltd. and Su Min Kaiyuan Wuxi Investment Co., Ltd. The basic information of Junxin (Shanghai) Equity Investment Fund Management Co., Ltd. is as follows:
The basic information of Su Min Kaiyuan Wuxi Investment Co., Ltd. is as follows:
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The newly-increased shareholders Juyuan Juxin, Pingyang Wenyuan and Su Min Toujunxin are all limited partnerships established in accordance with the law and effectively existing, and have the shareholder qualifications stipulated by laws and regulations. As of the signing date of this prospectus, Juyuan Juxin, Pingyang Wenyuan and Su Min Toujunxin have no kinship, relationship, entrusted shareholding, trust shareholding or other interest transfer arrangements with other shareholders, directors, supervisors, senior management personnel of the issuer, the heads of the intermediary agencies and their signatories.
(VI) Shareholding by strategic investors among shareholders and their brief information.
As of the signing date of this prospectus, the issuer has no strategic investor shareholding.
(7) the relationship between the shareholders before the issuance and the respective shareholding ratio of the related shareholders.
As of the signing date of this prospectus, the relationship between the issuer’s shareholders and their respective shareholding ratios are as follows:
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Except for the relationship among shareholders listed in the above table, there are no other relationships among shareholders of the company.
(eight) the company’s shareholders’ public offering of shares.
This issuance does not involve the public offering of shares by shareholders of the company.
(nine) the financial products such as private equity investment funds holding the issuer’s shares are included in the supervision.
As of the date of issuance of this prospectus, the issuer has 13 shareholders, all of whom are non-natural person shareholders, and 5 of them are private investment funds. The private equity investment funds and their management institutions among the issuer’s shareholders have been filed and registered in asset management association of china according to law. All the above shareholders have the qualifications to act as promoters or contribute to the issuer as stipulated in laws, regulations and normative documents, as follows:
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V. Brief information on the directors, supervisors, senior managers and core technicians of the issuer.
(1) Brief introduction of the members of the board of directors
The current board of directors consists of 9 directors, including 1 chairman and 3 independent directors. Directors are elected or replaced by the general meeting of shareholders, with a term of three years, and may be re-elected at the expiration of the term. The basic information of the current directors of the Company is as follows:
Note: In December 2020, the company held the fifth extraordinary general meeting of shareholders in 2020. Due to the expiration of the term of the fourth board of directors, the meeting elected Yuan Minmin, Mao Chenglie, Liu Jibin, Yu Peng, Zhao Zhidong, Yu Xiekang, Chen Peng and Yao Wangxin as directors of the fifth board of directors of the company, including Yu Xiekang, Chen Peng and Yao Wangxin as independent directors of the company. According to the Guiding Opinions on Establishing the Independent Director System in Listed Companies, the independent directors shall be re-elected for no more than six years, and the terms of office of Yu Xiekang, Chen Peng and Yao Wang xin of the company will expire in December 2021.
1. Yuan Minmin
For Yuan Minmin’s resume, please refer to Section V Basic Information of the Issuer, Section III Basic Information of the Issuer, Major Shareholders and Actual Controllers Holding More than 5%, Section III Basic Information of Major Shareholders and Actual Controllers Holding More than 5%.
2. Mao Chenglie
For Mao Chenglie’s personal resume, please refer to "III. Basic Information of the Issuer’s Ownership Structure, Subsidiaries, Major Shareholders Holding More than 5% of the Shares and Actual Controllers" in Section V of the Prospectus.
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Basic information of major shareholders and actual controllers holding more than 5% of shares. "
3. Liu Jibin
Liu Jibin, male, born in December 1969, China nationality, without permanent residency abroad, master’s degree, accountant. From May 2002 to December 2004, he served as the copy minister and the current minister of the financial audit headquarters of Dunan Holding Group Co., Ltd.; From January 2005 to June 2007, he served as director, deputy general manager, chief financial officer and secretary of the board of directors of Zhejiang Dunan Artificial Environment Co., Ltd.; From August 2007 to January 2019, he served as deputy general manager and secretary of the board of directors of Yongxing Special Materials Technology Co., Ltd.; Since February 2019, he has worked in Hangzhou Jinlong Optical Cable Co., Ltd.. He is currently a director of the company, and concurrently serves as a director of Yongxing Da Holding Group Co., Ltd. and a supervisor of Jiangxi yongcheng Lithium Technology Co., Ltd.
4. Yu Peng
Yu Peng, male, born in April 1966, China nationality, no permanent residency abroad, master’s degree, senior economist. From June 1999 to November 2003, he served as deputy general manager of Jiangsu Wuxi Yuansheng (Group) Co., Ltd.; From December 2003 to June 2007, he served as assistant to the chairman of Wenzhou Brilliance Investment Co., Ltd.; From July 2007 to April 2008, he served as deputy director of Wuxi Industrial Assets Management Co., Ltd., secretary of the board of directors and minister of investment and development department; From May 2008 to September 2010, he served as director of the office and minister of legal and securities affairs of Wuxi Industrial Development Group Co., Ltd.; From October 2010 to May 2018, he served as executive deputy general manager, party branch secretary, trade union chairman, director and general manager of Wuxi Venture Capital Group Co., Ltd. At present, he is a director of the company and concurrently serves as a director of Wuxi High-tech Venture Capital Co., Ltd.
5. Zhao Zhidong
Zhao Zhidong, male, born in April 1976, China nationality, without permanent residency abroad, bachelor, assistant engineer. From May 2000 to July 2001, he served as the marketing manager of Beijing Internet Consulting Co., Ltd.; From July 2001 to August 2002, he served as deputy general manager of Xi ‘an Xidian Jietong Wireless Network Communication Co., Ltd. and head of Beijing Branch; Since August 2002, he has served as the chairman and general manager of Wuxi High-tech Venture Capital Co., Ltd.. Now he is a director of the company, and concurrently serves as the chairman and general manager of Wuxi High-tech Venture Capital Co., Ltd.
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6. Li Ming
Li Ming, female, born in May 1976, China nationality, without permanent residency abroad, bachelor’s degree, certified tax accountant. From January 2002 to December 2009, he served as the director of Hunan Xiaoxiang Tax Agency; From January 2010 to July 2012, he served as the project manager of Tianjian Certified Public Accountants Hunan Branch; Since August 2012, he has served as a supervisor of Hunan Hudahai Jiejinshan Investment Management Co., Ltd.; Since January 2020, he has served as a supervisor of Changsha Hejun Investment Co., Ltd.. He is currently a director of the company, and concurrently serves as a supervisor of Hunan Hudahai Jiejinshan Investment Management Co., Ltd., Changsha Hejun Investment Co., Ltd. and Changsha Erdao Sanlian Automobile Service Co., Ltd.
7. Yu Xiekang
Yu Xiekang, male, born in June 1948, is a senior economist with China nationality and no permanent residency abroad. From August 1989 to February 2003, he served as assistant general manager and deputy general manager of China Huajing Electronics Group Company. From March 2003 to December 2014, he served as director, general manager and vice chairman of Jiangsu Changdian Technology Co., Ltd.; Since December 2014, he has served as the chairman of Huajin Semiconductor Packaging Pilot Technology R&D Center Co., Ltd.. At present, he is an independent director of the company and concurrently serves as the chairman of Huajin Semiconductor Packaging Pilot Technology R&D Center Co., Ltd.
8. Chen Peng
Chen Peng, male, born in October 1977, China nationality, no permanent residency abroad, master’s degree. Since July 2004, he has served as a lawyer and partner of Shanghai Tongli Law Firm. Now he is an independent director of the company and a partner of Shanghai Tongli Law Firm.
9. Yao Wangxin
Yao Wangxin, male, born in July, 1974, China nationality, without permanent residency abroad, doctor, senior accountant. From September 2006 to August 2008, he served as an auditor of China University of Science and Technology; From September 2008 to June 2011, he studied at Tianjin University of Finance and Economics; From July 2011 to July 2013, he served as an auditor of China University of Science and Technology; Since August 2012, he has served as an associate professor and master tutor of Anhui University. At present, he is an independent director of the company, and concurrently serves as an associate professor and master tutor of Anhui University. He also serves as an independent director in Anhui Wanneng Co., Ltd., Anhui Jiuhuashan Tourism Development Co., Ltd., Tongling Jieya Biotechnology Co., Ltd. and Anhui Iponokang Biotechnology Co., Ltd.
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(II) Brief introduction of members of the Board of Supervisors
The current Board of Supervisors consists of three supervisors, including one employee representative supervisor and one chairman. The term of office of the supervisor is three years, and the supervisor may be re-elected at the expiration of the term. The basic information of the current supervisors of the Company is as follows:
Note: In December 2020, the company held the fifth extraordinary shareholders’ meeting in 2020. Due to the expiration of the term of the fourth board of supervisors, the meeting elected Xia Yongjie and Wu Min as the non-employee representative supervisors of the fifth board of supervisors, and together with Chloe Wang, the employee representative supervisor elected at the staff meeting held on the same day, formed the fifth board of supervisors of the company.
1. Xia Yongjie
Xia Yongjie, male, born in January 1981, China nationality, with no permanent residency abroad, master’s degree, engineer. Graduated from Southeast University in June 2003; Worked in the company in July 2003, mainly engaged in research and development, and is currently the chairman and design manager of the company’s board of supervisors.
2. Wu Min
Wu Min, male, born in September 1980, China nationality, with no permanent residency abroad, master, engineer. Graduated from Southeast University in June 2003; Worked in the company in March 2004, mainly engaged in research and development, and is currently the supervisor and design manager of the company.
3. Chloe Wang
Chloe Wang, male, born in January 1986, China nationality, without permanent residency abroad, bachelor’s degree. I graduated from Taihu College of Jiangnan University in July 2008. From November 2008 to October 2009, I worked as a foreign trade clerk in Zhangjiagang Jiangnan Automobile Manufacturing Co., Ltd. In January 2010, he worked in the company as a comprehensive salesman, and now he is the supervisor of the company.
(III) Introduction of senior management personnel
The senior management of the company includes the general manager, deputy general manager, financial controller and secretary of the board of directors. The company has 6 senior managers, and the basic information is as follows:
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Note: In December 2020, the company held the first meeting of the fifth board of directors. Due to the change of the company’s board of directors, the meeting appointed Yuan Minmin as the general manager, Mao Chenglie as the secretary and deputy general manager of the board of directors, Zhou Baoming, Wang Dong and Sean as the deputy general managers, and Dong Hong as the financial controller.
1. Yuan Minmin
For Yuan Minmin’s resume, please refer to Section V Basic Information of the Issuer, Section III Basic Information of the Issuer, Major Shareholders and Actual Controllers Holding More than 5%, Section III Basic Information of Major Shareholders and Actual Controllers Holding More than 5%.
2. Mao Chenglie
For Mao Chenglie’s resume, please refer to Section V Basic Information of the Issuer, Section III Basic Information of the Issuer, Major Shareholders and Actual Controllers Holding More than 5%, Section III Basic Information of Major Shareholders and Actual Controllers Holding More than 5%.
3. Wang Dong
For Wang Dong’s resume, please refer to Section V Basic Information of the Issuer, Section III Basic Information of the Issuer’s Shareholding Structure, Subsidiaries, Major Shareholders and Actual Controllers Holding More than 5%, Section III Basic Information of Major Shareholders and Actual Controllers Holding More than 5%.
4. Zhou Baoming
For Zhou Baoming’s resume, please refer to Section V Basic Information of the Issuer, Section III Basic Information of the Issuer, Major Shareholders and Actual Controllers Holding More than 5%, Section III Basic Information of Major Shareholders and Actual Controllers Holding More than 5%.
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5. Sean
For Sean’s resume, please refer to Section V Basic Information of Issuer, Section III Basic Information of Issuer’s Ownership Structure, Subsidiaries, Major Shareholders Holding More than 5% and Actual Controllers, Section III Basic Information of Major Shareholders Holding More than 5%.
6. Dong Hong
Dong Hong, female, born in November 1971, China nationality, no permanent residency abroad, college degree, assistant engineer. From July 1993 to September 2000, he served as an accountant of Xishan Fuel Corporation; From September 2000 to July 2002, he served as the chief accountant of Wuxi Kangjia Materials Co., Ltd. Worked in the company in July 2002, and is now the financial controller of the company.
(4) Brief introduction of core technicians
The company has 9 core technicians. The basic situation is as follows:
For the basis of identifying the core technicians, please refer to the relevant contents of "VI. Technical R&D of the Issuer" and "IV. Relevant information of core technicians and R&D personnel" in Section VI Business and Technology of this prospectus.
1. Tang Dayong
For Tang Dayong’s resume, please refer to Section V Basic Information of the Issuer, Section III Basic Information of the Issuer, Major Shareholders and Actual Controllers Holding More than 5%, Section III Basic Information of Major Shareholders and Actual Controllers Holding More than 5%.
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2. Wang Dong
For Wang Dong’s resume, please refer to Section V Basic Information of the Issuer, Section III Basic Information of the Issuer’s Shareholding Structure, Subsidiaries, Major Shareholders and Actual Controllers Holding More than 5%, Section III Basic Information of Major Shareholders and Actual Controllers Holding More than 5%.
3. Wang Guopeng
Wang Guopeng, male, born in March 1977, China nationality, without permanent residency abroad, master, engineer. From August 2000 to September 2002, he worked as a design engineer of Wuxi Huarun Silicon Microelectronics Co., Ltd. Worked in the company in October 2002, and is currently the deputy director of the company’s design institute.
4. Wu Xiangjun
Wu Xiangjun, male, born in April, 1978, China nationality, without permanent residency abroad, master, engineer. From August 2001 to May 2003, he worked as a design engineer of Wuxi Huarun Silicon Microelectronics Co., Ltd., and joined the company in June 2003. He is now the deputy director of the company’s design institute.
5. Liu Wei
Liu Yu, female, born in February 1978, China nationality, without permanent residency abroad, bachelor’s degree. From July 2000 to April 2001, he worked as an applied electronics engineer in Jiangsu Chunlan Electronics Group Co., Ltd., and from May 2001 to October 2002, he worked as a layout design engineer in Wuxi Huarun Silicon Microelectronics Co., Ltd. Worked in the company in October 2002, and is currently the deputy director of the company’s design institute.
6. Xia Yongjie
For Xia Yongjie’s resume, please refer to Section V Basic Information of the Issuer, V Brief Information of the Issuer’s Directors, Supervisors, Senior Management and Core Technicians, and II Brief Introduction of the Board of Supervisors in this prospectus.
7. Wu Min
For Wu Min’s resume, please refer to Section V Basic Information of the Issuer, V Brief Information of the Issuer’s Directors, Supervisors, Senior Managers and Core Technicians, and II Brief Introduction of the Board of Supervisors in this prospectus.
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8. shi bo
Shi bo, male, born in March 1979, China nationality, without permanent residency abroad, bachelor, engineer. From September 2001 to July 2005, he served as an engineer of Wuxi China Resources Silicon Microelectronics Co., Ltd. Worked in the company in August 2005, and is now the application technology manager of the company.
9. Sun Sibing
Sun Sibing, male, born in June 1981, China nationality, with no permanent residency abroad, master’s degree, engineer. Worked in the company in May 2007, and is now the design manager of the company.
(5) Part-time jobs of directors, supervisors, senior managers and core technicians.
As of the signing date of this prospectus, the company’s directors, supervisors, senior managers and core technicians, except for their positions in the company and its subsidiaries, have other external part-time jobs as follows:
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Except for the above contents, as of the signing date of this prospectus, the directors, supervisors, senior managers and core technicians of the company have no other part-time jobs.
(6) The kinship among directors, supervisors, senior managers and core technicians.
As of the signing date of this prospectus, there is no kinship among the directors, supervisors, senior managers and core technicians of the issuer.
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6. Important agreements signed between the issuer and directors, supervisors, senior managers and core technicians.
As of the signing date of this prospectus, all the directors, supervisors, senior managers and core technicians who are employed and paid in the company have signed the Labor Contract, and all the directors and independent directors have signed the Director Employment Contract or the Independent Director Employment Contract with the company. In addition, the core technical personnel also signed a confidentiality agreement and a non-competition agreement with the company. As of the signing date of this prospectus, the above agreement has been performed normally and there is no breach of contract. For the relevant commitments made by the directors, supervisors, senior managers and core technicians of the company, please refer to "VI. Important Commitments of Relevant Institutions or Personnel in this Offering" in Section X of Investor Protection of this Prospectus.
VII. Changes of the issuer’s directors, supervisors, senior managers and core technicians in the last two years.
In the last two years, the changes of directors, supervisors, senior managers and core technicians of the company are as follows:
(1) Changes of directors
(II) Changes of supervisors
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(III) Changes of senior management personnel
In the last two years, the senior management of the company has not changed.
(IV) Changes of core technical personnel
At present, the company has 9 core technicians, namely, Tang Dayong, Wang Dong, Wang Guopeng, Wu Xiangjun, Liu Yu, Xia Yongjie, Wu Min, shi bo and Sun Sibing. These core technicians have not changed in the past two years.
To sum up, in the last two years, there have been no major changes in the company’s directors, senior managers and core technicians, and the changes in supervisors are mainly due to the resignation of employees and other reasons, and the relevant changes do not have a significant adverse impact on the company’s production and operation.
Eight, the issuer’s directors, supervisors, senior management personnel, core technical personnel and their close relatives holding the issuer’s shares.
As of the signing date of this prospectus, the directors, supervisors, senior managers and core technicians of the company do not have direct shareholding, and their indirect shareholding in the issuer is as follows:
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Except for the above, during the reporting period, there was no situation that the spouses, parents, parents and children of directors, supervisors, senior managers and core technicians directly or indirectly held the shares of the issuer. As of the signing date of this prospectus, the shares of the company directly or indirectly held by the aforementioned directors, supervisors, senior managers and core technicians have not been pledged or frozen.
Nine, the issuer’s directors, supervisors, senior management personnel and core technical personnel of foreign investment.
As of the signing date of this prospectus, in addition to the relevant contents in "VIII. Issuer’s Directors, Supervisors, Senior Managers, Core Technicians and Their Close Relatives" in this section, other foreign investments of the Company’s directors, supervisors, senior managers and core technicians are as follows:
Except for the above circumstances, other directors, supervisors, senior managers and core technicians of the issuer do not exist.
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In other foreign investments, there is no conflict of interest between the above-mentioned foreign investments and the issuers.
Ten, the issuer’s directors, supervisors, senior management personnel and core technical personnel remuneration, equity incentives and related arrangements.
(a) the composition of remuneration, the basis for determination and the procedures for performance.
As of the signing date of this prospectus, the remuneration of directors, supervisors, senior management personnel and core technicians working in the Company consists of wages, bonuses and welfare allowances, and the relevant remuneration is determined according to the relevant remuneration standards and systems of the Company; Independent directors receive a fixed allowance in the company. The remuneration and assessment committee under the board of directors is responsible for the remuneration assessment of directors (except independent directors) and senior managers. The remuneration and assessment plan of the issuer’s directors, supervisors and senior management personnel have fulfilled the corresponding review procedures in accordance with the Articles of Association and other corporate governance systems.
(2) The proportion of the total remuneration to the total profit of the issuer in each period.
During the reporting period, the proportion of the remuneration of directors, supervisors, senior managers and core technicians in the total profits of the Company is as follows:
Unit: 10,000 yuan
The current directors, supervisors, senior managers and core technicians of the Company receive salaries/allowances in the Company in 2020 as follows:
Unit: 10,000 yuan
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In addition to the above income, the directors, supervisors, senior managers and core technicians of the company did not enjoy other benefits and pension plans in the issuer or other enterprises controlled by the company.
(3) Equity incentives and related arrangements that have been formulated or implemented before the public offering is declared.
As of the signing date of this prospectus, the Company does not have any equity incentives (such as employee stock ownership plan, restricted stock and stock options) or other institutional arrangements being implemented for directors, supervisors, senior managers, other core personnel and employees.
XI. Information of the Issuer’s Staff
(a) the number of employees and changes
At the end of each reporting period, the total number of employees of the issuer was 172, 196, 221 and 260 respectively.
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1. Job category
As of December 31, 2020, the professional structure of the issuer’s employees is as follows:
2. Academic structure
As of December 31, 2020, the education level of the issuer’s employees is as follows:
3. Age structure
As of December 31, 2020, the age composition of the issuer’s employees is as follows:
(two) the issuer’s social insurance and housing provident fund payment.
During the reporting period, the basic information about the social insurance paid by the issuer for employees is as follows:
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During the reporting period, the basic information about the housing accumulation fund paid by the issuer for employees is as follows:
At the end of each reporting period, the proportion of social insurance and housing accumulation fund paid by the company for employees exceeded that of ninety-seven percent, and the payment was in good condition. Some employees did not pay social insurance and housing provident fund, mainly because the employees of the company included retirement and re-employment, hiring overseas employees or paying in the next month at the end of the term.
According to the certificate issued by the social insurance and housing provident fund management department where the company and its subsidiaries are located, during the reporting period, the company and its subsidiaries did not suffer from administrative penalties in social insurance and housing provident fund for violating laws and regulations.
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Section 6 Business and Technology
I. Main business and main products of the company
(I) Main business of the company
The issuer is committed to the research and development and sales of analog chips, mainly providing customers with efficient power management solutions through high-performance and high-reliability power management chips, and actively developing and promoting other types of products such as intelligent networking delay management units and signal chain chips. At present, the company has become one of the main suppliers of power management chips in the consumer electronics market based on its dominant position in the application fields such as mobile phones and wearable devices, and continues to lay out in the fields of household appliances, Internet of Things, automotive electronics and network communication.
Power management chip mainly provides various power management solutions for electronic equipment. Its performance and reliability will directly affect the working efficiency and service life of electronic equipment, and it is an indispensable part of electronic equipment. Power management chips are widely used, but the market has long been dominated by international brands.
The company has been deeply involved in the field of power management chips for nearly 20 years. Guided by market demand and cutting-edge technology trends, it has continuously improved its research and development strength, achieved technological breakthroughs in the directions of low noise, high efficiency, miniaturization and integration, and formed a wealth of core technologies and functional modules IP, as well as design platforms covering power conversion, power protection and other categories. The company calls mature module IP in the design platform and applies it to circuit design, providing customers with better customized solutions and ensuring the accuracy and efficiency of research and development. Efficient and excellent R&D capabilities have enabled the company to successfully develop OVP, LDO and other products at home or earlier, which have been recognized by international customers. The performance indicators of some products such as noise, PSRR and EOS protection have approached or surpassed those of international brand bidding products.
Over the years, the company has accurately grasped the changing trend of the market, accumulated a good brand reputation in the competition by virtue of its profound technical accumulation, excellent R&D innovation capability and product series with outstanding performance and reliable quality, and continued to carry out international business and promote import substitution in the domestic market through customized and differentiated services. At present, the company has passed the rigorous certification process of many world-renowned consumer electronics customers, and has formed a high-quality terminal customer base including Samsung, Customer A, Xiaomi, LG and Wentai, which has been highly recognized by customers. It is a rare power management chip design company with a customer base covering many well-known consumer electronics companies at home and abroad.
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(II) Main products of the company
During the reporting period, the company’s main products were power management chips, which formed a series of products with complete varieties and reliable quality in the field of power management. In addition, it also actively developed and promoted other high-performance analog chips such as intelligent networking delay management unit and signal chain products.
1. Power management chip
Power management chip is a chip that takes on the responsibility of power conversion, distribution, detection and other power management in electronic equipment system. Because different electronic devices and application scenarios require different power management schemes, power management chips have the characteristics of wide application range and many sub-categories. In order to meet the diversified needs in different application environments, the company has introduced power management chips covering mainstream products in the market, with more than 500 product models, which can be divided into power conversion, power protection, display driver and other series according to functions, as follows:
The application fields of the company’s power management chip are as follows:
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(1) Power conversion chip
The company’s power conversion chips mainly include various LDOs, charging management chips and converters (DC/DC, AC/DC). Among them, the company’s LDO has complete varieties, excellent performance, wide applicable current range, low noise and high anti-interference ability.
(2) Power protection chip
The company’s power protection chips mainly include overvoltage protection chips, overcurrent protection chips and other switch products.
The company developed overvoltage protection chips earlier in China, and formed a complete product series. The products have the characteristics of low on-resistance, strong EOS protection ability, fast transient voltage turn-off speed and low clamping voltage. In the company’s overvoltage protection chip, OVP and TVS can be used together to enhance the protection of electronic products.
The company’s over-current protection chips are mainly all kinds of load switches and current limiting switches, which have the characteristics of low on-resistance and strong current capacity, stable and reliable current detection, and have the function of reverse current cutoff.
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(3) Display drive circuit
The company’s display drive circuits mainly include LED drive circuits, LCD display drive circuits, RGB constant-current display drive circuits, large-screen display drive circuits and other display drive circuits, with a complete range of products.
2. Others
In addition to the power management chip, the company’s other products mainly include intelligent networking delay management unit and high precision.
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Hall chip, signal chain chip, etc.
The company’s intelligent networking delay management unit has the characteristics of wide delay range and accurate delay step, which can realize safe and accurate blasting in small-section excavation, metal mines, coal mines and other special environments.
(III) Main business models
The company adopts the Fabless business model typical of the integrated circuit industry, focusing on chip research and development and sales, and the manufacturing links such as wafer manufacturing and packaging testing are mainly carried out by external suppliers, with the characteristics of technology-driven, flexible and efficient, as follows:
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1. R&D mode
Under Fabless mode, the company always regards R&D as the core of enterprise operation activities, and has established a rigorous and efficient R&D process, as follows:
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(1) Project evaluation and planning stage
In order to ensure the consistency between the R&D direction and the cutting-edge trends at home and abroad, the company keeps a dynamic track of the technological development of the industry and the changes in the demand of downstream terminals, and fully discusses the R&D direction, performance requirements, process paths and other factors with customers. According to the above market information and customer demand feedback, the company formulates and forms a product definition with strong pertinence and high accuracy. After the product definition is formed, the company prepares a feasibility assessment report, conducts project review, and passes and completes the project.
(2) Design and review stage
The design and review stage mainly includes system and circuit design, testability design, simulation and layout design, as follows:
① System and circuit design
After the project was approved, the company set up a project team to carry out various system and circuit design work, including application system design, process design, topology structure and circuit design. In the above design work, the project team needs to design the application system and process scheme for chip operation in combination with product definition, terminal application environment and customer requirements, define each sub-module and form a topological structure diagram. After the topology is completed, the project team will carry out circuit wiring according to the process and performance requirements.
② Design for Testability
Testability design is an important link to realize product quality control, and its main purpose is to formulate multi-dimensional test scheme in the design stage to improve product testability. At this stage, designers will determine all kinds of functions and performance indicators to be tested according to the circuit characteristics, and design automatic test (ATE test) scheme, application test scheme and reliability assessment scheme from the dimensions of test coverage, extreme application environment simulation and accelerated life experiment, respectively, in order to achieve more comprehensive and strict quality control.
③ Simulation and layout design
This stage mainly includes pre-simulation verification, layout design, parasitic parameter extraction and post-simulation verification. Specifically, designers put the logic structure of the circuit in the simulation system for pre-simulation verification, and combine the simulation results, process parameters and design rules to convert the circuit diagram into an integrated circuit layout through layout design. After that, the project team will combine the parasitic resistance and capacitance data introduced in the layout design to verify the signals and parameters by post-simulation, so as to further optimize the circuit and layout design. The purpose of the above simulation verification is to reflect the circuit parameters.
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The deviation between the number and the design requirements, and constantly optimize the design accordingly, so as to ensure the accuracy of the design and improve the success rate of research and development.
④Tapeout application
After ensuring that the design nodes are approved, the project team will apply for Tapeout review and optimize the design according to the problems found in the review.
(3) Production and assessment of engineering samples
After Tapeout passed the review, the company informed the wafer manufacturing and packaging enterprises to carry out the slicing and packaging of engineering batch samples, and carried out data monitoring and analysis of key quality links such as PCM parameter monitoring and online parameter monitoring respectively. After the production of engineering batch samples is completed, the company will strictly carry out multi-dimensional assessment procedures such as ATE test, application test and reliability assessment, and verify its wafer manufacturing process by window to ensure the matching between design and process.
(4) product mass production approval
The new product will be introduced into the formal mass production stage after passing the evaluation of small batch production and being verified by customers.
2, procurement and production mode
The company adopts the Fabless business model typical of the integrated circuit industry, focusing on the research and development of chips. Besides testing some finished products by itself, the production links are mainly completed by third parties. During the reporting period, the outsourcing production mode of the company after the design is divided into two types: separately commissioned production and unified commissioned production, with separately commissioned production as the main mode, and the average proportion of separately commissioned production cost in each period is 76.12% of the main business cost. Among them, the separately commissioned production mode means that after the company purchases wafers from wafer manufacturing enterprises, it entrusts packaging, testing and other links to packaging, testing and other manufacturing enterprises respectively; Unified entrusted production mode means that the company entrusts the production to a supplier with the scale advantage of subdivided products and production management experience, who purchases wafers and then entrusts them to various packaging, testing and other manufacturing enterprises respectively, and the company purchases semi-finished chips from them after sealing and testing. In addition, in order to meet the needs of customers’ sporadic products, the company directly outsourced a small number of finished chips for supporting sales.
(1) commissioned production respectively
At present, the company’s main suppliers are mainstream enterprises with good reputation, advanced technology and large scale in the industry, among which wafer suppliers are mainly East Hi-Tech and China Resources Shanghua, and packaging and testing suppliers are mainly Tongfu.
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Micro-electricity, long-term electricity technology, Huatian technology, etc.
① Selection of suppliers
The design institute, operation department and quality department comprehensively evaluate the suppliers, and the suppliers need to have mature and stable process capability, perfect quality control system, sufficient production capacity and competitive business conditions.
The company will conduct primary selection, capability evaluation, screening and re-evaluation of suppliers, and select suitable suppliers according to the evaluation results and include them in the list of qualified suppliers. During the cooperation, the company will regularly assess and evaluate the comprehensive performance of qualified suppliers, and dynamically adjust the supplier list according to the evaluation results.
② Procurement and production process
The company mainly makes purchasing and production plans according to customers’ expected demand, upstream production capacity and company inventory, and issues purchase orders to wafer manufacturing enterprises to arrange wafer production and manufacturing. After the wafer manufacturing is completed, the circuit function and performance of the wafer die are tested by the China Test Factory. After passing the test, the wafer is mainly packaged and tested by the sealing and testing enterprise (a small number of products are tested by the company), and the products are braided, packaged and put into storage.
③ Product quality control
The company insists on quality as the guarantee, and forms a quality management system covering design and production, and adopts the whole process management for production and processing procedures. In the process of tape-out and packaging, the company performs data monitoring and analysis of key quality links such as PCM parameter monitoring and online parameter monitoring respectively. In addition to a large number of data collection and analysis, the company manages the production and processing procedures by combining regular and irregular audits, which effectively reduces the probability of abnormal situations, further ensures the extremely low on-line failure rate (DPPM) of the company’s products, and establishes a highly reliable brand image.
(2) Unified commissioned production
During the reporting period, the products produced by the company by unified commissioned production mode are only transient suppression overvoltage protection chips. Since 2016, the demand of well-known customers for overvoltage protection of terminal electronic products has increased, and the overvoltage protection chip developed by the company for transient suppression has successfully passed the certification and gradually achieved mass sales. Since the company did not produce such sub-products before, it did not have the scale advantage in the casting and packaging test of this new product. Therefore, the company cooperated with Shanghai Wei ‘an, a supplier with scale advantage and production management experience in this sub-product, and entrusted them to coordinate production in a unified way, which was conducive to reducing the pressure on the company’s production organization and gaining the cost advantage.
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3. Sales model
During the reporting period, the company adopted the sales model of "direct sales as the main and distribution as the auxiliary" in combination with the characteristics of the downstream market, and the proportion of direct sales exceeded 70%.
(1) sales model and sales system
The company’s products are mainly used in consumer electronics fields such as mobile phones and wearable devices, and the downstream market competition pattern is relatively concentrated. Combined with the characteristics of the downstream market, the company adopts the key account strategy and direct sales-oriented sales model. With the breakthrough of the company’s technical ability and the improvement of the product system, the company’s brand awareness continues to increase, and the number of well-known consumer electronics customers under the direct sales model increases. Compared with the distribution model, the company’s direct sales model based on large customers is conducive to shortening the sales process, optimizing services and grasping customer needs in time. In addition, the company maintains real-time communication with customer technical departments, which can provide technical support in time and guide customer needs, which is conducive to improving the timeliness and accuracy of technology and product development.
In order to expand sales channels, the company takes the distribution model as a supplement to the direct sales model. Under the distribution mode, dealers can quickly push products to more end customers and application fields, which is conducive to expanding market coverage and improving brand promotion, and at the same time, it also shares the pressure of the issuer to explore new customers under the rapid expansion of business scale.
(2) Sales process
The company and major customers mostly determine the basis of cooperation by means of framework agreement, and subsequent transactions are carried out by order. After obtaining the customer’s order, the salesperson further negotiates with the customer to confirm the delivery date, notifies the delivery according to the delivery date arrangement, and delivers it to the designated place of the customer, and tracks the customs declaration or arrival of the goods, and gives timely feedback to the customer.
Companies usually give customers with high quality and stable cooperation a certain credit period, and collect money by bank transfer or acceptance draft within a certain period after delivery; There are also cases where a small number of customers are sold in advance.
4. Reasons for adopting the current business model and changes.
The Fabless model adopted by the company is formed according to industry practices and the characteristics of the company itself, which has not changed significantly during the reporting period and will not change significantly in the foreseeable future.
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(4) The evolution of the company’s main business and main products since its establishment.
Since its establishment, the company has been focusing on the research and development and sales of analog chips mainly based on power management chips, and its main business has not changed significantly. With the development of the downstream market, the evolution of the company’s main products and application fields is as follows:
Evolution of the company’s products and application fields
(1) Initial stage
At the beginning of its establishment, the company focused on the research and development and sales of chips in traditional electronic markets such as DVD, stereo, set-top box and remote control, and established good cooperative relations with BBK, TCL, Sony, Philips and Foxconn, and accumulated cooperation experience with brand customers.
With the upgrading of downstream electronic products and the rapid popularization of mobile phones, the company seized the market opportunity in time, switched the research and development direction, and launched a series of low-voltage and low-power power products to enter the mobile phone market.
(2) incubation period
During 2009-2012, the emerging consumer electronics market represented by mobile phones rose, which gave birth to a large number of chip demands. The company accurately grasped the changes in the downstream market, and the rapidly launched dual SIM card power control chip was recognized by Samsung Electronics, and entered the Samsung Electronics supplier system in 2010.
The company has successively developed products such as load switch, battery switch and LDO, which have been widely used in Samsung’s mobile phones. With the mass production of products in the field of mobile phones, the company’s business focus has gradually shifted to mobile phones.
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Transition in emerging consumer electronics field.
(3) development period
During 2013-2017, the company continued to carry out R&D and technical upgrading, and deepened the technical system based on core technology, functional module IP and design platform. On this basis, it launched new products such as OVP, TVS, current limiting switch and intelligent networking delay management unit, and constantly improved product series such as load switch, LED display driver and LDO. In addition, the company competes with internationally renowned chip design companies such as TI, ON Semi and DIODES in the supplier system of Samsung Electronics, and its development experience and market reputation have been rapidly improved. With good technology accumulation and brand reputation, the company’s terminal application in Samsung Electronics has gradually developed from mobile phones and flat panel displays to wearable devices, and has become a supplier of well-known consumer electronics brands such as LG.
With the promotion of various new products, the company’s downstream application areas focus on mobile phones and gradually develop into wearable devices, Internet of Things and other fields.
(4) Stable rising period
Since 2018, the company has continuously upgraded the IP and design platform of each functional module, forming a more mature technical system. On this basis, products such as low-noise high-performance LDO and high-precision charging management chip have been launched, and integrated products (multi-power supply PMIC, etc.) have been laid out, which has enriched the product categories and further broadened the application fields.
As the focus of the electronics industry shifts to China, the company actively promotes the import substitution of chips, provides customers with fast, differentiated and personalized services through good market reputation, industrial chain resource coordination and excellent product performance, and enters the supplier system of well-known consumer electronics customers such as Xiaomi and Customer A, which provides new impetus for performance growth.
At present, the company has become one of the major power management chip design enterprises in the domestic consumer electronics field.
(five) the process flow chart of the main products
During the reporting period, the company focused on the research and development and sales of analog chips, and the manufacturing links such as wafer manufacturing and packaging testing were mainly carried out by external suppliers. For details of the process flow of main products, please refer to "I. Main business and main products of the company" in Section VI of this prospectus.
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(six) the main environmental pollutants involved in the production and operation, the main treatment facilities and treatment capacity.
Because Fabless mode focuses on chip research and development and sales, and it is not engaged in manufacturing itself, the main pollutants produced by the company in the course of operation are domestic sewage and domestic garbage. Among them, the domestic sewage is discharged into the municipal sewage pipe network after treatment through the sewage facilities in the park; Domestic garbage is removed and disposed by the sanitation department.
Second, the basic situation of the company’s industry
(1) Industry category
The company is mainly engaged in R&D and sales of high-performance analog chips such as power management chips. According to the Guidelines for Industry Classification of Listed Companies (revised in 2012) issued by China Securities Regulatory Commission, the company’s industry is "C39 computer, communication and other electronic equipment manufacturing".
(two) the industry management system and the competent department
The competent department of the company’s industry is the Ministry of Industry and Information Technology of the People’s Republic of China, and the industry self-discipline organization is China Semiconductor Industry Association. Its main functions are as follows:
(3) Major laws, regulations and policies of the industry
As a basic, leading and strategic industry related to the national economy and safeguarding national security, the integrated circuit industry has been encouraged and supported by the Chinese government. In order to promote the development of the integrated circuit industry, China has issued a series of policies and regulations in recent years, which are encouraged in terms of industrial positioning, strategic objectives, taxation, etc. The main laws, regulations and policies in the industry are as follows:
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A series of encouragement policies issued by the state have brought vigorous development opportunities for China’s integrated circuit industry. As an integrated circuit design enterprise focusing on technology and market for a long time, the company will also benefit from a good industrial environment and achieve rapid development.
(IV) Basic overview of the integrated circuit design industry
1. Introduction to the industry
(1) Introduction of integrated circuits
Integrated circuit is a circuit with specific functions by using semiconductor technology or thick film and thin film technology to connect electronic components and wiring such as transistors, resistors and capacitors on the same dielectric substrate, and then packaging them in the same package. As the cornerstone of the global information industry and modern industrial grain, integrated circuits have been widely used in many fields, such as consumer electronics, high-end manufacturing, network communication, household appliances, Internet of Things and so on, and have become one of the important symbols to measure a country’s industrial competitiveness and comprehensive national strength.
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Some application fields of integrated circuit products
(2) Industrial chain division of labor
The integrated circuit industry chain includes integrated circuit design, chip manufacturing, packaging testing and professional materials and equipment manufacturing. Among them, integrated circuit design is to design and develop all kinds of chip products according to the demand of the terminal market, and its design level determines the function, performance and cost of the chip, which is at the upstream of the industrial chain.
Integrated circuit industry chain
Consumer electronic products such as traffic management
cloud computing
Financial security, etc
High end manufacturing
Many other fields
optical instrument
Intelligent internet of things integrated circuit
Integrated circuit design chip manufacturing chip packaging and testing
Special materials and equipment for integrated circuits
app; application
(3) Characteristics of integrated circuit design industry
Integrated circuit design industry belongs to technology-intensive and talent-intensive industries, and the industry as a whole is characterized by being based on experienced design talents and driven by technological innovation.
① Talent is the foundation of industry development.
In the design process of integrated circuits, circuit design, manufacturing technology and semiconductor device physics need to be considered comprehensively.
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The coordination of performance parameters puts forward higher requirements for engineers’ experience, and usually requires the division of labor and cooperation of teams. Therefore, the development of integrated circuit design industry needs to accumulate a large number of experienced design talents.
② Driven by technological innovation.
From traditional electronic industries such as radios and televisions to emerging electronic industries such as computers, mobile phones, flat panel displays, and new generation network communications, integrated circuits have constantly changed people’s lives since their appearance, which has promoted the development of the electronic industry to a certain extent. However, with the rapid change of electronic information technology, the application scenarios and functions of electronic products are increasingly complex, which also puts forward requirements for the continuous innovation of integrated circuit industry. Design enterprises need to have the ability of continuous innovation and rapid development to adapt to the rapidly changing market demand.
③ highly market-oriented industry competition.
The research and development achievements of integrated circuit design companies are often measured by the effect of the chip in the end product, and show the characteristics of long research and development cycle and large initial investment. For most chip design companies, the virtuous circle of "R&D-customer verification-product sales-sustainable development" can only be realized by continuous innovation and rapid introduction of products into the market to obtain benefits. Therefore, the integrated circuit design industry requires companies in the industry to have keen insight and long-term market and technology accumulation, so as to accurately grasp the changes in market and customer demand, ensure the accuracy and rationality of R&D direction and product layout, and gain competitive advantages.
④ The realization of design needs the cooperation of industrial chain resources.
In the industrial chain division of integrated circuits, the design industry focuses on R&D and sales, while the wafer manufacturing and packaging and testing industries are responsible for production and processing. Therefore, the design of integrated circuits can not be separated from the cooperation of wafer manufacturing and sealing and testing. In order to ensure product quality, lead time and control cost, design companies need to accumulate certain industrial chain resources in the industry, fully understand the supplier’s process technology and capacity distribution and establish a foundation of mutual trust, so as to achieve good cooperation with suppliers.
2. Industry classification
(1) industry classification under different business models
According to whether integrated circuit design enterprises build their own wafer manufacturing, packaging and testing production lines, they can be mainly divided into IDM mode and Fabless mode.
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IDM, also known as vertical integration manufacturer, mainly adopts the business model of self-design, manufacturing, packaging, testing and sales, and its business scope covers the main links of integrated circuit design, wafer manufacturing, packaging and testing. Because this model requires high financial strength, technology research and development and management level, most of them are global chip giants with strong technical and financial strength, such as Intel. Fabless mode means no production and processing line mode. The design company is responsible for product development and sales, and the production process is entrusted to Foundry and packaging and testing enterprises. Fabless mode enables design companies to concentrate resources on R&D and design with limited funds and scale, which has played an important role in the rapid development of integrated circuit industry. At present, a large number of well-known international integrated circuit design enterprises have adopted Fabless mode, such as Qualcomm, NVIDIA, AMD and so on.
Some participating enterprises in the integrated circuit industry chain
(2) product classification within the industry
According to the technology or application type of chips, they can be mainly divided into analog chips and digital chips. Among them, analog chips mainly refer to analog circuits composed of resistors, capacitors, transistors, etc., which are integrated to process continuous analog signals; Digital chip is an integrated circuit that performs arithmetic and logic operations on discrete digital signals (such as binary codes represented by two logic levels of 0 and 1). The specific features are as follows:
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Different from digital chips, analog chip design requires designers to design circuits, layout and simulation at transistor level based on their understanding of physical characteristics and manufacturing process of electronic products, and requires higher experience of engineers. Excellent analog chip design enterprises need long-term experience and technology accumulation. Take the major analog chip design enterprises in the world as an example. Most of them were established in the early 1960s when integrated circuits were born and in the 1990s when they developed rapidly. They relied on rich technology and experience, and a large number of core IP and product categories to form competition barriers.
Source: Public information.
3. Industry competition pattern
China’s integrated circuit design industry started late, and its technical level lags behind the international advanced level as a whole. As the manufacturing focus of global electronic products shifts to China, some excellent domestic products with continuous innovation ability.
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IC design companies have emerged in market segments and gradually implemented import substitution in the domestic market.
(1) the global market competition pattern
Developed countries such as Europe and the United States, due to their early development, have a lot of technology accumulation, perfect industrial chain supporting links and sufficient talent reserves in the field of integrated circuit design, and have obvious first-Mover advantages. At present, the global integrated circuit design industry is still dominated by European and American companies. In 2018, the top ten Fabless design companies in the world accounted for about 70% of the market, as follows:
Unit: millions of dollars
Source: DIGITIMES Research
(2) the domestic market competition pattern
In the domestic market, integrated circuit design enterprises show pyramid distribution. A few local IC design companies mastering high-end chip technology and international IC design enterprises entering the China market constitute the first echelon in the domestic market; The second echelon is composed of IC design enterprises with technological breakthroughs in market segments and R&D advantages and competitive strength; Many small and medium-sized enterprises competing in the low-end field are the third echelon. According to ICCAD 2010 data, in 2019, the number of IC design enterprises with sales exceeding 100 million yuan in China accounted for only 13.03%, while the number of enterprises with sales less than 100 million yuan accounted for 86.97%.
With the shift of the focus of electronic product manufacturing to China, the domestic electronic product manufacturing industry is rising day by day, resulting in a large number of chip demand in the domestic market. Small and medium-sized enterprises with technical advantages and competitive strength in segmentation seize the market opportunity of industrial focus shift, replace the original international brand share in the supply chain with designs and differentiated services closer to customer needs, and gradually promote import substitution. Taking the issuer as an example, the company has been accurate for many years.
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Grasping the changing trend of the market, we have accumulated a certain brand reputation in the competition by virtue of profound technology accumulation, excellent R&D innovation ability and product series with outstanding performance and reliable quality, and provided better solutions for domestic customers while continuing to carry out international business through customized and differentiated services, thus gradually replacing the original international brand products used by customers.
4. Overview of the development of integrated circuit design industry
(1) The global integrated circuit design market is growing steadily.
With the rise of the emerging consumer electronics market represented by mobile phones and tablet computers, as well as the rapid development of the automotive electronics, industrial control and Internet of Things markets, the demand for integrated circuits has greatly increased. In this context, the scale of the global integrated circuit design industry has continued to grow. According to IC Insights data, the annual compound growth rate of the global integrated circuit design industry is 7.58% from 2010 to 2018.
Scale and growth of global integrated circuit design industry from 2010 to 2018
Source: IC Insights
(2) The scale of China’s integrated circuit design industry is rapidly increasing, and there is a broad space for future development.
With the development of the industry and the change of market division in various regions of the world, the focus of the global integrated circuit industry has shifted. With its huge consumer electronics market, huge electronic manufacturing base and labor cost advantages, China has attracted global IC companies to invest in China, and with the government’s strong support for the IC industry, high-quality local chip design companies have emerged in China.
According to the data of China Semiconductor Industry Association, the market size of China’s integrated circuit design industry has increased from 38.3 billion yuan in 2010 to 377.8 billion yuan in 2020, with a compound annual growth rate of 25.72%, which has become a domestic market.
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One of the most dynamic fields in the integrated circuit industry.
Scale of China’s IC design industry from 2010 to 2020
Source: China Semiconductor Industry Association.
In addition, China’s integrated circuit design industry has become the highest proportion in the industrial chain. According to the data of China Semiconductor Industry Association, in recent years, the sales scale of China’s integrated circuit design industry has shown an upward trend, accounting for 42.70% of the integrated circuit industry by 2020, but there is still a significant gap compared with the level of nearly 60% of the world’s integrated circuit design output value, and there is still a big room for development of China’s integrated circuit design industry in the future.
Market structure of China’s integrated circuit industry in 2009 -2020
Source: China Semiconductor Industry Association.
(3) China’s chip import substitution space is huge.
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Although China is the world’s largest demand market for integrated circuits, domestic demand is mainly met by imports, especially for high-end chips with high value. According to the data of China Industrial Information Network and General Administration of Customs, compared with China’s long-term dependence on imported crude oil, China’s IC imports will reach 350 billion US dollars in 2020, which is 1.99 times of the crude oil imports. In addition, according to customs data, the export value of China’s integrated circuits in 2019 was only US$ 116.6 billion, and the import value far exceeded the export value, indicating that there is a lot of import substitution space in China’s chip field. In order to promote the process of chip localization, in May 2015, the State Council released "Made in China 2025", which proposed that the domestic chip self-sufficiency rate should reach 40% in 2020 and 70% in 2025.
China’s imports of crude oil and integrated circuits from 2014 to 2020
Source: Flush iFind, General Administration of Customs.
Although the overall process of chip localization is still in the initial stage, and there is still a big gap between the high-end chip field and the international advanced level, the technical gap has gradually narrowed in some application fields. In addition, import substitution not only requires high-quality product performance, but also requires supply chain security, differentiation and customized services. Some domestic design enterprises have achieved market share improvement in sub-sectors through a large number of technical reserves, industrial chain resources accumulation, excellent product performance and high-quality services.
5. Overview of power management chip market development
The power management chip is responsible for the transformation, distribution and detection of electric energy in the electronic equipment system, which can be applied to various terminal products such as consumer electronics and mobile communication, and is an important part of the analog chip. According to WSTS data, in 2018, the market size of power management chips accounted for 42% of the global analog chips.
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In recent years, the global power management chip market has maintained a steady growth. According to the statistics of Semiconductor, the global output value of power management chips from 2015 to 2017 was $19.1 billion, $19.8 billion and $22.3 billion respectively. In addition, according to the analysis of Transparency Market Research, the global power management chip market will reach 56.5 billion US dollars in 2026, and it is estimated that the compound annual growth rate will be 10.69% during 2018-2026, among which the growth in the Asia-Pacific region dominated by China will be the most important driving force. Driven by the continuous growth of downstream demand, China’s power management chip market has shown a steady growth trend in recent years. According to CCID Consulting’s data, during 2018, China’s power management chip market has reached 68.153 billion yuan, and there is still much room for development in the future.
China’s power management chip industry scale from 2015 to 2018
Source of data: CCID Consulting, Foresight.com.
6. Development of downstream application industry of products
Power management chips mainly provide various power management solutions for electronic equipment, and there are many downstream application fields. At present, the company’s power management products are mainly used in consumer electronics fields such as mobile phones and wearable devices, and are laid out in the fields of household appliances, Internet of Things, automotive electronics and network communication.
(1) Mobile phone market
Mobile phone is one of the important application fields of power management chip. Because the voltage and current applied to the normal operation of each module of mobile phone are different, the power management chip is needed to provide various solutions such as power conversion, regulation, switching and protection.
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Legend of the application of power management chip in mobile phone
Note: The products owned by the company are identified in color.
① The demand of mobile phones for power management chips is increasing.
A, the complexity of mobile phone functions and the improvement of performance have increased the market demand for power conversion chips.
In recent years, with the complexity of functions and the improvement of performance, the internal modules of the circuit system in mobile phones have increased accordingly. Because different modules need different power supply, in order to realize the collaborative power supply and power management of different modules, the demand for conversion power management chips in mobile phones is on the rise.
Taking the camera function of mobile phone as an example, with the increasing demand of consumers for mobile phone shooting, in addition to improving pixels, mobile phone companies also increase the depth of field lens, macro lens and wide-angle lens on the basis of main shooting to improve shooting performance, which makes the number of cameras increase. According to IDC and Forward-looking Industry Research Institute, the average in 2019
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Each mobile phone is equipped with 3.21 cameras.
Changes in the number of cameras mounted on a single smartphone in the world from 2014 to 2019
Source: IDC, Prospective Industry Research Institute.
At present, the flagship products of mainstream mobile phone manufacturers have been equipped with three to four cameras, and the number of cameras of some manufacturers has increased to five. The number of mobile phone cameras continues to increase, which makes the market demand for chips such as LDO used in cameras increase accordingly.
Number of some mobile phone cameras
Source of data: public information.
B, the increasing demand for mobile phone battery safety has promoted the market demand for power protection chips.
As the most commonly used portable equipment, mobile phones are portable and frequently used, and their security plays an important role in the service life, user safety and brand image of mobile phones. In the process of mobile phone design,
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It is necessary to fully consider the safety protection of each module of the internal circuit to ensure the safety and reliability of the product during use. In recent years, the increasing demand for mobile phone battery safety has promoted the growth of market demand for power protection products such as overvoltage protection and overcurrent protection.
② The development of 5G technology will bring broad market space for power management chips.
With the development of 5G technology, the interactive functions of mobile phones are further increased, and the power requirements of each functional module are different from those of 3G and 4G mobile phones, which puts forward higher requirements for the noise level and power consumption of mobile phone power management chips. In addition, the popularity of 5G technology may trigger a new wave of replacement in the global smart phone market, which brings good market opportunities for power management chips. According to market research company Canalys, the global shipment of 5G mobile phones will reach 774 million units in 2023, accounting for 51.4% of the total smartphone market share. Among them, China, as the key area of global 5G network construction, will be the largest 5G smartphone market in the world, and its shipment volume is expected to account for 34% of the global market.
Forecast of 5G mobile phone shipments and proportion from 2019 to 2023
Source: Canalys
(2) Smart wearable device market
With the popularity of wearable devices such as smart watches, smart bracelets, TWS headphones and smart glasses, the market scale of smart wearable devices has increased year by year, which has driven the growth of market demand for power management chips. According to IDC data, the global wearable device market has reached 445 million units in 2020, a rapid growth compared with 78 million units in 2015, with a compound annual growth rate of 41.66%. In addition, along with technology
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With the wave of progress and intelligence, the types of smart wearable devices are also increasing rapidly. The rapid development of the smart wearable device market has put forward various demands for power management chips, which provides a broad space for the development of the power management chip market.
Global wearable device market scale from 2015 to 2020
Source: flush iFind
(3) Home appliance market
In addition to the market of mobile phones and wearable devices, power management chip products are also used in the fields of home appliances such as televisions, washing machines and refrigerators. With the improvement of people’s living standards, the home appliance market has maintained steady growth. According to the flush iFind data, the output of major household appliances such as washing machines, air conditioners and color TVs increased from 72.02 million units, 143.33 million units and 140.27 million units in 2013 to 80.42 million units, 210.65 million units and 196.26 million units in 2020 respectively. In addition, in recent years, household appliances have shown an intelligent development trend, and the subdivision varieties and human-computer interaction functions have increased, which has led to a richer demand for power management chips.
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Scale of Main Products in China’s Household Appliances Market from 2013 to 2020
Source: flush ifind
(4) Other fields
After the integrated circuit is embedded in the Internet of Things, it can collect any information that needs to be monitored, connected and interacted in real time, and realize intelligent perception, identification and management of goods and processes. The company’s intelligent networking delay management unit is mainly used for digital electronic detonators. It combines the Internet of Things, Beidou and encryption communication technologies to realize the remote link between remote control equipment and initiators and detonator ignition components, the precise control of each node in the networking, the cloud identity authentication and other functions. It is outstanding in the aspects of delay range, setting step accuracy, reliability and adaptability, and can be applied to safe and precise blasting in special environments such as small-section excavation, metal mines and coal mines. Because the electronic detonator has incomparable safety and control functions with traditional detonators, it has high safety factor, convenient management and low social hazard factor, which can realize the closed management of initiating explosive devices and is more suitable for the current development trend of blasting industry. In December 2018, the Ministry of Public Security and the Ministry of Industry and Information Technology issued the "Notice on Implementing the General Rules for Information Management of Industrial Electronic Detonators", requiring local public security organs and competent departments of civil explosive industry to unite with relevant departments and industry associations to vigorously promote the application of electronic detonators and ensure the goal of full use of electronic detonators in 2022. According to the first information data of civil explosion, the output of electronic detonators in 2020 was 117 million rounds, a substantial increase compared with 60 million rounds in 2019, accounting for 12.24% of the total output of industrial detonators. Under the background that electronic detonators are in full use, the market space of electronic detonators will be greatly improved. but
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As an indispensable part of electronic detonators, intelligent networked delay management unit will benefit from the double benefits brought by the replacement of stock market and the development of electronic detonators.
(five) the industry technology and the technical characteristics and development trend of the issuer.
1. Technical characteristics and development trend of the industry
Power management chip is an indispensable device in all electronic equipment, which takes on the functions of conversion, distribution and detection of electric energy in the electronic equipment system. With the continuous increase of types, functions and application scenarios of electronic products, the requirements of consumers for the stability, energy efficiency and volume of electronic products are getting higher and higher. In order to meet the requirements of terminal electronic products, low noise, high efficiency, miniaturization and integration have become important technical development trends of power management chips.
(1) Low noise
Under Moore’s Law, the chip process size is shrinking, which makes the switching current density per unit area higher and the current switching speed faster. The noise level generated by internal circuits and the ripple superimposed on the stable voltage during energy transmission are greatly increased, which will directly affect the stability of voltage output. Therefore, the ability of noise reduction and ripple suppression of power management chip plays an important role in the stability, efficiency and safety of electronic equipment power supply, which is one of the core indicators of power management chip. Low noise has become an important technical development direction of power management chip.
(2) High efficiency
In recent years, with the increasing frequency and duration of use of portable mobile devices such as smart phones and wearable devices in daily life, the requirements for endurance and operational efficiency of electronic devices are getting higher and higher, which means that the internal components need to reduce power consumption and improve work efficiency as much as possible. In this context, power management chips need to provide lower power consumption and higher efficiency solutions for terminal electronic products through the improvement of design level and process technology.
(3) miniaturization and integration
With the demand of light and thin terminal products and the complexity of application scenarios, integrated circuit products need smaller volume and fewer peripheral devices while their functions are stable. Power management chips can effectively save size and realize more functions by reducing package size or integrating modules with different functions. Therefore, miniaturization,
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Integration has become an important technical development trend of power management chip integrated circuits.
2. Technical characteristics and development trend of the issuer
The company has been deeply involved in the field of power management chips for nearly 20 years, and has always carried out research and development based on market demand and cutting-edge trends, and has continuously achieved technological breakthroughs in the directions of low noise, high efficiency, miniaturization and integration.
Examples of technical development direction of LDO and OVP products of the company
(1) Low noise
The company has been researching and developing in the direction of reducing noise and improving ripple suppression ratio for many years, and has developed a series of functional modules IP for noise reduction, anti-interference and stabilizing power supply, such as high-precision stable reference voltage source, high-precision low-temperature drift reference current source, low-pass multi-order filter and PSRR boost input stage, and formed the core technology of low noise and high power supply ripple suppression.
The company has developed low noise or very low noise product series by using the above technical system, among which the company’s low noise and high performance LDO product series can achieve less than 10? V’s ultra-low noise and high ripple rejection ratio (PSRR) exceeding 90dB have outstanding ultra-low noise and high anti-interference ability in the industry, which can meet the strict requirements of noise and PSRR indicators in mobile phone camera power supply and video module power supply.
(2) High efficiency
In order to reduce power consumption and improve the efficiency of power management chip, the company has formed a series of functional modules IP to reduce power consumption, such as low-power bootstrap circuit, nano-ampere micro-power bias current module, dynamic response acceleration module, micro-power error amplifier module and dynamic scanning start module, which provide a lot of low power for terminal applications.
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Power consumption and high efficiency scheme, some LDO products can achieve power consumption as low as nanoampere level, and the power consumption of load switch is as low as microampere level.
In addition, the company closely followed the development trend of market technology and laid out in advance. Under the condition of low dropout voltage and low input voltage, it improved the voltage stabilization effect of LDO, improved its practical use efficiency, and strengthened the research and development of high-performance DC/DC products, which was more in line with the market demand trend for the performance of power management chips.
(3) miniaturization and integration
The company implemented the product miniaturization strategy earlier in the industry, and began to launch ultra-small package LDO since 2012. At present, most products adopt ultra-small packages such as WLCSP, QFN, DFN, etc. to meet the customer’s demand for product miniaturization; At the same time, the company continues to develop integrated products, and has developed a power protection chip that integrates path management, switch and OVP functions, and a charging management chip with path management that integrates charging management and load switch functions. In addition, the company’s multi-channel power supply PMIC products have been mass-produced and continue to be laid out on integrated products.
(six) the specific situation of the issuer’s scientific and technological achievements and deep integration of the industry.
1. Scientific and technological achievements made by the issuer
The company has been deeply involved in the field of power management for nearly 20 years, and has formed an advanced and mature technical system based on rich core technologies and functional modules IP, covering various design platforms such as power conversion and power protection around the development trend of power management chips such as low noise, high efficiency, miniaturization and integration. Among them, functional module IP refers to a reusable module which is formed through the accumulation of design experience and can realize one or more functions in the process of product system and circuit design.
At present, the company has independently developed and formed core technologies such as EOS rapid suppression and release technology, low noise and high power ripple suppression technology, accurate current and voltage detection and charging management technology, and intelligent switching and management technology of complex multi-power supply system in many fields such as EOS protection, low noise, high precision and integration, which have been reflected in a large number of functional modules IP. The design platform built by the company on the basis of core technology and functional module IP enables the R&D team to call all kinds of mature module IP in the design, better form solutions and achieve R&D goals quickly and efficiently, and finally form a large number of low-noise and high-performance product series. On the other hand, the company has continuously accumulated and optimized the function module IP and upgraded the design platform in practice, thus maintaining the practicality and advancement of the technical system.
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Taking OVP products as an example, the company has integrated many mature modules such as high-energy EOS protection module and transient voltage instantaneous turn-off detection module in OVP product design to ensure the success rate of R&D and product performance, and effectively improve R&D efficiency. The specific application is shown in the following figure:
EOS rapid inhibition and release
technology
Low noise and high power ripple suppression technology
Core technology of accurate current and voltage detection charging management technology
Concrete manifestation of continuous improvement
Functional module IP
High-order fading stable display
Indication technique
Transmission and data communication technology with clock calibration
Intelligent switching and management technology of power supply in complex multi-power system
Power conversion design platform
Power protection design platform
The display-driven design platform embodies continuous improvement.
Design platform
High-energy EOS protection module, transient voltage instantaneous turn-off detection module, high-precision stable voltage reference …
OUTOUTOUT
Charge pump boosting
module
Overvoltage protection detection module
Block overtemperature protection module low voltage reset detection module
Function control module
GND
INININ
BUS_DET
High energy EOS protection
module
Transient voltage instantaneous turn-off detection module
Accelerated shutdown module
High precision reference electricity
Pressure source high precision low temperature bleaching
Current source module
Low noise and high power lines
Rapid suppression and release of EOS related to wave suppression technology
Radiological correlation
Other functional modules IP
EOS quick release module
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2. Deep integration with the industry.
The company’s scientific and technological achievements are formed by continuous research and development combined with market demand for many years. The market has strong pertinence and great application value, which provides a guarantee for the company’s rapid response to research and development and continuous innovation of products. Through the above-mentioned scientific and technological achievements, the company has developed a large number of low-noise and high-efficiency product series. At present, the company’s products are mainly used in mobile phones, wearable devices and other consumer electronics fields, and continue to be laid out in the fields of household appliances, Internet of Things, automotive electronics, network communication and so on, realizing the deep integration of technology and industry, as follows:
(1) Mobile phone field
With the increasing use of mobile phone in daily life, its functions become increasingly complex, its performance continues to improve and it requires higher security. Therefore, downstream mobile phone brand customers put forward higher requirements for power conversion and protection level. The company timely and accurately grasped the opportunity of the booming mobile phone market, and with years of technical accumulation and R&D experience, it continuously improved the performance of power conversion chips such as LDO, formed a series of products such as low-noise high-performance LDO, high-current LDO and high-performance charging management chip, and took the lead or developed power protection chips such as OVP and TVS suitable for mobile phone port protection in China.
Through good market reputation, industrial chain collaborative resources and excellent product performance, the company has successively established good cooperative relations with well-known mobile phone brand customers at home and abroad, such as Samsung, LG, Xiaomi and Customer A, and realized the deep integration of the company’s products in the field of mobile phone applications.
Application example of company chip in mobile phone
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(2) The field of wearable devices
With the diversification of downstream market demand, well-known consumer electronics brands have successively launched wearable devices represented by smart bracelets, smart watches and TWS headsets. Based on good cooperation with Samsung, Xiaomi, Customer A and other consumer electronics brands in mobile phone business, the company has successively entered the above-mentioned customer wearable device business segment, and has provided about 20 products in various categories such as LDO, OVP, charging management chip and load switch.
(3) Other fields
There are many applications of high-performance analog chips. In addition to the deep integration of the above fields, the company has gradually applied technologies and products to other fields. The company has mass-produced or developed products used in the fields of Internet of Things, automotive electronics, 5G base stations and drones.
Iii. Analysis of the Issuer’s Industry Status and Industry Competition
(a) the main enterprises in the industry
The main enterprises in the global power management chip market include well-known IC design companies such as TI (Texas Instruments), ON Semi (Ansemi), DIODES (Daer Technology) and Richtek (Lichtek Technology), which have leading advantages in sales scale, product types and core IP. In recent years, with the rapid development of domestic integrated circuit industry, some high-quality power management chip design companies have emerged in the market segments and become rising stars. The main enterprises include Shengbang, Weir, Fuman Electronics and publishers, as follows:
(1) The world’s major power management chip enterprises.
①TI (Texas Instruments)
TI is the world’s leading semiconductor multinational company, mainly engaged in the research, manufacture and sales of innovative digital signal processing and analog circuits. In addition to semiconductor business, it also provides sensing and control, educational products and digital light source processing solutions. At present, it is listed on NASDAQ in the United States, with stock code: TXN.
②ON Semi (Ansemi)
ON Semi is a supplier of power management integrated circuits and standard semiconductors, and its product range includes power and signal management, logic, discrete and customized devices, which are applied in automobile, communication, computer, consumption, industry, LED lighting, medical care, military aircraft, aerospace, smart grid and other fields. Currently,
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It is a NASDAQ listed company in the United States, stock code: ON.
③DIODES (Daer Technology)
DIODES is a global leading manufacturer and supplier of high-quality products active in discrete, logic and analog semiconductor markets, mainly serving different markets such as consumer electronics, computers, communications, industry and automobiles. Currently, it is a NASDAQ listed company in the United States, with stock code: DIOD.
④Richtek (Litun Technology)
Richtek is an international analog IC design company, focusing on providing customers with diversified and competitive products and complete power management solutions. The products are widely used in computers, consumer terminal products, network communication devices, large-size panel displays and other fields.
⑤MPS (American Core Source)
MPS is an enterprise integrating R&D, design, manufacturing and sales, focusing on designing and manufacturing high-performance analog integrated circuits and mixed information integrated circuits. It is currently listed on NASDAQ in the United States, with the stock code of MPWR.
⑥ Silicone force
Sili is committed to the research, development, design and sales of high power density and high efficiency power supply chips, and is one of the few IC design companies in the world that can produce small packages, high voltage and high current. Its products are mainly used in industrial and 3C industries. At present, it is a listed enterprise in Taiwan Province stock market with stock code: 6415.TW.
(2) Major domestic power management chip enterprises.
① Shengbang shares
The main business of Shengbang Co., Ltd. is the research and development and sales of analog chips. The main products cover two major fields: signal chain and power management, which are used in communication, consumer electronics, industrial control, medical instruments, automotive electronics and other fields. Shengbang shares have been listed on Shenzhen Stock Exchange with the trading code of 300661.
② Weil shares
Weir’s main business is the R&D and design of semiconductor products such as CIS and power management of semiconductor discrete devices, as well as passive devices (including resistors, capacitors, inductors, etc.), structural devices, discrete devices and IC.
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The distribution business of semiconductor products is widely used in mobile communication, vehicle electronics, security, network communication, household appliances and other fields. Weil shares have been listed on the Shanghai Stock Exchange with the trading code of 603501.
③ Full electron
The main business of Fuman Electronics is the design, development, packaging, testing and sales of high-performance analog and digital-analog mixed integrated circuits. The main products include power management chips, LED control and driving chips, MOSFET chips and other chips. Fuman Electronics has been listed on Shenzhen Stock Exchange with the trading code of 300671.
(2) Comparison between the issuer and comparable companies in the same industry.
1. Reasons for selecting comparable companies in the same industry
The internationally renowned IC design companies such as TI, ON Semi, DIODES, Richtek, etc. are quite different from the issuers in the overall product category, quantity and application field, and the above-mentioned companies are rich in funds, leading in brand reputation and scale, so their comparability with the companies is not strong. Although some domestic listed companies in the same industry are not completely consistent with the issuer’s product categories and application fields, some products overlap and compete in certain fields, so they are selected as comparable companies in the same industry in China, as follows:
Source of data: comparable companies publicly disclose information.
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2. Comparison with international competitors
Note 1: The above competitors’ data mainly come from their official website, publicly disclosed information, IC Insights, etc. Unless otherwise specified, they are all data in 2019 or at the end of 2019, the same below;
Note 2: The business scale is converted into US metadata at the average exchange rate in 2019;
Note 3: Due to the limitation of public data, market share = analog chip revenue in 2019 (or operating income of the company)/global analog chip market scale released by /IC Insights in 2019.
3. Comparison with comparable domestic companies
(1) Comparison with domestic comparable companies in terms of market position, market share, technical strength, sales volume and product types.
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Note 1: The above competitor data mainly comes from its official website, public disclosure of information, etc. Note 2: Considering the overall size of domestic comparable companies and the limitations of public data, market share = revenue of power management chips in 2018/market size of China’s power management chips in 2018 as shown by Foresight.
(2) Comparison with the sales scale of comparable domestic companies.
From the comparison of sales scale, the company’s sales scale of power management chips is close to that of domestic comparable companies, and it has become the main supplier of power management chips in the domestic consumer electronics field.
Unit: 10,000 yuan
Note: The above data are selected from the sales revenue of power management chips publicly disclosed by comparable companies, among which: Weir shares include the revenue of power IC and TVS products, and Fuman Electronics includes the revenue of power management and LED lamps, LED control and drive products.
For the comparison between the company and other comparable companies in the same industry, please refer to the relevant contents in "Section VIII Financial Accounting Information and Management Analysis" in this prospectus.
4. Comparison of technical strength and key performance indicators
The company has been deeply involved in the field of power management for nearly 20 years, combined with the market demand and the continuous innovation of cutting-edge information, and has formed a rich core technology and functional module IP, and based on this, it has formed a multi-category design platform covering power conversion, power protection and so on, with outstanding technical strength. From the comparison of key performance indexes of bidding products
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Generally speaking, the performance indicators of the company’s power management chip and power protection chip products have reached or exceeded the international and domestic bidding products. The specific comparison is as follows:
(1) Power conversion chip
Note 1: The products of the above company are the mainstream models of various series of the company, the same below; Note 2: International and domestic competing products are mainstream products that compete with issuers on major customer platforms. The specific application positions and functions of products are the same, and the grades are basically the same, but it is not excluded that companies in the same industry have other products with better performance. Note 3: The index data of competing products come from the product brochures of various companies, the same below.
As can be seen from the above table, the core indicators of the above-mentioned power conversion chips of the company are better than domestic competing products, and are equal to international competing products.
(2) Power protection chip
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As can be seen from the above table, among the company’s power protection chips, (1) OVP product with low on-resistance (ET9650) has better on-resistance level, turn-off speed and product size than competing products in the same period on the premise of having the EOS protection capability equivalent to that of international competitors; (2) Under the same working voltage and size, the peak current and clamping voltage of TVS product (ES26P4NA) with strong EOS protection level are better than those of international competitors, and the EOS protection ability is stronger; (3) The low-power load switch (ET3138) is superior to the international and domestic competitors in the ultimate voltage and maximum current, and has low on-resistance and small size, and low static power consumption. Its performance indexes are basically the same as those of international competitors, and significantly superior to those of domestic competitors.
5. Market position of the company
Due to the highly concentrated competition pattern in the consumer electronics field, especially in the mobile phone market, the top five mobile phone brands account for more than 70% of the market share. Focusing on power management products in the field of consumer electronics, the company has adhered to the key customer strategy for many years, and formed a high-quality terminal customer base including Samsung, Customer A, Xiaomi, LG and Wentai, which has been highly recognized by customers. It is a rare power management chip design enterprise covering many well-known consumer electronics customers in China. In the consumer electronics market, especially in the mobile phone terminal market, it has a certain brand awareness.
In addition, from the comparison of the above operating conditions, technical strength and key performance indicators of products, it can be seen that the sales scale of power management chips of the company is close to that of domestic comparable companies, and the performance indicators of the main power management chips and power protection chips have reached or exceeded the international and domestic bidding products.
To sum up, the company is one of the main suppliers of power management chips in the field of consumer electronics.
(C) the company’s competitive advantage
1. Excellent R&D capability
Design and innovation are important means for IC design companies to maintain their core competitive advantages. Because the realization of analog circuit design depends on the design team’s understanding of the physical characteristics and technology of electronic products and the experience of topology design and wiring layout. Therefore, analog circuit design requires the design team to have rich design experience and
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Technology accumulation.
The company has been deeply involved in the field of power management for nearly 20 years. Focusing on the development trend of power management chips such as low noise, high efficiency, miniaturization and integration, combined with the market demand of mobile phones, wearable devices and other application fields, the company has continuously developed a wealth of core technologies and functional modules IP, and based on this, it has formed a multi-category design platform covering power conversion, power protection and so on.
The above-mentioned technical system of the company is formed after years of research and development accumulation, which has been verified by the market and continuously optimized in application, providing a large number of advanced and mature infrastructure for the R&D team while maintaining a certain degree of advancement. The R&D team calls various mature module IP in the design platform and applies it to the circuit design, which can better form a power supply solution and quickly achieve the R&D goal, ensuring the accuracy and efficiency of R&D.. With a highly targeted, efficient and accurate R&D system, the company accurately grasps the development trend of mobile phones, wearable devices and other application fields, which enables the company to have excellent innovation capabilities in mobile phones, wearable devices and other fields.
2. Advantages of product performance and reliability
Performance and reliability are important dimensions to measure the chip level, and are also important factors for customers to choose chip design enterprises and products. With high-quality products, quick-response R&D system and differentiated services, the company competes with some products of world-renowned IC design companies such as TI, ON Semi, DIODES and Richtek in specific fields, and the performance indexes of some products have reached or exceeded the bidding products of international brands. At the same time, in terms of product reliability, the company continues to introduce and adopt advanced quality management concepts, implement strict and perfect quality control system in the process of R&D and production, and run high-standard quality control system through product design and production.
In the design process, the company needs to consider the quality of products, the margin of performance parameters and the testability of products, and determine the testability scheme including ATE test scheme, application test scheme and reliability assessment scheme, and assess the reliability of products from multiple dimensions such as test coverage, extreme application environment simulation and accelerated life test. In the tape-out and packaging test, the company performs data monitoring and analysis of key quality links, such as PCM parameter monitoring and online parameter monitoring, respectively, to achieve quality control of the production process.
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In addition, in order to cope with risks and abnormal situations, the company has formulated a sound risk assessment scheme and acceptance criteria. When the conditions of quality abnormal events are triggered, the company will start a meeting review that at least includes design, engineering and quality, timely and deeply explore the causes of the abnormalities, and ensure that no risky products flow out to customers after the abnormal control is triggered.
Through the perfect testing and assessment of products at different stages, the company ensured the stable performance of the products in different application environments, which made the on-line failure rate (DPPM) of the company’s products in the customer’s production line far lower than the customer’s requirements, and established a highly reliable brand image.
3. Customer resource advantages based on high-quality end customers
Integrated circuits play an important role in the performance and safety of terminal electronic products. Customers not only require chips.
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Can meet the performance indicators, but also need to have high reliability. Therefore, in order to reduce product risks, customers have a high threshold and a long time for supplier qualification certification, and products need to be verified and tested repeatedly. However, after entering the supplier system, cooperation is relatively stable and there is a high barrier to customer certification.
In the field of consumer electronics, especially in the field of mobile phones, the market structure is highly concentrated, and the top five brands account for more than 70% of the market. Since 2010, the company has officially entered the supplier system of Samsung Electronics, and has accumulated a lot of development experience by bidding with internationally renowned enterprises such as TI in international business. Taking the quality requirements of international customers as the criterion, the company has formed excellent R&D capability and strict quality control system, gradually formed a good market reputation, and passed the certification of mainstream consumer electronics brand suppliers such as customers A, Xiaomi and LG.
At present, the issuer’s end customers have covered well-known consumer electronics brands at home and abroad such as Samsung, LG, Xiaomi and Customer A. With outstanding product performance and stable product quality, the company has maintained a good cooperative relationship with the above customers, and the cooperation field has gradually expanded from mobile phones and wearable devices to home appliances, automotive electronics and other business sectors, and the cooperation has further deepened, forming a good customer advantage.
4. Synergistic advantages of industrial chain
In order to ensure the realization of design, integrated circuit design enterprises need to grasp the downstream market demand and technical changes in time, and fully understand the supplier’s process changes and production capacity. The company has maintained a long-term and stable cooperative relationship with mainstream wafer manufacturing, packaging and testing enterprises with advanced technology and high maturity in the world, fully understanding their technological level and changes, enabling the company to intervene and run in upstream technical resources in advance, and then integrate upstream and downstream technologies, technological resources and application requirements into product research and development, so as to realize the dynamic transmission of industrial chain requirements-process-design and effective industrial chain resource coordination.
(D) the company’s competitive disadvantage
1. There is a certain gap with international competitors in terms of market position, overall technical strength, sales scale and product category scale.
International competitors such as TI, ON Semi, DIODES and Richtek serve the global semiconductor market, with leading market ranking, strong overall technical strength, rich product categories and significantly higher sales scale than issuers. Compared with the above-mentioned international leading enterprises, the company still has a certain gap in terms of enterprise scale, comprehensive technical strength, talent reserve and the ability to provide full range of solutions.
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2. There is a certain gap in the number of R&D personnel and the amount of R&D investment compared with domestic comparable listed companies. Although the company has a small difference in market position and market share with domestic competitors, the latter has strengthened its R&D investment by virtue of the brand effect of listed companies and the implementation of investment projects with raised funds, which makes the company have a certain gap in the number of R&D personnel and the amount of R&D investment. In addition, compared with domestic competitors, although the company has a relatively complete product and customer layout in the field of consumer electronics such as mobile phones and wearable devices, it is limited by team and fund allocation, and its application field is relatively single. Through this issuance, especially the implementation of investment projects with raised funds, it will help the company attract outstanding R&D talents, strengthen R&D strength and technical reserves, and further expand the company’s market share, product types and application fields.
3. The financing channel is relatively single.
The company mainly relies on its own capital accumulation and equity financing to achieve development, and the financing channel is relatively single. With the steady development of the downstream market, the company’s market share and business scale will further expand, and the company’s subsequent research and development and expansion may bring certain financial pressure. The company’s current financial strength limits R&D and operation, and it is urgent to expand financing channels to further improve profitability and sustainable development.
(V) Opportunities and challenges faced by the industry
1. Opportunities facing the industry
(1) The integrated circuit industry is a national strategic industry, which is highly supported by the state.
Integrated circuit industry is a strategic industry of information development, and it is one of the important symbols to measure a country’s industrial competitiveness and comprehensive national strength. Due to the late start, the development of China’s integrated circuit industry can not meet the domestic demand at this stage, and a large number of integrated circuits still rely on imports.
In order to encourage and promote the development of integrated circuit industry, the state has issued a series of fiscal, taxation and intellectual property protection policies. In January 2017, the Guiding Catalogue of Key Products and Services of Strategic Emerging Industries issued by the National Development and Reform Commission listed IC chip design and services in the catalogue of key products of strategic emerging industries. In the "Government Work Report" in 2018, the promotion of the development of the integrated circuit industry was listed as the first place in the development of the real economy, highlighting the importance and forerunner of the integrated circuit industry. The strong support of national policy is the development of integrated circuit industry
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The exhibition has brought good development opportunities.
(2) Diversified application fields and continuous growth of downstream demand.
With the continuous growth of national economy and consumption level, China has become the most important consumer market and production base of electronic products in the world. With the increasing complexity of downstream products’ functions and the continuous expansion of their application fields, their performance requirements have been continuously improved, bringing new market demands to the integrated circuit industry. Taking mobile phones as an example, the market demand for power conversion chips has increased due to the complexity of mobile phone functions and the improvement of performance. In addition, the demand for power protection chips has been promoted by the improvement of mobile phone battery safety, which has increased the demand for power management chips for a single mobile phone. At the same time, the development of 5G technology will bring broad market space for power management chips. In addition, emerging consumer electronic products, such as smart bracelets and TWS headphones, are growing rapidly, bringing new hot spots to the market and giving birth to new market demand.
(3) China’s integrated circuit design industry is becoming more and more mature, and the import substitution space is gradually tapped.
With the shift of the focus of the global integrated circuit industry to China, China’s integrated circuit industry chain has gradually matured, a large number of wafer manufacturing and packaging and testing enterprises have been put into production, and the upstream process level has gradually improved, providing capacity guarantee for the domestic integrated circuit design industry. Although the overall process of chip localization is still in the initial stage, there is still a big gap with the international advanced level, but the technical gap has gradually narrowed in some subdivided products and application fields. In addition, some excellent domestic design companies, including issuers, have achieved market share improvement in sub-sectors through long-term R&D innovation, industrial chain resource accumulation and differentiated services, and gradually promoted import substitution.
2. Challenges faced by the industry
(1) The talents in the IC design industry are still relatively scarce.
The design of integrated circuits needs to comprehensively consider the cooperation of circuit design, manufacturing technology and physical properties of semiconductor devices, so it needs multi-disciplinary comprehensive talents. Although there are some technicians in the development of China’s integrated circuit industry, they still can’t meet the growth of market demand and the talents are relatively scarce.
(2) There is still a big gap between the domestic technical level and the comprehensive strength of enterprises and the international advanced level.
Europe, America and other countries or regions have a lot of technology accumulation and perfect industrial chain supporting environment in the field of integrated circuit design, and at the same time have leading advantages in production scale and brand reputation. However, China’s integrated circuit design industry started late, and compared with the international leading enterprises, domestic enterprises have made great progress in overall technical level, enterprise scale,
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There are still some gaps in talent pool and the ability to provide a full range of solutions.
Iv. Production and sales of main products and procurement of raw materials
(1) Production and sales of main products
1. Sales revenue of main products
(1) Product sales by category
According to different product categories, the issuer’s main products can be divided into power management chips and other two categories. During the reporting period, the proportion of the issuer’s main business income by functional type is shown in the following table:
Unit: 10,000 yuan
(2) Income by sales mode
During the reporting period, the income distribution of the issuer under different sales modes is shown in the following table:
Unit: 10,000 yuan
(3) Average selling price
During the reporting period, the changes of the average selling price (excluding tax) of the company’s main product power management chips are shown in the following table:
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Unit: yuan/capsule
Usually, products with performance advantages and competitive advantages have higher prices when they are launched into the market. With the passage of time and market competition, the unit price usually keeps declining and remains stable after it is reduced to a certain extent. In addition, due to the variety and model of power management chips, the average unit price of various products of the company is greatly affected by the change of product structure. During the reporting period, the average selling price of various products fluctuated due to factors such as the launch of new products, the realization of mass sales and the change of product structure. In 2018, the average selling price of the company’s power management chips decreased by 22.37%, mainly due to the fact that the average selling price of the power protection chips with the largest proportion among the power management chips decreased by 19.73% year-on-year. For details, please refer to "X. Analysis of operating results", "I. Analysis of operating income" and "3. Analysis of changes in main business income" in "Section VIII Financial Accounting Information and Management Analysis" of this prospectus.
2. Production and sales rate of main products during the reporting period.
During the reporting period, the production and sales rate of the issuer’s main product power management chip is shown in the following table:
Unit: ten thousand pieces
Note: Output refers to the quantity of finished products received in the current period.
3. Sales of the top five customers during the reporting period
(1) Sales of the top five customers during the reporting period
During the reporting period, the company’s sales amount (excluding tax) to the top five customers (consolidated by the same actual controller) and its proportion to the total sales (excluding tax) in each period are shown in the following table:
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Unit: 10,000 yuan
Note 1: Suzhou Daya Electronics Co., Ltd. and its related parties include Suzhou Daya Electronics Co., Ltd. and DA YA(HK)LIMITED. Note 2: Yunnan High-Energy Materials Economic and Trade Co., Ltd. and its related parties include Yunnan Ranyi Co., Ltd., Yunnan High-Energy Materials Economic and Trade Co., Ltd., Yunnan Ruida Civil Explosive Co., Ltd., Yunnan Anbao Digital Electronic Technology Co., Ltd. and Yunnan Tianyu Blasting Technology Co., Ltd. Deqin Branch. Note 3: Wentai Communication Co., Ltd. and its related parties include Wentai Communication Co., Ltd., Wentai Technology (Wuxi) Co., Ltd., Wingtech Group (HK) Ltd., Kunming Wentai Communication Co., Ltd. and Wentai Technology (Shenzhen).
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Limited company.
The company focuses on the research and development and sales of analog chips, and the product application field is mainly the consumer electronics field represented by mobile phones. According to IDC data, in 2020, the shipments of Samsung, Huawei, Apple, Xiaomi and VIVO, the top five global smartphone brands, accounted for 71.3% of the global smartphone shipments. The highly concentrated market structure of the downstream mobile phone industry makes the company’s customers more concentrated. During the reporting period, the sales of the top five customers of the company accounted for 87.35%, 82.35% and 77.26% respectively, of which the sales of Samsung Electronics accounted for 73.56%, 59.24% and 46.44% respectively. With the improvement of the company’s R&D strength, product variety and brand reputation, the company has intensified the development of new customers, passed the certification of well-known consumer electronics customers such as A, LG and Wentai, and the sales share of Samsung Electronics has also shown a downward trend.
During the reporting period, none of the company’s directors, supervisors, senior managers, core technicians, major related parties or shareholders holding more than 5% of the company’s shares had any interests in the above customers.
(2) Changes of the top five customers during the reporting period and the reasons for the changes.
During the reporting period, the changes of the company’s top five customers are as follows:
Unit: 10,000 yuan
① During the reporting period, with the deepening of cooperation or cooperation with Samsung, Customer A, Wentai, Yunnan Ranyi and other well-known and demanding customers in the downstream market, the sales scale of the issuer to these customers showed an overall growth trend. Among them, in 2019 and 2020, a number of products of the issuer passed the certification of customers A and Wentai and achieved mass sales, which increased the sales amount in the past two years; In 2019 and 2020,
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The company’s sales amount to Yunnan Ranyi continued to increase, mainly due to the rapid increase in the output of Yunnan Ranyi digital electronic detonators under the background of the country’s vigorous promotion and application of digital electronic detonators, and the corresponding increase in the procurement of the company’s intelligent networking delay management unit. In 2020, affected by the epidemic, Samsung Electronics’ global mobile phone shipments decreased by 9.84%, and the company’s product purchases decreased accordingly, which made the company’s sales to Samsung Electronics decline.
② During the reporting period, the issuer maintained stable cooperation with Daya Electronics and Wuxi Chengke Electronics Co., Ltd., and the overall transaction amount showed an increasing trend. Among them, in 2019 and 2020, the issuer’s sales amount to Daya Electronics continued to increase, mainly due to the fact that the company’s products entered the Xiaomi supplier system through Daya Electronics at the end of 2018, and the number of terminal models entered after mass supply in 2019 increased. In addition, with the increasing demand for overvoltage protection and camera shooting of terminal electronic products, well-known terminal manufacturers such as Huabei, Chuanyin and Xiaomi increased their purchases of power protection chips or power conversion chips, which made the above-mentioned major terminal customers.
③ During the reporting period, the sales amount of the issuer to Zhao Nengkun increased first and then decreased, mainly due to the cooperation between the issuer and Zhao Nengkun in December 2017. In 2018, the bitcoin mining market was booming, and Zhao Nengkun purchased more power conversion chips from the company for end customers. In 2019, due to the technical upgrade of bitcoin mining machine, low-voltage conversion chips were no longer used, resulting in a decrease in the purchase volume of corresponding products.
4. Sales of the top five direct selling customers during the reporting period.
(1) Sales of the top five direct selling customers during the reporting period.
In each period of the reporting period, the content, quantity, amount (excluding tax) of products sold by the company to the top five direct selling customers (calculated by the same actual controller) and the proportion of total direct selling income (excluding tax) in each period are shown in the following table:
Unit: ten thousand pieces, ten thousand yuan
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Note 1: Yunnan High-Energy Materials Economic and Trade Co., Ltd. and its related parties include Yunnan Ranyi Co., Ltd., Yunnan High-Energy Materials Economic and Trade Co., Ltd., Yunnan Ruida Civil Explosive Co., Ltd., Yunnan Anbao Digital Electronic Technology Co., Ltd. and Yunnan Tianyu Blasting Technology Co., Ltd. Deqin Branch.
Note 2: Wentai Communication Co., Ltd. and its related parties include Wentai Communication Co., Ltd., Wentai Technology (Wuxi) Co., Ltd., Wingtech Group (HK) Ltd., Kunming Wentai Communication Co., Ltd. and Wentai Technology (Shenzhen) Co., Ltd.
Note 3: LG Electronics Inc. and its related parties include LG Electronics Inc., Inspur LG Digital Mobile Communications Co., Ltd., PT. LG Electronics Indonesia cibitung Factory and Nanjing LG Xingang New Technology Co., Ltd.
Note 4: Strait Cailiang (Zhangzhou) Photoelectric Co., Ltd. and its related parties include Strait Cailiang (Zhangzhou) Photoelectric Co., Ltd. and Fujian Huajie Photoelectric Co., Ltd.
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(2) Changes in sales of the top five direct selling customers during the reporting period and the reasons for the changes.
During the reporting period, the sales changes of the company’s top five direct sales customers are as follows:
Unit: 10,000 yuan
In each issue of the reporting period, the top five direct selling customers of the issuer are mainly well-known downstream enterprises such as Samsung, Customer A, Wentai, LG and Yunnan Ranyi. The reasons for the sales changes are as follows:
① During the reporting period, with the deepening of cooperation or cooperation with Samsung, Customer A, Wentai, LG, Yunnan Ranyi and other well-known and demanding customers in the downstream market, the sales scale of the issuer to these customers showed an overall growth trend. Among them, in 2019 and 2020, a number of products of the issuer passed the certification of customers A and Wentai and achieved mass sales, which increased the sales amount in the past two years; In 2019 and 2020, the company’s sales amount to Yunnan Ranyi continued to increase, mainly because the output of Yunnan Ranyi digital electronic detonator increased rapidly under the background of the country’s vigorous promotion and application of digital electronic detonators, which correspondingly increased the purchase of the company’s intelligent networking delay management unit. In 2020, affected by the epidemic, Samsung Electronics’ global mobile phone shipments decreased by 9.84%, and the company’s product purchases decreased accordingly, which made the company’s sales to Samsung Electronics decline.
② Strait Cailiang is mainly engaged in the production of LED display screens, and mainly purchases large-screen display drive circuit products from issuers. During the reporting period, the transaction amount was greatly reduced to the termination of cooperation, mainly due to the low technical threshold of large-screen display drive circuits, fierce market competition and low gross profit margin. The company gave up this product strategically considering the principle of cost-effectiveness.
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③ Dalian Dongxian Electronics Co., Ltd. purchased a small amount from the company, and the transaction amount fluctuated slightly due to the change of its own demand. With the increase in the sales scale of the company’s new large customers, the sales proportion of Dalian Dongxian Electronics Co., Ltd. has gradually declined, and it has no longer ranked among the top five direct sales customers of the company since 2019.
5. Sales of the top five customers during the reporting period.
(1) Sales of the top five customers during the reporting period.
In each period of the reporting period, the content, quantity, amount (excluding tax) of products sold by the company to the top five customers (calculated by the same actual controller) and the proportion of total distribution income (excluding tax) in each period are shown in the following table:
Unit: ten thousand pieces, ten thousand yuan
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Note 1: Suzhou Daya Electronics Co., Ltd. and its related parties include Suzhou Daya Electronics Co., Ltd. and DA YA(HK)LIMITED. Note 2: Harbour Light Technology Limited and its related parties include Harbour Light Technology Limited and Gangli Electronic Technology (Shenzhen) Co., Ltd..
(2) The sales changes of the top five customers and the reasons for the changes during the reporting period.
During the reporting period, the sales changes of the top five customers of the company’s distribution model are as follows:
Unit: 10,000 yuan
During the reporting period, the top five customers of the issuer were mainly Daya Electronics, Wuxi Chengke Electronics Co., Ltd. and Zhao Nengkun. The reasons for the sales changes are as follows:
① During the reporting period, the issuer maintained stable cooperation with Daya Electronics and Wuxi Chengke Electronics Co., Ltd., and the overall transaction amount showed an increasing trend. Among them, in 2019 and 2020, the issuer’s sales amount to Daya Electronics continued to increase, mainly due to the fact that the company’s products entered the Xiaomi supplier system through Daya Electronics at the end of 2018, and the number of terminal models entered after mass supply in 2019 increased. In addition, with the increasing demand for overvoltage protection and camera shooting of terminal electronic products, well-known terminal manufacturers such as Huabei, Chuanyin and Xiaomi increased their purchases of power protection chips or power conversion chips, which made the above-mentioned major terminal customers.
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The volume of purchases increased significantly year-on-year, which led to the increase in the number of electronic purchases of Daya.
② During the reporting period, the sales amount of the issuer to Zhao Nengkun increased first and then decreased, mainly due to the cooperation between the issuer and Zhao Nengkun in December 2017. In 2018, the bitcoin mining market was booming, and Zhao Nengkun purchased more power conversion chips from the company for end customers. In 2019, due to the technical upgrade of bitcoin mining machine, low-voltage conversion chips were no longer used, resulting in a decrease in the purchase volume of corresponding products.
③ During the reporting period, the company maintained a stable cooperative relationship with dealers such as Hua Hong Zhixin Electronic Technology Co., Ltd., but the cooperation scale was relatively small, and the transaction amount fluctuated due to the demand of end customers. In addition, Shenzhen Guanchen Technology Co., Ltd. is the main distributor of Xiruiwei. After the company acquired Xiruiwei at the end of 2018, it became the top five distributors of the company in 2019. Wuxi Heyue Electronics Co., Ltd. is a distributor that the company started to cooperate in the second half of 2019. With the promotion of business, the sales amount in 2020 has increased.
(two) the main raw materials and energy and their supply.
1, the main procurement situation
The company adopts Fabless mode, which is typical of integrated circuit industry. It mainly customizes and purchases wafers from wafer foundries and entrusts packaging and testing factories to package and test wafers. The details are as follows:
Unit: 10,000 yuan
Note: Outsourced chips mainly refer to the fact that after the company designs, it entrusts the production to a supplier with the scale advantage of subdivided products and production management experience, who purchases wafers and entrusts packaging and testing enterprises to complete the packaging test before purchasing.
2. Purchase price of main raw materials
During the reporting period, the company’s raw materials were mainly customized wafers, which were produced and processed by wafer manufacturing enterprises according to the company’s design requirements. The fluctuation of wafer purchase price is mainly caused by the complexity of process technology, wafer specifications
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Grid, product structure and market supply and demand changes and other factors. In each period of the reporting period, the company’s wafer purchase unit price was 2,071.88 yuan/piece, 2,164.14 yuan/piece and 2,162.55 yuan/piece, respectively, and the purchase unit price was relatively stable.
3. Energy procurement
Because the company is mainly engaged in the research and development of analog chips, the energy consumed by business activities is mainly a small amount of electricity and water, which are supplied by the municipal government, accounting for a low proportion of costs and expenses, and have not had a significant impact on the company’s operating performance.
4. Purchasing situation of the top five suppliers during the reporting period
(1) Purchasing situation of the top five suppliers during the reporting period
During the reporting period, the purchase contents, purchase amount (excluding tax) and the proportion of the company’s top five suppliers (calculated by the same actual controller) to the total purchase amount (excluding tax) in the current period are shown in the following table:
Unit: 10,000 yuan
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Note 1: Tongfu Microelectronics Co., Ltd. and its related parties include Tongfu Microelectronics Co., Ltd., Hefei Tongfu Microelectronics Co., Ltd. and Nantong Tongfu Microelectronics Co., Ltd.
Note 2: Wuxi China Resources Shanghua Technology Co., Ltd. and its related parties include Wuxi China Resources Shanghua Technology Co., Ltd., Wuxi China Resources AXA Technology Co., Ltd., Wuxi China Resources Shanghua Semiconductor Co., Ltd., China Resources Microelectronics (Chongqing) Co., Ltd., Wuxi China Resources Microelectronics Co., Ltd. and Wuxi Disi Microelectronics Co., Ltd.
Note 3: Tianshui Huatian Technology Co., Ltd. and its related parties include Huatian Technology (Xi ‘an) Co., Ltd., Tianshui Huatian Technology Co., Ltd. and Huatian Technology (Kunshan) Electronics Co., Ltd.
Note 4: Shanghai Changyuanwei An Wei Electronics Co., Ltd. was renamed as Shanghai Wei ‘an Semiconductor Co., Ltd. in 2019.
Most of the company’s main suppliers are well-known wafer manufacturing and packaging enterprises at home and abroad, with advanced technology and high maturity, and the technology has certain market leadership. In each period of the reporting period, the company’s purchases from the top five suppliers and their related parties accounted for 79.46%, 75.37% and 74.57% of the total purchases in the current period, respectively. The company did not purchase more than 50% from a single supplier and did not rely on a few suppliers.
During the reporting period, none of the company’s directors, supervisors, senior managers, core technicians, major related parties or shareholders holding more than 5% of the company’s shares had any interests in the above suppliers.
(2) Reasons for changes in the purchase amount from the top five suppliers during the reporting period.
In each period of the reporting period, the top five suppliers of the company and the contents of their purchases were relatively stable. The changes in the purchase amount of the top five suppliers were mainly caused by the company’s dynamic adjustment of the purchase scale according to the expected demand of customers for products put into production in different suppliers, the supplier’s production capacity and the company’s stocking situation, and the changes in the purchase unit price affected by factors such as product structure and process changes.
① Wafer suppliers: East Hi-Tech and China Resources Shanghua.
In each issue of the reporting period, East Hi-Tech and China Resources Shanghua were among the top five suppliers of the company, and they were the main wafer suppliers of the company. With the increase of the sales scale of the company, the purchase amount from them showed an overall upward trend.
In 2018, the company’s purchase amount from East Hi-Tech and China Resources Shanghua decreased, mainly due to: a. With the change of customer’s design concept, the demand for some large-area dual-channel overvoltage protection chips gradually changed to single-channel, and the wafer consumption decreased; And the sales of display drive circuits and overcurrent protection chips decreased in that year, while the area of low-current general LDO with increased sales was small, which also led to the overall decline in wafer consumption; B, the same
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At that time, with the transformation of two-way overvoltage protection chips to one-way, the scale and proportion of wafers manufactured by high-voltage BCD process decreased, while the unit price of wafers manufactured by high-voltage BCD process was higher than that of other processes, which led to the reduction of wafer purchase unit price and the corresponding reduction of wafer purchase amount. In 2019 and 2020, with the increasing sales of power conversion chips, overvoltage protection chips and high-voltage protection chips with integrated shutdown and suppression functions, the amount of wafers purchased from East Hi-Tech and China Resources Shanghai increased accordingly.
② Chip supplier: Shanghai Wei ‘an
In each issue of the reporting period, Shanghai Wei ‘an ranked among the top five suppliers of the company. The company entrusted it to be responsible for wafer procurement and packaging testing of transient suppression overvoltage protection chips, and the amount of chips purchased from it was 91,470,700 yuan, 84,722,200 yuan and 73,145,400 yuan respectively. In 2018, the company’s purchase amount from Shanghai Wei ‘an increased a lot, mainly because with the improvement of terminal electronic product protection demand, the market demand and sales scale of transient suppression overvoltage protection chips developed by the company increased significantly, and the purchase scale increased accordingly; However, as customers adjust the design scheme of power path management, the market demand for overvoltage protection chips for transient suppression will decrease in 2019 and 2020, and the company will correspondingly reduce its procurement from Shanghai Wei ‘an.
③ Packaging test suppliers: Tongfu Microelectronics, Huatian Technology and Changdian Technology.
A. Tongfu Microelectronics
In each issue of the reporting period, Tongfu Microelectronics ranked among the top five suppliers of the company. The company mainly entrusted it to package and test other chips except transient suppression overvoltage protection chips, and purchased RMB 25,547,100, RMB 38,661,600 and RMB 48,203,300 from it respectively. Among them, in 2018, the company’s purchase amount from Tongfu Microelectronics decreased slightly, mainly due to the decrease in sales of overcurrent protection chips and dual-channel overvoltage protection chips; In 2019 and 2020, with the increasing sales of power conversion chips, overvoltage protection chips and high-voltage protection chips with integrated shutdown and suppression functions, the purchase amount from Tongfu Microelectronics increased accordingly.
B, huatian technology
Huatian Technology mainly packages and tests power conversion chips for the company, and has entered the top five suppliers of the company since 2018. In each period of the reporting period, the company’s purchase amount from Huatian Technology was 34,921,200 yuan, 38,666,800 yuan and 38,397,900 yuan respectively, and the purchase amount continued to increase, mainly due to the company’s market and
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A variety of power conversion chips developed by customers have successfully passed the certification, and the sales of power conversion chips are increasing.
Five, the main fixed assets and intangible assets and other resource elements
(a) the main fixed assets
1, the basic situation of fixed assets
The company adopts a typical Fabless model, with relatively few fixed assets, mainly including buildings, machinery and electronic equipment, etc. The ownership of all kinds of assets is clear, and there are no disputes or potential disputes. By the end of 2020, the main fixed assets are as follows:
2. Houses and buildings
As of the signing date of this prospectus, the issuer has obtained 2 properties with a total construction area of 8,227.60 square meters, as follows:
3. Basic information of lease
As of the signing date of this prospectus, the office space used by the issuer’s subsidiaries Zhongshengchang, Xiruiwei and Semikentuo is leased property, as follows:
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(2) Information on major intangible assets
The intangible assets owned by the company mainly include land use right, patented technology, trademark right, exclusive right of integrated circuit layout design, domain name, software copyright, etc. The ownership of all kinds of intangible assets is clear, and there is no dispute or potential dispute.
1. Land use right
As of the signing date of this prospectus, the issuer has obtained a state-owned land use right certificate in one case, totaling 8,082.80 square meters, as follows:
2. Patent right
As of the signing date of this prospectus, the company and its subsidiaries have a total of 37 patents, including 26 invention patents and 11 utility model patents, all of which were originally obtained, as follows:
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Note 1: The term of validity of an invention patent is 20 years from the date of application. Note 2: The term of validity of a patent for utility model is 10 years from the date of application.
According to the Maximum Right Pledge Contract No.3210072018000694 signed by Si Ruiwei and Wuxi Science and Technology Branch of Agricultural Bank of China, Si Ruiwei pledged the above-mentioned patent rights No.31, 34, 35 and 36 for a period of November 27, 2018 to November 26, 2021. As of the signing date of this prospectus, except for the above circumstances, there are no rights restrictions such as pledge on the above other patent rights.
3. Trademark right
As of the signing date of this prospectus, the registered trademarks obtained by the issuer and its subsidiaries are as follows:
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As of the signing date of this prospectus, there are no rights restrictions such as pledge on the above registered trademarks.
4. Exclusive right of integrated circuit layout design
As of the signing date of this prospectus, the issuer and its subsidiaries have obtained 43 exclusive rights for layout design of integrated circuits, as follows:
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5. Domain name
As of the signing date of this prospectus, the company’s main Internet domain names are as follows:
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6. Software copyright
As of the signing date of this prospectus, the company’s main software copyrights are as follows:
(three) franchise and other major business qualifications
1. Franchise right
As of the signing date of this prospectus, the issuer has no franchise right.
2, the issuer’s main business license qualification, qualification
As of the signing date of this prospectus, the issuer’s main business license qualifications or qualifications are as follows:
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Six, the issuer’s technology research and development.
(a) the issuer’s core technology
1, the basic situation of core technology
Since its establishment, the company immediately focused on analog circuit design, guided by market demand and cutting-edge technology trends. After years of accumulation and optimization, it has formed a number of core technologies with strong market pertinence and great application value, laying a technical foundation for the company’s product development.
The company’s core technologies are all from independent research and development, and their specific contents, patent protection and application in products are as follows:
(1)EOS rapid inhibition and release technology
Excessive electrical stress (EOS) usually manifests as overvoltage or overcurrent, which generates a large amount of heat energy, making components
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The internal temperature is too high to damage components, which is the main external factor of integrated circuit failure. The situation of EOS is complex and inevitable, and the damage to the whole system will directly lead to equipment failure. Therefore, the rapid suppression and release of EOS is an important index to measure the performance of power protection chips. After years of research, the company has formed the EOS rapid suppression and release technology, which is fully reflected in the IP of functional modules such as EOS rapid release module, transient voltage instantaneous turn-off detection module, accelerated turn-off module and high-energy EOS protection module. This technology can quickly detect and cut off the power surge transmission path in nanosecond, and the output of the path has almost no fluctuation, which makes the EOS energy quickly released by the protection products, and the instantaneous release current can exceed 200A A.
The company’s EOS rapid suppression and release technology has been comprehensively applied in power protection products, which makes the products have excellent performance in EOS protection ability and transient voltage turn-off speed, especially the built-in EOS protection ability can be from the conventional 80 V to the rare 200 V in the industry.
(2) Low noise and high power ripple suppression technology.
Noise and PSRR are one of the most critical indicators in power supply system. High-definition display system, high-pixel camera system, high-speed storage unit and other application scenarios require high power supply noise and PSRR. After years of research and development and experience summary, the company has formed a low-noise and high-power ripple suppression technology, which is embodied in a series of functional modules IP for noise reduction, anti-interference and stable power supply, such as high-precision stable reference voltage source, high-precision low-temperature drift reference current source, low-pass multi-order filter and PSRR boost input stage, and has been widely used in LDO, charging management, current limiting switch and other products.
The company’s low-noise and high-performance LDO series products can achieve noise as low as 10? V and PSRR are up to 90dB, which can ensure the noise and ripple suppression requirements of power system in harsh use environment.
(3) High-order erasing display technology
Brightness refers to the hierarchical subdivision of display brightness. The finer the brightness, the more accurate the display uniformity and resolution will be. Erasing is to eliminate the dynamic brightness interference caused by dynamic fast scanning in the process of LED display. The company integrated high-precision linear adjustment module, PWM digital pulse adjustment module, high-consistency constant-current output module, dynamic erasing module and other functional modules IP, forming a distinctive high-order erasing display technology. This technology is mainly used in the company’s LED drive circuit and RGB constant current display drive circuit and other products, which makes the company produce.
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The product can support the unique dual-tone mode of linear adjustment and PWM adjustment, and the brightness adjustment is more detailed.
(4) Accurate current and voltage detection charging management technology.
The company’s accurate current and voltage detection and charging management technology is specially developed for small lithium battery application scenarios, including trickle charging control, constant current charging control, constant voltage detection and cut-off current detection, which can greatly improve the accuracy of detecting battery voltage, charging current and cut-off current. This technology has formed a low-voltage trickle charging module, a transient response acceleration module, a current detection and adjustment module and other functional modules IP, which are mainly applied to products such as charging management chips, and the voltage detection accuracy can reach 0.5%, which can meet the detection accuracy of 1mA of cut-off current in a constant current charging scenario of 1 year.
(5) Transmission and data communication technology with clock calibration.
In the transmission and data communication technology with clock calibration, clock calibration is mainly to control the delay time accurately, which is used in the field with very strict time control requirements; Transmission and communication technologies include IIC, IIS and user-defined inspection communication methods, which can be repeatedly checked to ensure the accuracy of communication data transmission and the normal use of the response system. This technology is embodied in the communication check and error correction module, anti-group pulse abnormal interference module and other functional modules IP, and finally applied to various switches, intelligent networking delay management units and other products of the company.
(6) Intelligent switching and management technology of complex multi-power supply system.
Usually, mobile devices include lithium battery interface, external charging interface, test channel power interface, etc. When all ports are connected to power supply at the same time, the power supply system needs to be stable without fluctuation, and can switch smoothly and automatically identify each power supply. The company’s intelligent power supply switching and management technology for complex multi-power supply systems is mainly aimed at the power supply path management of mobile devices powered by lithium batteries, including power supply detection, test loop design, power supply identification and software switching, etc., and has formed functional modules such as multi-channel power supply identification and switching structure module and precise internal voltage adjustment module, which are mainly used in charging management chips with path management and power supply protection chips with OVP, load switch and battery switch functions.
This technology can intelligently allocate the paths of charging and power consumption, and ensure the smooth switching of power supply system in the state of multiple power supplies. The internal resistance of power supply switch can be as low as 6m? , the flow capacity is more than 6A, and it has the function of automatic power path management (that is, automatic identification and selection of multi-channel power supplies), which automatically realizes complete isolation of multi-channel power supplies and avoids mutual interference.
All the core technologies of the company are independently researched and developed, and there are no disputes or potential disputes.
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2. Application and contribution of core technologies in main business and products or services.
During the reporting period, the company’s core technology should be used in the company’s main business, and most of the company’s operating income comes from the income of core technology products.
Unit: 10,000 yuan
(two) the scientific research strength and achievements of the core technology
1, the company’s honor
The company is an enterprise that enjoys tax preferential treatment for key integrated circuit design enterprises in the national planning and layout, and adheres to the business philosophy of "market-oriented, innovation-driven and quality-guaranteed" and has established a good market reputation. As of the signing date of this prospectus, the company’s honors are as follows:
2, the main scientific research projects undertaken
The company has undertaken a number of scientific research projects and obtained financial support from provincial and municipal levels. The main scientific research projects are as follows:
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(three) the issuer’s research and development projects
1. Main R&D projects of the company
As of the end of the reporting period, all the ongoing R&D projects of the company are independent research and development, and their details and progress are as follows:
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2. Comparison between related R&D projects and industry technical level
The company’s R&D projects are mainly implemented according to the industry technology development trend and downstream market demand, with high technical level and application value. Among them, the high-frequency and high-efficiency DC/DC circuit developed for mobile devices and the low-noise LDO products are all high-performance products with efficiency, power consumption and transient response speed as the design core indicators, mainly targeting internationally renowned brand products; The research and development and industrialization of high-precision magnetic control switch, high-precision portable equipment lithium battery charging management, OVP products adapted to fast charging technology, switching fast charging power supply management circuit with high efficiency as the design goal, high-speed data path management chip, special control chip for oil and gas exploitation and system all aim at reaching the performance level of competing products of internationally renowned brands.
3. Composition and proportion of R&D investment
The company drives business development with technological innovation, and needs to invest a lot of money in research and development every year. During the reporting period, the composition and proportion of the company’s R&D investment are as follows:
Unit: 10,000 yuan
For the composition of the issuer’s R&D investment, please refer to the relevant contents in "III. R&D expenses" in "X. Analysis of operating results" and "IV. Analysis of period expenses" in Section VIII of this prospectus.
4, cooperative research and development projects
The issuer’s holding subsidiary, Si Ruiwei, signed a "Technology Development (Cooperation) Contract" with Southeast University to cooperate in the research and development and application of key technologies of intelligent power drive modules for high-efficiency motors. The two sides agreed that the project will be led by Siruiwei and provided with technical support by Southeast University. The intellectual property rights generated during the project implementation period shall be owned by Siriwei, and both parties shall undertake the confidentiality obligation of all technical data.
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By the end of 2020, the company had no cooperative R&D agreement in progress.
(4) Relevant information of core technical personnel and R&D personnel
1, the proportion of core technical personnel and R&D personnel in the total number of employees.
2. Basis for identifying core technicians, professional qualifications and important scientific research achievements, awards and specific contributions to the issuer’s R&D. The issuer identifies core technicians mainly based on the research and development fields of employees, participation in R&D projects and responsibilities, contributions to the company’s actual production and operation, etc., and the selection criteria and basis for core technicians include:
(1) Have rich industry experience and strong correlation with professional background;
(2) Sign a formal labor contract with the company and hold an important position in the company’s research and development, technology and other positions;
(3) During his tenure, he participated in and led the research and development of a number of core technologies, completed a number of patent applications or drafted major technical standards, or played a key role in the contribution of scientific research achievements.
The core technical personnel of the company are as follows:
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3, the issuer of the core technical personnel to implement the incentive and management measures.
In order to fully mobilize the enthusiasm of core technicians and maintain team stability, the company has established a sound management system and incentive system for core technicians. In terms of management measures, the company is bound by signing confidentiality agreements, non-competition clauses and other means; In terms of incentive measures, the company not only adopts market competitive salary, employee stock ownership and other incentive measures, but also helps core technicians to realize the unity of self-value and enterprise development direction through excellent research and development conditions and systematic scientific research project management.
4. Major changes in core technical personnel during the reporting period and their impact on the issuer.
The issuer comprehensively considers the comprehensive indicators such as academic background, term of office and post, and sorts out the identification of core technicians. In 2017, the company identified Wang Dong, director of the design institute, as the core technician, and no longer identified Wang Fang, Miao Yingqiu, Lu Xiaojie and Yu Renchang as the core technicians. Since Wang Fang, Miao Yingqiu, Lu Xiaojie and Yu Renchang are still in the company, the change of core technical personnel has not had a significant adverse impact on the issuer.
(5) Technological innovation mechanism and innovation system arrangement.
1. Closely track the technological trends and market-oriented orientation at the forefront of the industry.
The company adheres to the research strategy of "two-way transmission of technology and market", based on the latest changes in technology and market demand, fully investigates the needs of downstream customers and participates in various industry exhibitions at home and abroad, and analyzes the market competition of target products.
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Competition situation and the life cycle of products in downstream industries; We have established a normal communication mechanism with experts in the industry, maintained a good communication relationship with experts and scholars in the same industry, tracked the cutting-edge technology trends in the industry in time, and conducted technical demonstrations on the projects under research, so as to continuously enhance the core competitiveness of the company’s products and provide products with better performance for the market.
2. Continue to attach importance to personnel training and R&D team building.
Professional talents are the cornerstone of the development and growth of integrated circuit design enterprises. The company has always attached importance to the cultivation and construction of R&D teams, continuously increased R&D investment and improved R&D system. At present, the company has formed a stable R&D echelon, and established a management team with complete configuration, advantages and complementarities from technology R&D, production management to marketing. The core management team has a stable structure and a clear division of labor among team members, and a series of systems have been formulated to enhance outstanding employees’ sense of identity with the company and stimulate their enthusiasm for work.
3. Strengthen knowledge management and improve the intellectual property system.
The company attaches great importance to the comprehensive management of various professional technical trends, project experience, market information and other knowledge, and has formulated the Knowledge Management Control Procedure, which clarifies the accumulation and exchange mechanism of internal and external information, professional technical knowledge and project experience, and realizes the comprehensive management and application of internal and external knowledge. At the same time, the company carries out technical protection through patent application, establishes and gradually improves the intellectual property system, and lays a knowledge foundation for the company’s continuous innovation.
VII. The issuer’s information on whether it meets the relevant matters stipulated in the Interim Provisions of Shanghai Stock Exchange on Reporting and Recommending the Issuance and Listing of Enterprises in science and technology innovation board.
(1) Matters related to the issuer’s compliance with Article 3 of the Interim Provisions.
1. The issuer’s business meets the requirements of the national science and technology innovation strategy.
In January 2017, the Guiding Catalogue of Key Products and Services of Strategic Emerging Industries issued by the National Development and Reform Commission listed IC chip design and services in the catalogue of key products of strategic emerging industries. In the discussion of the national government work report, promoting the development of the integrated circuit industry is listed as the first place in the development of the real economy, highlighting the importance and forerunner of the integrated circuit industry. At the same time, the integrated circuit design business engaged by the company meets the requirements of "strengthening original and leading scientific and technological research" and "promoting the optimization and upgrading of manufacturing industry" in the national "14 th Five-Year Plan".
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2. The issuer has key core technologies and strong ability to transform scientific and technological achievements.
After years of accumulation, the company has formed an advanced and mature technical system covering various design platforms such as power conversion and power protection, and a number of core technologies with strong market pertinence and great application value, and has developed a large number of low-noise and high-efficiency product series. The company’s technology has been able to achieve the key performance indicators of some products reaching or exceeding the level of domestic and foreign bidding products.
During the reporting period, the company’s R&D expenses increased year by year, accounting for more than 5% of its operating income, maintaining a high level of R&D investment; The number of R&D personnel has gradually increased. At the end of the reporting period, the proportion of R&D personnel in the number of employees has exceeded 51.15%. In addition, the company’s core technicians have professional educational background and rich work experience, and have strong scientific research capabilities.
The company actively carried out R&D work, and carried out a number of R&D projects at the same time during the reporting period. Mature technical reserves enabled the R&D team to quickly respond to market demand, develop high-quality products in time to participate in market competition, and after continuous products were put into the market, the technology could be verified and upgraded, forming a virtuous circle of "R&D-customer verification-product sales-sustainable development", ensuring good market competitiveness.
3. The issuer is highly recognized by the market and has formed a high-quality customer base.
The company has passed the rigorous certification process of many world-renowned consumer electronics customers, and has formed a high-quality end customer base including Samsung, Customer A, Xiaomi, LG and Wentai, which has been highly recognized by customers. Based on its dominant position in mobile phones, wearable devices and other application fields, the company has become one of the main suppliers of power management chips in the consumer electronics market, and continues to lay out in the fields of household appliances, Internet of Things, automotive electronics, network communication and so on.
The issuer conforms to the direction of science and technology innovation board’s support, and conforms to the provisions of Article 3 of the Interim Provisions that science and technology innovation board gives priority to supporting the issuance and listing of scientific and technological innovation enterprises that conform to the national scientific and technological innovation strategy, have advanced technologies such as key core technologies, have outstanding scientific and technological innovation capabilities, have outstanding ability to transform scientific and technological achievements, have outstanding industry status or have high market recognition.
(2) The issuer meets the industry fields as stipulated in Article 4 of the Interim Provisions.
The company’s main business is the research and development and sales of high-performance analog chips, and its main products are power management chips.
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The product belongs to the integrated circuit design industry, which conforms to Article 4 of the Interim Provisions that "the issuer applying for listing in science and technology innovation board shall belong to high-tech industries and strategic emerging industries in the following industries: (1) The new generation information technology field, mainly including semiconductors and integrated circuits, electronic information, next generation information networks, artificial intelligence, big data, cloud computing, software, Internet, Internet of Things and intelligent hardware, etc.". The issuer’s main business matches the classification of its industry field, but there is no significant difference with the classification of comparable companies’ industry field.
(3) Matters related to the issuer’s compliance with Article 5 of the Interim Provisions.
1. The accumulated R&D investment of the company in the last three years accounts for 7.49% of the accumulated operating income in the last three years, and the accumulated amount of R&D investment in the last three years has reached 102,024,400 yuan, as follows:
Unit: 10,000 yuan
Therefore, the company meets the conditions of "the accumulated R&D investment in the last three years accounts for more than 5% of the accumulated operating income in the last three years, or the accumulated R&D investment in the last three years is more than 60 million yuan".
2. The company generated 26 invention patents (including one subsidiary, Siriwei) from its main business income, which met the conditions of "more than 5 invention patents (including national defense patents) from its main business income, except for software enterprises".
3. The company’s operating income in the last year was 542,836,700 yuan, and the compound growth rate of operating income in the last three years was 25.56%, which met the conditions of "the compound growth rate of operating income in the last three years reached 20%, or the amount of operating income in the last year reached 300 million yuan".
4. At the end of 2020, the company had 133 R&D personnel, accounting for 51.15% of the total employees, which met the condition that R&D personnel accounted for no less than 10% of the total employees in that year.
To sum up, the company complies with Article 5 of the Interim Provisions on the Declaration and Recommendation of science and technology innovation board Enterprises’ Issuance and Listing, and meets the requirements of scientific and technological attributes such as science and technology innovation board’s support direction, scientific and technological innovation industry fields and related indicators.
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Eight, the issuer’s overseas operations
As of the signing date of this prospectus, the issuer has no overseas operations.
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Section 7 Corporate Governance and Independence
I. Establishment, perfection and operation of the system of shareholders’ meeting, board of directors, board of supervisors, independent directors and secretary of the board of directors According to the requirements of the Company Law, the Securities Law and other relevant laws, regulations and normative documents, the company has established and improved the governance structure composed of shareholders’ meeting, board of directors, board of supervisors, independent directors and management, and formulated system documents including the rules of procedure of shareholders’ meeting, board of directors and board of supervisors, forming an authority and decision-making body. The shareholders’ meeting, the board of directors, the board of supervisors and senior management of the company operate in a standardized manner in accordance with the requirements of relevant laws, regulations and normative documents, the Articles of Association and relevant rules of procedure. All shareholders, directors, supervisors and senior management are conscientious and earnestly exercise their rights and perform their obligations in accordance with the system.
During the reporting period, the company did not have any major defects in corporate governance.
(a) the establishment and improvement of the shareholders’ general meeting system and its operation.
According to the Company Law and relevant regulations, the company has formulated the Articles of Association, Rules of Procedure for Shareholders’ General Meeting and other institutional documents, in which the Articles of Association clearly defines the responsibilities, authorities and basic system of shareholders’ general meeting, and the Rules of Procedure for Shareholders’ General Meeting provides detailed provisions on the convening procedures of shareholders’ general meeting. Since 2017, the company has held 17 shareholders’ meetings, and all the previous shareholders’ meetings have complied with the relevant laws, regulations and the Articles of Association in terms of convening methods, procedures, voting methods, resolutions and signing, and there is no violation of the Company Law, the Articles of Association and other provisions in exercising their functions and powers.
(two) the establishment and operation of the board of directors system
The board of directors of the company is responsible for the shareholders’ meeting. According to the Articles of Association and the Rules of Procedure of the Board of Directors, the board of directors of the company consists of 9 directors, including 3 independent directors. The board of directors shall have a chairman, who shall be elected by the board of directors by more than half of all directors. Directors are elected or replaced by the general meeting of shareholders, with a term of three years. Directors may be re-elected at the expiration of their term of office, and independent directors may not be re-elected for more than six years.
The board of directors and directors shall exercise their rights in strict accordance with the Articles of Association and the Rules of Procedure of the Board of Directors.
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And fulfill their obligations. Since 2017, the company has held a total of 21 meetings of the board of directors. All previous meetings of the board of directors have complied with the provisions of relevant laws, regulations, the Articles of Association and related systems in terms of convening methods, procedures, voting methods, signing and resolutions, and there is no violation of the Company Law, the Articles of Association and related systems. The Board of Directors mainly made relevant resolutions on major business management issues of the company, major issues submitted to the shareholders’ meeting for discussion, appointment and removal of senior management personnel, and effectively played its role.
(three) the establishment and operation of the board of supervisors system
The company’s board of supervisors is responsible for the shareholders’ meeting. The Company has formulated the Rules of Procedure for the Board of Supervisors, and the Board of Supervisors and supervisors exercise their rights and perform their obligations in strict accordance with the Articles of Association and the Rules of Procedure for the Board of Supervisors. The Board of Supervisors of the Company consists of three supervisors, of which two supervisors are shareholders’ representatives, elected by the shareholders’ meeting; The employee representative shall serve as a supervisor, not less than 1/3 of the members of the board of supervisors of the company, and shall be elected by the employees of the company through democratic forms such as the employee assembly and the employee representative assembly. Since 2017, the Company has held 20 meetings of the Board of Supervisors. All previous meetings of the Board of Supervisors have complied with the relevant laws, regulations and the Articles of Association in terms of convening methods, procedures, voting methods, contents of resolutions and signing, and there is no violation of the Company Law, the Articles of Association and related systems to exercise their functions and powers. The Board of Supervisors is mainly responsible for the effective supervision of the company’s major production and operation decisions, regular financial reports, the work of the board of directors and senior management personnel, and has effectively played the role of the Board of Supervisors.
(four) the establishment and operation of the independent director system
According to the Company Law, Guiding Opinions on Establishing the Independent Director System in Listed Companies, Articles of Association and other relevant provisions, the Company has formulated the Working Rules for Independent Directors. The company has 3 independent directors, not less than 1/3 of all directors, including an accounting professional. The number, personnel composition, qualifications and election procedures of the company’s independent directors are in compliance with the Articles of Association, Working Rules for Independent Directors and relevant laws and regulations.
According to the Articles of Association, Working Rules for Independent Directors and other work requirements, independent directors of the company fulfill their duties dutifully, actively attend all board meetings, provide professional and constructive opinions for major decisions of the company, and play a positive role in promoting the operation of the company in accordance with the norms of corporate governance structure.
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(five) the establishment and operation of the secretary system of the board of directors.
The Company has formulated the Working Rules for the Secretary of the Board of Directors. According to the Articles of Association and the Working Rules for the Secretary of the Board of Directors, the company has a secretary of the board of directors who is responsible for the company and the board of directors.
The secretary of the board of directors of the company carried out his work in accordance with the Articles of Association and the Detailed Rules for the Work of the Secretary of the Board of Directors, earnestly performed his duties, prepared all previous meetings of the board of directors and shareholders’ meeting in strict accordance with the provisions, attended relevant meetings on time, and diligently and conscientiously performed the relevant duties stipulated in the Detailed Rules for the Work of the Secretary of the Board of Directors.
(six) the establishment of special committees of the board of directors
According to the resolution of the shareholders’ meeting, the Company has established a strategy committee, an audit committee, a nomination committee and a remuneration and assessment committee under the board of directors. The members of special committees are all composed of directors, of which more than half are independent directors in the Audit Committee, Nomination Committee and Remuneration and Appraisal Committee, and the convener is an accounting professional.
The list of members of the special committees of the board of directors of the company is as follows:
Since the establishment of the special committees of the board of directors, all members have given full play to their professional expertise, worked diligently and performed their duties in strict accordance with the requirements of laws, regulations and the company system, and standardized their operation.
Ii. information on the issuer’s shares with special voting rights
As of the signing date of this prospectus, the company has no special voting shares or similar arrangements.
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III. Issuer’s Agreement Control Framework
As of the signing date of this prospectus, the company has no agreement control structure.
Iv. internal control system
(a) the company’s management’s self-assessment opinions on the integrity, rationality and effectiveness of internal control
The board of directors of the company believes that the company has completed the work according to the established plan of internal control inspection and supervision, and the work plan of internal control inspection and supervision covers the main aspects and the whole process of internal control, which provides a reasonable guarantee for the implementation, feedback and improvement of the internal control system. The company judges whether the design of the company’s internal control system is complete and reasonable and whether the implementation of internal control is effective according to the requirements of gradually improving and meeting the company’s sustainable development needs. Judgments are made according to internal environment, risk assessment, control activities, information and communication, internal supervision and other elements. In the process of establishing internal control, the company fully considered the characteristics of the industry and the company’s many years of management experience, ensuring that internal control meets the company’s production and operation needs and plays an effective role in controlling business risks; Since the company formulated the internal control system, all the systems have been effectively implemented, which has played a positive and effective role in strengthening management, standardizing actions, improving economic benefits and long-term development of the company.
The company has effectively maintained the internal control related to financial reporting in all major aspects according to the requirements of the Basic Standards for Internal Control of Enterprises.
(2) Certified public accountants’ opinions on the internal control of the company
Rongcheng Certified Public Accountants (Special General Partnership), the auditor of this issuance, issued "Rongcheng Special Word [2021]No. 230Z0204" and "Internal Control Appraisal Report", holding that Lixin Micro maintained effective internal control over financial reports in all major aspects in accordance with the Basic Standards for Internal Control of Enterprises and relevant regulations on December 31, 2020.
V. Violation of laws and regulations
The issuer operates in strict accordance with the Company Law and other relevant laws and regulations and the Articles of Association.
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Operating in accordance with the law, there was no major violation of laws and regulations during the reporting period, and there was no major punishment by the state administrative organs and industry authorities.
VI. Capital occupation and external guarantee during the reporting period
During the reporting period, there was no situation that the issuer’s funds were occupied by the controlling shareholder, actual controller and other enterprises controlled by it by borrowing, paying off debts, paying in advance or other means, and there was no illegal guarantee for the controlling shareholder, actual controller and other enterprises controlled by it.
Seven, the issuer’s ability to operate independently and continuously.
Since the establishment of the overall change, the Company has operated in strict accordance with the Company Law and other laws and regulations and the Articles of Association, established and improved the corporate governance structure, and is independent from the controlling shareholder, actual controller and other enterprises controlled by the above-mentioned entities in terms of assets, personnel, finance, institutions and business, with an independent and complete business system and the ability to operate independently directly facing the market.
(a) the integrity of the assets
The company was changed from Lixin Micro Co., Ltd. as a whole, and the business, assets, personnel and related creditor’s rights and debts of the original Lixin Micro Co., Ltd. have all entered the joint-stock company. The company has the technology, place and necessary equipment and facilities needed to carry out business, trademarks, patents, proprietary technology and technical service system, management system and marketing system related to production and operation, and the core technologies and products have independent intellectual property rights. The ownership of the company’s assets is clear and complete, and there is no situation that the controlling shareholder, actual controller or other enterprises controlled by it occupy the company’s assets.
(II) Personnel independence
The company has established an independent personnel and salary management system. The general manager, deputy general manager, secretary of the board of directors, financial officer and other senior management personnel all work in the company full-time and receive remuneration. They have not held other positions except directors and supervisors in the controlling shareholder, actual controller and other enterprises controlled by them, and have not received remuneration from the controlling shareholder, actual controller and other enterprises controlled by them. The company’s financial personnel are not working part-time in the controlling shareholder, actual controller or other enterprises controlled by them.
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(3) Financial independence
The company has an independent financial accounting department, and has established an independent and standardized financial accounting system and financial accounting system in accordance with the Accounting Law of People’s Republic of China (PRC), Accounting Standards for Business Enterprises and other laws and regulations, and can make financial decisions independently. The company has set up a separate bank account, and there is no sharing of bank accounts with controlling shareholders, actual controllers and other enterprises controlled by them. As an independent taxpayer, the company independently fulfills its tax declaration and tax payment obligations according to law. During the reporting period, there were no cases in which the controlling shareholder and actual controller illegally occupied the company’s funds and interfered with the use of the company’s funds.
(4) Institutional independence
The company has a sound corporate governance structure, set up necessary functional departments according to business needs, and established a standardized operation system. The institutions and functional departments of the company operate independently according to the responsibilities stipulated in the Articles of Association and other management systems, and are completely separated from the functional departments of controlling shareholders, actual controllers and other enterprises controlled by them, and there is no subordinate relationship with each other. The company has independent business and office space, and there is no confusion with controlling shareholders, actual controllers and other enterprises controlled by them.
(5) Business independence
The company has established a corporate governance structure and an internal organizational structure that meet the requirements of the modern enterprise system, and operates independently in operation and management, forming an independent procurement, R&D and sales business system, with the ability to operate independently for the market. The issuer’s business is independent of the controlling shareholder, actual controller and other enterprises controlled by it, and there is no horizontal competition with the controlling shareholder, actual controller and other enterprises controlled by it, which has a significant adverse impact on the issuer and has a serious impact on independence or related party transactions in obviously unfair.
(6) Changes in the issuer’s main business, control right, management team and core technical personnel.
In the last two years, there have been no major changes in the company’s main business, control rights, directors, supervisors, senior managers and core technicians; The ownership of the issuer’s shares held by the controlling shareholder and shareholders controlled by the controlling shareholder and actual controller is clear, the actual controller has not changed in the last two years, and there is no major ownership dispute that may lead to the change of control rights.
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(seven) other matters affecting the ability to continue to operate.
As of the signing date of this prospectus, the ownership of the company’s main assets is clear, and there is no major ownership dispute, no major risk of debt, no major guarantee or major litigation, arbitration and other contingencies; The business environment of the company is good, and there are no major changes that have occurred or will occur, which have a significant impact on continuing operations.
Eight, horizontal competition
(1) Lixin Micro has no horizontal competition with the controlling shareholder, actual controller and other enterprises controlled by it.
The company’s main business is the research and development and sales of analog chips. As of the signing date of this prospectus, except for the company and its subsidiaries, Yijing Investment, the controlling shareholder, has not engaged in other businesses or held other foreign investments. The actual controllers of the company, Yuan Minmin, Mao Chenglie, Zhou Baoming, Wa Donghui, Sean, Tang Dayong, Wang Dong and Wang Fang, do not directly or indirectly control other enterprises except holding the equity of Yijing Investment. The issuer has not engaged in the same or similar business with the controlling shareholder, actual controller and other enterprises controlled by it, and there is no horizontal competition.
(2) Commitment of the controlling shareholder and actual controller on avoiding horizontal competition.
In order to avoid potential horizontal competition, the controlling shareholder and actual controller of the company issued the Commitment on Eliminating or Avoiding Horizontal Competition. For details, please refer to the Commitment on Avoiding Horizontal Competition in Section X Investor Protection of this prospectus.
IX. Related Parties, Related Relationships and Related Transactions
(1) Related parties and related relationships
According to the Company Law, Accounting Standards for Business Enterprises No.36-Related Party Disclosure and Administrative Measures for Information Disclosure of Listed Companies, the main related parties and their relationships of the Company during the reporting period are as follows:
1. Directly or indirectly control the shareholders of the issuer and other enterprises controlled by them.
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2. Other shareholders who directly hold more than 5% of the company’s shares and the enterprises controlled by them.
Note 1: On October 29th, 2020, Wuxi Huading Investment Consulting Co., Ltd. changed its name to Wuxi Huading Investment Management Co., Ltd.; On March 18th, 2021, it was renamed as Wuxi Huading Venture Capital Management Co., Ltd.. Note 2: On September 25th, 2020, Wuxi Gaochuang Equity Investment Partnership (Limited Partnership) was established. Note 3: On November 20th, 2020, Wuxi Chanfa Venture Capital Center (Limited Partnership) was established, and Wuxi Venture Capital held 100% of its total investment directly and indirectly.
Note 4: On December 25th, 2020, the controlling shareholder of Wuxi Kefa Financing Guarantee Co., Ltd. was changed to Wuxi Finance Bureau (holding 60.78%), and Wuxi Venture Capital held 20%.
Note 5: On April 15th, 2021, Wuxi Chuangwei Equity Investment Partnership (Limited Partnership) was established.
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3. Other shareholders who indirectly hold more than 5% of the company’s shares.
Note: On September 23, 2020, the shareholder of Wuxi Venture Capital was changed from Wuxi Industrial Development Group Co., Ltd. to Wuxi Chanfa Jinfu Group Co., Ltd., which indirectly held more than 5% of the issuer’s shares through Wuxi Venture Capital; Wuxi Chanfa Jinfu Group Co., Ltd. is a wholly-owned subsidiary of Wuxi Industrial Development Group Co., Ltd. Before and after the change, the actual controller of Wuxi Venture Capital was the State-owned Assets Supervision and Administration Commission of Wuxi Municipal People’s Government, and there was no change.
4. Directors, supervisors and senior managers of the company and its controlling shareholders.
5. Other related natural persons
The controlling shareholder and actual controller of the company, and the close family members of other shareholders, directors, supervisors and senior managers holding more than 5% of the shares are related parties of the company, including the close family members.
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Including spouses, parents and their parents, brothers and sisters and their spouses, children and their spouses who have reached the age of 18, brothers and sisters of their spouses and parents of their spouses.
6. Holding subsidiaries and shareholding companies
7. Other related legal persons
Other affiliated legal persons of the company include enterprises controlled by affiliated natural persons of the company or serving as directors and senior managers; Or other natural persons, legal persons or other organizations that have a special relationship with the listed company and may lead to the interests of the listed company being tilted towards them according to the principle that substance is more important than form. The main situation is as follows:
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Note 1: On March 9, 2021, Huajin Semiconductor (Jiashan) Co., Ltd. was established, with Yu Xiekang, an independent director of the issuer, as its chairman.
8. Related parties that existed during the reporting period.
(1) The company is associated with an enterprise in which a natural person has served as a director or a shareholder.
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(2) The original directors, supervisors and senior managers of the company and other related natural persons and other related legal persons.
During the reporting period, the related parties of the Company once existed, including former directors Zhao Ying and Mao Jinhu, supervisors Wu Xiangjun, Cui Luxia and Yu Renchang, and their close family members, including spouses, parents and spouses’ parents, brothers and sisters and their spouses, children over the age of 18 and their spouses, spouses’ brothers and sisters and parents of their children’s spouses; And enterprises controlled or served as directors or senior managers by the above-mentioned personnel.
9. Others
In addition to the above-mentioned related parties, related parties that have met the criteria for identifying related parties in the past 12 months or in the next 12 months, such as Accounting Standards for Business Enterprises No.36-Disclosure of Related Parties, science and technology innovation board Stock Listing Rules of Shanghai Stock Exchange, also constitute related parties of the issuer.
(II) Related party transactions during the reporting period.
1. Recurring related party transactions
(1) Purchasing goods and accepting labor services
During the reporting period, the company purchased goods and received labor services from related parties as follows:
Unit: 10,000 yuan
Suzhou Zhengzhong Electronic Technology Co., Ltd. is 99.00% owned by the brother of Wang Fang, the actual controller of the company.
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Division, early mainly engaged in lighting related trade. In 2017 and 2018, the company purchased a small amount of LED lighting lamps and accessories for internal decoration, with a small amount.
(2) selling goods and providing services
During the reporting period, the company did not sell goods or provide labor services to related parties.
(3) Salary of key management personnel
During the reporting period, the company paid remuneration to directors, supervisors and senior management personnel as follows:
Unit: 10,000 yuan
During the reporting period, the salaries paid by the company to key management personnel were 3,553,700 yuan, 3,882,900 yuan and 4,374,800 yuan respectively, showing an overall upward trend, mainly due to the corresponding increase in the salaries of key management personnel with the expansion of the company’s business scale to strengthen refined management.
2. Incidental related party transactions
During the reporting period, there were no other incidental related party transactions except that related parties provided guarantees for the company. The guarantee provided by related parties for the Company is as follows:
Unit: 10,000 yuan
The above-mentioned related guarantee is the guarantee provided by Mr. Yuan Minmin, the actual controller of the company, for the bank loan of the subsidiary Xiruiwei. The guarantee period is two years from the expiration of the debt performance period agreed in the main contract (the term of the bank loan contract is from December 14, 2020 to December 13, 2021).
On December 9, 2020, the subsidiary Xiruiwei signed the Working Capital Loan Contract No.32010120200022446 with Wuxi Science and Technology Sub-branch of Agricultural Bank of China. Mr. Yuan Minmin, the actual controller of the company, provided a guarantee for the above-mentioned bank loan of the subsidiary Xiruiwei, and the guarantee period was from December 9, 2020 to December 8, 2023. Mr. Yuan Minmin’s guarantee for the bank loan of the subsidiary Xiruiwei has been the fourth.
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The 14th meeting of the Board of Directors, the 13th meeting of the 4th Board of Supervisors and the 5th Extraordinary General Meeting of Shareholders in 2020 were reviewed and approved, and the related shareholders abstained from voting on this proposal. The independent directors recognized the above matters and expressed their independent opinions after careful examination.
(III) Balance of accounts receivable and payable of related parties
At the end of each reporting period, the company did not have the balance of accounts receivable and payable to related parties.
(4) Procedures performed by the affiliated transactions during the reporting period.
In view of the related party transactions during the reporting period, the company has fulfilled the review procedures stipulated in the articles of association. On May 28th, 2020, the company held the 10th meeting of the 4th Board of Directors and the 10th meeting of the 4th Board of Supervisors, and reviewed and approved the Proposal on Confirming Related Transactions of the Company during the Reporting Period. On June 12, 2020, the company convened the third extraordinary general meeting of shareholders in 2020 to review and approve the above proposal submitted by the board of directors, and related shareholders abstained from voting on this proposal. The independent directors recognized the above matters and expressed their independent opinions after careful examination. On December 8, 2020, the company held the 14th meeting of the 4th Board of Directors and the 13th meeting of the 4th Board of Supervisors, and reviewed and approved the Proposal on Confirming New Related Party Transactions in the Reporting Period. On December 23, 2020, the company convened the fifth extraordinary general meeting of shareholders in 2020 to review and approve the above proposal submitted by the board of directors, and related shareholders abstained from voting on this proposal. The independent directors recognized the above matters and expressed their independent opinions after careful examination.
(5) The impact of related party transactions on the issuer’s financial position and operating results during the reporting period.
During the reporting period, the issuer’s regular related party transactions mainly paid remuneration to directors, supervisors and senior managers; Incidental related party transactions mainly involve related parties providing guarantees for the issuer. The related party transactions between the issuer and related parties do not harm the issuer’s interests and have no significant impact on the company’s financial position and operating results.
(VI) Changes of related parties
During the reporting period, the changes of related parties are mainly reflected in: (1) the company added Siliwei as a subsidiary;
(2) The change of the company in which the related natural person once served as a director or held shares; (3) Changes of directors and supervisors of the company and other related natural persons and other related legal persons related to the original directors and supervisors, specifically
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For details, please refer to "IX. Related Parties, Related Relationships and Related Transactions", "I. Related Parties and Related Relationships" and "VII. Related Parties that existed during the reporting period" in this section of this prospectus.
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Section VIII Financial Accounting Information and Management Analysis The financial accounting data quoted in this section are all quoted from or calculated from the financial report audited by Rongcheng Club unless otherwise specified. This section explains the important items in the financial statements. Investors want to know more about the company’s financial accounting information. The company reminds investors to read the full text of the financial report and audit report attached to this prospectus.
I. Financial statements
(1) Consolidated balance sheet
Unit: Yuan
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(II) Consolidated income statement
Unit: Yuan
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(III) Consolidated cash flow statement
Unit: Yuan
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II. Audit Opinions and Key Audit Matters
(1) Audit opinion
Rongcheng Certified Public Accountants (special general partnership) accepted the entrustment of the Company to carry out the merger and balance sheet of the parent company on December 31, 2020, December 31, 2019 and December 31, 2018, the merger and parent company’s income statement, merger and parent company’s cash flow statement, merger and parent company’s owner’s equity statement and notes to related financial statements in 2020, 2019 and 2018. The audit opinion is as follows:
"We believe that the attached financial statements were prepared in accordance with the provisions of the Accounting Standards for Business Enterprises in all major aspects, and fairly reflected the merger of Lixin Micro on December 31, 2020, December 31, 2019 and December 31, 2018, the financial status of the parent company, the merger in 2020, 2019 and 2018, and the operating results and cash flow of the parent company."
(II) Key audit items
The key audit items are the most important items that Rongcheng Club considers to audit the financial statements in 2020, 2019 and 2018 according to professional judgment. The response to these matters is based on the audit of the financial statements as a whole and the formation of audit opinions. Rongcheng Club will not express opinions on these matters separately.
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1. Revenue recognition
(1) Description of matters
Lixin Micro is mainly engaged in the research and development and sales of analog chips. In 2020, 2019 and 2018, Lixin Micro’s operating income was 542,836,700 yuan, 474,579,200 yuan and 344,343,200 yuan respectively.
As revenue is a key performance indicator of Lixin Micro, there is an inherent risk that Lixin Micro’s management (hereinafter referred to as "management") manipulates the timing of revenue recognition in order to achieve specific goals or expectations, and it is an important component of the consolidated income statement, so Rongcheng Club will identify revenue recognition as a key audit item.
(2) Audit response
The audit procedures implemented by Rongcheng Club mainly include:
① Understand and evaluate the design and operational effectiveness of key internal controls related to revenue recognition of management;
② Check the sales contracts, orders and other materials, identify the contract terms and conditions related to the risk of commodity ownership and the transfer of remuneration, and evaluate whether the time of revenue recognition meets the requirements of the accounting standards for business enterprises;
(3) Perform analytical procedures for income and cost, including: analytical procedures for income, cost and gross profit margin fluctuations in each period;
(4) Obtain sales list, select samples of recorded income transactions, and check supporting documents such as sales contracts, invoices, outbound orders, acceptance certificates and customs declarations;
⑤ Implement confirmation procedures for major customers and check the post-payment situation of major customers;
⑥ On-site visit and verification of major customers;
⑦ Perform cut-off test, select samples from income transactions recorded before and after the balance sheet date, check the materials such as outbound order, logistics and transportation documents and receipt documents, and confirm that the income is recorded in the appropriate accounting period;
(8) Obtain the relevant export data of the customs department and check with the book export records.
2. Inventory impairment
(1) Description of matters
Lixin Micro is mainly engaged in the research and development and sales of analog chips. The main raw materials are wafers, and the production links are entrusted.
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To the professional wafer foundry, packaging test factory to complete. The net realizable value of inventory is measured according to the estimated selling price of inventory minus the estimated costs, sales expenses and related taxes and fees to be incurred upon completion. On the balance sheet date, the inventory for which depreciation reserve has been accrued shall be evaluated. If the influencing factors have disappeared or sales have been realized during the reporting period, it shall be turned back or resold within the original accrued amount. As of December 31, 2020, December 31, 2019 and December 31, 2018, the book balance of Lixinwei’s inventory was 111,740,100 yuan, 111,163,600 yuan and 94,810,900 yuan respectively, and the corresponding inventory depreciation reserve balance was 20,197,000 yuan and 11,000 yuan respectively. In view of the large amount involved in this project and the need for management to make significant judgments, Rongcheng Club identified inventory impairment as a key audit item.
(2) Audit response
Audit procedures related to inventory impairment implemented by Rongcheng Club mainly include:
① Understand, evaluate and test the design and implementation of internal control related to inventory management and inventory impairment, so as to evaluate whether it is reasonable and effective to make provision for inventory depreciation;
(2) to supervise the inventory, check the quantity and condition of the inventory, and pay attention to whether the related defective and sluggish materials are identified;
(3) Obtain the inventory depreciation reserve calculation table, and recheck the important assumptions involved in the net realizable value calculated by the management, such as checking the estimated sales price, the costs, sales expenses and related taxes incurred by the completion;
(4) Obtain the inventory age list at the end of the period, make an analytical review of the inventory with longer inventory age, analyze whether the provision for inventory depreciation is reasonable, and check the changes of inventory depreciation in the current period accrued in previous years.
III. Criteria for judging major events or importance levels related to financial accounting information
According to the industry and actual business situation, the company judges the importance of financial information from the nature and amount of the project. When judging the importance of the nature of the project, the company mainly considers whether the project belongs to daily activities in nature and whether it will have a significant impact on the company’s financial situation, operating results and cash flow. When judging the importance of the project amount, the company mainly considers whether the project amount accounts for more than 5% of the pre-tax profit in the relevant accounting period. Major events related to financial accounting information disclosed by the company in this section.
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The standard is that the amount exceeds 5% of the pre-tax profit of the relevant accounting period, or the amount does not reach 5% of the pre-tax profit, but the company thinks it is more important.
Four, the basis of the preparation of financial statements, statements to follow the accounting standards for enterprises, the scope of consolidated financial statements and changes.
(A) the basis for the preparation of financial statements
1. Preparation basis
Based on going concern, the Company confirms and measures according to the actual transactions and events, and the accounting standards for business enterprises and their application guidelines and standards interpretation, and prepares financial statements on this basis. In addition, the Company also disclosed relevant financial information in accordance with China Securities Regulatory Commission’s Compilation Rules for Information Disclosure of Companies Offering Securities to the Public No.15-General Provisions on Financial Reporting (revised in 2014).
2. Continuing operation
The Company has evaluated the ability of going concern for 12 months from the end of the reporting period, and found no matters affecting the ability of going concern. It is reasonable for the Company to prepare financial statements based on going concern.
(2) A statement of compliance with the accounting standards for enterprises
The financial statements prepared by the Company meet the requirements of the Accounting Standards for Business Enterprises, and truly and completely reflect the company’s financial status, operating results, changes in owners’ equity and cash flow.
(3) The scope of consolidated statements and its changes
1. Subsidiaries included in the scope of consolidated financial statements
All subsidiaries controlled by the company are included in the scope of consolidated financial statements. As of December 31, 2020, the subsidiaries included in the consolidated financial statements are as follows:
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2. Special purpose entities or operating entities that form control rights through entrusted operation or lease. As of the signing date of this prospectus, the company has no special purpose entities or operating entities that form control rights through entrusted operation or lease.
3. Changes in the scope of consolidated financial statements
During the reporting period, the new subsidiaries of the issuer are as follows:
During the reporting period, the issuer reduced its subsidiaries as follows:
(1) Business combination not under the same control
① Overview of business combination under different control during the reporting period.
Unit: Yuan
(Continued from the previous table)
Note 1: Stellar Optoelectronics is a holding subsidiary of Siriwei, and Siriwei holds 51.00% equity of Stellar Optoelectronics.
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Note 2: From June to December, 2018, the company successively signed the Equity Transfer Contract with the original shareholders Gu Yaokui, Pan Weigang, Wang Weihua and Wuxi Xiruiwei Management Consulting Partnership (Limited Partnership) to acquire 45.39% equity of Xiruiwei; In December 2018, the company paid all the equity transfer funds; On December 31, 2018, the company signed the Concerted Action Agreement with the shareholders and directors who hold 5.45% equity of Siruiwei; After the above-mentioned matters are completed, the company controls Siliwei in total.
With 50.84% of the voting rights, it can control the financial and business policies of Siriwei, enjoy the corresponding benefits and bear the corresponding risks. In summary, the merger date of the company’s acquisition of Xiruiwei is December 31, 2018.
② merger cost and goodwill
Unit: Yuan
The company recognizes the difference between the merger cost on the purchase date and the fair value of the identifiable assets and liabilities of the acquiree obtained in the business combination as goodwill; At the same time, the Company confirms the deferred income tax liabilities according to the difference between the fair value of the acquiree’s identifiable assets and liabilities acquired in the business combination and the tax basis, and adjusts the amount of goodwill accordingly. The fair value of the identifiable net assets of the merged company obtained by the Company was appraised and confirmed by Zhongshui Zhiyuan Assets Appraisal Co., Ltd..
③ The identifiable assets and liabilities of the purchaser on the purchase date.
Unit: Yuan
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(2) Changes in the scope of consolidation due to other reasons
On December 27, 2019, Wuxi Hengxing Optoelectronic Co., Ltd., a holding subsidiary of Wuxi Xirui Microelectronics Co., Ltd., was approved for cancellation by Wuxi Binhu District Market Supervision Administration, and will no longer be included in the scope of consolidated financial statements from the date of cancellation. On September 3, 2020, with the approval of the Administrative Examination and Approval Bureau of Wuxi National High-tech Industrial Development Zone (Xinwu District, Wuxi City), the company established Wuxi Semikentuo Microelectronics Co., Ltd., a holding subsidiary, holding 51% of its shares, which has been included in the consolidated financial statements of the company since its establishment. During the reporting period, there was no business combination under the same control, no sale of shares that lost control and reduction of subsidiaries, no reverse purchase and no absorption merger.
V. Major accounting policies and accounting estimates
During the reporting period, there was no significant difference in the main accounting policies between the company and comparable A-share listed companies in the same industry.
During the reporting period, the company’s main accounting policies and accounting estimates are as follows:
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(A) the accounting treatment method of business combination under the same control and not under the same control
1. Business combination under the same control
The assets and liabilities acquired by the Company in business combination shall be measured according to the book value of the acquired merged party in the consolidated financial statements of the ultimate controlling party on the merger date. Among them, if the accounting policies adopted by the merged party and the Company before the business combination are different, the accounting policies shall be unified based on the principle of materiality, that is, the book values of the assets and liabilities of the merged party shall be adjusted according to the accounting policies of the Company. If there is a difference between the book value of the company’s net assets obtained in the business combination and the book value of the consideration paid, the capital reserve (capital premium or equity premium) shall be adjusted first. If the balance of the capital reserve (capital premium or equity premium) is insufficient to be offset, the surplus reserve and undistributed profit shall be offset in turn. For the accounting treatment method of business combination under the same control through step-by-step transactions, please refer to "5. Accounting treatment of special transactions" in "V. Major accounting policies and accounting estimates" in this section, "II. Preparation method of consolidated financial statements".
2. Business combination not under the same control
The identifiable assets and liabilities of the acquiree acquired by the Company in the business combination shall be measured at their fair values on the purchase date. Among them, if the accounting policies adopted by the acquiree and the Company before the business combination are different, the accounting policies shall be unified based on the principle of materiality, that is, the book values of the assets and liabilities of the acquiree shall be adjusted according to the accounting policies of the Company. The company’s merger cost on the purchase date is greater than the difference between the fair value of the identifiable assets and liabilities of the acquiree, which is recognized as goodwill; If the merger cost is less than the difference between the fair values of the identifiable assets and liabilities of the acquiree obtained in the business combination, the merger cost and the fair values of the identifiable assets and liabilities of the acquiree obtained in the business combination shall be reviewed first. If the merger cost is still less than the fair values of the identifiable assets and liabilities of the acquiree after review, the difference shall be recognized as the profit and loss of the current merger.
For the accounting treatment method of business combination under different control through step-by-step transactions, please refer to "5. Accounting treatment of special transactions" in "V. Major accounting policies and accounting estimates", "II. Preparation method of consolidated financial statements" in this section.
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3. Handling of transaction costs in business combination.
Intermediary expenses such as audit, legal services, evaluation and consultation and other related management expenses incurred for business combination are included in the current profit and loss when incurred. The transaction costs of equity securities or debt securities issued as the merger consideration are included in the initial recognition amount of equity securities or debt securities.
(B) the preparation method of consolidated financial statements
1. Determination of the scope of merger
The scope of consolidation of consolidated financial statements is determined on the basis of control, including not only subsidiaries determined by voting rights (or similar voting rights) themselves or in combination with other arrangements, but also structured entities determined by one or more contractual arrangements.
Control means that the Company has the power over the investee, enjoys variable returns by participating in the related activities of the investee, and has the ability to influence the amount of returns by using the power over the investee. Subsidiary refers to the subject controlled by the Company (including the enterprise, the divisible part of the invested unit, and the structured subject controlled by the enterprise, etc.), and the structured subject refers to the subject that is not designed with voting rights or similar rights as the decisive factor when determining its controlling party (note: sometimes called special purpose subject).
2. Preparation method of consolidated financial statements
The Company prepares consolidated financial statements based on the financial statements of itself and its subsidiaries and other relevant information.
In preparing consolidated financial statements, the Company regards the whole enterprise group as an accounting entity, and reflects the overall financial position, operating results and cash flow of the enterprise group according to the requirements of confirmation, measurement and presentation of relevant accounting standards for enterprises and unified accounting policies.
(1) merge the assets, liabilities, owners’ equity, income, expenses and cash flow of the parent company and its subsidiaries.
(2) Offset the long-term equity investment of the parent company in the subsidiary and the share of the parent company in the owner’s equity of the subsidiary.
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(3) offset the influence of internal transactions between the parent company and its subsidiaries and subsidiaries. If the internal transaction shows that the related assets have impairment losses, the losses shall be fully recognized.
(4) Adjust special transactions from the perspective of enterprise groups.
3. Handling of increasing or decreasing subsidiaries during the reporting period
(1) Increase subsidiaries or businesses
(1) subsidiaries or businesses added by business combination under the same control.
A. When preparing the consolidated balance sheet, adjust the opening number of the consolidated balance sheet, and at the same time, adjust the related items of the comparative statement, which is regarded as that the consolidated reporting entity has existed since the final controlling party started to control.
B. When preparing the consolidated income statement, the income, expenses and profits of the subsidiary and business combination from the beginning of the current period to the end of the reporting period shall be included in the consolidated income statement, and relevant items in the comparative statement shall be adjusted at the same time, which shall be regarded as the existence of the consolidated reporting entity from the time when the final controlling party starts to control.
C. When preparing the consolidated cash flow statement, the cash flows of the subsidiary and the business combination from the beginning of the current period to the end of the reporting period shall be included in the consolidated cash flow statement, and at the same time, the relevant items in the comparative statement shall be adjusted, as if the consolidated reporting entity had existed since the time when the final controlling party started to control.
(2) subsidiaries or businesses added by business combination not under the same control.
A. When preparing the consolidated balance sheet, the opening amount of the consolidated balance sheet is not adjusted.
B when preparing the consolidated income statement, the income, expenses and profits of the subsidiary and the business from the purchase date to the end of the reporting period shall be included in the consolidated income statement.
C. When preparing the consolidated cash flow statement, the cash flow of the subsidiary from the purchase date to the end of the reporting period shall be included in the consolidated cash flow statement.
(2) Disposal of subsidiaries or businesses
① When preparing the consolidated balance sheet, the opening number of the consolidated balance sheet is not adjusted.
(2) when preparing the consolidated income statement, the income, expenses and profits of the subsidiary and the business from the beginning of the period to the disposal date shall be
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Run into the consolidated income statement.
③ When preparing the consolidated cash flow statement, the cash flows of the subsidiary and the business from the beginning to the disposal date shall be included in the consolidated cash flow statement.
4. Special considerations in merger and offset
(1) Long-term equity investment held by subsidiaries of the Company shall be regarded as treasury shares of the Company, and shall be listed as "minus treasury shares" under the item of owner’s equity in the consolidated balance sheet.
For the long-term equity investments held by subsidiaries, the long-term equity investments and their shares in the owners’ equity of the corresponding subsidiaries shall be offset with reference to the offset method of the Company’s equity investments in subsidiaries.
(2) The items of "special reserve" and "general risk reserve" are not paid-in capital (or share capital) or capital reserve, but also different from retained earnings and undistributed profits. After the long-term equity investment and the owner’s equity of subsidiaries offset each other, they will be restored according to the share attributable to the owner of the parent company.
(3) If the book values of assets and liabilities in the consolidated balance sheet are temporarily different from those in tax basis, where the taxpayer belongs, deferred income tax assets or deferred income tax liabilities shall be recognized in the consolidated balance sheet, and income tax expenses in the consolidated income statement shall be adjusted at the same time, except for deferred income tax related to transactions or events directly included in the owner’s equity and business combination.
(4) Unrealized internal transaction gains and losses arising from the sale of assets by the Company to subsidiaries shall be fully offset against the "net profit attributable to owners of the parent company". Unrealized gains and losses of internal transactions arising from the sale of assets by subsidiaries to the Company shall be offset between "net profit attributable to owners of the parent company" and "gains and losses of minority shareholders" according to the distribution ratio of the Company to the subsidiaries. Unrealized internal transaction gains and losses arising from the sale of assets between subsidiaries shall be offset between "net profit attributable to owners of the parent company" and "minority shareholders’ gains and losses" according to the distribution ratio of the company to the seller’s subsidiaries.
(5) If the current losses shared by minority shareholders of a subsidiary exceed their share in the initial owner’s equity of the subsidiary, the balance shall still be offset against the minority shareholders’ equity.
5. Accounting treatment of special transactions
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(1) purchase minority shareholders’ equity
The Company purchases the equity of subsidiaries owned by minority shareholders of subsidiaries. In individual financial statements, the investment cost of long-term equity investment newly acquired by purchasing minority shares is measured according to the fair value of the consideration paid. In the consolidated financial statements, the capital reserve (capital premium or equity premium) shall be adjusted for the difference between the newly acquired long-term equity investment due to the purchase of minority shares and the share of net assets that should be continuously calculated by subsidiaries from the purchase date or the merger date according to the newly-increased shareholding ratio. If the capital reserve is insufficient to be offset, the surplus reserve and undistributed profit shall be offset in turn.
(2) Obtaining control rights of subsidiaries step by step through multiple transactions.
(1) realize enterprise merger under the same control step by step through multiple transactions.
If it is a "package transaction", the Company will treat each transaction as a transaction to obtain the control right of a subsidiary. In individual financial statements, in every transaction before the merger date, the equity investment is recognized as a long-term equity investment, and its initial investment cost is calculated according to the corresponding shareholding ratio. The share of the book value of the net assets of the merged party in the consolidated financial statements of the final controlling party is determined. The difference between the initial cost of the long-term equity investment and the book value of the consideration is adjusted to the capital reserve (capital premium or equity premium). If the capital reserve (capital premium or equity premium) is insufficient to be offset, the surplus reserve and undistributed profit will be offset in turn. In the subsequent measurement, the long-term equity investment is accounted for according to the cost method, but it does not involve the preparation of consolidated financial statements. On the merger date, the initial cost of the Company’s long-term equity investment in subsidiaries is determined according to the book value share of the net assets of the merged party in the consolidated financial statements of the final controlling party, and the difference between the initial investment cost and the book value of the long-term equity investment before the merger plus the book value of the new consideration for further shares on the merger date will be adjusted to the capital reserve (capital premium or equity premium). If the capital reserve (capital premium or equity premium) is insufficient to be offset, the surplus reserve and undistributed profit will be offset in turn. At the same time, the consolidated financial statements on the merger date are prepared, and in the consolidated financial statements of the Company, it is deemed that all parties involved in the merger are adjusted in their current state when the final controlling party starts to control.
If the terms, conditions and economic impact of each transaction meet one or more of the following conditions, multiple transactions are usually treated as "package transactions":
A, these transactions are concluded at the same time or considering the mutual influence.
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B, these transactions as a whole can achieve a complete business result. C the occurrence of one transaction depends on the occurrence of at least one other transaction. D. A transaction is uneconomical when considered alone, but it is economical when considered together with other transactions. If it is not a "package transaction", in each transaction before the merger date, each transaction of the Company shall be recognized as a financial asset (financial asset measured at fair value through profit or loss or available-for-sale financial asset) or a long-term equity investment according to the equity method according to the fair value of the consideration paid. On the merger date, the Company determines the initial investment cost of long-term equity investment in individual financial statements according to the share of the net assets of subsidiaries in the book value of the consolidated financial statements of the ultimate controlling party after the merger. The capital reserve (capital premium or equity premium) shall be adjusted for the difference between the initial investment cost of the long-term equity investment on the merger date and the book value of the long-term equity investment before the merger plus the book value of the newly paid shares on the merger date. If the capital reserve is insufficient to be offset, the surplus reserve and undistributed profit shall be offset in turn. In the consolidated financial statements of the Company, it is deemed that all parties involved in the merger were adjusted in their current state when the ultimate controller started to control. When preparing the consolidated financial statements, the relevant assets and liabilities of the merged party should be incorporated into the comparative statements of the consolidated financial statements of the merged party not earlier than the time when the merged party and the merged party were under the control of the ultimate controller.And adjust the related items under the owner’s equity in the comparison report. Due to the insufficient balance of the combined party’s capital reserve (capital premium or equity premium), the part of the retained earnings realized by the combined party before the merger that belongs to the combined party has not been fully recovered in the consolidated financial statements, and the Company will explain this situation in the notes to the statements, including the amount of retained earnings realized by the combined party before the merger, the amount attributed to the Company and the amount that has not been transferred to the retained earnings in the consolidated balance sheet due to the insufficient balance of capital reserve.
If the equity investment held by the merging party before obtaining the control right of the merged party is accounted for according to the equity method, the relevant profits and losses, other comprehensive income and other changes in owners’ equity have been confirmed between the date of obtaining the original equity and the date when the merging party and the merged party are under the final control of the same party and the merging date, and the initial retained income during the comparative statement period shall be offset respectively.
(2) realize business combination under different control step by step through multiple transactions.
If it is a "package transaction", the Company regards each transaction as a transaction to gain control of its subsidiary.
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Easy to handle. In individual financial statements, in every transaction before the merger date, the equity investment is recognized as a long-term equity investment and its initial investment cost is determined according to the fair value of the consideration paid. In the subsequent measurement, the long-term equity investment is accounted for according to the cost method, but it does not involve the preparation of consolidated financial statements. On the merger date, in individual financial statements, the sum of the book value of the original long-term equity investment plus the new investment cost (fair value of the consideration paid for further acquisition of shares) is taken as the initial investment cost of the long-term equity investment on the merger date. In the consolidated financial statements, the initial investment cost is offset against the share of the fair value of the identifiable net assets of subsidiaries, and the difference is recognized as goodwill or included in the consolidated current profit and loss. If it is not a "package transaction", in each transaction before the merger date, each transaction of the investor shall be recognized as a financial asset (financial asset measured at fair value through profit or loss or available-for-sale financial asset) or a long-term equity investment according to the equity method according to the fair value of the consideration paid. On the merger date, in individual financial statements, the sum of the book value of the original equity investment (financial assets or long-term equity investment calculated according to the equity method) plus the new investment cost is taken as the initial cost of accounting for long-term equity investment by the cost method. In the consolidated financial statements, the equity of the purchased party held before the purchase date is re-measured according to the fair value of the equity on the purchase date, and the difference between the fair value and its book value is included in the current investment income;If the equity of the purchased party held before the purchase date involves other comprehensive income under the equity method accounting, other comprehensive income related to it will be converted into the current income on the purchase date, except for other comprehensive income arising from the re-measurement of defined benefit plans’s net assets or net liabilities by the merged party. In the notes, the Company discloses the fair value of the equity of the purchased party held before the purchase date, and the amount of relevant gains or losses arising from re-measurement according to the fair value.
(3) The Company disposed of its long-term equity investment in subsidiaries without losing control.
The parent company partially disposes of the long-term equity investment in its subsidiaries without losing control. In the consolidated financial statements, the disposal price and the disposal of the long-term equity investment correspond to the difference between the net assets of the subsidiaries calculated continuously from the purchase date or the merger date, and the capital reserve (capital premium or equity premium) is adjusted. If the capital reserve is insufficient to be offset, the retained income is adjusted.
(4) The Company disposes of its long-term equity investment in subsidiaries and loses control.
① Disposition of a transaction
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If the Company loses control over the investee due to the disposal of some equity investments, the remaining equity shall be re-measured according to its fair value on the date of loss of control when preparing consolidated financial statements. The sum of the consideration obtained from the disposal of the equity and the fair value of the remaining equity, minus the difference between the share of the net assets that should be continuously calculated by the original subsidiary from the purchase date or the merger date according to the original shareholding ratio, is included in the investment income in the current period when the control right is lost, and the goodwill is offset at the same time (Note: if the original enterprise is merged under different control and has goodwill). Other comprehensive income related to the original subsidiary’s equity investment will be converted into current investment income when losing control. In addition, other comprehensive income and other changes in owner’s equity related to the equity investment of Atomic Company are transferred to the current profit and loss when the control right is lost, except for other comprehensive income arising from the re-measurement of defined benefit plans’s net liabilities or changes in net assets by the investee.
② Step-by-step disposal of multiple transactions
In the consolidated financial statements, we should first judge whether the step-by-step transaction belongs to the "package transaction".
If the step-by-step transaction does not belong to the "package transaction", the transactions before the loss of control over the subsidiary shall be handled in accordance with the relevant provisions of "the parent company disposed of the long-term equity investment in the subsidiary but did not lose control".
If the step-by-step transaction is a "package transaction", each transaction should be treated as a transaction that disposes of the subsidiary and loses control; Among them, for each transaction before losing control, the difference between the disposal price and the share of the subsidiary’s net assets corresponding to the disposal investment shall be recognized as other comprehensive income in the consolidated financial statements, and transferred to the profit and loss of the current period when losing control.
(5) The minority shareholders of Factor Company increase capital and dilute the equity ratio owned by the parent company.
Other shareholders (minority shareholders) of the subsidiary have increased their capital, thus diluting the equity ratio of the parent company to the subsidiary. In the consolidated financial statements, its share in the subsidiary’s book net assets before capital increase is calculated according to the parent company’s shareholding ratio before capital increase, and the capital reserve (capital premium or equity premium) is adjusted according to the difference between this share and the subsidiary’s book net assets share after capital increase calculated according to the parent company’s shareholding ratio after capital increase. If the capital reserve (capital premium or equity premium) is insufficient to be offset, the retained earnings are adjusted.
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(3) Foreign currency business and translation of foreign currency statements
1. Method for determining the conversion exchange rate in foreign currency transactions
When the foreign currency transactions of the Company are initially confirmed, the spot exchange rate on the transaction date or the approximate exchange rate of the spot exchange rate is used to convert them into the functional currency.
2. Conversion method of foreign currency monetary items on the balance sheet date
On the balance sheet date, foreign currency monetary items are converted at the spot exchange rate on the balance sheet date. Exchange differences arising from the difference between the spot exchange rate on the balance sheet date and the spot exchange rate on the initial confirmation or the previous balance sheet date are included in the current profit and loss.
3. Conversion method of foreign currency statements
Before converting the financial statements of overseas operations of enterprises, adjust the accounting period and accounting policies of overseas operations to make them consistent with the accounting period and accounting policies of enterprises, then prepare financial statements in corresponding currencies (currencies other than the functional currency) according to the adjusted accounting policies and accounting periods, and then convert the financial statements of overseas operations according to the following methods:
(1) The assets and liabilities in the balance sheet are converted at the spot exchange rate on the balance sheet date, and the owners’ equity items are converted at the spot exchange rate at the time of occurrence except the undistributed profit item.
(2) The income and expenses in the income statement are converted by the spot exchange rate on the transaction date or the approximate exchange rate of the spot exchange rate.
(3) When preparing consolidated financial statements, the translation difference of foreign currency financial statements shall be separately listed as "other comprehensive income" under the item of owner’s equity in the consolidated balance sheet.
(4) Foreign currency cash flows and cash flows of overseas subsidiaries shall be converted by using the spot exchange rate on the date when the cash flows occur or the approximate exchange rate of the spot exchange rate. The impact of exchange rate changes on cash should be presented separately in the cash flow statement as a reconciliation item.
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(4) Financial instruments
1. Accounting policies for financial instruments applicable from January 1, 2019.
Financial instruments refer to contracts that form the financial assets of one party and the financial liabilities or equity instruments of other parties.
(1) Recognition and derecognition of financial instruments
When the Company becomes a party to a financial instrument contract, it shall confirm the relevant financial assets or financial liabilities.
If a financial asset meets one of the following conditions, the recognition shall be terminated:
① The contractual right to collect the cash flow of the financial asset is terminated.
② The financial asset has been transferred, and it meets the following conditions for termination confirmation of financial asset transfer.
If all or part of the current obligations of a financial liability have been discharged, the recognition of the financial liability or part thereof shall be terminated. If the Company (the debtor) and the creditor sign an agreement to replace the existing financial liabilities by taking on new financial liabilities, and the contract terms of the new financial liabilities are substantially different from those of the existing financial liabilities, the recognition of the existing financial liabilities will be terminated and the new financial liabilities will be recognized at the same time. If the Company substantially modifies the contract terms of the original financial liabilities (or part thereof), it shall terminate the original financial liabilities and confirm a new financial liability according to the modified terms.
Financial assets are bought and sold in a conventional way, and accounting recognition and derecognition are carried out according to the trading day. Buying and selling financial assets by conventional means refers to the delivery of financial assets in accordance with the provisions of the contract and at the time determined by laws and regulations or market practices. The trading day refers to the date when the Company promises to buy or sell financial assets.
(2) Classification and measurement of financial assets
Upon initial recognition, the Company classifies financial assets into: financial assets measured in amortized cost, financial assets measured at fair value through profit or loss, and financial assets measured at fair value through other comprehensive income according to the business model of managing financial assets and the contractual cash flow characteristics of financial assets. Unless the Company changes its business model of managing financial assets, in which case all the affected financial assets will be reclassified on the first day of the first reporting period after the business model changes, financial assets shall not be reclassified after initial recognition.
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Financial assets are measured at fair value upon initial recognition. For financial assets measured at fair value and whose changes are included in the current profit and loss, the relevant transaction costs are directly included in the current profit and loss, and other types of financial assets are included in their initial recognition amount. Notes receivable and accounts receivable arising from the sale of goods or the provision of services, which do not contain or consider significant financing components, are initially measured by the Company according to the transaction price defined in the income standards.
Subsequent measurement of financial assets depends on their classification:
① Financial assets measured in amortized cost.
Financial assets that meet the following conditions at the same time are classified as financial assets measured in amortized cost: the business model of the company to manage this financial asset is to collect contract cash flow as the goal; According to the contract terms of this financial asset, the cash flow generated on a specific date is only the payment of principal and interest based on the unpaid principal amount. For such financial assets, the effective interest rate method is adopted and the subsequent measurement is made according to amortized cost. The gains or losses arising from derecognition, amortization or impairment by the effective interest rate method are included in the current profits and losses.
② Financial assets measured at fair value and whose changes are included in other comprehensive income.
Financial assets that meet the following conditions at the same time are classified as financial assets measured at fair value and whose changes are included in other comprehensive income: the business model of the Company in managing this financial asset is to both collect contract cash flows and sell financial assets; According to the contract terms of this financial asset, the cash flow generated on a specific date is only the payment of principal and interest based on the unpaid principal amount. For such financial assets, fair value is adopted for subsequent measurement. Its discount or premium is amortized by the effective interest rate method and recognized as interest income or expense. Except impairment losses or gains and exchange gains and losses are recognized as current profits and losses, changes in the fair value of such financial assets are recognized as other comprehensive income until the financial assets are derecognized, and their accumulated gains or losses are transferred to current profits and losses. However, the relevant interest income of the financial asset calculated by the effective interest rate method is included in the current profit and loss.
The Company irrevocably chooses to designate some investments in non-trading equity instruments as financial assets measured at fair value and whose changes are included in other comprehensive income, and only the relevant dividend income is included in the current profit and loss, and the changes in fair value are recognized as other comprehensive income, until the financial assets are derecognized, their accumulated gains or losses are transferred to retained income.
③ Financial assets measured at fair value and whose changes are included in current profits and losses.
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The above-mentioned financial assets measured in amortized cost and those measured at fair value and whose changes are included in other comprehensive income are classified as financial assets measured at fair value and whose changes are included in current profits and losses. For such financial assets, fair value is used for subsequent measurement, and all changes in fair value are included in the current profit and loss.
(3) Classification and measurement of financial liabilities
The Company classifies financial liabilities into financial liabilities measured at fair value through profit or loss, financial guarantee contract liabilities and financial liabilities measured in amortized cost.
Subsequent measurement of financial liabilities depends on its classification:
① Financial liabilities measured at fair value and whose changes are included in current profits and losses.
This kind of financial liabilities includes trading financial liabilities (including derivative instruments belonging to financial liabilities) and financial liabilities designated to be measured at fair value and whose changes are included in current profits and losses. After initial recognition, such financial liabilities are subsequently measured at fair value, and the gains or losses (including interest expenses) generated are included in the current profits and losses, except those related to hedging accounting. However, for the financial liabilities designated as being measured at fair value and whose changes are included in the current profits and losses, the amount of changes in the fair value of the financial liabilities caused by changes in its own credit risk shall be included in other comprehensive income. When the financial liabilities are derecognized, the accumulated gains and losses previously included in other comprehensive income shall be transferred from other comprehensive income and included in retained income.
② Liabilities of financial guarantee contract
A financial guarantee contract refers to a contract that requires the company to pay a certain amount to the contract holder who has suffered losses when a specific debtor fails to pay his debts according to the original or revised terms of the debt instrument at maturity. The liabilities of financial guarantee contracts shall be subsequently measured according to the higher of the loss reserve amount determined according to the impairment principle of financial instruments and the balance of the initial confirmation amount after deducting the accumulated amortization amount determined according to the revenue recognition principle.
③ Financial liabilities measured in amortized cost.
After initial recognition, other financial liabilities are measured in amortized cost using the effective interest rate method.
Except in special circumstances, financial liabilities and equity instruments shall be distinguished according to the following principles:
(1) If the Company cannot unconditionally avoid performing a contractual obligation by delivering cash or other financial assets, the contractual obligation conforms to the definition of financial liabilities. Although some financial instruments do not explicitly include
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Terms and conditions of the obligation to deliver cash or other financial assets, but it is possible to indirectly form contractual obligations through other terms and conditions.
② If a financial instrument needs to be settled by or can be settled by the company’s own equity instrument, it is necessary to consider whether the company’s own equity instrument used to settle the instrument is used as a substitute for cash or other financial assets, or to enable the holder of the instrument to enjoy the residual equity in the assets of the issuer after deducting all liabilities. If it is the former, the instrument is the financial liability of the issuer; In the latter case, the instrument is the issuer’s equity instrument. In some cases, a financial instrument contract stipulates that the company must use or can use its own equity instruments to settle the financial instrument, in which the amount of contractual rights or contractual obligations is equal to the number of its own equity instruments that can be obtained or delivered multiplied by its fair value at the time of settlement, regardless of whether the amount of contractual rights or contractual obligations is fixed or changes completely or partially based on variables other than the market price of its own equity instruments (such as interest rate, the price of a commodity or the price of a financial instrument), the contract is classified as finance.
(4) derivative financial instruments and embedded derivative instruments
Derivative financial instruments are initially measured at the fair value on the day when the derivative transaction contract is signed, and subsequently measured at its fair value. A derivative financial instrument with a positive fair value is recognized as an asset, and a negative fair value is indeed considered as a liability.
Except that the part of cash flow hedging that is valid for hedging is included in other comprehensive income and transferred out and included in the current profit and loss when the hedged item affects the profit and loss, the gains or losses arising from changes in the fair value of derivatives are directly included in the current profit and loss.
For mixed instruments containing embedded derivatives, if the main contract is financial assets, the relevant provisions on the classification of financial assets shall apply to the mixed instruments as a whole. If the master contract is not a financial asset, and the hybrid instrument is not measured at fair value and its changes are included in the current profit and loss for accounting treatment, the embedded derivative instrument is not closely related to the master contract in terms of economic characteristics and risks, and the conditions are the same as those of the embedded derivative instrument, and the separate instrument meets the definition of derivative instrument, the embedded derivative instrument is split from the hybrid instrument and treated as a separate derivative financial instrument. If the fair value of the embedded derivative instrument cannot be measured separately on the acquisition date or the subsequent balance sheet date, the whole hybrid instrument is designated as a financial asset or financial liability measured at fair value and its changes are included in the current profit and loss.
(5) Impairment of financial instruments
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For financial assets measured in amortized cost, investment in debt instruments measured at fair value and whose changes are included in other comprehensive income, lease receivables and financial guarantee contracts, etc., the Company confirms loss reserves on the basis of expected credit losses.
① Measurement of expected credit loss
Expected credit loss refers to the weighted average of credit losses of financial instruments weighted by the risk of default. Credit loss refers to the difference between all the contracted cash flows that the Company discounted at the original real interest rate and all the cash flows that it expected to receive according to the contract, that is, the present value of all cash shortages. Among them, the financial assets purchased or originated by the Company that have suffered credit impairment shall be discounted according to the actual interest rate of the financial assets after credit adjustment.
The expected credit loss in the whole duration refers to the expected credit loss caused by all possible default events in the whole expected duration of financial instruments.
The expected credit loss in the next 12 months refers to the expected credit loss caused by the possible default events of financial instruments within 12 months after the balance sheet date (if the expected duration of financial instruments is less than 12 months, it is the expected duration), which is a part of the expected credit loss in the whole duration.
On each balance sheet date, the Company separately measures the expected credit losses of financial instruments at different stages. If the credit risk of financial instruments has not increased significantly since the initial recognition, it is in the first stage, and the company will measure the loss reserve according to the expected credit loss in the next 12 months; If the credit risk of a financial instrument has increased significantly since the initial recognition, but the credit impairment has not occurred, it is in the second stage, and the company measures the loss reserve according to the expected credit loss of the instrument throughout its duration; If the financial instrument has suffered credit impairment since its initial recognition, it will be in the third stage, and the Company will measure the loss reserve according to the expected credit loss of the instrument throughout its duration.
For financial instruments with low credit risk on the balance sheet date, the Company assumes that the credit risk has not increased significantly since the initial recognition, and measures the loss reserve according to the expected credit loss in the next 12 months.
For the financial instruments in the first and second stages and with low credit risk, the Company calculates the interest income according to the book balance before deducting the impairment reserve and the actual interest rate. For financial instruments in the third stage, the interest income shall be calculated according to the book balance minus the amortized cost and the actual interest rate after the provision for impairment has been made.
For notes receivable, accounts receivable, accounts receivable financing and contract assets, whether there is significant financing or not.
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As for the capital component, the Company measures the loss reserve according to the expected credit loss of the whole duration. A. For accounts receivable, separate impairment test shall be conducted for bills receivable, accounts receivable, other receivables, accounts receivable financing, contract assets and long-term receivables that are subject to objective evidence and applicable to individual assessment, so as to confirm the expected credit loss and make provision for individual impairment. For bills receivable, accounts receivable, other receivables, receivables financing, contract assets and long-term receivables without objective evidence of impairment, or when the expected credit loss of a single financial asset cannot be evaluated at a reasonable cost, the Company divides the bills receivable, accounts receivable, other receivables, receivables financing, contract assets and long-term receivables into several combinations according to the credit risk characteristics, and calculates the expected credit loss on the basis of the combinations. The basis for determining the combinations is as follows:
A the basis for determining the combination of bills receivable is as follows:
Bill Receivable Portfolio 1 Bank Acceptance Bill Receivable Portfolio 2 Commercial Acceptance Bill For the bills receivable divided into portfolios, the Company refers to the historical credit loss experience, combines the current situation and the forecast of the future economic situation, and calculates the expected credit loss through the default risk exposure and the expected credit loss rate throughout the duration.
B the basis for determining the combination of accounts receivable is as follows:
Accounts receivable portfolio 1 Accounts receivable portfolio of related party customers within the scope of accounts receivable consolidation 2 Accounts receivable from other customers For the accounts receivable divided into portfolios, the Company refers to the historical credit loss experience, and combines the current situation and the forecast of future economic situation to prepare the comparison table of accounts receivable aging and expected credit loss rate throughout the duration, and calculate the expected credit loss. C the basis for determining the combination of other receivables is as follows:
Other receivables portfolio 1 Interest receivable other receivables portfolio 2 Dividends receivable other receivables portfolio 3 Accounts receivable from related parties within the scope of consolidation
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Other receivables portfolio 4 Other receivables For other receivables classified into portfolios, the Company refers to the historical credit loss experience, combines the current situation and the forecast of the future economic situation, and calculates the expected credit loss through the default risk exposure and the expected credit loss rate in the next 12 months or the whole duration.
D the basis for determining the portfolio of receivables financing is as follows:
Accounts receivable financing portfolio 1 Bank acceptance bill accounts receivable financing portfolio 2 Commercial acceptance bill For the accounts receivable financing divided into portfolios, the Company refers to the historical credit loss experience, combines the current situation and the forecast of future economic situation, and calculates the expected credit loss through the default risk exposure and the expected credit loss rate throughout the duration.
B. Debt investment and other debt investment For debt investment and other debt investment, the Company calculates the expected credit loss according to the nature of the investment, the types of counterparties and risk exposures, and the expected credit loss rate in the next 12 months or the whole duration.
② It has low credit risk.
If the default risk of a financial instrument is low, the borrower’s ability to fulfill its contractual cash flow obligations in a short period of time is strong, and even if the economic situation and operating environment have adverse changes in a long period of time, it may not necessarily reduce the borrower’s ability to fulfill its contractual cash flow obligations, the financial instrument is considered to have low credit risk.
③ Credit risk increased significantly.
By comparing the default probability of financial instruments in the estimated duration determined on the balance sheet date with the default probability in the estimated duration determined at the time of initial recognition, the Company determines the relative change of the default probability of financial instruments in the estimated duration, so as to evaluate whether the credit risk of financial instruments has increased significantly since the initial recognition.
When determining whether the credit risk has increased significantly since the initial recognition, the Company considers reasonable and well-founded information, including forward-looking information, that can be obtained without unnecessary extra cost or effort. Examination of our company
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About the information includes:
A. Whether the internal price index caused by the change of credit risk has changed significantly. B adverse changes in business, financial or economic conditions that are expected to lead to significant changes in the debtor’s ability to perform its debt service obligations. C. Whether the actual or expected operating results of the debtor have changed significantly; Whether the regulatory, economic or technical environment in which the debtor is located has changed significantly. D. Whether the value of collateral as debt mortgage or the quality of guarantee or credit enhancement provided by a third party has changed significantly. These changes are expected to reduce the debtor’s economic motivation to repay within the time limit stipulated in the contract or affect the probability of default. E. Whether the economic motivation that is expected to reduce the debtor’s repayment within the time limit agreed in the contract has changed significantly. F. Expected changes to the loan contract, including whether the expected breach of contract may lead to the exemption or revision of contractual obligations, granting interest-free period, interest rate jumping, requiring additional collateral or guarantee, or making other changes to the contract framework of financial instruments.
G. Whether the debtor’s expected performance and repayment behavior have changed significantly. H. Whether the contract payment is overdue for more than 30 days (inclusive). According to the nature of financial instruments, the Company evaluates whether the credit risk has increased significantly on the basis of a single financial instrument or a combination of financial instruments. When evaluating on the basis of financial instrument portfolio, the Company can classify financial instruments based on common credit risk characteristics, such as overdue information and credit risk rating.
Under normal circumstances, if the overdue period exceeds 30 days, the Company determines that the credit risk of financial instruments has increased significantly. Unless the company can obtain reasonable and well-founded information without paying too much cost or effort, it can prove that the credit risk has not increased significantly since the initial confirmation, although the payment period agreed in the contract has exceeded 30 days.
④ Financial assets with credit impairment.
On the balance sheet date, the Company evaluates whether the financial assets measured in amortized cost and the debt investment measured in fair value whose changes are included in other comprehensive income have suffered credit impairment. When one or more events that adversely affect the expected future cash flow of a financial asset occur, the financial asset becomes an occurrence letter.
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Use impaired financial assets. Evidence of credit impairment of financial assets includes the following observable information:
The issuer or debtor has major financial difficulties; Debtor’s breach of contract, such as default or overdue payment of interest or principal; Creditors give concessions to debtors that they will not make under any other circumstances due to economic or contractual considerations related to their financial difficulties; The debtor is likely to go bankrupt or carry out other financial restructuring; The financial difficulties of the issuer or debtor lead to the disappearance of the active market of the financial asset; Purchase or generate a financial asset at a large discount, which reflects the fact that credit losses have occurred.
⑤ Presentation of expected credit loss reserve
In order to reflect the change of credit risk of financial instruments since the initial recognition, the Company re-measures the expected credit loss on each balance sheet date, and the resulting increase or reversal amount of loss reserve shall be included in the current profit and loss as impairment loss or gain. For financial assets measured in amortized cost, the loss reserve shall be deducted from the book value of the financial assets listed in the balance sheet; For creditor’s rights investments measured at fair value and whose changes are included in other comprehensive income, the Company confirms its loss provision in other comprehensive income, without offsetting the book value of the financial assets.
⑥ Write off
If the Company no longer reasonably expects that the contractual cash flow of a financial asset can be fully or partially recovered, the book balance of the financial asset will be directly written down. This write-down constitutes the derecognition of relevant financial assets. This usually happens when the company determines that the debtor has no assets or income sources to generate enough cash flow to repay the amount to be written down.
If the written-down financial assets are recovered later, they will be included in the profit and loss of the recovery period as the reversal of impairment losses.
(6) transfer of financial assets
The transfer of financial assets refers to the following two situations:
A transfer the contractual right to collect the cash flow of financial assets to the other party.
B transfer the whole or part of the financial assets to another party, but reserve the contractual right to collect the cash flow of the financial assets, and undertake the contractual obligation to pay the collected cash flow to one or more payees.
① derecognize the transferred financial assets.
Almost all the risks and rewards of ownership of financial assets have been transferred to the transferee, or have not been transferred.
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If the transfer does not retain almost all the risks and rewards of the ownership of the financial asset, but gives up the control of the financial asset, the recognition of the financial asset is terminated. When judging whether the control of the transferred financial assets has been abandoned, pay attention to the actual ability of the transferee to sell the financial assets. If the transferee can sell the whole transferred financial assets to a third party with no related party relationship, and there are no additional conditions to restrict the sale, it indicates that the enterprise has given up control over the financial assets. When judging whether the transfer of financial assets meets the conditions for derecognition of financial assets, the Company pays attention to the essence of the transfer of financial assets. If the overall transfer of financial assets meets the conditions for derecognition, the difference between the following two amounts shall be included in the current profit and loss:
A book value of the transferred financial assets. B. The sum of the consideration received due to the transfer and the accumulated amount of changes in fair value originally directly included in the owner’s equity (involving the transfer of financial assets for sale).
If the partial transfer of financial assets meets the conditions for derecognition, the overall book value of the transferred financial assets shall be apportioned between the derecognized part and the derecognized part (in this case, the retained service assets shall be regarded as a part of the derecognized financial assets) according to their respective relative fair values, and the difference between the following two amounts shall be included in the current profit and loss:
A. The book value of the derecognized part.
B. The sum of the consideration of the derecognized part and the corresponding derecognized part of the original accumulated amount of changes in fair value directly included in the owner’s equity (when the transferred financial assets are available-for-sale financial assets).
② Continue to be involved in the transferred financial assets.
If almost all the risks and rewards of ownership of financial assets have not been transferred or retained, and the control of the financial assets has not been abandoned, the relevant financial assets shall be recognized according to the extent of their continued involvement in the transferred financial assets, and the relevant liabilities shall be recognized accordingly.
The degree of continuous involvement in the transferred financial assets refers to the wind that the enterprise faces due to the change of the value of the financial assets.
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Risk level.
③ Continue to confirm the transferred financial assets.
If almost all the risks and rewards related to the ownership of the transferred financial assets are still retained, the whole of the transferred financial assets shall continue to be recognized, and the consideration received shall be recognized as a financial liability.
The financial assets and the confirmed related financial liabilities shall not offset each other. In the subsequent accounting period, the enterprise shall continue to recognize the income (or gains) generated by the financial assets and the expenses (or losses) generated by the financial liabilities.
(7) Offset of financial instruments
Financial assets and financial liabilities shall be listed separately in the balance sheet and shall not offset each other. However, if the following conditions are met at the same time, the net amount after mutual offset shall be listed in the balance sheet:
The Company has the legal right to offset the confirmed amount, and this legal right is currently enforceable;
The Company plans to settle on a net basis, or realize the financial assets and pay off the financial liabilities at the same time.
For the transfer of financial assets that do not meet the conditions for termination of recognition, the transferor shall not offset the transferred financial assets and related liabilities.
(8) Method for determining the fair value of financial instruments
For the method of determining the fair value of financial assets and financial liabilities, please refer to "(5) Fair value measurement" in "V. Major accounting policies and accounting estimates" in this section.
2. Accounting policies for financial instruments applicable to 2018 and previous years.
(1) Classification of financial assets
① Financial assets measured at fair value and whose changes are included in current profits and losses.
Including trading financial assets and financial assets directly designated as being measured at fair value through profit or loss, the former mainly refers to the stocks, bonds, funds held by the Company for sale in the near future, and derivative investment that is not used as an effective hedging instrument. When such assets are initially measured, the fair value at the time of acquisition is taken as the initial recognition amount, and the related transaction costs are included in the current profit and loss when incurred. The paid price includes cash dividends that have been declared but not yet paid or bond interest that has been paid but not yet received, and it is confirmed separately.
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Items considered receivable. Interest or cash dividends obtained during the holding period are recognized as investment income. On the balance sheet date, the Company measures such financial assets at fair value and its changes are included in the current profit and loss. When such financial assets are disposed of, the difference between their fair value and the initial recorded amount is recognized as investment income, and the gains and losses from changes in fair value are adjusted.
② Held-to-maturity investment
Mainly refers to the fixed maturity date, fixed or determinable recovery amount, and the company has a clear intention and ability to hold the treasury bonds and corporate bonds until maturity. Such financial assets are initially recognized according to the sum of the fair value at the time of acquisition and related transaction costs. The bond interest included in the payment price that has reached the interest payment period but has not been issued is separately recognized as a receivable item. During the holding period of held-to-maturity investment, the interest income is calculated and confirmed according to the amortized cost and the actual interest rate, and included in the investment income. When disposing of the held-to-maturity investment, the difference between the obtained price and the book value of the investment is included in the investment income.
③ Accounts receivable
Accounts receivable mainly include accounts receivable and other receivables. Accounts receivable refers to the accounts receivable formed by the company selling goods or providing services. Accounts receivable shall be initially recognized according to the contract or agreement price receivable from the buyer.
④ Available-for-sale financial assets
Mainly refers to the financial assets that the Company has not classified as financial assets measured at fair value and whose changes are included in current profits and losses, held-to-maturity investments, loans and receivables. Available-for-sale financial assets are initially recognized according to the sum of the fair value of the financial assets and related transaction costs. The bond interest that has reached the interest payment period but has not yet been received or the cash dividend that has been declared but not yet distributed included in the paid price is separately recognized as the receivable item. Interest or cash dividends obtained during the holding period of available-for-sale financial assets are included in investment income.
If the available-for-sale financial assets are monetary financial assets in foreign currencies, the exchange gains and losses arising therefrom shall be included in the current profits and losses. Interest on available-for-sale debt instruments calculated by the effective interest rate method is included in the current profit and loss; Cash dividends invested in available-for-sale equity instruments shall be included in the current profits and losses when the investee announces to pay dividends. On the balance sheet date, available-for-sale financial assets are measured at fair value, and the changes are included in other comprehensive income. When disposing of available-for-sale financial assets, the difference between the obtained price and the book value of the financial assets shall be included in the investment.
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Capital income; At the same time, the amount corresponding to the disposal part of the accumulated amount of fair value changes originally included in the owner’s equity will be transferred out and included in the investment income.
(2) Classification of financial liabilities
① Financial liabilities measured at fair value and whose changes are included in current profits and losses, including trading financial liabilities and financial liabilities designated as measured at fair value and whose changes are included in current profits and losses; Such financial liabilities are initially recognized at fair value, and related transaction costs are directly included in the current profit and loss, and changes in fair value are included in the current profit and loss on the balance sheet date.
② Other financial liabilities refer to financial liabilities other than those measured at fair value and whose changes are included in current profits and losses.
(3) Reclassification of financial assets
If an investment is no longer suitable to be classified as held-to-maturity investment due to the change of holding intention or ability, the Company will reclassify it as available-for-sale financial assets and make subsequent measurement at fair value. If the amount of sale or reclassification of the held-to-maturity investment is large and does not belong to the exception mentioned in Article 16 of the Accounting Standards for Business Enterprises No.22-Recognition and Measurement of Financial Instruments, so that the remaining part of the investment is no longer suitable to be classified as held-to-maturity investment, the Company shall reclassify the remaining part of the investment as available-for-sale financial assets, and carry out subsequent measurement at fair value, but this financial asset will no longer be classified as held-to-maturity investment in this accounting year and the next two complete accounting years.
On the reclassification date, the difference between the book value and fair value of the investment is included in other comprehensive income, and it is transferred out when the available-for-sale financial asset is impaired or derecognized, and is included in the current profit and loss.
(4) the distinction between financial liabilities and equity instruments
Except in special circumstances, financial liabilities and equity instruments shall be distinguished according to the following principles:
(1) If the Company cannot unconditionally avoid performing a contractual obligation by delivering cash or other financial assets, the contractual obligation conforms to the definition of financial liabilities. Although some financial instruments do not explicitly contain the terms and conditions of the obligation to deliver cash or other financial assets, they may indirectly form contractual obligations through other terms and conditions.
② If a financial instrument needs to be settled or can be settled by the company’s own equity instrument, it needs to be considered.
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Whether the company’s own equity instrument used to settle the instrument is used as a substitute for cash or other financial assets, or to enable the holder of the instrument to enjoy the residual equity in the assets of the issuer after deducting all liabilities. If it is the former, the instrument is the financial liability of the issuer; In the latter case, the instrument is the issuer’s equity instrument. In some cases, a financial instrument contract stipulates that the company must use or can use its own equity instruments to settle the financial instrument, in which the amount of contractual rights or contractual obligations is equal to the number of its own equity instruments that can be obtained or delivered multiplied by its fair value at the time of settlement, regardless of whether the amount of contractual rights or contractual obligations is fixed or changes completely or partially based on variables other than the market price of its own equity instruments (such as interest rate, the price of a commodity or the price of a financial instrument), the contract is classified as finance.
(5) transfer of financial assets
The transfer of financial assets refers to the following two situations:
A transfer the contractual right to collect the cash flow of financial assets to the other party. B transfer the whole or part of the financial assets to another party, but reserve the contractual right to collect the cash flow of the financial assets, and undertake the contractual obligation to pay the collected cash flow to one or more payees.
① derecognize the transferred financial assets.
If almost all the risks and rewards of ownership of a financial asset have been transferred to the transferee, or almost all the risks and rewards of ownership of a financial asset have not been transferred or retained, but the control of the financial asset has been abandoned, the recognition of the financial asset will be terminated.
When judging whether the control of the transferred financial assets has been abandoned, pay attention to the actual ability of the transferee to sell the financial assets. If the transferee can sell the whole transferred financial assets to a third party with no related party relationship, and there are no additional conditions to restrict the sale, it indicates that the enterprise has given up control over the financial assets.
When judging whether the transfer of financial assets meets the conditions for derecognition of financial assets, the Company pays attention to the essence of the transfer of financial assets.
If the overall transfer of financial assets meets the conditions for derecognition, the difference between the following two amounts shall be included in the current profit and loss:
A book value of the transferred financial assets.
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B. The sum of the consideration received due to the transfer and the accumulated amount of changes in fair value originally directly included in the owner’s equity (involving the transfer of financial assets for sale). If the partial transfer of financial assets meets the conditions for derecognition, the overall book value of the transferred financial assets shall be apportioned between the derecognized part and the derecognized part (in this case, the retained service assets shall be regarded as a part of the derecognized financial assets) according to their respective relative fair values, and the difference between the following two amounts shall be included in the current profit and loss:
A. The book value of the derecognized part.
B. The sum of the consideration of the derecognized part and the corresponding derecognized part of the original accumulated amount of changes in fair value directly included in the owner’s equity (when the transferred financial assets are available-for-sale financial assets).
② Continue to be involved in the transferred financial assets.
If almost all the risks and rewards of ownership of financial assets have not been transferred or retained, and the control of the financial assets has not been abandoned, the relevant financial assets shall be recognized according to the extent of their continued involvement in the transferred financial assets, and the relevant liabilities shall be recognized accordingly.
The degree of continuous involvement in the transferred financial assets refers to the risk level faced by the enterprise due to the change of the value of the financial assets.
③ Continue to confirm the transferred financial assets.
If almost all the risks and rewards related to the ownership of the transferred financial assets are still retained, the whole of the transferred financial assets shall continue to be recognized, and the consideration received shall be recognized as a financial liability.
The financial assets and the confirmed related financial liabilities shall not offset each other. In the subsequent accounting period, the enterprise shall continue to recognize the income generated by the financial assets and the expenses generated by the financial liabilities. If the transferred financial assets are measured in amortized cost, the related liabilities confirmed shall not be designated as financial liabilities measured at fair value and whose changes are included in the current profits and losses.
(6) Financial liabilities are derecognized
If all or part of the current obligations of a financial liability have been discharged, the recognition of the financial liability or part thereof shall be terminated.
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If the assets used to pay financial liabilities are transferred to an institution or a trust is established, and the current obligation to pay debts still exists, the recognition of the financial liabilities and the transferred assets will not be terminated.
If an agreement is signed with creditors to replace the existing financial liabilities by undertaking new financial liabilities, and the terms of the contract between the new financial liabilities and the existing financial liabilities are substantially different, the recognition of the existing financial liabilities shall be terminated and the new financial liabilities shall be recognized at the same time.
Where all or part of the contract terms of the existing financial liabilities are substantially modified, the recognition of the existing financial liabilities or part thereof shall be terminated, and the financial liabilities with modified terms shall be recognized as a new financial liability.
If all or part of the financial liabilities are derecognized, the difference between the book value of the derecognized part and the consideration paid (including the transferred non-cash assets or the new financial liabilities assumed) will be included in the current profit and loss.
(7) Offset of financial assets and financial liabilities
Financial assets and financial liabilities shall be listed separately in the balance sheet and shall not offset each other. However, if the following conditions are met at the same time, the net amount after mutual offset shall be listed in the balance sheet:
The Company has the legal right to offset the confirmed amount, and this legal right is currently enforceable;
The Company plans to settle on a net basis, or realize the financial assets and pay off the financial liabilities at the same time.
For the transfer of financial assets that do not meet the conditions for termination of recognition, the transferor shall not offset the transferred financial assets and related liabilities.
(8) Methods for testing impairment of financial assets and methods for drawing impairment reserves.
① Objective evidence of impairment of financial assets:
A. The issuer or debtor has serious financial difficulties.
B, the debtor violates the terms of the contract, such as interest payment or principal default or overdue.
C, the creditor for economic or legal considerations, to make concessions to the debtor in financial difficulties.
D. The debtor may close down or carry out other financial restructuring.
E. Due to the issuer’s major financial difficulties, the financial asset cannot continue trading in the active market.
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F. It is impossible to identify whether the cash flow of an asset in a group of financial assets has decreased, but after overall evaluation based on the published data, it is found that the estimated future cash flow of this group of financial assets has indeed decreased and can be measured. G. Significant adverse changes have taken place in the technology, market, economy or legal environment in which the debtor operates, so that investors in equity instruments may be unable to recover their investment costs. H. The fair value of investment in equity instruments falls seriously or temporarily. I. Other objective evidence indicating the impairment of financial assets.
② Impairment test of financial assets (excluding receivables)
A. impairment test of held-to-maturity investment
When the held-to-maturity investment is impaired, the book value of the held-to-maturity investment is written down to the present value of the estimated future cash flow (excluding the future credit loss that has not yet occurred), and the amount written down is recognized as asset impairment loss and included in the current profit and loss.
The present value of the expected future cash flow is determined by discounting the original actual interest rate of the held-to-maturity investment, and the value of the relevant collateral is considered (the expenses incurred in obtaining and selling the collateral are deducted). The original real interest rate is the real interest rate calculated and determined when the held-to-maturity investment is initially confirmed. For the held-to-maturity investment with floating interest rate, the current real interest rate stipulated in the contract can be used as the discount rate when calculating the present value of future cash flows.
Even if the terms of the contract are renegotiated or modified due to financial difficulties of the debtor or the issuer of the financial asset, the original real interest rate of the financial asset calculated before the terms are modified shall be used to calculate the impairment loss.
After the impairment loss of the held-to-maturity investment is confirmed, if there is objective evidence that the value of the held-to-maturity investment has recovered and is objectively related to the events that occurred after the loss was confirmed (such as the debtor’s credit rating has been improved, etc.), the originally confirmed impairment loss will be reversed and included in the current profit and loss.
After the held-to-maturity investment is impaired, the interest income is calculated and confirmed as the interest rate according to the discount rate used to discount the future cash flow when determining the impairment loss.
B. impairment test of available-for-sale financial assets
On the balance sheet, Japanese companies analyze the impairment of available-for-sale financial assets and judge this item.
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Whether the fair value of financial assets continues to decline. Under normal circumstances, if the fair value of available-for-sale financial assets has fallen by 50% or more relative to the cost at the end of the period, or the continuous decline time has reached or exceeded 12 months, and after comprehensive consideration of various related factors, it is expected that this downward trend is non-temporary, it can be determined that the available-for-sale financial assets have been impaired and the impairment loss can be confirmed. If the available-for-sale financial assets are impaired, when the impairment loss is confirmed, the accumulated loss caused by the decrease in fair value that was directly included in the owner’s equity will be transferred out and included in the asset impairment loss. Whether the financial assets of available-for-sale debt instruments are impaired can be analyzed and judged with reference to the above-mentioned investment in available-for-sale equity instruments.
Impairment losses arising from investment in available-for-sale equity instruments shall not be reversed through profit or loss. After the financial assets of available-for-sale debt instruments are impaired, the interest income is calculated and confirmed as the interest rate according to the discount rate used to discount the future cash flow when determining the impairment loss.
For available-for-sale debt instruments whose impairment losses have been confirmed, if the fair value has increased in the subsequent accounting period and is objectively related to the events that occurred after the confirmation of the original impairment losses, the originally confirmed impairment losses will be reversed and included in the current profits and losses.
(9) Methods for determining the fair value of financial assets and financial liabilities
For the method of determining the fair value of financial assets and financial liabilities, please refer to "(5) Fair value measurement" in "V. Major accounting policies and accounting estimates" in this section.
(V) Fair value measurement
The Company measures the fair value of relevant assets or liabilities at the price of major markets. If there is no major market, the Company measures the fair value of relevant assets or liabilities at the price of the most favorable market.
The main market refers to the market with the largest trading volume and the highest trading activity of related assets or liabilities; The most favorable market refers to the market that can sell related assets at the highest amount or transfer related liabilities at the lowest amount after considering transaction costs and transportation costs. The Company adopts the assumptions used by market participants to maximize their economic benefits when pricing the assets or liabilities.
1. Valuation technology
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The Company adopts valuation techniques that are applicable in the current situation and supported by sufficient available data and other information. The valuation techniques used mainly include market method, income method and cost method. The Company uses a method consistent with one or more of the valuation techniques to measure the fair value. If multiple valuation techniques are used to measure the fair value, considering the rationality of each valuation result, the amount that best represents the fair value in the current situation is selected as the fair value. In the application of valuation technology, the Company gives priority to the use of relevant observable input values, and only uses unobservable input values when relevant observable input values are unavailable or impracticable. Observable input value refers to the input value that can be obtained from market data. This input value reflects the assumptions used by market participants in pricing related assets or liabilities. An unobservable input value refers to an input value that cannot be obtained from market data. The input value is obtained according to the best available information of assumptions used by market participants in pricing related assets or liabilities.
2. Level of fair value
The Company divides the input values used in fair value measurement into three levels, and first uses the first level input values, then uses the second level input values, and finally uses the third level input values. The first level input value is the unadjusted quotation of the same asset or liability that can be obtained on the measurement date in the active market. The second level input value is the directly or indirectly observable input value of related assets or liabilities except the first level input value. The third level input value is the unobservable input value of related assets or liabilities.
(VI) Accounts receivable
The following accounts receivable accounting policies apply to 2018 and previous years.
1. Accounts receivable with significant single amount and single provision for bad debts.
Judgment basis or amount standard of significant single amount: The Company regards the accounts receivable or other receivables above 1 million yuan (including 1 million yuan) as significant single amount.
Withdrawal method of bad debt provision with significant single amount: for accounts receivable with significant single amount, impairment test shall be conducted separately. If there is objective evidence that it has been impaired, the impairment loss shall be recognized according to the difference between the present value of its future cash flow and its book value, and the corresponding bad debt reserve shall be accrued accordingly.
If the difference between the estimated future cash flow of short-term receivables and its present value is very small, the related impairment loss shall be determined.
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In case of loss, the estimated future cash flow may not be discounted.
2. Accounts receivable with provision for bad debts by portfolio.
For the accounts receivable with insignificant single amount, they are divided into several combinations according to the credit risk characteristics together with the accounts receivable that have not been impaired after independent testing. Based on the actual loss rate of the same or similar accounts receivable combinations with similar credit risk characteristics in previous years, the provision for bad debts should be determined in combination with the current situation. The basis for determining the credit risk portfolio is as follows:
Portfolio 1 takes the nature of payment as the credit risk characteristic portfolio, including the accounts receivable between companies within the scope of consolidated statements.
Portfolio 2 takes aging as the credit risk characteristic portfolio, including third-party receivables outside the scope of consolidated financial statements.
The accrual method of bad debt reserve by credit risk portfolio is as follows:
Except for objective evidence that the company will not be able to recover the money according to the original terms of accounts receivable, portfolio 1 does not make provision for bad debts between companies within the scope of accounts receivable consolidated statements.
Combination 2 aging analysis method
In the portfolio, the accrual ratio using aging analysis method is as follows:
3. Accounts receivable with insignificant single amount but single provision for bad debts.
For accounts receivable with insignificant single amount but with objective evidence that they have been impaired, the provision for bad debts based on the aging analysis method cannot reflect the actual situation. The Company conducts an impairment test separately, and confirms the impairment loss according to the difference between the present value of future cash flows and their book value, and accordingly makes corresponding provision for bad debts.
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(7) Inventory
1. Classification of inventory
Inventory refers to the finished products, semi-finished products, products in process of production, materials and materials consumed in the process of production or provision of labor services held by the company for sale in daily activities.
2. Pricing method of issued inventory
The company’s inventory is priced by weighted average method when it is issued.
3. Inventory system of inventory
The inventory of the Company adopts perpetual inventory system, which is counted at least once a year, and the amount of inventory gain and inventory loss is included in the profit and loss of the current year.
4, inventory depreciation reserve accrual method
On the balance sheet date, it is measured according to the lower of cost and net realizable value. If the cost of inventory is higher than its net realizable value, provision for inventory depreciation shall be made and included in the current profit and loss.
When determining the net realizable value of inventory, it is based on the reliable evidence obtained, and factors such as the purpose of holding inventory and the influence of events after the balance sheet date are considered.
(1) In the normal production and operation process, the net realizable value of the inventory directly used for sale, such as finished products, commodities and materials for sale, is determined by the estimated selling price of the inventory minus the estimated selling expenses and related taxes. The inventory held for the execution of the sales contract or labor service contract shall take the contract price as the measurement basis of its net realizable value; If the quantity of inventory held is more than the quantity ordered in the sales contract, the net realizable value of the excess inventory shall be measured on the basis of the general sales price. Materials used for sale, etc., take the market price as the measurement basis of their net realizable value.
(2) In the normal production and operation process, the net realizable value of the inventory of materials that need to be processed is determined by the estimated selling price of finished products minus the estimated cost, estimated sales expenses and related taxes at the time of completion. If the net realizable value of the finished product produced with it is higher than the cost, the material shall be measured at the cost; If the decline in the price of materials indicates that the net realizable value of finished products is lower than the cost, the materials shall be measured according to the net realizable value, and the inventory depreciation reserve shall be accrued according to the difference.
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(3) Inventory depreciation reserve is generally accrued according to a single inventory item; For inventory with large quantity and low unit price, it is accrued by inventory category.
(4) On the balance sheet date, if the factors influencing the previous write-down of inventory value have disappeared, the write-down amount will be restored and transferred back within the amount of the original provision for inventory depreciation, and the transferred amount will be included in the current profit and loss.
5. Amortization method of turnover materials
(1) Amortization method of low-value consumables: one-time write-off method is adopted when collecting.
(2) Amortization method of packaging: one-time write-off method is adopted when collecting.
(8) Fixed assets
Fixed assets refer to tangible assets with a higher unit value and a service life of more than one year, which are held for producing goods, providing services, leasing or management.
1. Confirmation conditions
Fixed assets shall be recognized at the actual cost when they meet the following conditions:
(1) The economic benefits related to the fixed assets are likely to flow into the enterprise.
(2) The cost of the fixed assets can be measured reliably.
Subsequent expenditures on fixed assets, which meet the conditions for confirmation of fixed assets, are included in the cost of fixed assets; Those that do not meet the conditions for the recognition of fixed assets are included in the current profit and loss when they occur.
2. Depreciation methods of various fixed assets
The Company shall accrue depreciation according to the life average method from the month following the scheduled serviceable condition of fixed assets, and determine the depreciation period and annual depreciation rate according to the category of fixed assets, estimated economic service life and estimated net salvage value rate respectively as follows:
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For fixed assets for which impairment reserve has been accrued, the accrued impairment reserve for fixed assets shall be deducted when depreciation is accrued. At the end of each year, the company rechecks the service life, estimated net salvage value and depreciation method of fixed assets. If the estimated service life is different from the original estimate, the service life of fixed assets shall be adjusted.
3. Identification basis, valuation method and depreciation method of financial leased fixed assets.
When the leased fixed assets have substantially transferred all the risks and rewards related to the assets, the Company confirms that the lease of the fixed assets is a financial lease. The cost of fixed assets obtained by financing lease shall be determined according to the lower of the fair value of the leased assets and the present value of the minimum lease payment on the lease start date. Fixed assets leased by financing shall be depreciated by the depreciation policy consistent with its own fixed assets. If it can be reasonably determined that the ownership of the leased asset will be acquired at the expiration of the lease term, depreciation shall be accrued within the service life of the leased asset; If it is impossible to reasonably determine that the ownership of the leased assets can be obtained at the expiration of the lease term, depreciation shall be accrued within the shorter period of the lease term and the service life of the leased assets.
(9) Intangible assets
1. Valuation method of intangible assets
According to the actual cost at the time of acquisition.
2. Service life and amortization of intangible assets
(1) service life estimation of intangible assets with limited service life
At the end of each year, the company shall carry out the service life and amortization method of intangible assets with limited service life.
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Review. After review, the service life and amortization method of intangible assets at the end of this period are not different from previous estimates.
(2) If it is impossible to foresee the period when intangible assets will bring economic benefits to the enterprise, they are regarded as intangible assets with uncertain service life. For intangible assets with uncertain service life, the company rechecks the service life of intangible assets with uncertain service life at the end of each year. If it is still uncertain after rechecking, it will conduct impairment test on the balance sheet date.
(3) Amortization of intangible assets
For intangible assets with limited service life, the Company determines their service life at the time of acquisition, and uses the straight-line method to systematically and reasonably amortize them within the service life, and the amortization amount is included in the current profit and loss according to the benefit items. The specific amortization amount is the amount after deducting the estimated residual value from its cost. For intangible assets with impairment provision, the accumulated amount of impairment provision for intangible assets should also be deducted, and the residual value is zero. However, the following circumstances are excluded: a third party promises to buy the intangible asset at the end of its service life, or can obtain the estimated residual value information according to the active market, and the market is likely to exist at the end of its service life.
Intangible assets with uncertain service life shall not be amortized. At the end of each year, the service life of intangible assets with uncertain service life is reviewed. If there is evidence that the service life of intangible assets is limited, its service life is estimated and amortized systematically and reasonably within the expected service life.
3, the division of internal research and development projects in the research stage and development stage of specific standards.
(1) The Company takes the materials for further development activities and related preparatory activities as the research stage, and the expenditure in the intangible assets research stage is included in the current profit and loss when it occurs.
(2) The development activities carried out after the Company has completed the research stage are regarded as the development stage.
4. Specific conditions for capitalization of expenditure in development stage.
Only when the expenditures in the development stage meet the following conditions can they be recognized as intangible assets:
(1) It is technically feasible to complete the intangible asset so that it can be used or sold.
(2) It has the intention to complete the intangible asset and use or sell it.
(3) the ways in which intangible assets generate economic benefits, including the ability to prove that there is a market for products produced by using the intangible assets or that there is a market for intangible assets themselves, and that intangible assets will be used internally, can prove it.
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Useful.
(4) Having sufficient technical, financial and other resources to support the development of the intangible assets, and having the ability to use or sell the intangible assets.
(5) Expenditure attributable to the development stage of the intangible assets can be reliably measured.
(X) Impairment of long-term assets
The impairment of long-term equity investment, fixed assets, construction in progress, intangible assets and goodwill of subsidiaries shall be determined by the following methods:
On the balance sheet date, judge whether there are signs of possible impairment of assets. If there are signs of impairment, the Company will estimate its recoverable amount and conduct impairment test. The goodwill formed by business combination, intangible assets with uncertain service life and intangible assets that have not yet reached the usable state are tested for impairment every year, regardless of whether there are signs of impairment.
The recoverable amount is determined according to the higher of the net amount after deducting the disposal expenses from the fair value of the asset and the present value of the estimated future cash flow of the asset. The Company estimates its recoverable amount on the basis of individual assets; If it is difficult to estimate the recoverable amount of a single asset, the recoverable amount of the asset group shall be determined based on the asset group to which the asset belongs. The identification of an asset group is based on whether the main cash inflow generated by the asset group is independent of the cash inflow of other assets or asset groups.
When the recoverable amount of an asset or asset group is lower than its book value, the Company will write down its book value to the recoverable amount, and the written-down amount will be included in the current profit and loss, and the corresponding asset impairment reserve will be accrued.
As far as the impairment test of goodwill is concerned, the book value of goodwill formed by business combination is allocated to the relevant asset groups according to reasonable methods from the purchase date; If it is difficult to allocate to the relevant asset group, allocate it to the relevant asset group combination. The relevant asset group or asset group combination is an asset group or asset group combination that can benefit from the synergistic effect of enterprise merger, and is not larger than the reporting division determined by the Company.
During the impairment test, if there are signs of impairment in the asset group or asset group combination related to goodwill, firstly, the impairment test is carried out on the asset group or asset group combination excluding goodwill, the recoverable amount is calculated, and the corresponding impairment loss is confirmed. Then the asset group or asset group combination containing goodwill is tested for impairment, and its book value is compared with the recoverable amount. If the recoverable amount is lower than the book value, the impairment loss of goodwill is confirmed.
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Once the asset impairment loss is confirmed, it will not be reversed in future accounting periods.
(11) Employees’ remuneration
Employee compensation refers to various forms of remuneration or compensation given by the company for obtaining services provided by employees or dissolving labor relations. Employee compensation includes short-term salary, post-employment benefits, dismissal benefits and other long-term employee benefits. The benefits provided by the Company to employees’ spouses, children, dependents, survivors of deceased employees and other beneficiaries also belong to employees’ salaries. According to liquidity, employee compensation is listed in the items of "employee compensation payable" and "long-term employee compensation payable" in the balance sheet respectively.
1, the accounting treatment method of short-term salary
(1) Basic salary of employees (salary, bonus, allowance and subsidy)
During the accounting period when employees provide services for them, the Company recognizes the actual short-term salary as a liability, which is included in the current profit and loss, unless other accounting standards require or allow it to be included in the cost of assets.
(2) Employee welfare funds
The employee welfare expenses incurred by the Company shall be included in the current profit and loss or related asset cost according to the actual amount. If employee welfare expenses are non-monetary benefits, they shall be measured at fair value.
(3) social insurance premiums such as medical insurance premiums, work-related injury insurance premiums, maternity insurance premiums and housing accumulation funds, as well as trade union funds and employee education funds.
The social insurance premium and housing accumulation fund such as medical insurance premium, work injury insurance premium and maternity insurance premium paid by the Company for employees, as well as the union funds and employee education funds withdrawn according to regulations, shall be calculated and determined according to the stipulated accrual basis and accrual ratio during the accounting period when employees provide services for them, and the corresponding liabilities shall be confirmed and included in the current profits and losses or related asset costs.
(4) Short-term paid absence
When employees provide services, thus increasing their rights of paid absence in the future, the Company will confirm the employee’s salary related to accumulated paid absence, and measure it by the expected amount of payment increased due to accumulated unpaid rights. The Company confirms the employee’s salary related to non-cumulative paid absences in the accounting period when employees actually have absences.
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(5) Short-term profit sharing plan
If the profit sharing plan meets the following conditions at the same time, the Company will confirm the relevant salary payable to employees:
(1) the enterprise due to past events now has the legal obligation to pay employees’ salaries or constructive obligation.
② The amount of salary obligations payable to employees arising from the profit sharing plan can be estimated reliably.
2. Accounting treatment method of post-employment benefits
(1) Set the deposit plan
During the accounting period when employees provide services for them, the Company recognizes the payable amount calculated according to the set deposit plan as a liability, and counts it into the current profit and loss or related asset cost. According to the set deposit plan, if it is not expected that all the payable amount will be paid within 12 months after the end of the annual report period for employees to provide relevant services, the Company will measure the payable employee’s salary with the discounted amount with reference to the corresponding discount rate (determined according to the market yield of national debt or high-quality corporate bonds in the active market that match the obligation period and currency of the set deposit plan on the balance sheet date).
(2) defined benefit plans
① Determine the present value of defined benefit plans’s obligations and the current service cost.
According to the expected cumulative welfare unit method, the relevant demographic variables and financial variables are estimated by using unbiased and consistent actuarial assumptions, the obligations arising from defined benefit plans are measured, and the attribution period of relevant obligations is determined. The Company discounts the obligations generated by defined benefit plans at the corresponding discount rate (determined according to the market yield of national debt or high-quality corporate bonds in the active market matching the term and currency of defined benefit plans’s obligations on the balance sheet date) to determine the present value and current service cost of defined benefit plans’s obligations.
② Confirm defined benefit plans’s net liabilities or net assets.
If there are assets in defined benefit plans, the Company will recognize the deficit or surplus formed by deducting the fair value of defined benefit plans’s assets from the present value of defined benefit plans’s obligations as a defined benefit plans’s net debt or net assets.
If there is a surplus in defined benefit plans, the Company will measure the net assets of defined benefit plans based on the lower of defined benefit plans’s surplus and asset ceiling.
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③ Determine the amount that should be included in the asset cost or current profit and loss.
Service costs include current service costs, past service costs and settlement gains or losses. Among them, except for the current service cost required or allowed to be included in the asset cost by other accounting standards, other service costs are included in the current profit and loss.
The net interest of defined benefit plans’s net liabilities or net assets, including the interest income of planned assets, the interest expenses of defined benefit plans’s obligations and the interest affected by the asset ceiling, are included in the current profit and loss.
④ Determine the amount that should be included in other comprehensive income.
Changes arising from remeasurement of defined benefit plans’s net liabilities or net assets, including:
A, actuarial gains or losses, that is, due to the adjustment of actuarial assumptions and experience, the present value of defined benefit plans’s obligations previously measured increases or decreases.
B. Return on planned assets, after deducting the amount included in the net interest of defined benefit plans’s net liabilities or net assets.
C, changes in the impact of the asset ceiling, deducting the amount included in the net interest of defined benefit plans’s net liabilities or net assets.
The above-mentioned changes arising from remeasurement of defined benefit plans’s net liabilities or net assets are directly included in other comprehensive income, and are not allowed to be reversed to profit or loss in subsequent accounting periods, but the Company can transfer these amounts recognized in other comprehensive income within the scope of equity.
3. Accounting treatment methods for dismissal benefits
Where the Company provides dismissal benefits to employees, the employee compensation liabilities arising from dismissal benefits shall be recognized as soon as possible and included in the current profits and losses:
(1) When an enterprise cannot unilaterally withdraw the dismissal benefits provided by the plan to terminate labor relations or the proposal to reduce labor relations.
(2) When the enterprise confirms the costs or expenses related to the reorganization involving the payment of dismissal benefits.
Dismissal benefits are not expected to be fully paid within 12 months after the end of the annual reporting period, with reference to the corresponding discount rate (according to the national debt or active that matches the obligation period and currency of defined benefit plans on the balance sheet date,
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Determine the market rate of return of high-quality corporate bonds in the market) Discount the amount of dismissal benefits, and measure the salary payable to employees with the discounted amount.
4. Accounting treatment methods for other long-term employee benefits
(1) It meets the requirements of the set deposit plan.
If other long-term employee benefits provided by the Company to employees meet the requirements of the set deposit plan, all the payable amount shall be measured at the discounted amount.
(2) It meets the conditions of defined benefit plans.
At the end of the reporting period, the Company recognized the employee compensation costs arising from other long-term employee benefits as the following components:
① Service cost.
② Net interest on net liabilities or net assets of other long-term employee benefits.
③ Re-measure the changes arising from the net liabilities or net assets of other long-term employee benefits.
In order to simplify the relevant accounting treatment, the total net amount of the above items is included in the current profit and loss or related asset cost.
(12) Income
1. Income accounting policies applicable from January 1, 2020.
(1) General principles
Income is the total inflow of economic benefits formed in the daily activities of the company, which will lead to the increase of shareholders’ rights and interests and has nothing to do with the capital invested by shareholders.
The Company has fulfilled its contractual obligations, that is, revenue is recognized when the customer obtains the control right of relevant commodities. Obtaining the control right of related commodities means being able to dominate the use of the commodities and obtain almost all economic benefits from them.
If the contract contains two or more performance obligations, the Company will allocate the transaction price to each individual performance obligation according to the relative proportion of the individual selling price of the goods or services promised by each individual performance obligation on the contract start date, and measure the income according to the transaction price allocated to each individual performance obligation.
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The transaction price is the amount of consideration that the company is expected to receive for transferring goods or services to customers, excluding the money received on behalf of third parties. When determining the transaction price of the contract, if there is a variable consideration, the Company will determine the best estimate of the variable consideration according to the expected value or the most likely amount, and include it in the transaction price with an amount not exceeding the amount that is unlikely to be significantly reversed when the relevant uncertainty is eliminated. If there is a significant financing component in the contract, the Company will determine the transaction price according to the amount payable in cash when the customer obtains the control right of the goods, and the difference between the transaction price and the contract consideration will be amortized by the effective interest rate method during the contract period. If the interval between the control right transfer and the customer’s payment is less than one year, the Company will not consider the financing component. If one of the following conditions is met, it is a performance obligation within a certain period of time; Otherwise, it is a performance obligation at a certain point:
① The customer obtains and consumes the economic benefits brought by the company’s performance at the same time;
(2) The customer can control the goods under construction during the performance of the Company;
(3) The commodities produced during the performance of the Company have irreplaceable uses, and the Company has the right to collect money for the accumulated part of the performance completed so far during the whole contract period.
For the performance obligations performed in a certain period of time, the Company shall confirm the income according to the performance progress during that period, except that the performance progress cannot be reasonably determined. The Company determines the performance progress of providing services according to the input method (or output method). When the performance schedule can’t be reasonably determined, if the company’s incurred costs are expected to be compensated, the revenue will be confirmed according to the incurred cost amount until the performance schedule can be reasonably determined.
For the performance obligations performed at a certain point in time, the Company recognizes the revenue when the customer obtains the control right of relevant commodities. When judging whether the customer has obtained the control right of goods or services, the Company will consider the following signs:
(1) The Company enjoys the current right to receive payment for the commodity or service, that is, the customer has the current payment obligation for the commodity;
② The Company has transferred the legal ownership of the commodity to the customer, that is, the customer has the legal ownership of the commodity;
③ The Company has transferred the goods in kind to the customer, that is, the customer has taken possession of the goods in kind;
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④ The Company has transferred the main risks and rewards of the commodity ownership to the customer, that is, the customer has obtained the main risks and rewards of the commodity ownership;
⑤ The customer has accepted the product.
(2) Specific methods
The specific methods for revenue recognition of the Company are as follows:
The contract for the sale of goods between our company and customers belongs to the performance of obligations at a certain point.
① The confirmation of domestic sales revenue shall meet the following conditions: the company will send the relevant goods to the place designated by the customer according to the contract, and after the customer signs for it, the company has transferred the main risks and rewards of ownership of this part of the goods to the customer, and enjoys the current right to receive money for this part of the goods. At the same time, the customer has the legal ownership of this part of the goods and has the current payment obligation for this part of the goods.
② Confirmation of export income shall meet the following conditions:
A, general mode
When the company completes the export customs declaration formalities according to the contract and the goods are actually released, the company has transferred the legal ownership of this part of export goods and the main risks and rewards of ownership to the customer, and at the same time, the company has obtained the current payment right for this part of goods, and the customer has the current payment obligation for this part of goods.
B, transfer warehouse mode
The company’s export sales transport the goods to the transit warehouse designated by the customer. After the customer actually receives them, it means that the company has transferred the main risks and rewards of the ownership of this part of the goods to the customer, and enjoys the current right to collect the goods. At the same time, the customer has the legal ownership of this part of the goods and has the current payment obligation for this part of the goods.
2. Income accounting policies applicable to 2019 and previous years.
(1) Income from sales of goods
The company has transferred the main risks and rewards of commodity ownership to the buyer; The company has neither retained the right to continue management related to ownership, nor effectively controlled the sold goods; The amount of income can be measured reliably; Related economic benefits are likely to flow into the enterprise; Related achievements that have occurred or will occur.
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When this can be measured reliably, the realization of commodity sales revenue is confirmed.
The specific methods for confirming the sales revenue of the Company’s commodities are as follows:
(1) Domestic sales: the sales revenue is confirmed when the contract products have been sent to the designated place of the customer and the customer’s receipt or statement is obtained as the risk reward transfer point.
② Export: In general, the sales revenue is recognized at the point when the export declaration formalities are completed and the customs declaration documents are obtained, and the contract products are transferred as risk reward after shipment and departure; Some export customers adopt the mode of transit warehouse. After the goods are delivered to the warehouse designated by the customer, the sales revenue is confirmed at the time when the risk reward is transferred.
(2) Income from providing labor services
If the results of the transaction of providing labor services on the balance sheet date can be estimated reliably, the income from providing labor services shall be confirmed by the percentage of completion method. The completion progress of the labor service transaction shall be determined according to the proportion of the incurred cost to the estimated total cost.
The reliable estimation of the result of providing labor service transaction means that: ① the amount of income can be measured reliably; ② Relevant economic benefits are likely to flow into the enterprise; ③ The degree of completion of the transaction can be reliably determined;
④ The costs that have occurred and will occur in the transaction can be measured reliably.
The Company determines the total income from providing labor services according to the contract or agreement price received or receivable, except that the contract or agreement price received or receivable is unfair. On the balance sheet date, the income from providing labor services in the current period shall be confirmed according to the total income from providing labor services multiplied by the completion schedule after deducting the accumulated confirmed income from providing labor services in the previous accounting period; At the same time, the current labor cost is carried forward according to the estimated total cost of providing labor services multiplied by the completion schedule after deducting the accumulated confirmed labor cost in the previous accounting period.
If the transaction results of providing labor services on the balance sheet date cannot be reliably estimated, the following situations shall be dealt with respectively:
① If the labor costs that have occurred are expected to be compensated, the income from providing labor services shall be confirmed according to the amount of labor costs that have occurred, and the labor costs shall be carried forward according to the same amount.
② If the labor cost that has occurred is not expected to be compensated, the labor cost that has occurred will be included in the current profit and loss, and the income from providing labor services will not be recognized.
(3) Income from transferring the right to use assets
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When the economic benefits related to the transaction are likely to flow into the enterprise and the amount of income can be measured reliably, the amount of income from transferring the right to use assets shall be determined in the following circumstances:
① The amount of interest income shall be calculated and determined according to the time when others use the monetary funds of the enterprise and the actual interest rate.
② The amount of royalty income shall be calculated and determined according to the charging time and method agreed in relevant contracts or agreements.
(XIII) Government subsidies
1, the confirmation of government subsidies
Government subsidies can only be confirmed if they meet the following conditions:
(1) The Company can meet the conditions attached to the government subsidy;
(2) The Company can receive government subsidies.
2, the measurement of government subsidies
If government subsidies are monetary assets, they shall be measured according to the amount received or receivable. If government subsidies are non-monetary assets, they shall be measured at fair value; If the fair value cannot be obtained reliably, it shall be measured according to the nominal amount.
3, the accounting treatment of government subsidies
(1) Government subsidies related to assets
Government subsidies obtained by the company for purchasing, constructing or otherwise forming long-term assets are classified as government subsidies related to assets. Government subsidies related to assets are recognized as deferred revenue, and are included in profits and losses by stages according to a reasonable and systematic method within the service life of related assets. Government subsidies measured according to the nominal amount are directly included in the current profits and losses. If the relevant assets are sold, transferred, scrapped or damaged before the end of the service life, the undistributed deferred revenue balance will be transferred to the profit and loss of the current asset disposal period.
(2) Government subsidies related to income
Government subsidies other than those related to assets are classified as government subsidies related to income. Government subsidies related to income shall be accounted for in accordance with the following provisions:
If it is used to compensate the related costs or losses of the Company in future periods, it will be recognized as deferred revenue, and it will be included in the current profit and loss during the period when the related costs or losses are recognized;
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Those used to compensate the related costs or losses that have occurred in the Company are directly included in the current profits and losses. For government subsidies that include both asset-related parts and income-related parts, different parts are accounted for separately; Those that are indistinguishable are classified as government subsidies related to income as a whole. Government subsidies related to the company’s daily activities are included in other income according to the essence of economic business. Government subsidies unrelated to the company’s daily activities are included in non-operating income and expenditure.
(3) Policy preferential loan discount
If the finance allocates the discount interest funds to the lending bank, and the lending bank provides loans to the Company at a preferential policy interest rate, the actually received loan amount shall be taken as the recorded value of the loan, and the relevant loan expenses shall be calculated according to the loan principal and the preferential policy interest rate. The finance will directly allocate the discount interest funds to the company, and the company will offset the relevant borrowing costs with the corresponding discount interest.
(4) government subsidies are returned
When the confirmed government subsidy needs to be returned, if the book value of relevant assets is reduced at the time of initial confirmation, the book value of assets will be adjusted; If there is a relevant deferred revenue balance, the book balance of the relevant deferred revenue will be offset, and the excess will be included in the current profit and loss; In other cases, it is directly included in the current profit and loss.
(14) Deferred income tax assets and deferred income tax liabilities
According to the temporary differences between the book values of assets and liabilities and tax basis on the balance sheet date, the Company usually adopts the balance sheet liability method to confirm and measure the impact of taxable temporary differences or deductible temporary differences on income tax. The Company does not discount deferred income tax assets and deferred income tax liabilities.
1. Recognition of deferred income tax assets
For deductible temporary differences, the impact on income tax is calculated according to the income tax rate during the expected reversal period, and the impact is recognized as deferred income tax assets, but only to the extent that the company is likely to obtain future taxable income for deducting deductible temporary differences, deductible losses and tax deduction.
At the same time, the impact of deductible temporary differences on income tax caused by the initial recognition of assets or liabilities in transactions or events with the following characteristics is not recognized as deferred income tax assets:
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(1) The transaction is not a business combination;
(2) When the transaction occurs, neither accounting profit nor taxable income (or deductible loss) will be affected.
The Company recognizes the deductible temporary differences related to the investment of subsidiaries, associated companies and joint ventures as deferred income tax assets if the following two conditions are met at the same time:
(1) Temporary differences are likely to turn back in the foreseeable future;
(2) In the future, it is likely to obtain taxable income used to deduct deductible temporary differences.
On the balance sheet date, if there is conclusive evidence that sufficient taxable income is likely to be obtained in the future period to offset the deductible temporary differences, deferred income tax assets not recognized in the previous period will be recognized.
On the balance sheet date, the Company rechecks the book value of deferred income tax assets. If it is probable that sufficient taxable income will not be obtained in the future to offset the benefits of deferred income tax assets, the book value of deferred income tax assets will be written down. When sufficient taxable income is likely to be obtained, the amount written down will be reversed.
2. Confirmation of deferred income tax liabilities
All taxable temporary differences of the Company are measured according to the income tax rate during the expected reversal period, and the amount of the impact is recognized as deferred income tax liabilities, except for the following circumstances:
(1) The impact of taxable temporary differences arising from the following transactions or events on income tax is not recognized as deferred income tax liabilities:
① Initial confirmation of goodwill;
② Initial recognition of assets or liabilities arising from a transaction with the following characteristics: the transaction is not a business combination, and the transaction does not affect accounting profits, taxable income or deductible losses.
(2) The Company’s taxable temporary differences related to investments in subsidiaries, joint ventures and associated enterprises are generally recognized as deferred income tax liabilities, unless the following two conditions are met at the same time:
① The Company can control the time when temporary differences are reversed.
② The temporary difference is unlikely to turn back in the foreseeable future.
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3. Confirmation of deferred income tax liabilities or assets involved in specific transactions or events.
(1) deferred income tax liabilities or assets related to business combination
For taxable temporary differences or deductible temporary differences arising from business combination not under the same control, the related deferred income tax expenses (or income) are usually adjusted when the deferred income tax liabilities or deferred income tax assets are recognized.
(2) Projects directly included in owners’ equity
Current income tax and deferred income tax related to transactions or events directly included in owners’ equity are included in owners’ equity. The impact of temporary differences on income tax Transactions or events included in owners’ equity include:
Other comprehensive income, accounting policy changes caused by changes in the fair value of available-for-sale financial assets, etc. adopt retrospective adjustment method or retrospective restatement method to correct differences in previous (important) accounting errors to adjust the retained income at the beginning, and mixed financial instruments containing both liabilities and equity components are included in owners’ equity at initial recognition.
(3) Can make up for losses and tax deduction
(1) the company’s own operating losses and tax deduction.
Deductible loss refers to the loss calculated and determined in accordance with the provisions of the tax law, which is allowed to be made up by taxable income in subsequent years. Uncompensated losses (deductible losses) and tax deductions that can be carried forward to future years according to the provisions of the tax law shall be treated as deductible temporary differences. When it is estimated that sufficient taxable income is likely to be obtained in the future period when losses can be compensated or taxes can be deducted, the corresponding deferred income tax assets will be recognized to the extent of the taxable income that is likely to be obtained, and the income tax expenses in the current income statement will be reduced.
② Compensatable uncompensated losses of the merged enterprise caused by business combination.
In a business combination, if the Company obtains the deductible temporary difference of the purchased party and fails to meet the conditions for the recognition of deferred income tax assets on the purchase date, it will not be recognized. Within 12 months after the purchase date, if new or further information is obtained to show that the relevant information on the purchase date already exists, and it is expected that the economic benefits brought by the temporary differences that can be deducted by the purchaser on the purchase date can be realized, the relevant deferred income tax assets will be recognized, and the goodwill will be reduced at the same time. If the goodwill is insufficient to be offset, the difference will be recognized as the current profit and loss; In addition to the above, the deferred income tax assets related to business combination are recognized and included in the current profit and loss.
(4) Temporary differences caused by merger and offset
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When the Company prepares consolidated financial statements, if the book value of assets and liabilities in the consolidated balance sheet is temporarily different from that in tax basis, the taxpayer to which it belongs, deferred income tax assets or deferred income tax liabilities shall be recognized in the consolidated balance sheet, and income tax expenses in the consolidated income statement shall be adjusted at the same time, except for deferred income tax related to transactions or events directly included in owners’ equity and business combination.
(5) Equity-settled share-based payment
If the tax law stipulates that the expenses related to share-based payment are allowed to be deducted before tax, during the period when the costs and expenses are confirmed according to the accounting standards, the Company will calculate and determine the tax basis and the temporary differences caused by it according to the estimated amount that can be deducted before tax according to the information obtained at the end of the accounting period, and confirm the related deferred income tax if the confirmation conditions are met. Among them, it is estimated that the amount that can be deducted before tax in the future period exceeds the cost related to share-based payment confirmed in accordance with accounting standards, and the income tax impact of the excess should be directly included in the owner’s equity.
(15) Significant accounting judgments and estimates.
Based on historical experience and other factors, including reasonable expectations for future events, the Company continuously evaluates the important accounting estimates and key assumptions adopted. Important accounting estimates and key assumptions that are likely to cause significant adjustment risks to the book values of assets and liabilities in the next fiscal year are listed as follows:
1. Classification of financial assets (after January 1, 2019)
The company’s major judgments in determining the classification of financial assets include the analysis of business model and contractual cash flow characteristics.
The Company determines the business model of managing financial assets at the level of financial asset portfolio, and the factors considered include the way of evaluating and reporting the performance of financial assets to key management personnel, the risks affecting the performance of financial assets and their management methods, and the way of obtaining remuneration for relevant business management personnel.
When evaluating whether the contractual cash flow of financial assets is consistent with the basic lending arrangement, the Company has the following main judgments: whether the time distribution or amount of the principal may change during the duration due to reasons such as early repayment; Whether interest only includes the time value of money, credit risk, other basic lending risks and consideration with costs and profits. For example, whether the amount paid in advance only reflects the unpaid principal and interest based on the unpaid principal, and the reasonable compensation paid for the early termination of the contract.
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2. Measurement of expected credit loss of accounts receivable (after January 1, 2019) The Company calculates expected credit loss of accounts receivable based on default risk exposure and expected credit loss rate of accounts receivable, and determines expected credit loss rate based on default probability and loss given default. When determining the expected credit loss rate, the Company uses internal historical credit loss experience and other data, and adjusts the historical data in combination with the current situation and forward-looking information. When considering forward-looking information, the indicators used by the company include the risk of economic downturn, changes in external market environment, technical environment and customer situation. The Company regularly monitors and reviews the assumptions related to the calculation of expected credit losses.
3. impairment of goodwill
The Company shall assess whether the goodwill is impaired at least annually. This requires estimating the use value of the asset group to which goodwill has been allocated. When estimating the use value, the Company needs to estimate the future cash flow from the asset group and select an appropriate discount rate to calculate the present value of the future cash flow.
4. Deferred income tax assets
Deferred income tax assets should be recognized for all unused tax losses to the extent that there is likely to be enough taxable profits to offset the losses. This requires the management to use a lot of judgment to estimate the time and amount of taxable profits in the future, and to determine the amount of deferred income tax assets to be recognized in combination with tax planning strategies.
(sixteen) major accounting policies, changes in accounting estimates and correction of accounting errors.
1. Major changes in accounting policies
(1) On April 30, 2019, the Ministry of Finance issued the Notice on Revising and Printing the Format of Financial Statements of General Enterprises in 2019 (Cai Shui [2019] No.6), which partially revised the format of the report (Cai Shui [2018] No.15), requiring enterprises that have implemented the new financial instrument standards and new income standards but have not implemented the new leasing standards to prepare financial statements as follows:
In the balance sheet, the item of "notes receivable and accounts receivable" is divided into "notes receivable" and "accounts receivable"; Add "accounts receivable financing" to reflect bills receivable and accounts receivable measured at fair value on the balance sheet date and whose changes are included in other comprehensive income; Merge "dividends receivable" and "interest receivable" into "other receivables"; Merge "fixed assets cleaning" into "fixed assets" project; will
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"engineering materials" are merged into "projects under construction"; Split the "notes payable and accounts payable" line item into "notes payable" and "accounts payable"; Merge "dividend payable" and "interest payable" into "other payables"; Merge "Special Payables" into "Long-term Payables". In the income statement, the detailed item of "the income from the termination of financial assets measured in amortized cost (the loss is filled with"-")" is added under the investment income item; Separate the item of "R&D expenses" from the item of "management expenses", and increase the amortization amount of self-developed intangible assets included in the management expenses in the item of "R&D expenses"; Split the detailed items of "interest expense" and "interest income" under the financial expense item. On September 19, 2019, the Ministry of Finance issued the Notice on Revising and Printing the Format of Consolidated Financial Statements (2019 Edition) (Cai Shui [2019] No.16), which was implemented in conjunction with Cai Shui [2019] No.6.
The Company prepared comparative statements according to the financial statement formats specified in Accounting [2019] No.6 and Accounting [2019] No.16, and changed the presentation of relevant financial statements by retrospective adjustment. The impact of presentation adjustment of relevant consolidated financial statements is as follows:
Unit: Yuan
(2) On March 31st, 2017, the Ministry of Finance issued Accounting Standards for Business Enterprises No.22-Recognition and Measurement of Financial Instruments (Cai Shui [2017] No.7), Accounting Standards for Business Enterprises No.23-Transfer of Financial Assets (Cai Shui [2017] No.8) and Accounting Standards for Business Enterprises No.24-Hedge Accounting (Cai Shui [2017] No.8) Domestic listed companies are required to implement the new financial instrument standards from January 1, 2019. On January 1, 2019, the Company implemented the above-mentioned new financial instrument standards and adjusted the relevant contents of accounting policies. For details, please refer to "V. Major Meetings" in this section.
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Accounting policies and accounting estimates ""(4) financial instruments ". If the recognition and measurement of financial instruments before January 1, 2019 are inconsistent with the requirements of the new financial instruments standards, the Company will retroactively adjust the classification and measurement (including impairment) of financial instruments in accordance with the provisions of the new financial instruments standards, and include the difference between the original book value of financial instruments and the new book value on the implementation date of the new financial instruments standards (that is, January 1, 2019) into the retained income or other comprehensive income on January 1, 2019. At the same time, the Company has not adjusted the data in the comparative financial statements.
① First implementation of new financial instrument standards and adjustments; First implementation of related items in financial statements at the beginning of the current year.
Unit: Yuan
② Description of the comparative data in the previous period of retrospective adjustment for the first implementation of the new financial instrument standards.
A. On January 1, 2019, the classification and measurement comparison table of financial assets before and after the implementation of the new financial instrument standards.
Unit: Yuan
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B. On January 1, 2019, the book value of the original financial assets was adjusted to the reconciliation table of the book value of the new financial instruments standards according to the new financial instruments standards.
Unit: Yuan
(3) On July 5, 2017, the Ministry of Finance issued Accounting Standards for Business Enterprises No.14-Income (Cai Shui [2017] No.22) (hereinafter referred to as "New Income Standards"), requiring domestic listed enterprises to implement the new income standards from January 1, 2020. The Company began to implement the new revenue standards on January 1, 2020. The implementation of the new revenue standards will not affect the company’s business model, contract terms and revenue recognition, and there is no difference in accounting policies for revenue recognition before and after the implementation of the new revenue standards. It has no influence on the annual (end) operating income, net profit attributable to ordinary shareholders of the company, total assets and net assets attributable to ordinary shareholders of the company before the first implementation date.
On December 10, 2019, the Ministry of Finance issued the No.13 Interpretation of Accounting Standards for Business Enterprises. The Company implemented this interpretation on January 1, 2020, and the previous years were not traced back.
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The first implementation of the new income standard and the new lease standard adjustment, the first implementation of the financial statements at the beginning of the year:
Unit: Yuan
2. Significant changes in accounting estimates
During the reporting period, the Company did not have any significant changes in accounting estimates.
3. Correction of major accounting errors
During the reporting period, the Company did not correct any major accounting errors.
6. List of non-recurring gains and losses verified by certified public accountants
According to the Non-recurring Profit and Loss Appraisal Report (Rongcheng Special Word [2021]No. 230Z0205) issued by Rongcheng Club, the specific contents and amount of the company’s non-recurring profit and loss during the reporting period and its impact on the current operating results are as follows:
Unit: 10,000 yuan
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In each period of the reporting period, the net non-recurring gains and losses attributable to shareholders of the parent company were 9,197,100 yuan respectively.
6.714 million yuan and 14.2613 million yuan, accounting for the proportion of net profit attributable to shareholders of the parent company in the current period, respectively
36.24%, 16.46% and 21.30%. In 2018, the company’s non-recurring gains and losses accounted for a relatively high proportion of the current net profit, mainly due to the large amount of government subsidies received; The non-recurring gains and losses in other periods have a relatively small impact on the company’s net profit and do not have a significant impact on the company’s operating results. See "1. Other income" and "7. Non-operating income and expenditure" in "X. Analysis of operating results" in this section.
Seven, the main tax rates, enjoy the main preferential tax policies.
(1) Main taxes and tax rates of the company
During the reporting period, the main taxes and tax rates of the Company and its subsidiaries are as follows:
Note: From January 1, 2018 to May 1, 2018, the company’s VAT rate was 17%; According to the Notice on Adjusting the VAT Rate issued by the Ministry of Finance and State Taxation Administration of The People’s Republic of China (Cai Shui [2018] No.32), on May 1, 2018,
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The value-added tax rate of 16% will be implemented from the date of; According to the Announcement of the Ministry of Finance, State Taxation Administration of The People’s Republic of China and the General Administration of Customs on Deepening the Reform of Value-added Tax (Announcement No.39 of the Ministry of Finance, State Taxation Administration of The People’s Republic of China and the General Administration of Customs in 2019), the VAT rate of 13% will be implemented from April 1, 2019.
(2) The corporate income tax rate of each company within the scope of merger
During the reporting period, the corporate income tax rates of the Company and its subsidiaries are as follows:
Note 1: Zhongshengchang, a subsidiary of the company, met the standards of small and meager profit enterprises during the reporting period and implemented a preferential income tax rate of 20%. Note 2: On December 31, 2018, the company acquired Xiruiwei and its holding subsidiary, Hengxing Optoelectronics, which was cancelled in December 2019. Note 3: Wuxi Semikentuo Microelectronics Co., Ltd., a holding subsidiary, was established in September 2020.
(3) Tax preferences during the reporting period
1, the national planning and layout of key integrated circuit design enterprise income tax concessions.
According to the Notice on Further Encouraging the Development of Enterprise Income Tax Policies for Software Industry and Integrated Circuit Industry issued by the Ministry of Finance and State Taxation Administration of The People’s Republic of China (Caishui [2012] No.27) and the Notice on Relevant Issues Concerning Enterprise Income Tax Preferential Policies for Software and Integrated Circuit Industry issued by the Ministry of Finance, State Taxation Administration of The People’s Republic of China, Development and Reform Commission and Ministry of Industry and Information Technology (Caishui [2016] No.49), the key integrated circuit design enterprises within the national planning layout,
According to State Taxation Administration of The People’s Republic of China Jiangsu Provincial Taxation Bureau’s "Announcement on the Verification Results of the First Batch of Declarations to Enjoy the Preferential Treatment of Key Software Enterprises, Integrated Circuit Design Enterprises and Key Integrated Circuit Design Enterprises in the National Planning Layout in 2018" and "Announcement on the Verification Results of the First Batch of Declarations to Enjoy the Preferential Treatment of Key Software Enterprises, Integrated Circuit Design Enterprises and Key Integrated Circuit Design Enterprises in the National Planning Layout in 2019", the company meets the preferential income tax conditions of key integrated circuit design enterprises in the national planning layout, 2018-2019.
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On December 11, 2020, according to the relevant provisions of the Announcement on Enterprise Income Tax Policies for Promoting the High-quality Development of Integrated Circuit Industry and Software Industry (Announcement No.45 of the Ministry of Finance, State Administration of Taxation, Development and Reform Commission and Ministry of Industry and Information Technology, 2020), key integrated circuit design enterprises and software enterprises encouraged by the state are exempted from enterprise income tax from the first year to the fifth year, and the enterprise income tax is levied at a reduced rate of 10% in subsequent years. The company expects to still enjoy this tax preference in 2020, and the enterprise income tax will be levied at a reduced rate of 10%.
2. Preferential income tax for small and low-profit enterprises
According to the Notice on Expanding the Scope of Preferential Income Tax Policies for Small and Low-profit Enterprises issued by the Ministry of Finance and the State Administration of Taxation (Cai Shui [2017] No.43) (hereinafter referred to as "Cai Shui [2017] No.43 Document"), from January 1, 2017 to December 31, 2019, the annual taxable income of small and low-profit enterprises is less than 500,000 yuan (including 500,000 yuan).
According to the Notice of the Ministry of Finance and the State Administration of Taxation on Further Expanding the Scope of Preferential Income Tax Policies for Small and Micro-profit Enterprises (Cai Shui [2018] No.77) (hereinafter referred to as "Cai Shui [2018] No.77 Document"), from January 1, 2018 to December 31, 2020, the annual taxable income is less than 1 million yuan (including 1 million yuan). Caishui [2017] No.43 document shall be abolished as of January 1, 2018.
According to the provisions of the Notice on Implementing the Inclusive Tax Relief Policy for Small and Micro Enterprises (Caishui [2019] No.13) issued by the Ministry of Finance and the State Administration of Taxation, from January 1, 2019 to December 31, 2021, the annual taxable income of small and low-profit enterprises shall be reduced by 25% and included in the taxable income, and the enterprise income tax shall be paid at the rate of 20%; For the part with an annual taxable income of more than 1 million yuan but not more than 3 million yuan, it will be included in the taxable income at a reduced rate of 50%, and the enterprise income tax will be paid at a rate of 20%; Caishui [2018] No.77 document shall be abolished as of January 1, 2019.
Zhongshengchang, a subsidiary of the company, met the above-mentioned preferential conditions for small and meager profit enterprise income tax during the reporting period. The actual corporate income tax burden in 2018 was 10%, and the actual corporate income tax burden in 2019 and 2020 was 5%.
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VIII. Major financial indicators during the reporting period
(A) the main financial indicators
Note: The calculation method of the above financial indicators is as follows:
1. Current ratio = current assets/current liabilities;
2. Quick ratio = (current assets-inventory)/current liabilities;
3. Asset-liability ratio = total liabilities/total assets * 100%;
4. Accounts receivable turnover rate (times) = operating income/average book balance of accounts receivable;
5. Inventory turnover rate (times) = operating cost/average book balance of inventory;
6. Profit before interest, tax, depreciation and amortization = net profit+income tax+interest expense+depreciation of fixed assets+long-term deferred expenses and amortization of intangible assets;
7. The ratio of R&D investment to operating income = R&D expenses/operating income * 100%;
8. Cash flow from operating activities per share = net cash flow from operating activities/total share capital at the end of the period;
9. Net cash flow per share = net increase in cash and cash equivalents/total share capital at the end of the period;
10. Net assets per share attributable to shareholders of the company = total equity attributable to shareholders of the parent company at the end of the period/total share capital at the end of the period.
(2) Return on net assets and earnings per share
According to the relevant provisions of the China Securities Regulatory Commission’s "Compilation Rules for Information Disclosure of Companies Offering Securities to the Public No.9-Calculation and Disclosure of Return on Net Assets and Earnings per Share (Revised in 2010)", during the reporting period, the company added
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The average return on equity and earnings per share are shown in the following table:
Note: The calculation method of the above financial indicators is as follows:
(1) weighted average return on equity = P0/(E0+NP ÷ 2+EI × MI ÷ M0-EJ × MJ ÷ M0 ek × MK ÷ M0)
Among them: P0 corresponds to the net profit attributable to shareholders of the parent company and the net profit attributable to shareholders of the parent company after deducting non-recurring gains and losses; NP is the net profit attributable to shareholders of the parent company; E0 is the initial net assets attributable to shareholders of the parent company; Ei refers to the newly added net assets belonging to shareholders of the parent company, such as issuing new shares or debt-to-equity swaps during the reporting period; Ej is the net assets attributable to shareholders of the parent company, such as repurchase or cash dividends during the reporting period; M0 is the number of months in the reporting period; Mi is the cumulative number of months from the next month of new net assets to the end of the reporting period; Mj is the cumulative number of months from the month following the decrease in net assets to the end of the reporting period; Ek refers to the increase or decrease of net assets caused by other transactions or events; Mk is the cumulative number of months from the month following the increase or decrease of other net assets to the end of the reporting period.
(2) Basic earnings per share = P0 ÷ (S0+S1+Si× Mi ÷ M0-SJ× MJ ÷ M0-SK)
In which: P0 is the net profit attributable to shareholders of the parent company or the net profit attributable to ordinary shareholders after deducting non-recurring gains and losses; S is the weighted average number of common shares outstanding; S0 is the total number of shares at the beginning; S1 refers to the number of shares increased during the reporting period due to the transfer of reserve fund to share capital or stock dividend distribution; Si refers to the number of shares increased during the reporting period due to the issuance of new shares or debt-to-equity swaps; Sj refers to the reduction in the number of shares due to repurchase during the reporting period; Sk is the number of shares contracted during the reporting period; M0 Number of months in the reporting period; Mi is the cumulative number of months from the month following the increase of shares to the end of the reporting period; Mj is to reduce the cumulative number of months from the following month to the end of the reporting period.
(3) Diluted earnings per share = P1/(S0+S1+Si × MI ÷ M0–SJ × MJ ÷ M0–SK+weighted average of increased common shares such as warrants, stock options and convertible bonds).
In which: P1 is the net profit attributable to the shareholders of the parent company or the net profit attributable to the shareholders of the parent company after deducting non-recurring gains and losses, and adjusted according to the Accounting Standards for Business Enterprises and relevant regulations in consideration of the influence of diluted potential common stock. When calculating the diluted earnings per share, the company should consider the influence of all diluted potential common shares on P1 and the weighted average number of shares, and include the diluted earnings per share in the order of the degree of dilution from large to small until the diluted earnings per share reaches the minimum. Because there is no diluted potential common stock in the company, the calculation of diluted earnings per share is the same as that of basic earnings per share.
IX. Division Information
During the reporting period, the company mainly engaged in the research and development and sales of analog chips, belonging to a single business segment, and there is no business segment that independently bears risks and rewards different from other components, so there is no need to present more detailed business segment information.
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X. Analysis of Operating Results
During the reporting period, the company’s operating performance and changing trend are shown in the following table:
Unit: 10,000 yuan
The company is mainly engaged in the research and development and sales of analog chips such as power management chips, and its downstream products are mainly used in consumer electronics fields such as mobile phones and wearable devices. During the reporting period, with the increasingly complex functions of terminal electronic equipment, the market demand and application fields of power management chips are increasing day by day. With its profound technical accumulation, excellent R&D and innovation capabilities and excellent product performance, the company has been highly recognized by the market, maintained good cooperation with existing well-known customers and constantly explored new well-known customers of consumer electronics, and its operating income and profitability showed a rapid growth trend.
(A) operating income analysis
1. Analysis of operating income composition
During the reporting period, the composition of the company’s operating income is as follows:
Unit: 10,000 yuan
During the reporting period, the company’s main business was research and development and sales of analog chips, and its main business income accounted for operating income.
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The proportion of income is 99.68%, 99.82% and 99.84% respectively, and its main business is outstanding. During the reporting period, the company’s other business income was mainly the electricity fee charged for water supply, with a small amount and proportion.
2. Analysis of income composition of main business
(1) Classification by product category
① Product categories
During the reporting period, the company’s main business income was classified according to product categories as follows:
Unit: 10,000 yuan
During the reporting period, the company’s main business income mainly came from the sales of power management chips, and the product structure did not change significantly. During the reporting period, the company’s sales revenue of power management chips achieved rapid growth, mainly due to the increasing demand for power management chips from terminal electronic devices such as mobile phones. With its profound technical accumulation and excellent R&D and innovation capabilities, the company continued to upgrade and innovate its products, and kept good cooperation with existing well-known customers while constantly exploring new well-known customers of consumer electronics, resulting in increasing sales revenue.
Other products of the company mainly include intelligent networking delay management unit and high-precision Hall chip. Among them, the intelligent networking delay management unit combines the delay chip module and communication technology to realize the functions of remote link, accurate delay and remote detection in the Internet of Things, which is mainly used in digital electronic detonators. During the reporting period, the company’s other income gradually increased, mainly due to the increasing sales income of intelligent networking delay management unit and the company’s continuous research and development and promotion of high-precision Hall chips and other new products under the background of the vigorous promotion and application of digital electronic detonators by the Ministry of Public Security and the Ministry of Industry and Information Technology.
② Power management chip subdivides products.
During the reporting period, the company’s power management chips were further broken down by function as follows:
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Unit: 10,000 yuan
As can be seen from the above table, during the reporting period, the company’s power management chips were mainly power protection chips and power conversion chips, and the product sales revenue continued to increase, mainly due to: a. Various power conversion chips developed by the company according to market and customer needs successfully passed the certification, and with the promotion of mass sales, the sales revenue and proportion of power conversion chips achieved rapid growth; B. The increase of customers’ demand for overvoltage protection and the company’s efforts to promote domestic business have led to the continuous growth of sales scale of power protection chips.
(2) Classification by sales region
During the reporting period, the company’s main business income was classified by sales region as follows:
Unit: 10,000 yuan
With deep technical accumulation and excellent product performance, the company has served internationally renowned customers for many years, and most of the downstream well-known customers have global processing plants and terminal markets. During the reporting period, the company mainly exported products, and the export income accounted for 78.14%, 76.24% and 69.95% of the main business income, mainly because the company directly declared and exported products to customers’ processing plants, warehouses and distribution centers in various countries or regions according to customers’ requirements. The geographical distribution of the company’s sales revenue conforms to the characteristics of the global operation of downstream customers and the integrated circuit industry.
(3) Classification by sales mode
During the reporting period, the company’s main business income was classified according to the sales model as follows:
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Unit: 10,000 yuan
During the reporting period, the company’s products were mainly used in consumer electronics fields such as smart phones and wearable devices, and the downstream market competition pattern was relatively concentrated. The company accordingly implemented the key customer strategy and adopted a sales model with direct sales as the mainstay and distribution as the supplement. In each period of the reporting period, the proportion of the company’s direct sales revenue to the main business income was as follows
81.45%, 75.37% and 73.27%. The company’s direct sales model is conducive to shortening the sales process, optimizing services, grasping customer needs in time, and improving the timeliness and accuracy of product development; The company regards distribution as a supplement to the direct sales model, which not only realizes the centralized sales of some scattered orders, but also helps to use the market resources of dealers to expand the company’s sales channels and further improve the company’s brand promotion and market share.
(4) Seasonal analysis of main business income
During the reporting period, the company’s main business income by quarter is as follows:
Unit: 10,000 yuan
During the reporting period, there were certain seasonal fluctuations in the company’s main business income, with sales revenue accounting for a relatively high proportion in the third quarter and revenue accounting for a relatively low proportion in the first quarter, mainly due to changes in downstream consumer electronics market demand. Usually, during the National Day, double "11", double "12", Christmas and other festivals and activities, the consumption demand of smart phones and wearable electronic devices is strong, and the downstream customers prepare goods in advance, and the purchasing demand in the third quarter is relatively strong, so the company’s revenue in the third quarter accounts for a relatively high proportion; The first quarter of the company is off-season, mainly due to the general holiday of electronic product manufacturing and integrated circuit manufacturers during the Spring Festival. In the second quarter of 2020, affected by the overseas COVID-19 epidemic, the sales scale of the company declined; But with the epidemic gradually under control,
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Many products of the company have passed the certification of large customers and achieved batch sales, and downstream customers have prepared goods in advance for consumption activities and festivals in the second half of the year. The sales revenue of the company in the third and fourth quarters has gradually picked up and achieved substantial growth.
3, the main business income change analysis
(1) the overall change analysis
The company is mainly engaged in the research and development and sales of analog chips such as power management chips, and its downstream products are mainly used in consumer electronics fields such as mobile phones and wearable devices. During the reporting period, the company’s main business income was 343,254,500 yuan, 473,732,800 yuan and 541,952,500 yuan, respectively, up by 38.01% and 14.40% year-on-year, showing an increasing trend, mainly under the favorable conditions of the country’s strong support for the development of integrated circuit industry and the increasing demand for chips by terminal electronic equipment. With its profound technical accumulation, excellent R&D and innovation capabilities and excellent product performance, the company has gained high recognition from the market. While maintaining good cooperation with existing well-known customers, it has continuously explored new well-known customers of consumer electronics, and its chip sales have been increasing.
① Good industrial policies and increasing downstream demand are the external thrust for the rapid growth of the issuer’s operating income.
Integrated circuit industry is a basic, leading and strategic industry to support economic development and safeguard national security. In recent years, China has issued a series of policies to strongly support the development of integrated circuit industry, and the integrated circuit industry chain has gradually matured, providing domestic integrated circuit design enterprises with capacity support and good development opportunities.
The company’s main products are power management chips, which are mainly used in portable electronic devices such as mobile phones and wearable devices. During the reporting period, with the complexity of mobile phone functions, the improvement of performance and the improvement of battery safety requirements, the market demand for power conversion chips and power protection chips continued to grow; In addition, the popularity of wearable devices such as smart bracelets, smart watches, TWS headsets and the promotion of 5G mobile phones further promote the increasing demand for chips for terminal electronic devices.
Therefore, good industrial policies and increasing downstream demand have created favorable conditions for the rapid development of the company and are the external thrust for the rapid growth of the issuer’s operating income.
(2) Deep technical accumulation, excellent R&D innovation ability and excellent product performance are the internal driving forces for the issuer’s rapid growth in operating income.
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The company has been deeply involved in the field of power management chips for nearly 20 years. Guided by market demand and cutting-edge technology trends, it has continuously improved its R&D strength, achieved technological breakthroughs in the directions of low noise, high efficiency, miniaturization and integration, and formed an advanced and mature technical system, ensuring the accuracy and efficiency of R&D. Driven by the above technical system, the company continuously upgraded the original products, developed and introduced new products, and formed more than 500 models of products covering power conversion chips, power protection chips and display drive circuits, realizing the deep integration of scientific and technological achievements and industries.
By virtue of its excellent R&D and innovation ability, the company has successfully developed OVP, LDO and other products at home or earlier, and has been recognized by international customers. The performance indexes of some products, such as noise, PSRR and EOS protection ability, have approached or surpassed those of international brand bidding products; In addition, the company insists on quality as the guarantee, implements strict and perfect quality control system in the process of R&D and production, ensures the stable performance of products in different application environments, and establishes a brand image of high stability and reliability.
Therefore, relying on profound technical accumulation and excellent R&D and innovation capabilities, the company continuously upgraded the original products and developed new products, forming a product series with outstanding performance and reliable quality, which is the internal driving force for the issuer’s rapid growth in operating income.
③ It is the direct driving force for the rapid growth of the issuer’s operating income to keep good cooperation with existing well-known customers and constantly explore new well-known customers of consumer electronics.
Since 2010, the company has officially entered the supplier system of Samsung Electronics, and has accumulated rich experience in bidding with internationally renowned enterprises such as TI in international business. Taking the quality requirements of international customers as the benchmark, the company has formed excellent R&D innovation ability and strict quality control system. With excellent product performance and high-quality differentiated service, it has established a good brand image and won high recognition from customers. While maintaining good cooperation with existing high-quality customers such as Samsung and LG, the company increased the development of well-known domestic customers and continuously promoted the import substitution in the domestic market. During the reporting period, the company successively passed the supplier certification of mainstream consumer electronics brands such as Xiaomi and Customer A, and the income of well-known large customers and newly added large customers continued to increase.
To sum up, during the reporting period, the rapid growth of the issuer’s main business income was in line with the development characteristics of the industry and the actual situation of the company.
(2) Analysis of changes in sales volume and unit price of main products.
During the reporting period, the company’s main business income mainly came from the sales of power management chips, which
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Changes in the sales volume and average unit price of tablets and their impact on sales revenue are as follows:
Unit: 10,000 PCs, RMB/PC, RMB 10,000.
Note 1: Influence of sales quantity change on sales revenue = (current sales volume-previous sales volume) * average sales price of previous sales/previous sales revenue. Note 2: Influence of changes in average selling price on sales revenue = (average selling price in current period-average selling price in previous period) * sales volume in current period/sales revenue in previous period. In each period of the reporting period, the company’s sales revenue of power management chips was RMB321,298,900, RMB429,161,600 and RMB465,722,000, respectively, up by 33.57% and 8.52% year-on-year, which was mainly affected by the increase in sales of power conversion chips and the increase in sales price of power protection chips. Products in the integrated circuit industry are updated rapidly. Usually, products with performance advantages and competitive advantages are sold at higher prices when they are launched into the market. With the passage of time and market competition, their unit prices usually keep declining and remain stable after being reduced to a certain extent. Company power supply
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There are many categories and models of management chips, and the average selling unit price is greatly influenced by the change of product structure. During the reporting period, due to the launch of new products, the realization of mass sales and the change of product structure, the average sales price of various products fluctuated, which also had a certain impact on the sales revenue of power management chips.
The change in the sales revenue of the company’s power management chips is the result of the joint influence of the sales quantity and price of various products. The specific analysis is as follows:
① Power protection chip
During the reporting period, the company’s power protection chip products mainly include overvoltage protection chips, overcurrent protection chips and other switch chips.
In 2019 and 2020, the sales revenue of the company’s power protection chips increased by 14.80% year-on-year,
8.15%, mainly due to the continuous introduction of new products and the optimization of product structure, and its sales price increased by 15.34% and 26.08% respectively year-on-year. Specifically, the company increased its domestic business promotion, and some overvoltage protection chips with integrated shutdown and suppression functions entered the supplier system of well-known domestic customers. At the same time, the new products suitable for fast charging technology introduced by the company gradually realized batch sales. This makes the sales proportion of overvoltage protection chips with integrated turn-off and suppression functions in power protection chips increase continuously, and the sales price of such products is usually higher than that of other power protection chips, which raises the average sales price of power protection chips. B, with the improvement of customers’ requirements for the over-voltage protection level of mobile phones, the company introduced new products suitable for high-voltage protection, which also increased the sales price; C. With the company entering the supplier system of well-known domestic customers, the new products such as ultra-miniature packaged overcurrent protection chips applied to wearable devices and overvoltage protection chips applied to Type-C interfaces of notebook computers and mobile phones are gradually sold in batches, which also makes the sales price rise.
In 2019 and 2020, the sales volume of the company’s power protection chips decreased, mainly due to:
A, some customers change the design scheme of power path management, and the demand for overvoltage protection chips for transient suppression is reduced; B. Due to the COVID-19 epidemic abroad, the purchasing scale of some customers in 2020 has declined.
② Power conversion chip
During the reporting period, the company’s power conversion chip products mainly include low-current general LDO, low-noise high-performance LDO, high-voltage wide-input LDO, high-current LDO, charging management chip and converter.
During the reporting period, the sales revenue of the company’s power conversion chips increased by 92.42% and 5.37% respectively.
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The continuous growth trend is mainly due to the company’s continuous upgrading of low-current general LDO series products according to market and customer demand, and the development and introduction of high-current LDO and low-noise high-performance LDO for mobile phone cameras, high-voltage wide-input LDO for small household appliances and other new products. With the gradual promotion of product certification and mass sales, the sales of power conversion chips have achieved rapid growth.
In addition, in 2019, with the mass sales of general LDO products with 300mA current, other high-priced LDO products and charging management chips developed by the company, the sales unit price of power conversion chips increased by 15.35% year-on-year, which also promoted the substantial growth of sales revenue of power conversion chips in 2019.
③ Display drive circuit
During the reporting period, the company’s display drive circuit products mainly include LED drive circuit, LCD display drive circuit, RGB constant current display drive circuit, large screen display drive circuit and other display drive circuits.
In 2019, the sales revenue of the company’s display driver circuits decreased by 8.89% year-on-year, mainly due to:
A, the technical threshold of large-screen display driver circuit is low, the market competition is fierce, and the gross profit margin is low. The company strategically reduces the investment in this product, and the sales volume drops accordingly; B. The sales volume of the company’s RGB constant-current display driver circuit declined due to the influence of the conversion of mobile phone LCD screen to AMOLED screen, the decrease in the demand for backlight driver market and the decrease in the demand for color flashing prompt function of mobile phone incoming calls. In 2019, the average sales unit price of the company’s display driver circuit decreased by 11.94%, mainly due to: a, the sales of LCD display driver circuits developed and introduced by the company for small household appliances such as electronic scales, toys and ear thermometer increased, and these products mainly used bare core sales, and the sales unit price was lower; B, the company increased efforts to promote LED drive circuits to domestic small customers, which led to a decrease in the sales price of such products.
In 2020, the sales revenue of the company’s display drive circuit increased by 38.03% year-on-year, mainly due to the continuous increase in the sales of LCD display drive circuits developed for small household appliances such as electronic scales, toys and ear temperature guns, which led to an increase of 25.70% year-on-year.
4, the third party payment situation
During the reporting period, the payors of the sales receipts received by the Company were mainly customers of the Company, and there were some cases that the sales receipts were received through third parties other than customers, as follows:
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Unit: 10,000 yuan
In each period of the reporting period, the amount of third-party payment and the proportion of operating income of the issuer were small. The company has established strict internal control procedures for sales payment. The above-mentioned third-party payment mainly refers to the customer entrusting related parties or other third parties to pay for the goods due to their own financial arrangements and the convenience of settlement and payment. The sales returned by customers through third parties are true and have reasonable commercial reasons, which are in line with the actual situation of customers; The issuer and its actual controller, Dong Jiangao or other related parties have no relationship or other interest arrangements with the payer of the third party’s payment; During the reporting period, the company did not have any disputes over the ownership of payment due to third-party payment. To sum up, the above-mentioned third-party payment situation has not adversely affected the issuer’s business operation, financial management and income authenticity.
(B) Analysis of operating costs
1. Analysis of operating cost composition
During the reporting period, the composition of the company’s operating costs is as follows:
Unit: 10,000 yuan
During the reporting period, the company’s operating costs were 256,918,900 yuan, 351,465,900 yuan and 383,776,800 yuan respectively, which increased with the increase of sales revenue. The main business cost of the company is the main component of the operating cost; Other business costs are mainly the cost of water supply and electricity, and the amount and proportion are small.
2, the main business cost composition and change analysis
(1) Classification by product category
① Product categories
During the reporting period, the company’s main business costs were classified according to product categories as follows:
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Unit: 10,000 yuan
② Power management chip subdivides products.
During the reporting period, the cost of the company’s power management chip was further broken down by function as follows:
Unit: 10,000 yuan
During the reporting period, the proportion and changing trend of the company’s various product costs were basically consistent with the main business income.
(2) Analysis by constituent elements
During the reporting period, the cost composition of the company’s main business is as follows:
Unit: 10,000 yuan
The company adopts the Fabless business model typical of the integrated circuit industry, focusing on the research and development of chips. Besides testing some finished products by itself, the production links are mainly completed by third parties. After the design is completed, the outsourcing production mode of the company can be divided into two types. One is that after the company purchases wafers from wafer manufacturing enterprises, it entrusts packaging, testing and other links to various manufacturing enterprises respectively; The other is to entrust the production to the scale advantage of subdivided products.
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And suppliers with experience in production management will purchase wafers and entrust them to various packaging, testing and other manufacturing enterprises respectively. Therefore, during the reporting period, the company’s main business costs were mainly composed of the procurement costs of wafers and chips, packaging and testing fees, and a small number of employees’ salaries and depreciation in their own workshops. In each period of the reporting period, the proportion of the company’s various cost items was basically stable, slightly fluctuating due to changes in product structure, wafer purchase unit price and differences in packaging and testing prices of different types of products. In 2018, due to the increasing demand of customers for overvoltage protection of terminal electronic products, the number of overvoltage protection chips purchased by the company through outsourced production increased, resulting in a higher proportion of the cost of outsourced chips in the main business cost than in other periods, and the proportion of raw materials and packaging test fees decreased accordingly. In 2019 and 2020, with the rapid increase in sales revenue of other products of the company, the proportion of sales of overvoltage protection chips decreased, and the proportion of chips purchased by outsourcing production decreased accordingly, and the proportion of raw materials and packaging test fees rose accordingly.
(III) Gross profit and gross profit margin analysis
1, gross profit composition and change analysis
(1) Comprehensive gross profit situation
During the reporting period, the composition of the company’s gross profit is as follows:
Unit: 10,000 yuan
During the reporting period, the company’s comprehensive gross profit was consistent with the change trend of product sales scale, and the main business gross profit was the main source of the company’s gross profit.
(2) Gross profit by product category
During the reporting period, the composition of the gross profit of the company’s sales by product is as follows:
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Unit: 10,000 yuan
During the reporting period, the gross profit of the company’s main business mainly came from the sales of power management chips. With the continuous expansion of sales scale, the total gross profit increased accordingly.
2. Analysis on the change of gross profit margin of main business
(1) Comprehensive gross profit margin analysis
During the reporting period, the gross profit margin of the company’s main business is as follows:
Products in the integrated circuit industry are updated quickly, and products with performance advantages and competitive advantages can get higher gross profit margin when they are launched into the market; With the passage of time and market competition, its gross profit margin usually keeps declining, and remains stable after it is reduced to a certain extent. Therefore, chip design companies need to accurately grasp the market changes and individual needs of customers, and increase the sales proportion of high-margin products through continuous R&D innovation and new product promotion, so as to maintain a stable or high comprehensive gross profit margin level.
In each period of the reporting period, the gross profit margin of the company’s main business products was 25.45%, 25.98% and 29.33% respectively, which fluctuated slightly due to the change of product structure. During the reporting period, the gross profit margin of other products of the company was relatively high, mainly due to the company’s continuous research and development of a variety of new products with high technical content.
(2) Analysis of gross profit margin of main products
During the reporting period, the gross profit margin of the company’s power management chip segmentation products is as follows:
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In 2019 and 2020, the gross profit margin of the company’s power management chips increased due to the increasing proportion of sales of high-margin products developed by the company and the effective control of unit costs by optimizing the layout of some chips. During the reporting period, the changes of gross profit margin of the company’s main products are analyzed as follows:
① Power protection chip
During the reporting period, the changes of unit price, unit cost and gross profit margin of the company’s power protection chips are as follows:
Unit: 10,000 PCs, 10,000 RMB, RMB/PC.
In each period of the reporting period, the gross profit margin of the company’s power protection chips was 26.34%, 24.75% and 30.27% respectively, and the gross profit margin first decreased and then increased. The specific analysis is as follows:
In 2019, the gross profit margin of the company’s power protection chips was 24.75%, down by 1.59 percentage points year-on-year, mainly due to the following reasons: a. With the increasing requirements of customers for the overvoltage protection level of mobile phones, the sales proportion of the company’s overvoltage protection chips suitable for high voltage continued to rise, but due to the relatively large area and high packaging difficulty of such chips, the increase in unit cost was higher than the increase in sales unit price; B, the company actively explores domestic business, and the universal overvoltage protection chip with integrated shutdown and suppression functions has been adopted by more well-known domestic customers.
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The proportion of sales has increased, but due to the fierce competition of this kind of products, the gross profit margin is low, which correspondingly lowers the average gross profit margin of power protection chips. In 2020, the gross profit margin of the company’s power protection chips was 30.27%, up by 5.52 percentage points compared with the same period of last year, mainly because the new products developed and launched in the second half of 2019 gradually realized mass sales, and the sales scale in this period increased. Among them, a, the company developed and launched ultra-micro packaged overcurrent protection chips for wearable devices, overvoltage protection chips for notebook computers and mobile phones, and other new products, which implemented import substitution among customers, and the gross profit margin was high. B, in order to meet the demand of fast charging of mobile phones, the company introduced ultra-low on-resistance (8m? ) over-voltage protection chip, which is 30m higher than the on-resistance originally applied to conventional smart phones? The gross profit margin of our products is high.
② Power conversion chip
During the reporting period, the changes of unit price, unit cost and gross profit margin of the company’s power conversion chips are as follows:
Unit: 10,000 PCs, 10,000 RMB, RMB/PC.
In each period of the reporting period, the gross profit margin of the company’s power conversion chips was 18.51%, 26.68% and 27.17%, respectively, increasing by 8.17% and 0.49% year-on-year, showing an upward trend, mainly due to the company’s continuous research and development of new products and effective control of unit costs, specifically: a. The company continuously upgraded the series of low-current general LDO products according to market and customer needs. And research and develop a variety of new products such as high-current LDO and low-noise high-performance LDO applied to mobile phone cameras, high-voltage wide-input LDO applied to small household appliances, etc. With the realization of product certification and mass sales, the average gross profit margin has increased accordingly; B. In 2019, the company upgraded and optimized the layout of the high-voltage wide-input LDO and the charging management circuit applied to the smart bracelet, which reduced the die area while improving the performance, effectively controlled the unit cost and promoted the power conversion chip.
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The rise in interest rates.
③ Display drive circuit
During the reporting period, the changes of unit price, unit cost and gross profit margin of the company’s display drive circuit are as follows:
Unit: 10,000 PCs, 10,000 RMB, RMB/PC.
In each period of the reporting period, the gross profit margin of the company’s display driver circuit was 32.15%, 33.01% and 31.63%, respectively, showing an overall upward trend, which was mainly affected by the change of product structure. Among them, the gross profit margin increased slightly in 2019, mainly due to the following reasons: a. The technical threshold of large-screen display driver circuit was low, the market competition was fierce, and the gross profit margin was low. The company strategically reduced its investment in this product, and its sales proportion decreased accordingly. B. Newly developed LCD display drive circuits for washing machine display screens and RGB constant-current display drive circuits for smart speakers, keyboards, etc. are continuously introduced, and the gross profit margin is correspondingly high. In 2020, the gross profit margin of display driving circuit decreased slightly due to the increase in the sales proportion of general dynamic scanning dot matrix LCD driving products with low gross profit margin.
(3) Analysis of gross profit margin of other products
During the reporting period, in addition to the main product power management chip, the company actively developed and promoted a variety of high-performance analog chips, such as intelligent networking delay management unit, signal chain chip, high-precision Hall chip and so on, which were applied in the Internet of Things, consumer electronics, household appliances, network communication and other fields. Through continuous design, testing, verification, etc., some other new products developed by the company gradually passed customer certification and achieved small batch sales. In each period of the reporting period, the sales income of other products of the company was 21,955,700 yuan, 44,571,200 yuan and 76,230,500 yuan respectively, accounting for 6.40%, 9.41% and 14.07% of the main business income respectively, and the sales amount and proportion were relatively small.
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In each period of the reporting period, the specific composition, sales quantity, sales amount, average sales price and gross profit rate of other products of the company are as follows:
Unit: 10,000 pieces (10,000 pieces, 10,000 sets, 10,000 pieces), 10,000 yuan, 10,000 yuan/piece (one piece, one set)
Note: The company’s intelligent networking delay management units include intelligent networking delay management chips (unit: 10,000), intelligent networking delay management modules (unit: 10,000) and programmable networking controllers (unit: 10,000), etc. As the main sales units are intelligent networking delay management modules, the sales quantities listed in the above table are simple totals. In addition to the above and consignment of a small number of wafers (unit:
Ten thousand pieces), other types of products are ten thousand pieces.
In each period of the reporting period, the gross profit margin of other products of the company was 36.70%, 26.96% and 30.06%, respectively.
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The fluctuation is mainly due to the fact that other products are mostly new products of other categories that the company tries to develop and promote, and there are many types and models of subdivided products, and the sales are still unstable, which is greatly affected by the changes in the product structure sold. The specific analysis is as follows:
In 2019, the gross profit margin of other products of the company decreased by 9.74 percentage points compared with the previous year, which was mainly due to the large decrease in the gross profit margin of the intelligent networking delay management unit. The main reasons were as follows: ① According to customer demand, the company purchased a variety of auxiliary materials such as electronic components, and then assembled them with its own intelligent networking delay management chip to form an electronic detonator module, which was sold to the outside world. In 2019, the types and numbers of auxiliary materials such as electronic components in the new products developed for tunnel blasting increased, and the tight supply of electronic components in the market this year led to some purchase costs. (2) In the context of the country’s vigorous promotion and application of digital electronic detonators, in order to quickly seize market share, the company increased its business promotion efforts and reduced its sales price.
In 2020, the gross profit margin of other products of the company rebounded, mainly due to: ① the company continued to optimize the design scheme of intelligent networking delay management unit, streamlined the types and numbers of auxiliary materials such as electronic components on the basis of maintaining performance, and with the expansion of sales scale, the company’s bargaining power in purchasing electronic components increased and the single purchase volume increased, which led to the decrease of procurement cost and the increase of gross profit margin of intelligent networking delay management unit; ② The company continuously develops, upgrades or introduces a variety of new products such as analog-to-digital conversion chips and level shift chips, which improves the gross profit margin of signal chain chips; ③ The high-precision Hall chips developed and launched by the company gradually realized mass sales. With the increase of the sales proportion of this high-margin product, the average gross profit margin was correspondingly increased.
3. Comparative analysis of gross profit margin of listed companies in the same industry
During the reporting period, the comparison between the gross profit margin of the company’s main business and the gross profit margin of power management chips of comparable listed companies in the same industry is as follows:
Source of data: Data of comparable companies in the same industry come from publicly disclosed documents. Note: The gross profit margin of comparable companies listed in the above table is the gross profit margin of power management chips of various companies, among which Weir shares power management chips include power IC and TVS products, and Fuman electronic power management chips include power management products and LED lamps, LED control and drive products.
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During the reporting period, the gross profit margin of the company’s main business was at a reasonable level compared with the gross profit margin of power management chips of comparable listed companies in the same industry, and the trend of gross profit margin was basically the same. The product structure and application fields of power management chips of the company are still different from those of comparable companies, resulting in differences in gross profit margin. The gross profit margin of the company is lower than that of Shengbang and Weir, mainly because the company’s power management chips are mainly used in consumer electronics fields such as smart phones and wearable electronic devices, while the power management chips of Weir and Shengbang are also used in industrial fields. For the comparison of product structure and application fields between the company and comparable listed companies in the same industry, please refer to "III. Analysis of the Issuer’s Industry Status and Industry Competition" in Section VI Business and Technology of this prospectus.
(IV) Period cost analysis
During the reporting period, the company’s expenses in various periods and their proportion to operating income are as follows:
Unit: 10,000 yuan
During the reporting period, the proportion of the company’s expenses in operating income was 18.46%, 15.97% and 17.37% respectively. With the rapid expansion of the company’s business scale, the continuous improvement of R&D investment and market development, the amount of expenses during the period showed an overall growth trend. The company’s expenses during the period match the business scale, actual business situation and external environment.
1. Selling expenses
(1) Analysis of the composition and changes of sales expenses
During the reporting period, the specific composition of the company’s sales expenses is as follows:
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Unit: 10,000 yuan
During the reporting period, the total sales expenses of the company were 22,920,700 yuan, 28,681,100 yuan and 27,643,600 yuan respectively, and the sales expense ratio was 6.66%, 6.04% and 5.09% respectively. With the continuous expansion of business scale, the sales expense increased correspondingly, but the sales expense ratio decreased. During the reporting period, the company’s sales expenses were mainly composed of sales service fees and employees’ salaries. The total proportion of the above two expenses to the total sales expenses was as follows
90.34%, 88.11% and 89.30%.
During the reporting period, the company’s employee compensation mainly includes the salary, bonus and social security accumulation fund of sales-related personnel. In each period of the reporting period, the company’s employees’ salaries were 7,533,900 yuan, 9,785,000 yuan and 9,545,600 yuan respectively, which showed an overall growth trend, mainly due to the continuous increase of business scale, the number of sales staff and the salary level of the company increased accordingly.
During the reporting period, the details of the company’s sales service fees are as follows:
① The change of sales service fee in each period of the reporting period is basically consistent with the change of sales revenue.
During the reporting period, the company’s sales service fee mainly refers to the fees paid to external sales service units to entrust them with marketing promotion and customer maintenance. The company implements the key account strategy and direct sales mode, and the direct sales customers are mainly world-renowned consumer electronics companies (Samsung, LG, etc.). In order to further expand market share, improve sales service efficiency and ensure service quality for some well-known customers, the company assists the company in marketing, business communication and after-sales tracking services through sales service units with industry experience.
During the reporting period, the company’s sales service fees were mainly based on the customer offices developed and maintained by external sales service units.
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The corresponding sales amount is calculated and determined by multiplying it by a certain sales service rate. In each period of the reporting period, the changes of the company’s sales service fee and sales revenue are as follows:
Unit: 10,000 yuan
In each period of the reporting period, the company’s sales service fees were 13,171,800 yuan, 15,486,500 yuan and 15,140,300 yuan, respectively, and the changing trend was consistent with the changing trend of sales revenue of corresponding customers assisted by external sales service units. Among them: in 2018-2019, with the increase in sales revenue of Samsung and LG, the main customers assisted by external sales service units, the company’s sales service fees increased accordingly; In 2020, the sales service fee decreased slightly year-on-year, mainly due to the impact of the COVID-19 epidemic, the company’s sales revenue to Samsung decreased slightly. In each period of the reporting period, the proportion of the company’s sales service fee to operating income was 3.83%, 3.26% and 3.26% respectively.
2.79%, showing an overall downward trend, mainly due to the company’s efforts to independently explore well-known domestic customers while maintaining good cooperation with existing high-quality customers such as Samsung and LG, and constantly promoting import substitution in the domestic market. During the reporting period, the company successively passed the supplier certification of mainstream consumer electronics brands such as Xiaomi and Customer A, and the sales revenue and proportion of well-known consumer electronics customers independently developed and maintained by the company increased.
To sum up, in each period of the reporting period, the change of the company’s sales service fee is basically consistent with the change of sales revenue, and the slight difference is in line with the actual situation of the company and reasonable.
② The signing and performance of the sales service fee contract.
In each period of the reporting period, the company’s sales service fees were mainly paid to overseas sales service units ETEKKOREA Co.,Ltd, and the sales service fees were 12,650,300 yuan, 14,311,400 yuan and 13,393,500 yuan respectively, accounting for 96.04%, 92.41% and 88.46% of the sales service fees in each period respectively. ETEK
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KOREA Co.,Ltd is registered in South Korea, and its controlling shareholder and actual controller is Li Dongyuan (Korean nationality). It mainly assists the company in business communication with Samsung, product technical feedback communication and after-sales tracking service, etc., and promotes it to Samsung foundries, effectively reducing the influence caused by geographical, linguistic and cultural communication differences in overseas sales, improving communication efficiency, service quality and expanding sales channels. Over the years, the company has maintained stable and good cooperative relations with ETEK KOREA Co.,Ltd and Samsung. During the reporting period, the signing and performance of the sales service fee contract between the company and ETEK KOREA Co.,Ltd are as follows:
(2) The sales expense ratio is compared with that of listed companies in the same industry.
During the reporting period, the comparison of sales expenses to operating income between the Company and comparable companies in the same industry is as follows:
Note: Data of comparable companies in the same industry come from publicly disclosed documents.
During the reporting period, with the rapid expansion of business scale, the company’s sales expenses increased correspondingly, but the sales expense ratio decreased continuously. Compared with comparable companies in the same industry, the company’s sales expense ratio is at a reasonable level, slightly higher than the arithmetic average of comparable companies, mainly because: a, the company’s sales scale is lower than that of comparable companies; B, the company to
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Direct sales are the mainstay, and export accounts for a relatively high proportion. Due to overseas business development and customer maintenance needs, there are relatively many sales service fees.
2. Management expenses
(1) Analysis of composition and changes of management expenses
During the reporting period, the specific composition of the company’s management expenses is as follows:
Unit: 10,000 yuan
During the reporting period, the company’s management expenses were 11,696,000 yuan, 14,288,200 yuan and 16,798,500 yuan respectively, and management fee rate was 3.40%, 3.01% and 3.09% respectively. The company’s management expenses mainly include employees’ salary, depreciation and amortization, office expenses, business entertainment expenses, agency service fees, etc. During the reporting period, the above five expenses accounted for 82.46%, 84.51% and 80.63% of the management expenses respectively. In 2019 and 2020, the company’s management expenses increased by 2,592,200 yuan and 2,510,300 yuan respectively compared with the previous year, mainly due to the substantial increase in the company’s operating scale, and the acquisition of its subsidiary, Si Ruiwei, resulting in a corresponding increase in employee salaries, depreciation and amortization, business entertainment expenses and other expenses.
(2) Comparison between management fee rate and listed companies in the same industry.
During the reporting period, the ratio of management expenses (after deducting R&D expenses and share-based payment) to operating income between the Company and comparable companies in the same industry is as follows:
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Source of data: Data of comparable companies in the same industry come from publicly disclosed documents. Note: During 2018-2020, Shengbang and Weir implemented equity incentives, resulting in a large amount of share payment. The above table shows management fee rate after deducting share payment. In each period of the reporting period, with the expansion of sales scale, the company’s management fee rate kept decreasing. Compared with comparable companies in the same industry, management fee rate is at a reasonable level.
3. R&D expenses
(1) Analysis of the composition and changes of R&D expenses
During the reporting period, the specific composition of the company’s R&D expenses is as follows:
Unit: 10,000 yuan
During the reporting period, the company’s R&D expenses were RMB 27,452,000, RMB 35,590,600 and RMB 38,981,800 respectively, accounting for 7.97%, 7.50% and 7.18% of the operating income respectively. During the reporting period, in order to meet customers’ escalating product and technology needs and maintain strong R&D innovation capabilities, the company continued to expand its R&D team, launch new R&D projects and increase R&D investment, resulting in increasing R&D expenses.
The overall budget, expenditure amount and implementation progress of R&D projects corresponding to the company’s R&D expenses are as follows:
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Unit: 10,000 yuan
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During the reporting period, the company has no capitalization of R&D expenses.
(2) R&D expense ratio is compared with that of listed companies in the same industry.
During the reporting period, the ratio of R&D expenses (after deducting share-based payment) to operating income of the Company and comparable companies in the same industry is as follows:
Source of data: Data of comparable companies in the same industry come from publicly disclosed documents. Note: From 2018 to 2020, Shengbang and Weir implemented equity incentives, resulting in a large amount of share-based payment. The R&D expense ratio listed in the above table is after deducting share-based payment.
During the reporting period, based on the business needs and development strategy, the company formulated the R&D objectives and plans that meet the company’s business scale and actual needs. The R&D investment increased with the expansion of business scale, and the ratio of R&D investment to operating income remained relatively stable. The ratio of R&D expenses to operating income is lower than that of comparable companies in the same industry, mainly because: ① the financial strength of the company is smaller than that of listed companies, and the number of R&D personnel is lower than that of listed companies;
② The R&D field of the company is relatively concentrated, and it has been deeply involved in the field of power management for a long time and has formed a mature technical system, which ensures the accuracy and high efficiency of R&D..
4. Financial expenses
During the reporting period, the specific composition of the company’s financial expenses is as follows:
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Unit: 10,000 yuan
During the reporting period, the financial expenses of the company were 1,480,700 yuan,-2,755,500 yuan and 10,855,900 yuan respectively, accounting for 0.43%, -0.58% and 2.00% of the operating income respectively. In 2018-2019, the company’s financial expenses decreased significantly, mainly because the company mainly exported goods and its export business was mainly settled in US dollars. The company held more bank deposits and accounts receivable in US dollars, which was affected by the overall rise of the exchange rate of US dollars against RMB, resulting in exchange losses. Gradually transformed into exchange gains; In 2020, due to the overall decline of the exchange rate of the US dollar against RMB, exchange losses were generated, which led to a substantial increase in the company’s financial expenses.
(V) Analysis of other items in the income statement
1. Other income
During the reporting period, other income of the company was government subsidies related to daily business activities, as follows:
Unit: 10,000 yuan
(1) Government subsidies related to assets
During the reporting period, the company’s government subsidies related to assets were recognized as deferred revenue upon receipt, and were calculated in installments.
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Other income, details are as follows:
Unit: 10,000 yuan
Note: This project is an additional deferred revenue for the acquisition of Si Ruiwei at the end of 2018. According to the Jiangsu Science and Technology Project Contract signed by Si Ruiwei, Jiangsu Provincial Science and Technology Department and Wuxi National High-tech Industrial Development Zone Science and Technology and Information Bureau, Si Ruiwei received a total of "Research and Development of Key Technologies for Intelligent Power Drive Modules of High Efficiency Motors" in 2017 and 2018.
1,200,000 yuan. As of December 31, 2018, the book balance of Siruiwei deferred revenue was 1,169,100 yuan.
(2) Government subsidies related to income
During the reporting period, the details of the government subsidies obtained by the company related to income and used to compensate the related costs or losses incurred by the company are as follows:
Unit: 10,000 yuan
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2. Investment income
During the reporting period, the company’s investment income was the income from the purchased structured bank deposits and wealth management products, the income from the due delivery of forward foreign exchange settlement and sale contracts and the investment income from the cancellation of subsidiaries. The details are as follows:
Unit: 10,000 yuan
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The company has implemented the new financial instrument standards since January 1, 2019. The "investment income from disposal of trading financial assets" in the above table accounts for the income generated by bank structured deposits and wealth management products.
3. Income from changes in fair value
During the reporting period, the company’s gains from changes in fair value were the floating gains and losses arising from bank structured deposits, wealth management products and dual-currency deposits purchased and forward foreign exchange settlement and sale contracts purchased to cope with the risk of exchange rate fluctuations. The details are as follows:
Unit: 10,000 yuan
Since January 1, 2019, the company has implemented the new financial instruments standards, accounting for bank structured deposits, wealth management products and dual-currency deposits as "transactional financial assets" and "derivative financial assets", and recognizing the gains from changes in fair value accordingly.
4. Credit impairment loss
During the reporting period, the details of the company’s credit impairment losses are as follows:
Unit: 10,000 yuan
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In 2019 and 2020, the company’s credit impairment losses mainly included bad debt losses accrued from accounts receivable, other receivables and notes receivable, totaling-1,976,200 yuan and-439,100 yuan respectively. Since January 1, 2019, the company has implemented the new financial instrument standards and adjusted the bad debt loss from the "asset impairment loss" account to the "credit impairment loss" account.
5. Asset impairment loss
During the reporting period, the details of the company’s asset impairment losses are as follows:
Unit: 10,000 yuan
During the reporting period, the company’s asset impairment losses were mainly accrued bad debt losses of receivables and inventory depreciation losses. Since January 1, 2019, the company has implemented the new financial instrument standards and adjusted the bad debt loss from the "asset impairment loss" account to the "credit impairment loss" account. In each period of the reporting period, the amount of inventory depreciation accrued by the company was relatively large, mainly due to the characteristics of rapid upgrading of integrated circuit products. Based on the principle of prudence, the company fully accrued impairment reserves for inventories with signs of impairment.
According to the asset impairment policy, the company fully accrued the impairment reserves of accounts receivable, other receivables, notes receivable and inventories, and there was no sign of impairment of fixed assets and intangible assets.
6. Income from asset disposal
During the reporting period, the company’s assets disposal income was RMB 0.01 million,-48,000 yuan and-41,700 yuan respectively, which was small and had little impact on the company’s profits.
7. Non-operating income and expenditure
(1) Non-operating income
During the reporting period, the details of the company’s non-operating income are as follows:
Unit: 10,000 yuan
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During the reporting period, the company’s non-operating income was RMB 0,000, RMB 117,500 and RMB 1,900 respectively, which was mainly due to the government subsidies received that had nothing to do with the daily activities of the company. The overall amount was small and had little impact on the company’s profits.
During the reporting period, the government subsidies included in the company’s non-operating income were RMB 0,000,000, RMB 100,000 and RMB 100,000 respectively.
01,000 yuan, and the details of government subsidies are as follows:
Unit: 10,000 yuan
(2) Non-operating expenses
During the reporting period, the details of the company’s non-operating expenses are as follows:
Unit: 10,000 yuan
During the reporting period, the company’s non-operating expenses were mainly the loss of non-current assets, donation expenses, etc., which were small and had little impact on the company’s profits.
(VI) Non-recurring profit and loss analysis
In each period of the reporting period, the net non-recurring gains and losses attributable to shareholders of the parent company were 9,197,100 yuan respectively.
6.714 million yuan and 14.2613 million yuan, accounting for the proportion of net profit attributable to shareholders of the parent company in the current period, respectively
36.24%, 16.46% and 21.30%. In 2018, the company’s non-recurring gains and losses accounted for a relatively high proportion of the current net profit, mainly due to the large amount of government subsidies received; The non-recurring gains and losses in other periods have a relatively small impact on the company’s net profit and do not have a significant impact on the company’s operating results. During the reporting period, please refer to "VI. Non-recurring gains and losses verified by certified public accountants" in this section for the specific contents of the company’s non-recurring gains and losses and the impact on the company’s operation.
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Schedule of recurring profit and loss ".
1. Government subsidies
During the reporting period, the government subsidies received by the company were mainly revenue-related government subsidies, and the government subsidies included in the current profit and loss were as follows:
Unit: 10,000 yuan
During the reporting period, the company received more government subsidies, mainly because the integrated circuit industry to which the company belongs is a strategic industry strongly supported by the state, and the state issued a series of policies to support the development of integrated circuit design enterprises; On the other hand, the issuer is a technology-driven enterprise with more R&D projects and R&D investment, and most of the projects receiving government subsidies are closely related to the company’s main business. As a chip design company, the company needs to continue to invest in R&D. Under the background of the country’s strong support for the development of this industry, it is expected that it will still receive more government subsidies in the future. The issuer’s main source of profit is operating profit. With the expansion of the company’s operating scale and the enhancement of profitability, the proportion of government subsidies to net profit has decreased, and there is no significant dependence on government subsidies.
For details of government subsidies received by the company, please refer to "1. Other income" and "7. Non-operating income and expenditure" in "X. Analysis of operating results" in this section.
2. Changes in investment income or value formed by the investee or financial instruments that are not included in the scope of consolidated statements.
During the reporting period, the company’s investment income or value changes caused by the investee or wealth management tools that are not included in the consolidated statements mainly include the investment income and fair value change gains and losses caused by the purchased bank structured deposits, wealth management products and dual-currency deposits, and forward foreign exchange settlement and sale contracts. The details are as follows:
Unit: 10,000 yuan
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During the reporting period, the total amount of investment income and changes in fair value arising from the above-mentioned bank structured deposits, wealth management products, dual-currency deposits and forward foreign exchange settlement and sale contracts was small, which did not have a significant impact on the company’s operating results in each period.
(seven) the main tax payment and tax incentives.
1, the main tax situation
During the reporting period, the main taxes paid by the company were enterprise income tax and value-added tax. The payable and paid-in situation is shown in the following table:
Unit: 10,000 yuan
Note: The unpaid enterprise income tax and value-added tax of the company and its subsidiaries are negative at the end of the period, which are listed as "other current assets" in the statements.
During the reporting period, the corporate income tax and value-added tax paid by the company showed an increasing trend, mainly due to the continuous expansion of the company’s business scale, the continuous growth of operating income and total profit, and the corresponding increase in taxes paid by the company. The amount of value-added tax payable by the company is relatively small, mainly because the company regularly applies to the tax authorities for export tax rebate according to the relevant policies of the state on export tax rebate.
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During the reporting period, the Company and its subsidiaries strictly abided by national and local tax laws and regulations, and paid various taxes and fees according to law. The taxes and tax rates implemented were in compliance with relevant tax laws and regulations. The State Taxation Bureau and the Local Taxation Bureau, where the company and its subsidiaries are registered, have issued certificates of no violation of laws and regulations on the tax payment of the company and its subsidiaries during the reporting period.
2, the relationship between income tax expenses and accounting profits.
During the reporting period, the company’s income tax expenses were as follows:
Unit: 10,000 yuan
During the reporting period, the relationship between company income tax expenses and total profits is as follows:
Unit: 10,000 yuan
3, enjoy the preferential tax situation and its impact on business performance.
During the reporting period, the preferential tax policies enjoyed by the company that affect profits are mainly preferential tax policies for key integrated circuit design enterprises within the national planning layout, and enterprise income tax can be levied at a reduced rate of 10%. For specific policies, please refer to "III" of "VII. Tax Rates of Major Taxes and Major Preferential Tax Policies" in this section.
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Domestic tax incentives ".
During the reporting period, the preferential corporate income tax enjoyed by the company and its impact on the company’s profits are as follows:
Unit: 10,000 yuan
During the reporting period, the proportion of the income tax preferential amount enjoyed by the company to the current pre-tax profit was as follows
6.26%, 8.52% and 10.13%, the overall proportion is not high, and there is no significant dependence on tax incentives.
The integrated circuit industry in which the company is located is an industry encouraged by the state, and the relevant preferential tax policies have not changed significantly during the reporting period. The company has been recognized as an integrated circuit design enterprise within the national planning layout, and during the reporting period, the proportion of R&D personnel, possession of core key technologies and independent intellectual property rights, R&D expenses as a proportion of revenue, and the proportion of integrated circuit design and sales revenue are all in line with the provisions of relevant laws and regulations, such as the Notice on Relevant Issues Concerning Enterprise Income Tax Preferential Policies for Software and Integrated Circuit Industry (Caishui [2016] No.49) issued by the Ministry of Finance, State Taxation Administration of The People’s Republic of China, Development and Reform Commission and Ministry of Industry and Information Technology. The company expects that.
XI. Asset Quality Analysis
(A) the overall composition of assets and change analysis
At the end of each reporting period, the composition and changes of the company’s assets are shown in the following table:
Unit: 10,000 yuan
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During the reporting period, with the expansion of business scale and the accumulation of operating results, the company’s total assets continued to grow. At the end of each reporting period, the company’s assets were mainly current assets, and the proportions of current assets to total assets were as follows
94.12%, 94.70% and 94.66%, mainly because the company adopts Fabless business model, focusing on integrated circuit design, wafer manufacturing, packaging testing and other links are mainly completed by third parties, and the investment in fixed assets is relatively small, which has the characteristics of asset-light strategy.
(B) Analysis of the composition and changes of current assets
At the end of each reporting period, the specific composition of the company’s current assets is as follows:
Unit: 10,000 yuan
At the end of each reporting period, the company’s current assets were mainly composed of monetary funds, accounts receivable, inventories, other current assets and transactional financial assets, and the total amount of the above five assets accounted for 92.79%, 92.31% and 90.38% of the total current assets respectively. At the end of each reporting period, the company’s current assets continued to increase, mainly due to the corresponding increase in accounts receivable and inventory balance with the expansion of the company’s business scale.
1. Monetary funds
At the end of each reporting period, the company’s monetary funds are as follows:
Unit: 10,000 yuan
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The company’s monetary funds are mainly composed of bank deposits and other monetary funds, and other monetary funds are mainly bank acceptance bill deposits and forward foreign exchange settlement and sales deposits. At the end of each reporting period, the company’s monetary fund balance was 61,723,800 yuan, 57,512,000 yuan and 113,952,700 yuan respectively, accounting for the following proportions of current assets:
19.79%, 15.79% and 28.75%, the continuous expansion of business scale and good sales returns provided sufficient monetary funds for the company.
At the end of each reporting period, the principal balance of the company’s bank structured deposits and wealth management products was 90.41 million yuan, 90.90 million yuan and 50.60 million yuan respectively, and the total balance with monetary funds was 152.1338 million yuan, 148.412 million yuan and 164.5527 million yuan respectively.
Except for other monetary funds, there are no other monetary funds at the end of the period with restrictions on use and potential recovery risks due to mortgage, pledge or freezing.
2. Transactional financial assets
At the end of each reporting period, the trading financial assets of the Company are as follows:
Unit: 10,000 yuan
At the end of 2019 and 2020, the trading financial assets held by the company were mainly short-term floating income bank structured deposits and wealth management products purchased to improve the income of idle funds. Since January 1, 2019, the company has implemented the new financial instrument standards, and adjusted the bank structured deposits and wealth management products from the subject of "other current assets" to the subject of "transactional financial assets".
At the end of 2019 and 2020, the details of bank structured deposits and wealth management products purchased by the company are as follows:
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Unit: 10,000 yuan
3. Derivative financial assets
At the end of each reporting period, the company’s derivative financial assets are as follows:
Unit: 10,000 yuan
The derivative financial assets held by the company are mainly the floating income generated by the unexpired forward foreign exchange settlement and sale contracts purchased to cope with the risk of exchange rate fluctuations.
4. Notes receivable
At the end of each reporting period, the Company’s notes receivable are as follows:
Unit: 10,000 yuan
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At the end of each reporting period, the book value of the company’s notes receivable was 14,435,900 yuan, 18,777,400 yuan and 15,969,800 yuan respectively, accounting for 4.63%, 5.15% and 4.03% of current assets respectively, mainly due to bank acceptance bills paid by customers. At the end of 2019, the balance of bills receivable of the company increased, mainly due to the increase in payment for goods settled by bills with the expansion of domestic sales. At the end of 2020, the book value of the company’s bills receivable decreased by 2,807,600 yuan compared with the end of 2019, mainly due to the increase in bills accepted by banks with higher credit ratings, the increase in the balance of bills receivable listed as "accounts receivable financing" according to the new financial instrument standards, and the increase in the amount of bills that were terminated when endorsed to suppliers.
At the end of each reporting period, the company’s commercial acceptance bills are small and bad debt reserves have been withdrawn. During the reporting period, the company did not have any other cases of converting bills receivable into accounts receivable due to the drawer’s non-performance. By December 31, 2020, the company had no pledged bills receivable; Notes receivable that have been endorsed or discounted and have not yet expired total 8,101,900 yuan.
5. Accounts receivable
(1) Analysis of changes in the balance of accounts receivable
At the end of each reporting period, the overall situation of the company’s accounts receivable is as follows:
Unit: 10,000 yuan
At the end of each reporting period, the company’s balance of accounts receivable was 61,070,600 yuan, 94,518,600 yuan and 98,058,200 yuan, respectively, increasing by 54.77% and 3.74%, mainly due to the strong market demand in the downstream terminal application field, the excellent product performance of the company and the continuous expansion of new well-known customers.
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The balance of accounts receivable still in the credit period at the end of each period will increase accordingly. At the end of each reporting period, the company’s accounts receivable balance accounted for 17.74% of the operating income in the same period,
19.92% and 18.06%. Among them, the increase in the proportion of accounts receivable balance in 2019 was mainly due to the rapid expansion of the company’s business scale, the revenue in the fourth quarter of each year increased rapidly year-on-year, and the corresponding proportion of accounts receivable balance in the operating income of the year increased; At the end of 2020, the balance of the company’s accounts receivable was slightly higher, but the proportion decreased.
(2) The aging of accounts receivable
At the end of each reporting period, the aging of accounts receivable of the Company is as follows:
Unit: 10,000 yuan
The company comprehensively considers the customer’s credit qualification, purchasing scale, cooperation history and other factors, negotiates with customers to determine the credit period, and makes appropriate adjustments according to the changes in the customer’s credit status. During the reporting period, most of the company’s main customers are well-known consumer electronics companies at home and abroad, and the credit period is generally 1-4 months, and the credit policy is basically stable.
At the end of each reporting period, the proportion of accounts receivable aged within one year of the company to the balance of accounts receivable was as follows
98.89%, 98.59% and 99.07%, the quality of accounts receivable is high, the payment situation is good, and the risk of bad debts is small.
(3) bad debt provision of accounts receivable
At the end of each reporting period, the company’s bad debt provision for accounts receivable is as follows:
Unit: 10,000 yuan
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① Accounts receivable with bad debts accrued by portfolio.
During the reporting period, the accounts receivable with bad debts by portfolio are as follows:
Unit: 10,000 yuan
The company refers to the historical credit loss experience, combines the current situation and the forecast of the future economic situation, and comprehensively determines the credit risk characteristics of accounts receivable and the proportion of bad debt provision. The ratio of provision for bad debts of the issuer’s receivables is compared with that of comparable listed companies in the same industry as follows:
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Source of data: Data of comparable companies in the same industry come from publicly disclosed documents. Note: The provision for bad debts of receivables within one year of Shengbang Co., Ltd. is 1% in 2018, and the expected credit loss is 2% in 2019.
From the above table, it can be seen that there is no significant difference in the proportion of bad debts in accounts receivable between the company and comparable listed companies in the same industry. At the same time, more than 98% of the issuer’s accounts receivable are aged within one year, and the accounts receivable aged within one year are set aside for bad debts according to 5%. The policy of setting aside accounts receivable is cautious.
② Accounts receivable with single provision for bad debts
At the end of 2019 and the end of 2020, the accounts receivable of the company with single provision for bad debts are as follows:
Unit: 10,000 yuan
The company made a single provision for bad debts on the balance of accounts receivable of RMB 218,000 yuan from its customer Shenzhen Ruiding Technology Co., Ltd., because this customer is expected to be unable to pay the money owed to the company due to poor management. Based on the principle of prudence, the company made a full provision for bad debts for this part of accounts receivable at the end of 2019 and the end of 2020. Apart from the above, the company has no other accounts receivable with high recoverable risk.
To sum up, at the end of each reporting period, the accounts receivable of the company within one year accounted for more than 98%, and the quality of accounts receivable was high; The company’s bad debt provision policy is cautious; Accounts receivable with bad debt provision according to the combination of credit risk characteristics are all provided with bad debt provision according to the company’s bad debt provision policy; For accounts receivable with high risk of recovery, the company has made full provision for bad debts in a single item, and the amount of provision is sufficient.
(4) The top five accounts receivable balances
At the end of each reporting period, the top five accounts receivable balances are as follows:
Unit: 10,000 yuan
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Note 1: Suzhou Daya Electronics Co., Ltd. and its related parties include Suzhou Daya Electronics Co., Ltd. and DA YA(HK)LIMITED. Note 2: Wentai Communication Co., Ltd. and its related parties include Wentai Communication Co., Ltd., Wentai Technology (Wuxi) Co., Ltd. and Wing Tech Group (HK) Ltd..
Note 3: Yunnan High Energy Materials Economic and Trade Co., Ltd. and its related parties include Yunnan Ranyi Co., Ltd. and Yunnan High Energy Materials Economic and Trade Co., Ltd.
Note 4: Strait Cailiang (Zhangzhou) Photoelectric Co., Ltd. and its related parties include Strait Cailiang (Zhangzhou) Photoelectric Co., Ltd. and Fujian Huajie Photoelectric Co., Ltd.
Note 5: LG Electronics Inc. and its related parties include LG Electronics Inc. and Inspur Lejin Digital Mobile Communications Co., Ltd..
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At the end of each reporting period, the total accounts receivable balance of the top five accounts receivable customers accounted for 84.75%, 83.46% and 81.89% respectively. At the end of 2020, the top five customers of the company’s accounts receivable balance are mainly large customers with long-term cooperation, with relatively strong financial strength and good credit. The accounts receivable are all aged within one year, and the risk of bad debts is low.
As of December 31, 2020, there is no money from shareholders holding more than 5% (including 5%) of the voting shares in the company’s accounts receivable balance.
6. Accounts receivable financing
At the end of each reporting period, the company’s receivables financing situation is as follows:
Unit: 10,000 yuan
At the end of 2019 and the end of 2020, the receivables financing held by the company mainly consisted of bills received by the company and accepted by banks with higher credit ratings. Since January 1, 2019, the company has implemented the new financial instrument standards and adjusted the qualified notes receivable to the account of "accounts receivable financing".
7. Advance payment
At the end of each reporting period, the prepayment and aging of the Company are as follows:
Unit: 10,000 yuan
At the end of each reporting period, the company’s prepayments are mainly prepaid materials purchase, outsourcing packaging and testing fees, electricity charges, etc., and the amount is small, and the aging is mainly within one year.
As of December 31, 2020, the top five prepayments of the company are shown in the following table:
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Unit: 10,000 yuan
8. Other receivables
At the end of each reporting period, the basic situation of the company’s other receivables and bad debt reserves is as follows:
Unit: 10,000 yuan
At the end of each reporting period, the balance of other accounts receivable of the Company is classified by nature as follows:
Unit: 10,000 yuan
At the end of each reporting period, the balance of other receivables of the company mainly consists of purchase deposit paid and export tax rebate receivable, etc. The amount is small, the aging is mainly within one year, and the risk of money recovery is small. At the end of 2020, the balance of other receivables increased by 2,154,500 yuan compared with the end of 2019, mainly due to the remaining 2,115,500 yuan of export tax rebate in 2020, which was returned in early 2021.
As of December 31, 2020, the top five other receivables of the Company are as follows:
Unit: 10,000 yuan
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9. Inventory
(1) Inventory composition
At the end of each reporting period, the specific composition of the company’s inventory is as follows:
Unit: 10,000 yuan
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The company adopts a typical Fabless business model, focusing on chip research and development, wafer manufacturing, packaging testing and other links are mainly completed by third parties. Therefore, the company’s inventory is mainly composed of inventory goods, raw materials and entrusted processing materials, among which: the inventory goods are finished products that have been packaged and tested, the raw materials are mainly customized wafers purchased from wafer manufacturers, and the entrusted processing materials are wafers and chips that are packaged and tested by mid-term testing, packaging and finished product testing manufacturers at the end of the period.
(2) Analysis of inventory changes
At the end of each reporting period, the company’s inventory balance and its proportion in operating income are as follows:
Unit: 10,000 yuan
During the reporting period, the company mainly made purchasing and production plans according to the customer’s expected demand, upstream production capacity and the company’s inventory, and constantly adjusted the stocking level according to the changes in market demand.
At the end of each reporting period, the book value of the company’s inventory was 76,697,600 yuan, 92,822,600 yuan and 91,543,100 yuan respectively, accounting for 24.59%, 25.48% and 23.10% of current assets. At the end of each reporting period, the company maintained a high inventory balance and showed an overall growth trend, mainly due to the following reasons: ① the chip production cycle is long, and it needs to go through wafer production, mid-test, packaging, finished product testing and other links from the time the company issues a purchase order to the wafer manufacturer; However, the wafer and packaging market is highly concentrated, and the production capacity is relatively tight. In order to ensure the timeliness of supply to customers, it is necessary to schedule and stock the production capacity in advance. ② There is a strong market demand for downstream end products. The company’s products have excellent performance and constantly explore new well-known customers. The scale of production and sales continues to expand. The company increases its stocking according to the expected increase of customers’ demand, and the company’s inventory balance mainly increases with the increase of business scale.
Therefore, in the case of increasing business scale, in order to ensure the timeliness and continuity of supply to customers,
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The company has appropriately raised the inventory level, and the raw materials, materials entrusted for processing and goods in stock have generally increased. Generally speaking, there was no abnormal increase in the company’s inventory balance or significant structural changes during the reporting period, and the changes in the company’s inventory were consistent with the operating conditions.
(3) Inventory depreciation reserve
At the end of each reporting period, the company fully considered the characteristics of the industry and the actual situation of the company. After making an inventory check, it conducted an impairment test on the ending inventory in strict accordance with the inventory depreciation reserve policy, and accrued the inventory depreciation reserve according to the difference between the ending inventory cost and the net realizable value.
At the end of each reporting period, the company’s inventory depreciation reserves were RMB 18,113,200, RMB 18,341,000 and RMB 20,197,000 respectively, accounting for 19.10%, 16.50% and 18.07% of the inventory balance, which was relatively stable. The company’s inventory with depreciation was mainly raw materials and inventory goods. The large amount of the company’s inventory depreciation reserve is mainly due to the rapid upgrading of integrated circuit products. Based on the principle of prudence, the company fully accrued the impairment reserve for the inventory with signs of impairment. The amount of inventory depreciation loss accrued by the company in each period of the reporting period is respectively
6,083,100 yuan, 8,499,900 yuan and 8,984,300 yuan, and the ratio of inventory depreciation reserve to inventory balance at the end of each reporting period was 19.10%, 16.50% and 18.07%, respectively, which was relatively stable.
At the end of each reporting period, the company’s provision for inventory depreciation is reasonable and sufficient.
10. Other current assets
At the end of each reporting period, the Company’s other current assets are as follows:
Unit: 10,000 yuan
At the end of each reporting period, the company’s other current assets mainly include structured deposits, wealth management products and listed companies.
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Agency fees, value-added tax allowance, etc., were 93.3092 million yuan, 4.5841 million yuan and 9.3819 million yuan respectively, accounting for 29.92%, 1.26% and 2.37% of current assets respectively. At the end of 2018, the company’s other current assets amounted to a large amount, mainly due to the purchase of short-term floating income bank structured deposits and wealth management products to improve the income of idle funds; At the end of 2019 and the end of 2020, the amount of other current assets decreased significantly, mainly due to the company’s implementation of the new financial instrument standards from January 1, 2019, and the adjustment of bank structured deposits, wealth management products and dual-currency deposits to the accounting of "transactional financial assets" and "derivative financial assets".
At the end of 2018, the details of structured deposits and wealth management products purchased by the issuer are as follows:
Unit: 10,000 yuan
(C) Non-current assets composition and change analysis
At the end of each reporting period, the composition of the Company’s non-current assets is as follows:
Unit: 10,000 yuan
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At the end of each reporting period, the company’s non-current assets are mainly composed of fixed assets, intangible assets, goodwill, deferred income tax assets, etc. The proportion of the total amount of the above four assets to the total non-current assets is respectively
99.41%, 94.25% and 100.00%.
1. Fixed assets
(1) Composition of fixed assets
At the end of each reporting period, the specific composition of the company’s fixed assets is as follows:
Unit: 10,000 yuan
The company adopts the Fabless business model typical of the industry, and focuses on the research and development of chips. Wafer manufacturing, packaging testing and other links are mainly completed by third parties. Except for research and development and finished product testing, the investment in other fixed assets is relatively small. At the end of each reporting period, the company’s fixed assets are mainly office buildings, R&D and finished product testing equipment, transportation equipment and office equipment, etc., which are small in scale and conform to the characteristics of Fabless mode in asset-light strategy. During the reporting period, the company added some fixed assets according to business needs, mainly machinery and electronic equipment needed for R&D and finished product inspection. The scale of fixed assets can meet daily business needs.
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During the reporting period, the company’s fixed assets were used in good condition, and there was no impairment of assets, so there was no need to make provision for impairment.
(2) The issuer’s fixed assets depreciation policy is compared with that of comparable companies in the same industry.
During the reporting period, the company’s fixed assets depreciation policy was compared with that of comparable listed companies as follows:
As can be seen from the above table, there is no significant difference between the issuer’s fixed assets depreciation accrual policy and comparable companies in the same industry.
2. Construction in progress
At the end of each reporting period, the balance of the company’s construction in progress was RMB 0,000,949,600 and RMB 0,000 respectively, which was relatively small, mainly due to the ERP software that was commissioned for external development in 2019.
At the end of each reporting period, there were no signs of impairment in the projects under construction of the Company, and no provision for impairment was required.
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3. Intangible assets
At the end of each reporting period, the details of intangible assets of the Company are as follows:
Unit: 10,000 yuan
At the end of each reporting period, the intangible assets of the company were mainly land use rights, chip design software and financial software, with book values of 2,330,300 yuan, 1,638,100 yuan and 3,035,100 yuan respectively, which were relatively small. At the end of 2018, when the company acquired the new patent rights and trademark rights, the patent rights and trademark rights held by it were recorded according to the assessed value. At the end of 2020, the intangible assets of the company increased by 1,397,000 yuan compared with the end of 2019, mainly due to the large amount of software purchased in this period and transferred from projects under construction in order to better carry out production and operation management. During the reporting period, there was no capitalization of R&D expenses. At the end of each reporting period, the intangible assets of the company showed no signs of impairment, and no provision for impairment was required.
4. Goodwill
At the end of each reporting period, the company’s goodwill is as follows:
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Unit: 10,000 yuan
At the end of 2018, the company acquired Xiruiwei under different control to form a goodwill of 3,660,800 yuan. According to the assessment of the recoverable amount of the asset group of goodwill at the end of 2019 by Zhongshui Zhiyuan Assets Appraisal Co., Ltd., a third-party appraisal agency with relevant qualifications, and the goodwill impairment test was carried out, the company’s goodwill showed no signs of impairment, and no provision for impairment was required. At the end of 2020, the company conducted a goodwill impairment test according to the Provisions of the Measures for Accrual of Goodwill Impairment and the Accounting Standards for Business Enterprises No.8-Asset Impairment. By using the cash flow discount model, it fully considered the influence of adverse events such as impairment signs on key parameters such as future net cash flow, discount rate and forecast period, and reasonably determined the recoverable amount. The company’s goodwill was not impaired.
5. Deferred income tax assets
At the end of each reporting period, the details of the Company’s deferred income tax assets are as follows:
Unit: 10,000 yuan
At the end of each reporting period, the balance of deferred assets of the company was 2,371,300 yuan, 2,430,600 yuan and.
2.399 million yuan. The company’s deferred income tax assets are mainly formed by the deductible temporary differences caused by the provision for inventory depreciation and bad debts and the deferred revenue formed by receiving government subsidies.
6. Other non-current assets
At the end of each reporting period, the Company’s other non-current assets are as follows:
Unit: 10,000 yuan
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At the end of each reporting period, the balance of other non-current assets of the company was 115,700 yuan, 223,000 yuan and.
00,000 yuan, a small amount, mainly for prepaid equipment purchase.
(D) Analysis of asset turnover capacity
1, the company’s asset turnover ability analysis.
During the reporting period, the turnover rate of the company’s main assets is as follows:
Considering the credit qualification, purchasing scale, cooperation history and other factors of customers, the company generally gives customers a credit period of 1-4 months. In each period of the reporting period, the turnover rate of accounts receivable of the company was 6.18, 6.10 and 5.64 respectively, and the overall payment of accounts receivable was good, and the payment period was basically in line with the credit policy. In 2020, the turnover rate of the company’s accounts receivable decreased slightly, mainly due to the substantial increase in the company’s sales revenue in the second half of the year and the increase in the balance of accounts receivable at the end of the credit period, as the epidemic situation was gradually controlled, many products of the company passed the certification of major customers and achieved batch sales, and downstream customers prepared goods in advance for consumption activities and festivals in the second half of the year.
In each period of the reporting period, the inventory turnover rate was 2.85, 3.41 and 3.44 respectively. Due to the long production cycle of chips from wafer to finished products, in order to ensure a reasonable inventory level to meet the requirements of sales delivery, the company makes purchasing and production plans according to customers’ expected demand and upstream production capacity, and constantly adjusts the stocking level dynamically according to changes in market demand, which makes the inventory turnover rate fluctuate slightly.
2. Comparative analysis of listed companies in the same industry
During the reporting period, the company’s asset turnover index was compared with that of comparable companies in the same industry as follows:
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Source of data: Data of comparable companies in the same industry come from publicly disclosed documents.
During the reporting period, the company’s accounts receivable turnover rate was in the reasonable range of comparable listed companies in the same industry, and its inventory turnover rate was better than that of comparable companies, indicating that the company’s income quality, procurement and inventory management level were good, and its asset operation efficiency was high.
XII. Analysis of solvency, liquidity and going concern ability
(A) Analysis of the composition and changes of liabilities
1. Analysis on the overall composition and changes of liabilities
At the end of each reporting period, the company’s debt structure is as follows:
Unit: 10,000 yuan
At the end of each reporting period, the company’s liabilities were mainly current liabilities, which accounted for 95.42%, 97.93% and 99.04% of the total liabilities respectively. Among them, current liabilities were mainly composed of operating liabilities such as notes payable and accounts payable, and the company’s liability structure matched its asset structure.
2. Composition and change analysis of current liabilities
At the end of each reporting period, the company’s current liabilities are as follows:
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Unit: 10,000 yuan
At the end of each reporting period, the company’s current liabilities were mainly composed of accounts payable and notes payable, and the total amount of the above two liabilities accounted for 89.30%, 91.11% and 87.13% of the total current liabilities respectively. At the end of each reporting period, the company’s current liabilities showed an overall growth trend, mainly due to the corresponding increase in the balance of accounts payable with the expansion of the company’s business scale.
(1) Short-term loans
At the end of each reporting period, the Company’s short-term borrowings are as follows:
Unit: 10,000 yuan
During the reporting period, the company’s operating performance and operating cash flow were good, and its business development was mainly realized through the funds accumulated from its own operating results. The company only has short-term loan balance at the end of 2019 and 2020.
1,000,000 yuan is a bank loan obtained by the holding subsidiary, Xi Ruiwei, due to the demand for funds.
As of December 31, 2020, the details of the company’s short-term loans are as follows:
Unit: 10,000 yuan
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As of December 31, 2020, the company had no short-term loans that were due and unpaid.
(2) Notes payable
At the end of each reporting period, the company’s notes payable are as follows:
Unit: 10,000 yuan
At the end of each reporting period, the balance of notes payable of the Company was RMB 35,863,500, RMB 32,726,400 and RMB 19,069,300 respectively, accounting for 45.02%, 31.51% and 20.41% of current liabilities respectively, and the amount was relatively large, mainly due to the fact that the Company paid part of the payment of domestic major suppliers by issuing bank acceptance bills to improve the efficiency of capital use. At the end of 2019 and the end of 2020, the balance of bills payable of the company decreased year-on-year, mainly due to the decrease in the purchase scale of the company from suppliers who settled part of the payment by bills, and the balance of bills payable at the end of the period decreased accordingly. During the reporting period, the company paid the bills in time according to the agreed maturity date, and there was no case of not accepting the bills payable in time.
(3) Accounts payable
At the end of each reporting period, the company’s accounts payable are as follows:
Unit: 10,000 yuan
During the reporting period, the company’s accounts payable mainly include the raw materials and chip purchase funds payable to suppliers in daily operations, packaging and testing fees and sales service fees payable to sales service units. At the end of each reporting period, the balance of accounts payable of the Company was RMB35,275,500, RMB61,887,900 and RMB62,320,600 respectively, accounting for current liabilities.
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The proportions are 44.28%, 59.59% and 66.72% respectively. At the end of 2019, the company’s balance of accounts payable increased, mainly due to the corresponding increase in wafer and chip procurement scale and outsourcing packaging test scale with the expansion of the company’s production and sales scale. At the end of each reporting period, the company’s accounts payable are mainly within one year, and there is no repayment risk. As of December 31, 2020, the top five accounts payable balances of the company are as follows:
Unit: 10,000 yuan
At the end of each reporting period, there is no money payable to shareholders and individuals who hold more than 5% (including 5%) of the voting shares of the Company in the company’s accounts payable balance.
(4) Advance payment
At the end of each reporting period, the company’s advance receipts are as follows:
Unit: 10,000 yuan
At the end of each reporting period, the company’s advance receipts were mainly the payment received from some customers in advance, with a small amount, accounting for a low proportion of current liabilities. In order to ensure the timeliness of payment recovery and prevent the possible risk of bad debts, the company adopts the method of advance payment for individual dealers, initial cooperation or small-scale customers. The company has implemented the new income standard since January 1, 2020, and adjusted the advance payment to the account of "contract liabilities".
(5) Contract liabilities
At the end of each reporting period, the Company’s contractual liabilities are as follows:
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Unit: 10,000 yuan
The company has implemented the new income standard since January 1, 2020, and adjusted the advance payment to the account of "contract liabilities".
(6) Payable staff salaries
At the end of each reporting period, the Company’s salary payable to employees is as follows:
Unit: 10,000 yuan
During the reporting period, the company’s employee compensation mainly consists of wages, bonuses, welfare funds and social security accumulation fund, and the year-end bonus of the previous year is usually paid at the beginning of the following year. At the end of 2019 and 2020, the company’s salary balance payable to employees increased, mainly due to the corresponding increase in wages and bonuses with the expansion of the company’s business scale and the increase in the number of employees.
(7) Taxes payable
At the end of each reporting period, the balance of taxes payable by the Company is as follows:
Unit: 10,000 yuan
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At the end of each reporting period, the company’s taxes payable mainly include enterprise income tax, value-added tax and withholding taxes, with the balance of 1,520,800 yuan, 437,100 yuan and 582,700 yuan respectively, accounting for 1.91%, 0.42% and 0.62% of current liabilities respectively. At the end of 2018, the balance of taxes payable by the company was relatively large, mainly due to the fact that the company acquired the equity of some shareholders of Siruiwei at the end of 2018, and the amount of personal income tax withheld and remitted was relatively large; After the company withheld and remitted the above taxes in early 2019, the amount of taxes payable at the end of 2019 decreased accordingly.
(8) Other payables
At the end of each reporting period, the composition of other payables of the Company is as follows:
Unit: 10,000 yuan
At the end of each reporting period, the balance of other payables of the company was 793,300 yuan, 808,400 yuan and 780,500 yuan respectively, which were relatively small, mainly including the deposit received, the social security payable withheld and remitted, the rent and property fees, employee reimbursement, etc.
(9) Other current liabilities
At the end of each reporting period, the Company’s other current liabilities are as follows:
Unit: 10,000 yuan
Since January 1, 2020, the company has implemented the new income standard, and adjusted the VAT output tax in the advance payment to the account of "other current liabilities".
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3. Composition and change analysis of non-current liabilities
At the end of each reporting period, the company’s non-current liabilities are as follows:
Unit: 10,000 yuan
At the end of each reporting period, the Company’s non-current liabilities were 3,821,000 yuan, 2,195,900 yuan and 909,700 yuan, which were relatively small and mainly composed of deferred revenue and deferred income tax liabilities.
(1) deferred revenue
At the end of each reporting period, the details of the company’s deferred revenue are as follows:
Unit: 10,000 yuan
At the end of each reporting period, the company’s deferred revenue balance was 3,168,400 yuan, 1,861,200 yuan and 677,900 yuan respectively, mainly due to the government subsidies related to assets received by the company, which will be included in the profit and loss by installments according to the depreciation amount of purchased equipment. See "1. Other Income" in "X. Analysis of Operating Results" and "V. Analysis of Other Items in the Income Statement" in this section for details of the company’s deferred revenue’s installment into the current profit and loss.
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(2) Deferred income tax liabilities
At the end of each reporting period, the details of the Company’s deferred income tax liabilities are as follows:
Unit: 10,000 yuan
At the end of each reporting period, the balance of deferred income tax liabilities of the company was 652,500 yuan, 334,700 yuan and.
231,900 yuan, the amount of which is relatively small, is mainly caused by the appreciation of assets arising from the acquisition of Siruiwei under different control and the taxable temporary differences arising from the changes in the fair value of the purchased structured deposits, wealth management products and forward foreign exchange settlement and sale contracts.
(B) Analysis of solvency
1. Main debts at the end of the latest period
During the reporting period, the company’s operating performance and cash flow were good, and its business development was mainly realized through the funds accumulated from its own operating results, with a small amount of loans. As of December 31, 2020, the company’s short-term loan balance was RMB 1 million, with details as follows:
Unit: 10,000 yuan
As of December 31, 2020, the company had no debts such as related party loans, contractual commitments, contingent liabilities, and there was no capitalization of borrowing costs.
2. Main solvency indicators
During the reporting period, the company’s main solvency indicators are as follows:
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Note: The calculation method of the above financial indicators is as follows:
1. Current ratio = current assets/current liabilities;
2. Quick ratio = (current assets-inventory)/current liabilities;
3. Asset-liability ratio = total liabilities/total assets * 100%;
4. Profit before interest, tax, depreciation and amortization = net profit+income tax+interest expense+depreciation of fixed assets+long-term deferred expenses and amortization of intangible assets;
5. Interest guarantee multiple = (net profit+income tax+interest expense)/interest expense; In 2017 and 2018, the company has no interest expenses.
During the reporting period, with the continuous expansion of the company’s business scale and the continuous improvement of its operating performance, the company’s overall solvency continued to increase.
3. Analysis of solvency
At the end of each reporting period, the company’s current ratios were 3.91, 3.51 and 4.24 respectively, and its quick ratios were
2.95, 2.61 and 3.26, with strong short-term solvency.
At the end of each reporting period, the asset-liability ratio of the parent company was 23.83%, 26.42% and 21.34% respectively, and the consolidated asset-liability ratio was 25.20%, 27.56% and 22.53% respectively. The asset-liability ratio was low and the financial structure was stable. During the reporting period, the company realized the profit before interest, tax, depreciation and amortization of RMB29,571,700, RMB46,603,500 and RMB74,876,300 respectively. With the continuous growth of the company’s operating performance, the profit before interest, tax, depreciation and amortization increased continuously. The company’s interest expense is less, and the interest guarantee multiple is higher.
On the whole, at the end of each reporting period, the company’s debt balance was mainly operating liabilities formed by purchasing raw materials and chips and outsourcing packaging and testing. During the reporting period, the company maintained long-term and stable cooperative relations with major customers and suppliers, established a sound credit policy, and established a sound internal control system for purchase payment and sales collection, effectively controlling liquidity risks. At the same time, the company’s strong profitability and ability to generate cash from business activities also provide a guarantee for the company’s long-term and short-term debt repayment ability.
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4. Comparative analysis of comparable companies
During the reporting period, the comparison of solvency indicators between the Company and comparable listed companies in the same industry is as follows:
Source of data: Data of comparable companies in the same industry come from publicly disclosed documents.
During the reporting period, the company’s current ratio, quick ratio and asset-liability ratio were better than the average level of comparable companies, and the company had strong solvency. To sum up, the company’s management believes that the company’s financial structure is sound, the debt scale matches the asset scale, and there is no great debt repayment pressure; The company has good solvency index and strong solvency.
(3) The specific implementation of dividend distribution during the reporting period.
On May 26, 2018, the company held the 2017 annual general meeting of shareholders and agreed to distribute a cash dividend of RMB 10 million to all shareholders. On May 25, 2019, the company held the 2018 annual general meeting of shareholders and agreed to distribute a cash dividend of RMB 10 million to all shareholders. On February 12, 2020, the company held the first extraordinary shareholders’ meeting in 2020 and agreed to distribute a cash dividend of RMB 20 million to all shareholders. As of the signing date of this prospectus, the above cash dividends of the company have been paid in full.
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During the reporting period, except for the above circumstances, the company did not have any other distribution of profits. As of the signing date of this prospectus, the company has no profit distribution plan that has not been fully implemented.
(D) cash flow analysis
During the reporting period, the company’s cash flow is as follows:
Unit: 10,000 yuan
1. Analysis of cash flow generated by operating activities
(1) Cash flow from operating activities
During the reporting period, the cash flow generated by the company’s operating activities is as follows:
Unit: 10,000 yuan
In each period of the reporting period, the net cash flow generated by the company’s operating activities was 42,588,900 yuan, 5,771,100 yuan and 56,671,800 yuan respectively. During the reporting period, the company maintained long-term and stable cooperation with major customers and suppliers.
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As a result, the credit policy is sound, the sales return is good, and the business activities all generate net cash inflows.
(2) Comparative analysis of cash received from selling goods and providing services and operating income.
During the reporting period, the cash received by the company from selling goods and providing services is compared with the current operating income as follows:
Unit: 10,000 yuan
In each period of the reporting period, the company’s main customers are well-known consumer electronics enterprises at home and abroad, with high market reputation and good sales returns. The cash received from selling goods and providing services increased with the increase of operating income, accounting for 90.84%, 87.37% and 91.75% of the current operating income respectively.
(3) Comparative analysis of net cash flow and net profit from operating activities.
During the reporting period, the comparison between the net cash flow generated by the company’s operating activities and the current net profit is as follows:
Unit: 10,000 yuan
During the reporting period, the net cash flow generated by the company’s operating activities was generally less than the net profit, mainly due to the following reasons: ① With the continuous expansion of production and sales scale, the company appropriately increased stocking according to the increase of customers’ expected demand, the inventory balance showed an overall growth trend, and the cash paid for stocking increased; ② The company generally gives customers a credit period of 1-4 months, considering the credit qualification, purchasing scale and cooperation history of customers, while the upstream suppliers generally require the company to pay within 2 months. With the continuous expansion of business scale, the increase of the company’s operating accounts receivable is generally higher than that of operating accounts payable, and the cash recovered from sales lags behind the cash paid from purchasing. In 2018, the net cash flow generated by the company’s operating activities was higher than the net profit, which was mainly due to the following reasons: ① CITIC Bank gave the company a preferential treatment to issue bills payable within the credit line this year, and the company recovered the bill deposit of 13.68 million yuan; (2) The amount of payment made by the company by issuing bills has increased, and the balance of bills payable at the end of this year has increased by 10,393,500 yuan compared with the end of last year.
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During the reporting period, the difference between the net cash flow generated by the company’s operating activities and the current net profit was mainly caused by changes in operating accounts receivable and payable, inventory, asset impairment reserve and other factors. The specific differences are as follows:
Unit: 10,000 yuan
During the reporting period, the relationship between the issuer’s net profit and the net cash flow generated from operating activities was reasonable.
2. Analysis of cash flow generated by investment activities
During the reporting period, the cash flow generated by the company’s investment activities is as follows:
Unit: 10,000 yuan
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During the reporting period, the net cash flow generated by the company’s investment activities was-94,686,200 yuan,-2,080,100 yuan and 40,381,100 yuan respectively, which was mainly affected by investment, redemption of bank structured deposits, wealth management products and dual-currency deposits. In 2018, the company’s investment activities generated a net cash outflow of 94,686,200 yuan, mainly due to the company’s purchase of bank structured deposits and wealth management products to improve the income of idle funds, resulting in a net outflow of 90 million yuan, and the acquisition of Siruiwei paid a net cash outflow of 4,604,500 yuan.
3. Analysis of cash flow generated by financing activities.
During the reporting period, the cash flow generated by the company’s financing activities is as follows:
Unit: 10,000 yuan
In each period of the reporting period, the net cash flow generated by the company’s fund-raising activities was-10 million yuan,-9,038,700 yuan and-25,519,900 yuan respectively, mainly due to the payment of the distributed cash dividends and the fees of listed intermediaries.
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(V) Analysis of capital expenditure
1. Domestic expenditures during the reporting period
During the reporting period, the amount of capital expenditure incurred by the company was 1,087,700 yuan, 4,466,600 yuan and.
7.1538 million yuan, mainly for the purchase of machinery and equipment, electronic equipment, chip design software, etc. required for research and development and finished product testing.
2. Major capital expenditure plans at the end of the reporting period and foreseeable in the future
As of the signing date of this prospectus, the company’s foreseeable major capital expenditures in the future are mainly the "R&D and industrialization project of high-performance power conversion and driver chips", "R&D and industrialization project of high-performance power protection chips" and "R&D center construction project" to be invested by the funds raised in this public offering. For specific plans, please refer to Section 9 "Use of raised funds and future development plan" of this prospectus.
(VI) Liquidity risk analysis
At the end of each reporting period, the company’s liquidity related indicators are as follows:
During the reporting period, the company formed a customer base with well-known consumer electronics companies at home and abroad by virtue of its profound technical accumulation, excellent R&D and innovation capabilities and excellent product performance. The major customers have high quality accounts receivable and good sales returns, net cash inflow from business activities and sufficient monetary funds, and the business accumulation can guarantee the daily production and business activities.
In each period of the reporting period, the company’s debt structure was mainly current liabilities, which accounted for more than 95.00%, mainly including accounts payable, notes payable and other operating liabilities formed during the company’s operation, and the external borrowing was less, which matched the company’s business model and the scale of current assets. The company’s current ratio exceeds 3, short-term.
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Strong solvency, good asset liquidity and low probability of short-term liquidity risk; The asset-liability ratio is below 30.00%, and the financial structure is sound; The company’s credit standing is good, and there is no overdue debt outstanding.
There are no important events or commitments that affect the cash flow, the cash situation is good, and there are no situations or risk trends that have caused or may cause major adverse changes in liquidity. As the company is in a period of rapid business development and its business scale continues to grow, taking into account the characteristics of high R&D investment and rapid market demand changes in the IC design industry, the company has continuously improved the liquidity risk management system, further strengthened the collection management of accounts receivable and effectively controlled the inventory level, and gradually improved the cash flow level while ensuring the steady development of the company’s business; At the same time, the company will further accelerate the research and development of new products, optimize the product structure, and ensure profitability through continuous technological upgrading.
(VII) Analysis on the ability of sustainable operation.
The company has been deeply involved in the field of power management chips for nearly 20 years. At present, it has become one of the major power management chip design enterprises in the field of consumer electronics and a key integrated circuit design enterprise in the national planning layout. The company’s products are mainly power management chips such as power conversion chips, power protection chips and display drive circuits. The downstream products are mainly used in consumer electronics markets such as mobile phones and wearable devices, and continue to be laid out in the fields of household appliances, Internet of Things, automotive electronics and network communication.
At present, the company has passed the rigorous authentication process of many world-renowned consumer electronics customers, and formed a high-quality terminal customer base including Samsung, Customer A, Xiaomi, LG and Wentai, which has been highly recognized by customers. The cooperation field has gradually expanded from consumer electronics fields such as mobile phones and wearable devices to business sectors such as household appliances, Internet of Things, automotive electronics and network communication, and the cooperation has been further deepened, forming a good customer advantage.
In the future, the company will seize the opportunity of the rapid development of terminal applications such as consumer electronics, 5G communication, Internet of Things and automotive electronics, continue to introduce new products with international competitiveness driven by core technologies, and continue to explore high-quality customers and enhance brand influence to enhance the company’s sustainable profitability.
After careful evaluation of the company’s operation, the management of the company believes that the company can maintain good sustainable profitability in the foreseeable future, and there are no major adverse changes or risk factors in its sustainable operation ability.
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Thirteen, major investment, capital expenditure, major asset business restructuring or equity acquisition and merger.
(1) Major investment matters
During the reporting period, the company did not have any major investment matters.
(II) Capital expenditures
During the reporting period, please refer to "(5) Analysis of Capital Expenditure" in "XII. Analysis of solvency, liquidity and going concern" in this section of this prospectus for details.
(3) Major asset business restructuring matters
During the reporting period, the company did not have any major asset business restructuring.
(4) Matters related to equity acquisition and merger
During the reporting period, the company did not have any major equity acquisition and merger.
XIV. Future events of assets and liabilities, contingencies and other important events
(1) Matters after the balance sheet date
As of the signing date of this prospectus, the company has no important events after the balance sheet date that need to be disclosed.
(2) Contingencies
As of the signing date of this prospectus, the company has no major contingencies that need to be disclosed.
(three) major guarantees, litigation and other important matters.
As of the signing date of this prospectus, the company has no major external guarantee, major pending litigation or arbitration and other important matters that need to be disclosed.
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Fifteen, the main financial information and operating conditions of the financial report after the audit deadline.
(a) the main operating conditions of the financial report after the audit deadline
From the closing date of the company’s financial report audit (i.e. December 31, 2020) to the signing date of this prospectus, there have been no other major changes in the issuer’s business model, the purchase scale and price of major raw materials, the production and sales scale and price of major products, the composition of major customers and suppliers, tax policies and other major matters that may affect investors’ judgment.
(2) Review opinions of accounting firms
The company’s merger and parent company’s balance sheet on March 31st, 2021, merger and parent company’s income statement, merger and parent company’s cash flow statement and notes to financial statements have not been audited, but they have been reviewed by Rongcheng Club and the Review ReportNo. [2021]230Z1647 has been issued. The review opinions are as follows:
"According to our review, we didn’t notice anything that made us believe that the financial statements were not prepared in accordance with the provisions of the Accounting Standards for Business Enterprises, and failed to fairly reflect the merger of Lixin Micro on March 31, 2021 and the financial situation of its parent company, as well as the merger and the operating results and cash flow of its parent company from January to March 2021 in all major aspects."
(3) the issuer’s special statement
The Board of Directors, the Board of Supervisors, their directors, supervisors and senior management of the Company have carefully reviewed the unaudited financial statements of the Company from January to March, 2021 to ensure that there are no false records, misleading statements or major omissions in the information contained in these financial statements, and they are individually and jointly liable for the truthfulness, accuracy and completeness of their contents. The person in charge of the company, the person in charge of accounting work and the person in charge of accounting institutions have carefully reviewed the unaudited financial statements of the company from January to March 2021 to ensure the truthfulness, accuracy and completeness of these financial statements.
(4) Main financial information from January to March, 2021
According to the Review Report issued by Rongcheng Club, the main financial data of the company from January to March 2021 that have been reviewed but not audited are as follows:
1. Main data of consolidated balance sheet
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Unit: 10,000 yuan
2. Main data of consolidated income statement
Unit: 10,000 yuan
3. Consolidated main data of cash flow statement
Unit: 10,000 yuan
4. Main items and amounts of non-recurring gains and losses
Unit: 10,000 yuan
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As of March 31, 2021, the company’s assets and liabilities were in good condition, with total assets of 431,502,800 yuan, an increase of 3.08% compared with the end of last year, and the equity attributable to the owners of the parent company was 347,174,200 yuan, an increase of 7.46% compared with the end of last year.
From January to March 2021, the issuer realized an operating income of 166.2578 million yuan, a year-on-year increase of 45.10%; The net profit attributable to the owners of the parent company was 24,107,500 yuan, a year-on-year increase of 30.55%; After deducting non-recurring gains and losses, the net profit attributable to owners of the parent company was 21,388,800 yuan, up 47.48% year-on-year. In the first quarter of 2021, the company’s profit level increased by a large margin, mainly benefiting from the increasing market demand of the integrated circuit industry in the current period. With its profound technical accumulation, excellent R&D and innovation capabilities and excellent product performance, the company gained high recognition from the market, maintained good cooperation with customers and constantly developed new products, and its operating income and profit level showed a rapid growth trend.
From January to March, 2021, the net cash flow generated by the company’s operating activities was-8,810,900 yuan, a significant year-on-year decline, mainly due to the company’s appropriate increase in stocking according to the expected increase in customer demand and the increase in cash paid for stocking.
(V) Performance forecast for January-June 2021
Combined with the company’s reviewed financial statements from January to March 2021, the realized data in April 2021 and the purpose
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According to the previous orders in hand and customers’ expected demand, the company expects to achieve operating income of 320 million yuan to 350 million yuan from January to June 2021, a year-on-year change of 42.61% to 55.98%; It is estimated that the net profit attributable to the owners of the parent company is 45 million yuan to 50 million yuan, a year-on-year change of 50.24% to 66.93%; It is estimated that the net profit attributable to the owners of the parent company after deducting non-recurring gains and losses is 40 million yuan to 45 million yuan, a year-on-year change of 59.61% to 79.56%.
The above-mentioned performance forecast of the company from January to June 2021 has not been audited or reviewed by accountants, and does not constitute the company’s profit forecast or performance commitment.
XVI. Profit Forecast
The company did not prepare a profit forecast report.
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Section 9 Use of Raised Funds and Future Development Planning
I. Overview of investment projects with raised funds
(1) The plan and investment direction of this fundraising.
After deliberation and approval at the Third Extraordinary General Meeting of Shareholders in 2020 and the Second Extraordinary General Meeting of Shareholders in 2021, the company plans to publicly issue no more than 16 million A-share ordinary shares, accounting for no less than 25% of the total issued share capital. The net amount of the raised funds after deducting the issuance expenses is all used for the main business-related projects of the company, as follows:
Unit: 10,000 yuan
The company has completed the project filing and environmental impact registration form filing for the investment projects raised this time. The relevant investment projects raised funds do not involve new land, and will not produce industrial wastewater, waste gas, waste residue and noise, and will not pollute the environment.
If the net amount of funds raised in this issuance is lower than the investment amount of the above-mentioned fundraising projects, the insufficient part will be solved by self-financing; If the net raised funds exceed the investment amount of the above-mentioned fundraising projects, the excess will be used in accordance with the relevant regulations of China Securities Regulatory Commission and Shanghai Stock Exchange. Before the raised funds are put in place, the company will invest in advance through its own funds according to the actual progress of the project. After the raised funds are put in place, the previously invested funds will be replaced with the raised funds.
(2) Management system for the use of raised funds
The Company has complied with the Company Law, Securities Law and science and technology innovation board Stock Listing Rules of Shanghai Stock Exchange.
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Then, the Measures for the Administration of Raised Funds of Listed Companies of Shanghai Stock Exchange and other relevant laws and regulations and the Articles of Association have formulated the Management System for the Use of Raised Funds, which clearly stipulates the storage, use and management of raised funds. The funds raised this time will be deposited in a special account for centralized management in strict accordance with the above system, and the special account for raised funds shall not be deposited with non-raised funds or used for other purposes.
(C) the impact of the raised funds on the independence of the company after the implementation of the investment project
After the implementation of this fund-raising investment project, there will be no horizontal competition with the controlling shareholder and actual controller of the company, nor will it adversely affect the independence of the company.
(4) the relationship between the investment projects with raised funds and the existing main businesses and core technologies of the issuer.
This fund-raising investment project is carried out around the company’s main business. The main purpose is to improve the level of technology research and development, realize the research and development and industrialization of new products, and enhance the company’s core competitiveness, which is the consolidation and promotion of the company’s main business.
In addition, the company has been deeply involved in the field of power management for nearly 20 years, and has independently developed and formed core technologies such as EOS rapid suppression and release technology, low noise and high power ripple suppression technology, accurate current and voltage detection and charging management technology, and intelligent power supply switching and management technology for complex multi-power systems in many fields, which have been reflected in a large number of functional modules IP. The above-mentioned technical system and design platform have been verified by the market and continuously optimized in application, providing a large number of advanced and mature infrastructures for the R&D team, which is conducive to the company’s rapid and accurate product R&D and laying a technical foundation for the smooth implementation of this fund-raising investment project.
Therefore, the investment projects raised by the company are based on the existing technical system and are carried out around the company’s main business, which is in line with the company’s main business and technical conditions, and is conducive to maintaining technological advancement, further enriching product series and improving product performance.
(five) the specific arrangements for raising funds to focus on the field of scientific and technological innovation.
The investment projects raised by the company are planned according to the company’s business development and technological innovation needs. The implementation of the projects will help the company to enhance its research and development strength, enrich its product range and enhance its core competitiveness. Company capital
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The second fundraising investment project belongs to the field of scientific and technological innovation. For details, please refer to "II. Details of fundraising investment projects" in this section.
Second, the specific situation of investment projects with raised funds
(1) R&D and industrialization projects of high-performance power conversion and driver chips
1. Overview of the project
This project is a high-performance power conversion and driver chip research and development and industrialization project. The main content is to continuously deepen the technical accumulation of power conversion and driver chips, develop and launch high-performance power conversion and driver products, and meet higher market requirements with innovative, high-performance and high-quality products.
2. Necessity of project construction
The market competitiveness of integrated circuit design enterprises ultimately depends on product performance and advanced technology. Under the background of increasing performance and complex functions of terminal products, integrated circuit design enterprises need to guide customers’ needs with more advanced performance, more comprehensive product categories and more comprehensive solutions in order to remain competitive in the market competition. Therefore, the company needs to continuously deepen the existing technical fields, continue to optimize and innovate, and introduce products with better performance and higher added value.
Over the years, the company has always been committed to technological innovation and product performance improvement. Taking the common LDO series in power conversion chips as an example, after the company introduced the conventional LDO that meets the linear voltage conversion function in the early stage, through continuous technological innovation, it successively introduced product series that meet the technical development trends of industries such as low power consumption, low noise, high efficiency, miniaturization and integration. The continuous updating iteration of LDO series products provides customers with comprehensive and high-quality solutions.
To sum up, in order to maintain the leading performance of products, the company urgently needs to continue in-depth research and development, improve the performance of power conversion and display driver chips and the completeness of product types, continuously explore product application fields, and maintain the competitiveness of enterprises.
3. Feasibility of project construction
(1) A good industrial policy and a prosperous downstream market provide a steady market demand.
Integrated circuit industry is a strategic, basic and leading industry that supports economic development and guarantees national security.
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Industry. In recent years, China has issued a series of policies to strongly support the development of integrated circuit industry, and the integrated circuit industry chain has gradually matured, providing a certain capacity base and good development opportunities for domestic integrated circuit design enterprises.
During the reporting period, with the complexity of mobile phone functions, the improvement of performance and the improvement of battery safety requirements, the market demand for power conversion chips and power protection chips continued to grow; In addition, the popularity of wearable devices such as smart bracelets, smart watches, TWS headphones and the promotion of 5G mobile phones have further promoted the market demand for power management chips.
Therefore, a good industrial policy and a prosperous downstream market provide a sustained and stable market demand for the implementation of fundraising projects.
(2) Brand and customer advantages provide favorable conditions for the implementation of fundraising projects.
Over the years, the company has accurately grasped the changing trend of the market, accumulated a certain brand reputation in the competition by virtue of its profound technical accumulation, excellent R&D innovation ability and product series with outstanding performance and reliable quality, and continued to carry out international business and promote import substitution in the domestic market through customized and differentiated services. At present, the company has passed the rigorous certification process of many world-renowned consumer electronics customers, and has formed a high-quality end-user base including Samsung, Customer A, Xiaomi, LG and Wentai. The products are widely used in consumer electronics fields such as mobile phones and wearable devices, and continue to be expanded in the fields of household appliances, Internet of Things, automotive electronics and network communication. The brand and customer advantages accumulated by the company provide favorable conditions for the capacity digestion after the implementation of the fundraising project.
(3) The company’s profound technical accumulation has laid a technical foundation for the implementation of fundraising projects.
Combined with the market demand and the continuous innovation of cutting-edge information, the company has formed a wealth of core technologies and functional modules IP around the development trend of power management chips such as low noise, high efficiency, miniaturization and integration, and formed a multi-category design platform covering power conversion, power protection and so on. The above-mentioned technical system of the company is formed after years of research and development accumulation, which has been verified by the market and continuously optimized in application, providing a large number of advanced and mature infrastructure for the R&D team while maintaining a certain degree of advancement. The technical system accumulated by the company for many years can enable the company to realize rapid and accurate product research and development, laying a solid technical foundation for the realization of fundraising projects.
(4) The company has comprehensive management capabilities and can effectively support the implementation of fundraising projects.
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The company has established a complete corporate governance system and internal control measures to ensure the standardization of the operation system and the perfection of the management system. At the same time, the company’s good cooperation with well-known customers at home and abroad has accumulated rich project management experience and strict quality control system, which makes the company have the comprehensive management ability to carry out fundraising projects and can effectively support the implementation of the projects.
4, the project investment budget
5. Project implementation cycle and progress
The implementation period of this project is planned to be 3 years. The project schedule includes feasibility study, site decoration, equipment purchase and installation, personnel recruitment, training, product and technology development, etc. The specific progress is shown in the following table:
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(2) R&D and industrialization projects of high-performance power protection chips
1. Overview of the project
This project plans to implement R&D and industrialization of high-performance power protection chips, mainly through in-depth study of the application requirements of power protection chips, deepening the technical accumulation of power protection chips, constantly pursuing performance improvement and technological innovation, and continuously launching new products that meet market expectations.
2. Necessity of project construction
A safe and stable power supply scheme is the basic guarantee for the normal operation of electronic products, and it is an indispensable basic component and lifeline of electronic equipment. The protective performance of power supply protection chip determines the service life of power supply and the safety of core components. With the continuous improvement of the functional requirements of power protection products in the terminal application market, the company needs to continuously improve product performance indicators, increase product functions and expand product categories to meet the different needs of customers with a comprehensive product range; At the same time, due to the different needs of electronic products in different application fields for power protection products, the company needs to continuously develop new technologies and products in the field of power protection and expand the application fields of protection products.
Take OVP series, which is the main power protection product, as an example. The function of OVP product series of our company has expanded from a single overvoltage protection point setting method to a multi-voltage adjustable method suitable for different schemes, and gradually integrated the functions of path switch and power supply monitoring, and the protection performance standard has gradually increased from 80V to 200V, which is rare in the industry, and the transient voltage turn-off speed has increased from microsecond level to nanosecond level. The improvement of the function and performance of the above products is the process that the company promotes the application through the research and innovation of technology and products. Therefore, the power protection chip needs continuous research and development to realize product optimization, innovation and industrialization.
Therefore, the R&D and industrialization project of high-performance power protection chips will help the company to maintain and strengthen its competitive advantage in the field of power protection chips, thus improving its profitability and maintaining its competitiveness.
4, the project investment budget
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5. Project implementation cycle and progress
The implementation period of this project is planned to be 3 years. The project schedule includes feasibility study, site decoration, equipment purchase and installation, personnel recruitment, training, product and technology development, etc. The specific progress is shown in the following table:
(3) R&D center construction projects
1. Overview of the project
In this project, it is planned to continuously improve the technical R&D capability and talent pool by introducing outstanding talents in the industry, purchasing advanced experimental equipment and software, and to build various advanced R&D laboratories based on the existing technical system, combined with the main business, R&D experience, downstream market and the technological change trend of this industry, so as to improve the company’s R&D strength.
2. Necessity of project construction
Design innovation and R&D strength are the core embodiment of the competitiveness of integrated circuit design enterprises, and the improvement of R&D strength can not be separated from the reserve of technical talents and the construction of basic R&D architecture. Talents, equipment and auxiliary tools are indispensable support for the development of enterprises.
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Although the company has become one of the main power management chip design enterprises in the domestic consumer electronics field, and has accumulated rich R&D experience, technology and a large number of outstanding professionals in the fields of power conversion, power protection, display driver and other products, the fierce market competition and the import substitution demand of high-performance products have driven the company to continue to invest in R&D and maintain its competitiveness by continuously attracting outstanding talents in the industry and strengthening talent training.
3. Feasibility of project construction
(1) The technical team provided talent support for the implementation of the project.
Talent is the cornerstone of integrated circuit design enterprises. The company always pays attention to the construction of technical talent team, and constantly reserves through talent introduction and independent training, which makes the R&D team grow and develop continuously. By December 31, 2020, the company had 150 R&D and technical personnel, accounting for 57.69%, and formed a number of technical teams, which provided talent support for the implementation of R&D center construction projects.
(2) The technical system accumulated over the years has laid a technical foundation for the implementation of the project.
Technological innovation is the driving force for the development of IC design companies. Around the development trend of low noise, high efficiency, miniaturization and integration of power management chips, the company has formed a wealth of core technologies and functional modules IP, and based on this, it has formed a multi-category design platform covering power conversion, power protection and so on. The above-mentioned R&D system has not only been verified and continuously optimized in the application of the above-mentioned technical system, but also laid a technical foundation for the smooth implementation of the R&D center construction project.
4, the project investment budget
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The R&D center construction project includes the upgrading and construction of analog circuit laboratory, RF laboratory, reliability laboratory, hazardous substance detection laboratory and data center, in which the investment in fixed assets and intangible assets is mainly used for R&D, analysis, testing, data storage and other equipment, software and computer-aided design tools required by the above laboratories and data centers.
5. Project implementation cycle and progress
The implementation period of this project is planned to be 2 years. The project schedule includes feasibility study, site decoration, equipment purchase and installation, personnel recruitment, training, product and technology development, etc. The specific progress is shown in the following table:
(D) Development of reserve projects
1. Overview of the project
Based on the actual business needs, combined with the industry development trend, product and technology foundation, and the company’s future strategic planning, the company plans to raise 180 million yuan for the development of reserve projects, and specifically invest in the in-depth research and development and industrialization of signal chain chips, magnetic induction chip series and power management unit (PMU). The funds raised by this project will not be used for the investment of financial assets.
Based on the company’s existing key products, combined with technical requirements, strategic planning and market trends, the company’s current development reserve project is given priority to technology development, reserve and industrialization in other directions that are in line with the company’s strategic development plan, except for high-performance power conversion and driver chip research and development and industrialization projects, and high-performance power protection chip research and development and industrialization projects. Specifically, it is mainly used for technology and product upgrading, talent introduction, market development, etc. in the direction of signal chain chips, magnetic induction chips and power management system units (PMU). The main planned uses are as follows:
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Unit: 10,000 yuan
2, the background of the funds raised for the development of reserve projects.
The funds raised by the company this time are used to develop reserve projects, mainly to further strengthen the company’s reserves of new technologies and new products in the strategic development direction, and to better grasp the opportunities of downstream market development and domestic chip import substitution, which is an important link for the company to realize its future development strategic planning. The specific analysis is as follows:
(1) further strengthen the company’s reserve needs in new technologies and new products.
Integrated circuit design enterprises are typical technology-intensive industries. With the rapid change of downstream market demand, higher requirements are put forward for integrated circuit product innovation. In this context, integrated circuit design enterprises need to maintain strong continuous innovation ability, closely track the upstream and downstream technological changes, and constantly reserve new technologies and products to meet the ever-changing market demand. Therefore, the funds raised for the development of reserve projects can further strengthen the company’s reserves in new technologies and new products, expand product categories and maintain the competitiveness of enterprises.
(2) Provide support for grasping the opportunities of downstream market development and domestic chip import substitution.
In recent years, wearable devices such as smart watches and smart bracelets, and downstream markets such as 5G mobile phones have entered a stage of rapid growth. Coupled with the prosperity and development of emerging fields such as smart homes and the Internet of Things, more diversified demands have been put forward for integrated circuit products. In this context, the company continues to strengthen the research and development and production of existing superior products.
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In addition to industrialization, it is also necessary to grasp the development opportunities of the downstream market and make layout in other fields. At the same time, since the second half of 2018, the import substitution process of domestic chips has been significantly accelerated. The company has strengthened its efforts to expand the domestic market, satisfied customers’ demand for supply chain security, differentiation and personal service through good market reputation, comprehensive operation and management capabilities of the industrial chain, stable product performance and excellent service, and successively established cooperation with customers such as Xiaomi and Customer A. With the deepening of cooperation, on the one hand, the company needs to strengthen the promotion of superior products such as power conversion, power protection, display driver, on the other hand, it also needs to fully grasp customer resources, quickly enrich product categories, meet customers’ diversified needs, and thus increase customer stickiness. Considering that the company has achieved certain technical accumulation in the fields of PMU, magnetic induction chip, signal chain chip, etc., and has made certain progress in the layout and marketing of a small number of products. Therefore, the funds raised are used to develop reserve projects, which is conducive to the company’s layout according to market and technological changes in combination with existing technologies and business foundations.
(3) Developing reserve projects is an important part of the company’s strategic planning.
Based on its market position in the field of consumer electronics applications such as mobile phones, the company has made a strategic plan for its future development, guided by market demand and technological frontier trends. The company will continue to carry out technological innovation and product development, further explore the market, strengthen the training and introduction of outstanding talents, continue to develop a full range of high-quality power management chips, and lay the foundation for the company to build a leading power management chip technology platform and eventually become a world-class analog chip supplier. The specific investment of strategic planning reserve project development reserve project is based on the company’s future strategic planning needs. In addition to high-performance power conversion and driver chip research and development and industrialization projects, strengthening research and development in signal chain chips, magnetic induction chips, PMU and other fields is an important link in future strategic planning.
2, the specific arrangements for the development of reserve projects and its necessity and rationality.
The specific investment of the company’s development reserve projects has fully considered the market demand, and combined with the company’s technology, product research and development achievements and future strategic planning, it is mainly used for technology and product research and development, talent introduction and market development of signal chain chips, magnetic induction chips, PMU and other related businesses. Each specific investment is necessary and reasonable, as follows:
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(1) In-depth research and development and industrialization of signal chain chips.
① The necessity and rationality of in-depth research and development and industrialization of signal chain chips.
A. Signal chain chips are an important part of analog chips. Analog chips with broad market space can be divided into two categories according to their functions: power management chips and signal chain chips. Among them, signal chain chips account for about 47% of the market size of analog chips and are an important part of analog chips. Signal chain chips, including amplifiers, comparators and data conversion chips, are mainly responsible for converting sound, temperature, optical signals or electromagnetic waves received by various sensors into digital signals, which are widely used in consumer electronics, industry and many other fields. With the upgrading of 5G technology, the types and quantity of signal chain chips of mobile phones and base stations have increased simultaneously. According to ICInsights data, the global market size of signal chain chips will increase from $8.4 billion in 2016 to $11.8 billion in 2025, with an average compound annual growth rate of about 5.00%, and the market space is broad. B. In-depth R&D and industrialization of signal chain chips is an important strategic layout of the company. After years of technology and product accumulation, at present, the company has many products in the field of signal chain chips, such as signal processing chips, analog-to-digital conversion, digital-to-analog conversion, audio amplification and sound effect circuits, operational amplifier chips, level shift and level detection circuits. During the reporting period, the company’s signal chain chip products maintained steady development.
The signal chain chip market is widely used. The company’s in-depth research and development and industrialization of the signal chain chip business will help to increase new performance growth points on the basis of the power management chip platform, which is an important strategic deployment for the company to eventually become a world-class analog chip supplier. Although the company has accumulated some technologies and products in the field of signal chain chips, it is limited by R&D investment. At present, most of them are general products in the field of consumer electronics applications, and there are few types of products, but it needs to further enrich the product series, expand the application fields and gradually establish a dominant position in the field of signal chain chips.
② Specific arrangements for in-depth R&D and industrialization of signal chain chips
After the raised funds are in place, the company plans to use the development reserve funds from 2021 to 2025.
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On the basis of existing technologies and products, it is mainly used in the research and development of signal chain chip products such as high-precision operational amplifiers, industrial instrument amplifiers, high-precision analog-to-digital conversion and various switches. Compared with the company’s existing signal chain products, the future research and development products are more abundant, and the performance indicators and application fields are quite different.
To sum up, the signal chain chip has a broad market space and is an important strategic layout of the company; The company has accumulated some technologies and products in the field of signal chain chips, but it needs to be further strengthened. The company will use the development reserve funds for personnel training, product research and development, market development, etc. of the signal chain chip business, thus forming a product series with more complete varieties and applications, and the relevant arrangements are necessary and reasonable.
(2) R&D and industrialization of magnetic induction chip series.
① Necessity and rationality of R&D and industrialization of magnetic induction chip series
A, the market maintains strong demand for magnetic induction chips.
Magnetic induction chip refers to the magnetic sensor and control module based on Hall effect, which can be used in various applications related to magnetic field. Because of its non-contact, low power consumption, high response frequency, high detection accuracy, good reliability and long service life, it can be used for distance/position/angle detection and contactless switch, and is widely used in portable equipment, industrial automation, detection technology, positioning system and other fields. Taking consumer electronic products such as mobile phones and wearable devices as examples, magnetic induction chips can be used for camera lens telescopic position sensing, mobile phone flip detection, mobile phone magnetic proximity sensing and so on.
With the complexity of downstream application environment, the demand for non-contact motion and distance detection has greatly increased, and the market has maintained a strong demand for magnetic induction chips, which has become a huge market segment.
B, the company has made some progress in the research and development of magnetic induction chips, but it still needs to be further strengthened.
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Hall chip is a kind of magnetic induction chip. In 2018, the company developed two Hall chips suitable for mobile phones, TWS headsets and other products, and successfully sold them in batches to customers such as Samsung Electronics. During the reporting period, the sales scale increased rapidly.
Although the company has made some progress in the research and development of magnetic induction chips, the product categories are relatively single and the application fields are limited. Facing the vast downstream market space, the company still needs to further strengthen the research and development of magnetic induction chips, continuously enrich the product range and improve the product performance, thus providing new performance growth points for the company.
② Specific arrangement of research and development of magnetic field induction chip series
After the raised funds are in place, the company plans to use the development reserve fund of 30 million yuan from 2021 to 2025 to increase the research and development of magnetic field induction chip series products, focusing on the research and development of linear Hall chips, three-dimensional Hall chips, geomagnetic induction chips and other products. Compared with the company’s existing Hall chip products, the future research and development products will have more complete types and functions and wider application fields.
The in-depth research and development of magnetic induction chip series will gradually consolidate the technology, product achievements and customer channels formed by the company on magnetic induction chip products, and form a perfect product series with potential.
To sum up, magnetic induction chips are widely used and have a broad market space; The company has made some progress in the research and development of magnetic induction chips, but it still needs to be further strengthened. The company will use the project funds for the research and development of magnetic induction chip products, the absorption of technical talents in related fields, market development, etc., thus forming a perfect product series, and the relevant arrangements are necessary and reasonable.
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(3) Research and development and industrialization of power management unit (PMU)
① Necessity and rationality of research and development and industrialization of power management unit (PMU)
A, PMU represents the comprehensive strength in the field of power management, and it is one of the important development goals of power management chip design enterprises. PMU is a highly integrated power management scheme, which greatly improves power efficiency, prolongs battery working time, simplifies design and saves space by integrating various power management functions. Although all kinds of subdivided power management chips have advantages in flexibility and pertinence, highly integrated power management unit (PMU) has been widely used with the demand of light and thin terminal electronic products. PMU not only requires design enterprises to master the R&D and design of various power management sub-products, but also requires them to have a high degree of integration ability, which is an important embodiment of power management integration and represents the comprehensive strength of power management chip design enterprises. At present, only a few enterprises at home and abroad, such as TI, ON Semi and Huawei Hisilicon, have high-performance and large-scale PMU R&D capabilities.
Therefore, PMU represents the comprehensive strength in the field of power management and has a large market space, which is one of the important development goals of power management chip design enterprises.
B, the company has formed various infrastructure of integrated power management unit, which has laid a technical and product foundation for the research and development and industrialization of PMU.
The company has been deeply involved in the field of power management chips for nearly 20 years, and has developed and formed a variety of products including power conversion chips, power protection chips, display drive circuits, etc., covering a series of products such as LDO, charging management, OVP, TVS, load switches, current limiting switches, etc., and has provided integrated products such as multi-channel power supplies, laying a technical and product foundation for the research and development and industrialization of PMU.
In addition, with the intensification of market competition, the research and development and industrialization of PMU is an important plan to give full play to the company’s good layout advantages in the field of power management and open the gap with competitors.
② Specific arrangements for research and development and industrialization of PMU.
From 2022 to 2025, the company plans to further strengthen the technology and product reserves of various power management chips needed by PMU, and further research and innovation in integration, so as to start the production of PMU.
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Product research and development and industrialization. After the raised funds are in place, the company plans to use the development reserve funds of 50 million yuan for the technical research and development, talent introduction and market development of the PMU and related products mentioned above.
To sum up, PMU represents the comprehensive strength in the field of power management and is one of the important development goals of power management chip design enterprises; The company has formed all kinds of infrastructure of integrated power management unit, laying a technical and product foundation for PMU research and development and industrialization. The company will use the development reserve funds for the research and development and industrialization of PMU and related products, and the relevant arrangements are necessary and reasonable.
3. The scale of funds matches the capital demand of specific investment projects.
From the above (1) and (2), it can be seen that the development reserve funds will be invested in signal chain chips, magnetic induction chips, PMU and other directions, and the market space is broad, and it is highly correlated with the company’s development strategic planning, so it is urgent for the company to further strengthen R&D investment. At present, the company mainly carries out R&D activities in the field of power management chips such as power conversion, power management and display driver. Although there are certain technologies and products accumulated in signal chain chips, magnetic induction chips and PMU, the R&D efforts are limited. It is also necessary to absorb mature experience, improve technical level, enrich product lines and increase market development through the introduction of outstanding technical talents, which also requires greater financial support.
To sum up, combined with the company’s strategic development planning, as well as the necessity and specific arrangements in signal chain chip, magnetic induction chip, PMU R&D and industrialization, the fund scale of the company’s development reserve project matches the fund demand of specific investment projects.
4. Manage the operation arrangement
The Company has formulated the Management System for the Use of Raised Funds in accordance with the Measures for the Management of Raised Funds of Listed Companies of Shanghai Stock Exchange and other relevant laws and regulations and the Articles of Association, which clearly stipulates the storage, use and management of raised funds.
After the product R&D funds are in place, the company’s strategy committee will put forward reasonable suggestions for the company’s development reserve projects in combination with the market development trend, the company’s development strategy, product development planning, and talent training programs. The company will strictly implement the application and approval procedures for raised funds, and use the funds for technology, product development and talent reserve in a wider field according to the actual needs of business development.
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Third, the future development plan
(A) the company’s strategic planning
The issuer has been engaged in the research and development and sales of analog chips for a long time, mainly providing customers with efficient power management solutions through high-performance and high-reliability power management chips, and actively developing and promoting other types of products such as intelligent networking delay management units and signal chain chips. Based on its market position in consumer electronics applications such as mobile phones, the company will continue to develop a full range of high-quality power management chips and continue to lay out the signal chain chip market, guided by market demand and technological frontier trends. In the future, the company will strive to build a leading power management chip technology platform and eventually become a world-class analog chip supplier.
(2) Measures taken to achieve strategic objectives during the reporting period and their implementation effects.
1. High-quality customer resources and broad application fields.
With profound technical accumulation, excellent R&D innovation capability and product series with outstanding performance and reliable quality, the company has accumulated a certain brand reputation in the market competition, and through customized and differentiated services, it has formed a high-quality terminal customer base including Samsung, customer A, Xiaomi, LG and Wentai, laying a foundation for the company’s market position in the field of consumer electronics such as mobile phones. In addition, based on the cooperation in the field of mobile phones, the company gradually entered other business sectors such as customer wearable devices, household appliances and automotive electronics. The company’s achievements in the development of customers and applications have laid the foundation for the implementation of the company’s strategic planning.
2, technical innovation and quality control system construction
During the reporting period, around the development trend of power management chips such as low noise, high efficiency, miniaturization and integration, the company independently developed and formed core technologies such as EOS rapid suppression and release technology, low noise and high power ripple suppression technology, accurate current and voltage detection and charging management technology, intelligent power supply switching and management technology for complex multi-power systems in many directions such as EOS protection, low noise, high precision and integration, which were reflected in a large number of functional modules IP. In practice, the company has continuously accumulated and optimized the function module IP, upgraded the design platform, and maintained the practicality and advancement of the technical system. In addition, the company adopts advanced quality management concepts, implements strict and perfect control processes in R&D and production, and runs a high-standard quality control system through product design and production. The construction of the above-mentioned technical innovation system and quality control system enables the company to continuously
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Enhance the core competitiveness of products and lay a technical foundation for the realization of strategic planning.
(3) Measures planned for the future
1, continue to carry out technological innovation and product development.
Based on the market and customer demand, the company will continue to conduct in-depth research, and gradually plan and carry out research and development of new technologies in combination with technology development trends and industry evolution in downstream application fields.
(1) Strengthen the research and development of high-precision weak magnetic field induction, high-efficiency and high-precision programmable charging, high-precision battery capacity, intelligent management and high-frequency transmission, and open up the application fields of products such as magnetic field detection switches, fast charging and high-current switch charging circuits, and high-speed communication circuits;
(2) Focus on strengthening the research and development of DC/DC products with high current and low power consumption, consolidate their good market foundation in wearable devices and other fields, and expand their applications in communication base stations and industrial electronics;
(3) The company has formed various basic structures of integrated power management unit, and will conduct in-depth research and innovation on integration in the future, launch a power management unit (PMU) with integrated multi-channel power supply scheme, and gradually realize a monolithic power management system chip;
(4) Carry out research and development in the direction of extremely low noise technology and high bandwidth radio frequency technology, and develop radio frequency chips for communication equipment, wireless communication equipment and other fields.
Through the development of new technologies, the company will continue to expand product categories, improve product performance and provide customers with better and more complete products.
2. Continue to explore the market.
The company has always been adhering to the concept of technological innovation-driven, expanding product categories and improving product performance through independent innovation. Based on its market position in the domestic consumer electronics field, the company will devote itself to developing analog chips with international competitiveness in performance, stability and reliability, and use high-quality well-known customer resources at home and abroad to expand its business scale, strengthen brand building, and strive to enhance its market position and influence in the field of analog chips at home and abroad. In addition, in addition to consumer electronics such as mobile phones and wearable devices, the company will actively respond to market demand and continue to strengthen its layout in other application fields such as automotive electronics, network communication and industrial electronics.
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3, excellent talent training and introduction plan
In the future, the company will expand the channels of talent introduction, increase the training of talents, and introduce outstanding technical talents and management talents in the IC design industry. In terms of personnel training, the company continuously improved the personnel training system, supplemented by internal regular training and external training, and planned to cultivate a group of excellent integrated circuit design and management talents with strong professional ability and rich experience, and fully mobilized the enthusiasm and creativity of employees through multi-level incentive mechanism; As for the introduction of external talents, after listing, the company will adopt diversified incentives to increase the introduction of external talents, especially industry technical experts and high-end talents with outstanding management experience, so as to maintain the competitiveness of core talents.
4. Diversified financing and mergers and acquisitions
This issuance and listing of the company will provide sufficient financial support for the company’s subsequent development. The company will seriously organize the implementation of investment projects with raised funds, promote the growth of economic benefits, and actively give back to investors. In the future, according to the needs of strategic planning, the company will actively expand financing channels by using financing tools in the capital market to meet the capital needs of the company in its rapid development. While maintaining endogenous development, the company will take the opportunity to acquire chip design enterprises with high technical level and core competitiveness at home and abroad, so as to further expand the company’s technology portfolio, improve the solution ability in application fields and expand the target market, and effectively enhance the core competitiveness and sustainable development ability.
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Section 10 Investor Protection
I. Main arrangements for investor management
In order to standardize the information disclosure behavior of the company and related obligors and fully protect the legitimate rights and interests of investors, especially small and medium-sized investors, the company has formulated perfect information disclosure management system and investor relations management system in accordance with the Company Law, Securities Law and other relevant laws and regulations.
(1) Establish and improve the information disclosure system and process.
On April 22nd, 2020, the Company convened the 9th meeting of the 4th Board of Directors to review and approve the Information Disclosure Management System, which stipulated in detail the principles and contents of information disclosure, information disclosure standards, internal management of information transmission and disclosure, auditing and disclosure procedures, division of responsibilities for information disclosure, confidentiality measures and other matters. This system helps to strengthen the information communication between issuers and investors, improve the standard operation and corporate governance level, and effectively protect the legitimate rights and interests of investors.
According to the Information Disclosure Management System, the chairman of the board is the first person responsible for the company’s information disclosure, the secretary of the board of directors is the main person responsible for the information disclosure, responsible for managing the company’s information disclosure affairs, and the securities affairs representative assists the secretary of the board of directors; In addition to the announcement of the board of supervisors, the information disclosed by the company shall be released in the form of the announcement of the board of directors. Directors, supervisors and senior management personnel shall not release the undisclosed information of the company without the written authorization of the board of directors. In addition, the following review procedures should be strictly implemented before information disclosure: the person in charge of the department providing the information should carefully check the relevant information; The secretary of the board of directors conducts compliance review; Issued by the chairman.
(B) the establishment of investor communication channels
The Company has set up an office of the Secretary of the Board of Directors to be responsible for information disclosure and investor relations, with the Secretary of the Board of Directors as the direct person in charge of information disclosure. The contact information is as follows:
Secretary of the Board of Directors: Mao Chenglie
Tel: 0510-85217779
Fax: 0510-80297981
Company Website: http://www.etek.com.cn.
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Email: maocl@etek.com.cn
(3) Planning for the management of investors in the future
In order to strengthen the information communication between the company and investors, and form a long-term, stable and harmonious benign interactive relationship between the company and investors, the company convened the ninth meeting of the fourth board of directors on April 22, 2020 to review and approve the Investor Relations Management System.
The main ways for the company to communicate with investors include but are not limited to: regular reports and temporary announcements, annual report briefing, shareholders’ meeting, company website, one-on-one communication, mailing materials, telephone consultation, on-site visits, analyst meetings and roadshows.
The responsibilities of the company’s investor relations management mainly include: (1) analysis and research. Statistical analysis of the number, composition and changes of investors and potential investors; Continue to pay attention to all kinds of information such as opinions, suggestions and reports of investors and the media and feed them back to the board of directors and management of the company in time; (2) communication and contact. Integrate the information required by investors and publish it; Hold meetings and roadshows such as analyst briefing sessions, and accept consultations from analysts, investors and the media; Receive investors’ visits, maintain regular contact with institutional investors and small and medium-sized investors, and improve investors’ participation in the company; (3) Public relations. Establish and maintain good public relations with stock exchanges, trade associations, media and other companies and related institutions; Cooperate with relevant departments of the company to propose and implement effective treatment plans after major events such as litigation, major restructuring, changes in key personnel, stock trading changes and major changes in the business environment, and actively safeguard the company’s public image; (4) other work that is conducive to improving investor relations.
The Company will earnestly carry out the construction, management and maintenance of investor relations in accordance with the Investor Relations Management System, continuously improve the professionalism of investor relations management, strengthen the good interaction between the Company and investors, deepen investors’ understanding of the Company, and effectively protect the legitimate rights and interests of public investors.
II. Dividend distribution policy and actual distribution
(I) actual dividend distribution of the company during the reporting period
On May 26, 2018, the company held the 2017 annual general meeting of shareholders, and distributed a total cash dividend of RMB 10 million to all shareholders based on the total share capital of 48 million shares.
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On May 25, 2019, the company held the 2018 annual general meeting of shareholders, and distributed a total cash dividend of RMB 10 million to all shareholders based on the total share capital of 48 million shares. On February 12, 2020, the company held the first extraordinary general meeting of shareholders in 2020, and distributed a total cash dividend of 20 million yuan to all shareholders based on the total share capital of 48 million shares.
(2) Dividend distribution policies and decision-making procedures after the completion of this issuance and listing.
In order to fully consider the interests of all shareholders, according to the Articles of Association of Wuxi Lixin Microelectronics Co., Ltd. (Draft) reviewed and adopted by the company’s shareholders’ meeting, the dividend distribution policy after this issuance is as follows:
1, the principle of profit distribution
Pay full attention to the immediate and long-term interests of shareholders, and at the same time take into account the company’s current financial situation and sustainable development; Fully listen to and consider the opinions of minority shareholders, independent directors and supervisors. Under the premise of conforming to the principle of profit distribution and ensuring the normal operation and long-term development of the company, the company should pay attention to cash dividends.
2. Profit distribution mode
The company distributes profits in cash, stock or a combination of cash and stock, and gives priority to cash distribution; The use of stock dividends for profit distribution should have real and reasonable factors such as company growth and dilution of net assets per share.
3. Conditions and proportion of cash dividends
The company made a profit in the current year, and the distributable profit realized in that year (that is, the after-tax profit after making up the loss, withdrawing the statutory reserve fund and withdrawing any reserve fund) is positive. Under the condition that the cash dividend still meets the capital demand of normal production and operation, and there is no major investment plan or major capital expenditure, the company will distribute the profit at least once a year. In principle, the profit distributed by the company in cash every year is not less than 10% of the distributable profit realized in that year.
The board of directors of the company shall comprehensively consider the characteristics of the industry, development stage, its own business model, profitability and whether there are major capital expenditure arrangements, distinguish the following situations, and put forward differentiated cash dividend policies in accordance with the procedures stipulated in the company’s articles of association:
(1) The company’s development stage is mature and there is no major capital expenditure arrangement. When making profit distribution, it is now
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The proportion of gold dividends in this profit distribution should be at least 80%;
(2) The development stage of the company is mature and there are major capital expenditure arrangements. When making profit distribution, the proportion of cash dividends in this profit distribution should reach at least 40%;
(3) If the company’s development stage is in the growth stage and there are major capital expenditure arrangements, or the company’s development stage is not easy to distinguish but there are major capital expenditure arrangements, when making profit distribution, the proportion of cash dividends in this profit distribution should reach at least 20%.
4. Period interval of profit distribution
According to the company’s operation, the company will distribute dividends once every fiscal year in principle, and the profit distribution plan of the previous year is usually reviewed at the annual general meeting of shareholders; On the premise of meeting the capital needs of daily operations, major investment plans that can be expected or major cash expenditures, the board of directors of the company may make interim dividends according to the current operating profit and cash flow of the company, and the specific plan shall be submitted to the shareholders’ meeting of the company for approval after being reviewed by the board of directors of the company.
5, the company’s profit distribution review procedures
When the company formulates the specific plan of cash dividend, the board of directors shall carefully study and demonstrate the timing, conditions and minimum proportion of cash dividend, adjustment conditions and decision-making procedures of the company, and independent directors shall express clear opinions.
Independent directors can solicit the opinions of minority shareholders, put forward dividend proposals and submit them directly to the board of directors for deliberation.
Before the shareholders’ meeting deliberates the specific plan of cash dividend, the company shall actively communicate and exchange with shareholders, especially minority shareholders, through various channels, fully listen to their opinions and demands, and promptly answer their concerns.
When the company distributes dividends or adjusts dividend distribution policies by combining stocks or cash stocks, it needs to be reviewed and approved by a special resolution at the company’s general meeting of shareholders.
6. Adjustment mechanism of the company’s profit distribution
If the company really needs to adjust the dividend distribution policy according to the capital demand of production and operation, major investment and development planning, the adjusted dividend distribution policy shall not violate the relevant provisions of the China Securities Regulatory Commission and the stock exchange; The proposal on adjusting the dividend distribution policy requires prior consultation with independent directors and the board of supervisors.
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The opinions can only be submitted to the shareholders’ meeting of the company for consideration after being reviewed and approved by the board of directors of the company, and the matter must be approved by more than 2/3 of the voting rights held by shareholders attending the shareholders’ meeting. In order to fully listen to the opinions of minority shareholders, the company should provide convenience for public shareholders to participate in the shareholders’ meeting by providing online voting, and independent directors can openly solicit the voting rights of minority shareholders when necessary. Where a shareholder of the company illegally occupies the company’s funds, the company shall deduct the cash dividend distributed by the shareholder to repay the funds occupied by him.
(3) Differences in dividend distribution policies before and after issuance
The dividend distribution policy stipulated in the Articles of Association (Draft) of Wuxi Lixin Microelectronics Co., Ltd. has made detailed provisions on profit distribution principles, profit distribution methods, conditions and proportions of cash dividends, profit distribution intervals, company profit distribution review procedures, and company profit distribution adjustment mechanism, etc., paying more attention to the immediate interests and long-term interests of shareholders, taking into account the company’s current financial situation and sustainable development, which is conducive to the company’s sustainable development.
Iii. Distribution arrangement of accumulated profits before this issuance
The Third Extraordinary General Meeting of Shareholders of the Company in 2020 held on June 12, 2020 passed a resolution that the undistributed profits accumulated before the initial public offering will be shared by the new and old shareholders in proportion to their shares after the initial public offering and listing of the company.
Iv. the establishment of the issuer’s shareholder voting mechanism
At present, the company has established a shareholder voting mechanism in accordance with the relevant provisions of the CSRC, in which the Articles of Association (Draft) stipulates the relevant arrangements for the cumulative voting system to elect directors and supervisors of the company. The Company guarantees the rights of investors, especially small and medium-sized investors, to participate in the company’s major decisions and choose managers by establishing and improving the cumulative voting system, individual counting of votes by small and medium-sized investors and online voting at shareholders’ meetings.
(A) cumulative voting mechanism
When the shareholders’ meeting votes on the election of directors and supervisors, the company shall protect the rights and interests of minority shareholders by means of cumulative voting.
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(B) Separate vote counting mechanism for small and medium investors.
When the shareholders’ meeting considers major issues affecting the interests of small and medium-sized investors, the votes of small and medium-sized investors shall be counted separately. The results of separate counting shall be publicly disclosed in a timely manner.
(III) Arrangements for online voting at the shareholders’ meeting
The shareholders’ meeting will be held in the form of on-site meeting. On the premise of ensuring the legality and effectiveness of the shareholders’ meeting, the company will also provide convenience for shareholders to participate in the shareholders’ meeting by providing internet or other means. Shareholders who attend the shareholders’ meeting in the above way shall be deemed to be present.
(4) Relevant arrangements for soliciting voting rights
The company’s board of directors, independent directors, shareholders who meet the relevant requirements or investor protection institutions established in accordance with laws, administrative regulations or the provisions of the the State Council securities regulatory authority may, as solicitors, publicly request shareholders of listed companies to entrust them to attend the shareholders’ meeting and exercise shareholders’ rights such as proposal rights and voting rights on their behalf. It is forbidden to publicly solicit shareholders’ rights in a paid or disguised way.
Five, the existence of special voting rights, agreement control structure or similar special arrangements to take measures.
The company does not have special voting rights, agreement control structure or similar special arrangements.
Vi. Important commitments of relevant institutions or personnel in this offering.
(1) Prior to this issuance, the shareholders’ commitment to restrict the sale of the shares held by them, voluntarily lock the shares, extend the lock-up period, and the shareholders’ intention to hold shares and reduce their holdings.
1. The investment commitment of Yijing, the controlling shareholder of the company:
"1. Within 36 months from the date of listing of the company’s shares, the company will not transfer or entrust others to manage the company’s shares held by the company, nor will the company buy back such shares.
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2. Within 6 months after listing, if the closing price of the shares for 20 consecutive trading days is lower than the issue price of the company’s initial public offering, or the closing price at the end of 6 months after listing (if that day is not a trading day, it is the first trading day after that day) is lower than the issue price of the company’s initial public offering, the lock-up period of the company’s shares will be automatically extended for 6 months. In case of ex-dividend or ex-dividend due to cash dividend, share delivery, capitalization of share capital, issuance of new shares, etc. after listing, the above-mentioned issue price shall be adjusted accordingly in accordance with the relevant regulations of China Securities Regulatory Commission and Shanghai Stock Exchange.
3. If the shares of the company held by this enterprise are reduced within two years after the lock-up period expires, it shall comply with the provisions of relevant laws, regulations and rules, including but not limited to the secondary market bidding trading mode, block trading mode, agreement transfer mode, etc., and the reduction price shall not be lower than the issue price of the company’s initial public offering of shares (if the ex-dividend or ex-dividend is carried out due to cash dividend, share bonus, share capital increase and new share issuance, it shall be in accordance with China Securities Regulatory Commission and Shanghai Securities Regulatory Commission.
4. Before the company reduces its holdings of the issuer’s shares, it shall submit to the issuer five trading days in advance the reasons for the reduction, the reduction quantity, the future reduction plan and the explanation of the impact of the reduction on the corporate governance structure and going concern, and notify the issuer three trading days in advance and make an announcement, and timely and accurately fulfill its information disclosure obligations in accordance with the rules of the Shanghai Stock Exchange, except when the company holds less than 5% of the issuer’s shares.
5. If the relevant laws, regulations, normative documents and regulations of Shanghai Stock Exchange on which this enterprise made the above commitments are revised, or new laws, regulations, normative documents and regulations of Shanghai Stock Exchange are promulgated, this enterprise will implement them according to relevant requirements. "
2. The actual controllers Yuan Minmin, Mao Chenglie, Zhou Baoming, Wa Donghui, Sean, Tang Dayong, Wang Dong and Wang Fang promise:
"1. Within thirty-six months from the date of listing of the company’s shares, I will not transfer or entrust others to manage the company’s shares directly or indirectly held by me before this issuance, nor will I be repurchased by the company.
2. If the shares of the company I hold are reduced within two years after the lock-up period expires, it shall comply with the provisions of relevant laws, regulations and rules, including but not limited to the secondary market bidding transaction mode, block transaction mode, agreement transfer mode, etc., and the reduction price shall not be lower than the issue price of the company’s initial public offering of shares (if the ex-dividend or ex-dividend is carried out due to reasons such as cash dividend, share delivery, capitalization and new share issuance, it shall be in accordance with China Securities Regulatory Commission and Shanghai Securities.
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3. Within 6 months after listing, if the closing price of the shares for 20 consecutive trading days is lower than the issue price of the company’s initial public offering, or the closing price at the end of 6 months after listing is lower than the issue price of the company’s initial public offering, the lock-up period of the company’s shares will be automatically extended for 6 months. In case of ex-dividend or ex-dividend due to cash dividend, share delivery, capitalization of share capital, issuance of new shares, etc. after listing, the above-mentioned issue price shall be adjusted accordingly in accordance with the relevant regulations of China Securities Regulatory Commission and Shanghai Stock Exchange.
4. If the relevant laws, regulations, normative documents and regulations of Shanghai Stock Exchange on which I made the above commitments are revised, or new laws, regulations, normative documents and regulations of Shanghai Stock Exchange are promulgated, I will implement them according to the relevant requirements.
5. During my tenure as a director and senior manager, I (Yuan Minmin, Mao Chenglie, Wang Dong, Sean, Zhou Baoming) will declare the shares of the company directly or indirectly held by me and their changes. During my tenure, I will transfer no more than 25% of the total shares of the company directly or indirectly held by me every year; As a director and senior manager of the company, I will not transfer the shares of the company directly or indirectly held by me within six months after leaving the company.
6. During my tenure as a core technician, the pre-IPO shares held by me shall not exceed 25% of the total pre-IPO shares held by me directly or indirectly when the company goes public within four years from the date of expiration of the restricted sale, and the reduction ratio can be used cumulatively; I will not transfer the pre-IPO shares directly or indirectly held by me within six months after my resignation. "
3. The company’s shareholders Juyuan Juxin and Su Min Toujunxin promise:
"1. Within 36 months from the date of listing of the company’s shares, the company will not transfer or entrust others to manage the company’s shares held by the company, nor will the company buy back such shares.
2. If the relevant laws, regulations, normative documents and regulations of Shanghai Stock Exchange on which this enterprise made the above commitments are revised, or new laws, regulations, normative documents and regulations of Shanghai Stock Exchange are promulgated, this enterprise will implement them according to relevant requirements. "
4. Shareholders holding more than 5% of the shares of the Company promise:
"1. Within 12 months from the date of listing of the company’s shares, the company will not transfer or entrust others to manage the company’s shares held by the company, nor will the company buy back these shares.
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2. If the issuer’s shares held by this enterprise are reduced after the lock-up period expires, the reduction method, price and reduction.
The procedures must strictly abide by the provisions of relevant laws, regulations and normative documents on shareholding reduction and information disclosure. If the provisions of relevant laws, regulations and normative documents on matters related to the reduction of shares change, the relevant provisions shall prevail.
3. Before the company reduces its holdings of the issuer’s shares, it shall submit to the issuer five trading days in advance the reasons for the reduction, the reduction quantity, the future reduction plan and the explanation of the impact of the reduction on the corporate governance structure and going concern, and notify the issuer three trading days in advance and make an announcement, and timely and accurately fulfill its information disclosure obligations in accordance with the rules of the Shanghai Stock Exchange, except when the company holds less than 5% of the issuer’s shares.
4. If the relevant laws, regulations, normative documents and regulations of Shanghai Stock Exchange on which this enterprise made the above commitments are revised, or new laws, regulations, normative documents and regulations of Shanghai Stock Exchange are promulgated, this enterprise will implement them according to relevant requirements. "
5. Other shareholders of the Company promise:
"1. After the company has registered its initial public offering of shares with the consent of China Securities Regulatory Commission, the company will not transfer or entrust others to manage the company’s shares within 12 months from the date of listing of the company’s shares, nor will the company buy back the shares.
2. If the relevant laws, regulations, normative documents and regulations of Shanghai Stock Exchange on which this enterprise made the above commitments are revised, or new laws, regulations, normative documents and regulations of Shanghai Stock Exchange are promulgated, this enterprise will implement them according to relevant requirements. "
6. Dong Hong, the company’s senior manager, promises:
"1. I will not transfer or entrust others to manage the shares of the company directly or indirectly held before this issuance within 12 months from the date of listing and trading of the company’s shares on the Shanghai Stock Exchange, nor will I be repurchased by the company.
2. During my tenure as a senior manager of the company, I will declare to the company the shares of the company directly or indirectly held by me and their changes. During my tenure, I will transfer no more than 25% of the total shares of the company directly or indirectly held by me every year; As a senior manager of the company, I will not transfer the shares of the company directly or indirectly held by me within six months after leaving the company.
3, I directly or indirectly hold the company’s shares within two years after the expiration of the lock-in, the reduction price.
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Not less than the issue price of the company’s initial public offering of shares (if the ex-dividend or ex-dividend is carried out due to the distribution of cash dividends, share delivery, capitalization, issuance of new shares, etc., it shall be adjusted accordingly in accordance with the relevant regulations of China Securities Regulatory Commission and Shanghai Stock Exchange).
4. If the closing price of the company’s shares for 20 consecutive trading days is lower than the issue price of the company’s initial public offering within 6 months after listing (if the ex-dividend and ex-dividend are carried out due to cash dividends, share delivery, capitalization, issuance of new shares, etc., the relevant regulations of China Securities Regulatory Commission and Shanghai Stock Exchange shall be adjusted accordingly), or if the closing price at the end of 6 months after listing is lower than the issue price of the company’s initial public offering, the lock-up period for holding the company’s shares will be automatically extended for 6 months. In case of ex-dividend or ex-dividend due to cash dividend, share offering, capitalization of share capital, issuance of new shares, etc., the above-mentioned issue price will be adjusted accordingly in accordance with the relevant regulations of China Securities Regulatory Commission and Shanghai Stock Exchange.
5. If the relevant laws, regulations, normative documents and regulations of Shanghai Stock Exchange on which I made the above commitments are revised, or new laws, regulations, normative documents and regulations of Shanghai Stock Exchange are promulgated, I will implement them according to the relevant requirements. "
7. Company supervisors Xia Yongjie and Wu Min promise:
"1. I will not transfer or entrust others to manage the shares of the company directly or indirectly held before this issuance within 12 months from the date of listing and trading of the company’s shares on the Shanghai Stock Exchange, nor will I be repurchased by the company.
2. During my tenure as a supervisor of the company, I will declare to the company the shares of the company directly or indirectly held by me and their changes. During my tenure, I will transfer no more than 25% of the total shares of the company directly or indirectly held by me every year; As a supervisor of the company, I will not transfer my shares in the company within six months after leaving my post.
3. If the relevant laws, regulations, normative documents and regulations of Shanghai Stock Exchange on which I made the above commitments are revised, or new laws, regulations, normative documents and regulations of Shanghai Stock Exchange are promulgated, I will implement them according to the relevant requirements. "
8. The company’s core technicians Wang Guopeng, Wu Xiangjun, Liu Yu, Wu Min, Xia Yongjie, shi bo and Sun Sibing promise:
"1. I will not transfer the company’s shares within twelve months from the date of listing and trading on the Shanghai Stock Exchange.
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Let or entrust others to manage the shares of the company directly or indirectly held before this issuance, and the company will not buy back the shares.
2. I will not transfer the pre-IPO shares directly or indirectly held by me within six months after my resignation.
3. The pre-IPO shares held by me shall not exceed 25% of the total pre-IPO shares held by me directly or indirectly at the time of listing within four years from the expiration of the restricted sale period, and the reduction ratio can be used cumulatively.
4. If the relevant laws, regulations, normative documents and regulations of Shanghai Stock Exchange on which I made the above commitments are revised, or new laws, regulations, normative documents and regulations of Shanghai Stock Exchange are promulgated, I will implement them according to the relevant requirements. "
(2) Commitment on the stability of the stock price
1. Conditions for starting stock price stabilization measures
Within 36 months from the date of listing of the company’s shares, if there is a closing price for 20 consecutive trading days (if the closing price is not comparable to the net assets per share due to ex-rights, ex-interest, etc.), the closing price will be adjusted according to the relevant regulations of the Shanghai Stock Exchange. The same below) are all lower than the audited net assets per share of the company at the end of the latest period (net assets per share = total equity of common shareholders belonging to the parent company in the consolidated financial statements ÷ total shares of the company at the end of the period, the same below). In order to safeguard the interests of shareholders, enhance investor confidence and maintain the stability of the company’s stock price, the company, controlling shareholders, directors (excluding independent directors and directors who have not received remuneration from the issuer) and senior management promised to start stock price stabilization measures in accordance with this plan.
2. Specific measures and implementation procedures for stock price stability.
When the conditions for starting stock price stabilization measures (hereinafter referred to as "conditions") are met, the company shall, within five trading days, negotiate with the controlling shareholders, directors and senior managers in accordance with the laws and regulations in force at that time and the stock price stabilization plan, and put forward specific plans for stabilizing the company’s stock price in the following order and implement them. After the implementation of stock price stabilization measures, the company’s equity distribution shall meet the listing conditions.
(1) The company repurchases shares from public shareholders in a trading manner permitted by laws and regulations (hereinafter referred to as "the company repurchases shares").
The company shall convene a board meeting within 5 trading days from the date when the conditions are met to discuss the company’s proposal to the public.
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The plan for shareholders to buy back shares of the company shall be implemented and announced after being submitted to the shareholders’ meeting for deliberation and approval.
The company will buy back shares from public shareholders by trading methods and procedures permitted by laws and regulations, and the amount of funds used to buy back shares at a time shall not exceed 80% of the net profit attributable to the owners of the parent company in the previous fiscal year. The company’s funds for repurchasing shares are its own funds, and the price of repurchased shares shall not exceed the audited net assets per share at the end of the latest period.
(2) The controlling shareholder increases the company’s shares.
After the company completes the repurchase of public shares according to the stock price stabilization measures, the closing price of the company’s shares for three consecutive trading days is still lower than the company’s audited net assets per share at the end of the latest period, or the company cannot implement the stock price stabilization measures, the controlling shareholder of the company will submit an increase plan to the company within three trading days after the above situation occurs and announce it, and begin to implement the plan to increase the company’s shares three trading days after the company’s announcement.
The price of the controlling shareholder’s shareholding in the company is not higher than the audited net assets per share of the company at the end of the latest fiscal year, and the amount of funds used to increase the shareholding is not less than 30% of the cash dividend received by the controlling shareholder from the joint-stock company in the latest fiscal year, and does not exceed 50 million yuan.
After the controlling shareholder increases its shareholding in the company, the equity distribution of the company shall meet the listing conditions. The controlling shareholder of a company shall increase its shareholding in accordance with the provisions of relevant laws and regulations.
(3) Directors (excluding independent directors and directors who have not received remuneration from the issuer, the same below) and senior management personnel increase their holdings.
After the controlling shareholder completes the increase of the company’s shares according to the stock price stabilization measures, the closing price of the company’s shares for three consecutive trading days is still lower than the audited net assets per share of the company at the end of the latest period, or the company cannot implement the stock price stabilization measures. Directors and senior managers of the Company (including directors and senior managers who have not taken up their posts at the time of signing this plan or will be newly hired in the future) will submit an increase plan to the Company within three trading days after the above situation occurs and increase their holdings of the Company’s shares through trading methods permitted by laws and regulations. The purchase price shall not be higher than the audited net assets per share of the Company at the end of the latest period, and the amount used by directors and senior managers to purchase shares shall not be lower than 20% of the after-tax remuneration received by the Company’s directors and senior managers in the previous fiscal year.
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3. Conditions for terminating the stock price stabilization scheme
When the company’s share price has not met the conditions for starting the measures to stabilize the company’s share price, or the continued implementation of the stock price stabilization plan will lead to the company’s equity distribution not meeting the listing conditions, the implementation of the stock price stabilization plan may be terminated.
4. Promises of the issuer, controlling shareholder, directors and senior management on stabilizing the stock price.
The issuer promises that the company will buy back the shares from the public shareholders in the way permitted by laws and regulations. If the company fails to fulfill its repurchase obligations, the company will publicly explain the specific reasons for its failure in the general meeting of shareholders and newspapers designated by the China Securities Regulatory Commission and apologize to the shareholders and public investors.
The issuer’s controlling shareholder promises that if the triggered measures to stabilize the company’s stock price involve the company’s controlling shareholder increasing the company’s stock, the company will unconditionally increase the company’s stock according to the company’s stock price stabilization plan; If the enterprise fails to fulfill its obligation to increase its holdings, the shares of the company held by the enterprise shall not be transferred until the corresponding measures to stabilize the stock price are taken and implemented according to the provisions of the stock price stabilization plan.
The issuer’s directors and senior managers promise that if the triggered measures to stabilize the company’s stock price involve the company’s directors and senior managers to increase their holdings of the company’s shares, they should unconditionally increase their holdings in accordance with the company’s stock price stabilization plan; If I fail to fulfill my obligation to increase my holdings, I will stop receiving salary from the company within 10 trading days from the date of the above-mentioned events, and my shares in the company shall not be transferred until I take corresponding stock price stabilization measures according to the provisions of the stock price stabilization plan and implement them.
5. Constraint measures that should be initiated but not initiated for stock price stabilization measures.
When the conditions for starting stock price stabilization measures are met, if the company, controlling shareholder, directors and senior management personnel fail to implement the above specific measures to stabilize stock prices, the company, controlling shareholder, directors and senior management personnel promise to accept the following binding measures:
(1) The company, controlling shareholders, directors and senior management personnel will publicly explain the specific reasons for non-performance at the company’s shareholders’ meeting and newspapers designated by the China Securities Regulatory Commission and apologize to the company’s shareholders and public investors.
(2) If the controlling shareholder fails to take the above specific measures to stabilize the stock price, the shares of the company held by the controlling shareholder shall not be transferred until the corresponding measures to stabilize the stock price are taken and implemented according to the provisions of the plan (except that the company’s stock price has not met the conditions for starting the measures to stabilize the company’s stock price).
(3) If the directors and senior managers fail to take the above specific measures to stabilize the stock price, they will be in the front.
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Within 10 trading days from the date of the above-mentioned events, the company will stop paying the salaries of directors and senior managers who have not fulfilled their commitments, and the shares of the company held by these directors and senior managers shall not be transferred until these directors and senior managers take corresponding stock price stabilization measures according to the provisions of the plan and implement them (except that the company’s stock price has not met the conditions for starting the measures to stabilize the company’s stock price).
(3) Commitment to undertake compensation or liability for compensation according to law
1. The issuer promises that
(1) There are no false records, misleading statements or major omissions in the application documents of the company’s initial public offering and listing in science and technology innovation board.
(2) If there are false records, misleading statements or major omissions in the application documents for initial public offering of shares and listing in science and technology innovation board, which cause investors to suffer losses in securities trading, the Company will compensate the investors according to law. After the above illegal facts are confirmed by China Securities Regulatory Commission, the Company will determine the investor’s losses according to the measurable economic losses directly suffered by the investors, or according to the method or amount confirmed by the securities regulatory authorities and judicial organs.
(3) If there are false records, misleading statements or major omissions in the company’s prospectus, which have a significant and substantial impact on judging whether the company meets the issuance conditions stipulated by law, the company will repurchase all new shares issued by the initial public offering according to law. The Company will convene the board of directors and issue a notice of convening an extraordinary shareholders’ meeting in accordance with relevant laws, regulations and the Articles of Association within 5 trading days from the date when the illegal act is determined by the competent authority or the court makes a relevant judgment to consider the specific repurchase plan.
If the company’s initial public offering of shares has been issued but not listed, the repurchase price shall be the issue price, plus the interest of bank deposits for the same period; If the company’s initial public offering shares have been listed, the repurchase price shall be determined on the basis of the company’s stock offering price and with reference to relevant market factors. If there are ex-dividend and ex-dividend issues in the company’s shares, such as stock offering, capitalization of capital reserve, etc., the repurchased shares include all new shares issued by the initial public offering and their derivative shares, and the repurchase price will be adjusted accordingly.
2. The controlling shareholder of the issuer promises that
(1) There are no false records, misleading statements or major omissions in the application documents of the company’s initial public offering of shares and listing in science and technology innovation board, and the company bears individual and joint responsibility for its authenticity, accuracy and completeness.
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Legal responsibility.
(2) If there are false records, misleading statements or major omissions in the application documents of the company’s initial public offering of shares and listing in science and technology innovation board, which cause investors to suffer losses in securities trading, the company will compensate the investors according to law. This enterprise will determine the investor’s losses according to the measurable economic losses directly suffered by the investors after the above illegal facts are identified by the China Securities Regulatory Commission, or according to the methods or amounts identified by the securities regulatory authorities and judicial organs.
(3) If there are false records, misleading statements or major omissions in the company’s prospectus, which have a significant and substantial impact on judging whether the company meets the issuance conditions stipulated by law, the company will repurchase the original restricted shares that have been transferred according to law.
If the company’s initial public offering of shares has been issued but not listed, the repurchase price shall be the issue price, plus the interest of bank deposits for the same period; If the company’s initial public offering shares have been listed, the repurchase price shall be determined on the basis of the company’s stock offering price and with reference to relevant market factors. If there are ex-dividend and ex-dividend issues in the company’s shares, such as stock offering, capitalization of capital reserve, etc., the repurchased shares include all new shares issued by the initial public offering and their derivative shares, and the repurchase price will be adjusted accordingly.
In the implementation of the above share repurchase, if there are other provisions in laws, regulations and normative documents, such provisions shall prevail.
3. The actual controller of the issuer promises that
(1) There are no false records, misleading statements or major omissions in the application documents of the company’s initial public offering and listing in science and technology innovation board, and I shall bear individual and joint legal responsibilities for its authenticity, accuracy and completeness.
(2) If there are false records, misleading statements or major omissions in the application documents of the company’s initial public offering of shares and listing in science and technology innovation board, which cause investors to suffer losses in securities trading, the company will compensate the investors according to law. I will determine the investor’s losses according to the measurable economic losses suffered by the investors directly or according to the way or amount determined by the securities regulatory authorities and judicial organs after the above illegal facts are identified by the China Securities Regulatory Commission.
(3) If there are false records, misleading statements or major omissions in the company’s prospectus, which have a significant and substantial impact on judging whether the company meets the issuance conditions stipulated by law, I will buy back the original restricted shares that have been transferred according to law.
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If the company’s initial public offering of shares has been issued but not listed, the repurchase price shall be the issue price, plus the interest of bank deposits for the same period; If the company’s initial public offering shares have been listed, the repurchase price shall be determined on the basis of the company’s stock offering price and with reference to relevant market factors. If there are ex-dividend and ex-dividend issues in the company’s shares, such as stock offering, capitalization of capital reserve, etc., the repurchased shares include all new shares issued by the initial public offering and their derivative shares, and the repurchase price will be adjusted accordingly.
In the implementation of the above share repurchase, if there are other provisions in laws, regulations and normative documents, such provisions shall prevail.
4. The directors, supervisors and senior management of the issuer promise that
(1) There are no false records, misleading statements or major omissions in the application documents of the company’s initial public offering and listing in science and technology innovation board, and I shall bear individual and joint legal responsibilities for its authenticity, accuracy and completeness.
(2) If there are false records, misleading statements or major omissions in the application documents of the company’s initial public offering of shares and listing in science and technology innovation board, which cause investors to suffer losses in securities trading, I will compensate the investors according to law. I will determine the investor’s losses according to the measurable economic losses suffered by the investors directly or according to the way or amount determined by the securities regulatory authorities and judicial organs after the above illegal facts are identified by the China Securities Regulatory Commission.
(3) If there are false records, misleading statements or major omissions in the company’s prospectus, which have a significant and substantial impact on judging whether the company meets the issuance conditions stipulated by law, I promise to urge the company to buy back all the new shares of the initial public offering according to law.
5. The sponsor institution promises that
Everbright Securities promises to compensate investors for losses caused by false records, misleading statements or major omissions in the documents produced and issued for the issuer’s initial public offering.
6. The issuer’s lawyer promises that
Guo Hao Law Firm (Nanjing) promises that if the legal documents produced and issued by this firm in science and technology innovation board for the issuer’s initial public offering contain false records, misleading statements or major omissions, which cause losses to investors, this firm will compensate investors according to law after these matters are determined according to law, unless it can be proved that this firm is not at fault.
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7. The issuer’s accountant promises that
Rongcheng Certified Public Accountants (special general partnership) promises that if the documents produced and issued by the firm for the initial public offering of shares for the issuer and listed in science and technology innovation board contain false records, misleading statements or major omissions, which cause losses to investors, it will compensate investors according to law after these illegal facts are identified.
8. The issuer’s asset appraisal institution promises that
Zhongjing Minxin (Beijing) Assets Appraisal Co., Ltd. (formerly known as Hubei Minxin Assets Appraisal Co., Ltd.) promises that if there are false records, misleading statements or major omissions in the Assets Appraisal Report (E-Xin Pingbao Zi (2008) No.0134) produced and issued by the company for the initial public offering of shares for the issuer and listed in science and technology innovation board, the company will, after these matters are determined according to law.
9, the issuer’s capital verification review commitment
Rongcheng Certified Public Accountants Co., Ltd. (special general partnership) promises that if the documents produced and issued by the firm for the issuer’s initial public offering and listing in science and technology innovation board contain false records, misleading statements or major omissions, which cause losses to investors, the firm will compensate investors according to law after these illegal facts are identified.
(four) share repurchase and share repurchase measures and commitments.
For details, please refer to the relevant contents of "VI. Important Commitments of the relevant institutions or personnel of this offering" and "III. Commitment to undertake compensation or liability for compensation according to law".
(five) measures and commitments to fill the diluted immediate return
1. Measures taken by the issuer to fill the diluted immediate return of this public offering.
The funds raised by this public offering will be used for the development of the company’s main business. As it will take some time for the raised funds to generate economic benefits, if the growth rate of the company’s net profit is lower than that of equity and net assets after the issuance, there is a risk that the issuer’s earnings per share and return on net assets will decline. The company intends to take various measures to reduce the impact of diluted immediate returns, but the above specific measures do not mean to guarantee the company’s future profits, as follows:
(1) Actively implement investment projects with raised funds to realize the return on investment as soon as possible.
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The issuer has conducted feasibility study and demonstration on the investment project of raised funds listed this time, which is in line with the development trend of the industry and the issuer’s future development plan. If the investment project of raised funds is successfully implemented, it will help improve the issuer’s profitability. Before this fundraising is in place, the company intends to actively raise funds through various channels, actively allocate resources, carry out preparatory work for fundraising projects, and enhance the talent and technical reserves related to the project; After the funds raised in this issuance are in place, the company will actively implement fundraising projects, continue to effectively use the raised funds and actively explore the market, so as to obtain the expected return on investment as soon as possible and reduce the risk of diluting the immediate return after listing.
(2) Vigorously expand the existing business and increase the company’s sustainable profitability.
With the advantages of technology, brand, products and customer resources accumulated in the industry for many years, the company has developed a number of stable and high-quality customers and formed a good market reputation. The company will continue to consolidate and deepen its technological advantages in core business, actively explore the market, and strive to improve the level of sales revenue and profit, so as to reduce the impact of diluted immediate returns.
(3) Strengthen management and internal control to improve operational efficiency.
At present, the company has established a relatively complete and sound internal control management system, which ensures the normal and orderly operation of the company’s various business activities. In the next few years, the company will further improve the management level and corporate governance level, improve and strengthen the implementation supervision, and effectively improve the company’s operating efficiency. In addition, the issuer will design a more reasonable fund use plan, refine various budgets and effectively control operating costs in daily operations.
(4) Strengthen the supervision of raised funds to ensure the reasonable and legal use of raised funds.
In order to standardize the management and application of the raised funds of the company and effectively protect the legitimate rights and interests of investors, the company has formulated the Management System for the Use of Raised Funds, which clearly stipulates the storage, use, supervision and accountability of raised funds. The company will strictly abide by the "Management System for the Use of Raised Funds" and other relevant regulations, use it according to the promised purposes, and cooperate with the supervision banks and sponsors to inspect and supervise the use of raised funds.
(5) further improve the profit distribution policy and strengthen the investor return mechanism.
In order to improve the company’s profit distribution policy, enhance the transparency of profit distribution, and protect the legitimate rights and interests of public investors, the company has formulated the Articles of Association (Draft) and the dividend return plan for shareholders within three years after listing according to the relevant regulations and regulatory requirements of China Securities Regulatory Commission, further improving the principles, methods, conditions, decision-making procedures and mechanisms of profit distribution.
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2. Commitments of the controlling shareholder, actual controller, directors and senior management of the issuer to the issuer’s measures to fill the return can be effectively fulfilled. The commitments of the controlling shareholder and actual controller of the issuer to the issuer’s measures to fill the return are as follows:
"1. This enterprise/I promise not to interfere with the company’s management activities beyond its authority and not to encroach on the company’s interests.
2. If the above commitments are inconsistent with the explicit provisions of China Securities Regulatory Commission on measures to fill returns and their commitments or fail to meet the relevant provisions, our company/I will make corresponding adjustments according to the latest regulations and regulatory requirements of China Securities Regulatory Commission.
3. As one of the responsible subjects of the compensation measures, if we violate the above commitments or refuse to fulfill them, we/I agree to impose relevant penalties or take relevant management measures in accordance with the relevant regulations and rules formulated or issued by securities regulatory agencies such as China Securities Regulatory Commission and Shanghai Stock Exchange. "
The commitments made by the directors and senior management of the issuer to the issuer’s compensation measures are as follows:
"1. I don’t transfer benefits to other units or individuals for free or under unfair conditions, nor do I harm the interests of the company by other means;
2. I restrain my daily duty consumption behavior;
3. I don’t use the company’s assets to engage in investment and consumption activities unrelated to performing my duties;
4. I will actively exercise my functions and powers to make the salary system formulated by the board of directors and the salary and appraisal committee of the company linked to the implementation of the company’s measures to fill the diluted immediate return;
5. If the company implements the equity incentive plan in the future, I will actively exercise my powers to ensure that the exercise conditions of the equity incentive plan are linked to the implementation of the company’s measures to fill the diluted immediate return.
If the above commitments are inconsistent with the clear provisions of China Securities Regulatory Commission on the measures to fill the return and its commitments or fail to meet the relevant provisions, I will make corresponding adjustments according to the latest regulations and regulatory requirements of China Securities Regulatory Commission.
As one of the responsible subjects of the measures to fill the return, if I violate or refuse to fulfill the above commitments, I agree to make or issue them according to the securities regulatory agencies such as China Securities Regulatory Commission and Shanghai Stock Exchange.
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The relevant provisions and rules, to make relevant punishment or take relevant management measures. "
(six) the commitment of the profit distribution policy
The company has formulated the dividend distribution policies and decision-making procedures of the company after the completion of this issuance and listing, and at the same time, the company promises that it will strictly abide by the Articles of Association of Wuxi Lixin Microelectronics Co., Ltd. which is applicable after listing, the dividend return plan for three years after listing reviewed and approved by the shareholders’ meeting, and the arrangement of profit distribution policies specified by other regulations reviewed and approved by the shareholders’ meeting of the company.
(seven) the commitment to buy back shares issued and listed by fraud.
The issuer’s commitment on the repurchase of fraudulently issued shares is as follows:
"1. Ensure that there is no fraudulent issuance in this public offering and listing in science and technology innovation board.
2. If the company does not meet the conditions for issuance and listing, and has been issued and listed by fraudulent means, the company will start the share repurchase procedure within five working days after confirmation by the China Securities Regulatory Commission and other competent departments to buy back all the new shares issued by the company this time. "
The commitment of the controlling shareholder of the issuer on the repurchase of fraudulently issued shares is as follows:
"1. Ensure that there is no fraudulent issuance in this public offering and listing in science and technology innovation board.
2. If the company does not meet the conditions for issuance and listing, and has been issued and listed by fraudulent means, the company will start the share repurchase procedure within five working days after confirmation by the China Securities Regulatory Commission and other competent departments to buy back all the new shares issued by the company this time. "
The commitments of the actual controller of the issuer regarding the repurchase of fraudulently issued shares are as follows:
"1. Ensure that there is no fraudulent issuance in this public offering and listing in science and technology innovation board.
2. If the company does not meet the conditions for issuance and listing, and has been issued and listed by fraudulent means, I will start the share repurchase procedure within five working days after confirmation by the China Securities Regulatory Commission and other competent departments, and buy back all the new shares issued by the company this time. "
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(8) Commitment on avoiding horizontal competition.
In order to protect the legitimate rights and interests of the company and other shareholders and creditors of the company, the controlling shareholder and actual controller of the company issued the Commitment on Eliminating or Avoiding Horizontal Competition, promising:
"1. As of the date of issuance of this letter of commitment, this enterprise/I have not directly or indirectly engaged in the business that competes with Lixin Micro in any way, nor have any shares, equity, capital contribution, etc. of other enterprises that compete with Lixin Micro or may compete with it in the same industry.
2. The company/company or other organization controlled by me will not engage in the development, production and sales of the same or similar products as the existing main products of Lixin Micro in any form inside and outside China, including companies or other economic organizations that do not invest, purchase or merge in and outside China to compete with the existing main business of Lixin Micro.
3. During the period when the Company/I is recognized as the controlling shareholder/actual controller of Lixin Micro by laws and regulations, if Lixin Micro further expands its products and business scope, the companies or other organizations controlled by the Company/I will not engage in business activities that compete with the expanded business areas of Lixin Micro in any form, including companies or other economic organizations that do not invest, acquire or merge in and outside China to compete with the expanded business of Lixin Micro.
4. If the company/company or other organization under my control has a competitive business with Lixin Micro, it will stop producing or operating the competitive business or products, or incorporate the competitive business into Lixin Micro’s business, or transfer the competitive business to an unrelated third party to avoid horizontal competition.
5. The Company/I promise not to seek illegitimate interests by taking the position of controlling shareholder/actual controller of Lixin Micro, thereby damaging the rights and interests of other shareholders of Lixin Micro.
The above statement and commitment shall come into effect from the date of signing by this enterprise/me. This commitment is irrevocable. If the issuer’s rights and interests are damaged due to the violation of the above statements and commitments by the company/company controlled by me or other organizations, the company/person agrees to bear the corresponding liability for damages to the issuer. "
(9) Commitment on reducing and standardizing related party transactions.
1. The controlling shareholder of the issuer promises that
"During the period when this enterprise is the controlling shareholder of the company, this enterprise and other enterprises controlled by it will be reduced as much as possible.
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And regulate related transactions with the company. If this enterprise and other enterprises controlled by this enterprise inevitably have related transactions with the company in the future, they will sign a standardized written agreement in accordance with the principles of fairness, fairness, equal value and compensation, and strictly follow the procedures and methods stipulated in the Company Law, the Articles of Association, and the Implementation Rules for Related Transactions of Wuxi Lixin Microelectronics Co., Ltd., so as to conduct fair and reasonable transactions. When it comes to related party transactions of this enterprise and other enterprises controlled by this enterprise, this enterprise will abstain from voting according to the regulations, and will not use its controlling position in the company to seek illegitimate interests for this enterprise and other enterprises controlled by this enterprise in related party transactions with the company. If the enterprise violates the above commitments and causes economic losses to the company and its subsidiaries, the enterprise agrees to compensate the corresponding losses. "
2. The actual controller of the issuer promises that
"During my time as the actual controller of the company, I and other enterprises under my control will reduce and standardize related transactions with the company as much as possible. If I and other enterprises under my control inevitably have related transactions with the company in the future, they will sign a standardized written agreement in accordance with the principles of fairness, fairness, equal value and compensation, and strictly follow the procedures and methods stipulated in the Company Law, the Articles of Association and the Detailed Rules for the Implementation of Related Transactions of Wuxi Lixin Microelectronics Co., Ltd. to conduct related transactions in a fair and reasonable manner. When it comes to related transactions between myself and other enterprises I control, I will abstain from voting according to the regulations, and I will not use my actual control over the company to seek illegitimate interests for myself and other enterprises I control in related transactions with the company. If I violate the above commitments and cause economic losses to the company and its subsidiaries, I agree to compensate for the corresponding losses. "
3, the issuer holds more than 5% of the shares of shareholders commitment.
"During the period when the Company is the major shareholder of the Company, the Company and other enterprises under its control will reduce and standardize related transactions with the Company as much as possible. If this enterprise and other enterprises controlled by this enterprise inevitably have related transactions with the company in the future, they will sign a standardized written agreement in accordance with the principles of fairness, fairness, equal value and compensation, and strictly follow the procedures and methods stipulated in the Company Law, the Articles of Association, and the Implementation Rules for Related Transactions of Wuxi Lixin Microelectronics Co., Ltd., so as to conduct fair and reasonable transactions. Related party transactions involving this enterprise and other enterprises controlled by this enterprise, this enterprise will
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Decided to abstain from voting, not to take advantage of the company’s major shareholder position in the company, and to seek illegitimate interests for the company and other enterprises controlled by the company in related transactions with the company. If the enterprise violates the above commitments and causes economic losses to the company and its subsidiaries, the enterprise agrees to compensate the corresponding losses. "
4. The directors, supervisors and senior management of the issuer promise that
"During my tenure as a director/supervisor/senior manager of the company, I and other enterprises under my control will reduce and standardize related transactions with the company as much as possible. If I and other enterprises under my control inevitably have related transactions with the company in the future, they will sign a standardized written agreement in accordance with the principles of fairness, fairness, equal value and compensation, and strictly follow the procedures and methods stipulated in the Company Law, the Articles of Association and the Detailed Rules for the Implementation of Related Transactions of Wuxi Lixin Microelectronics Co., Ltd. to conduct related transactions in a fair and reasonable manner. I will abstain from voting according to the regulations, and will not use my position in the company to seek illegitimate interests for myself and other enterprises under my control in related transactions with the company.
If I violate the above commitments and cause economic losses to the company and its subsidiaries, I agree to compensate the corresponding losses. "
(10) Commitment on binding measures in case of failure to fulfill the commitment.
1. Constraint measures when the issuer fails to fulfill its commitments.
"If the Company fails to perform, indeed fails to perform or fails to perform the obligations and responsibilities in relevant commitments on schedule due to force majeure, the Company will take the following measures to restrain it:
(1) The Company will publicly explain the specific reasons for failing to fulfill its commitments in the newspapers designated by the shareholders’ meeting and China Securities Regulatory Commission, apologize to shareholders and public investors, and timely and fully disclose the specific reasons for failing to fulfill relevant commitments, indeed failing to fulfill them or failing to fulfill them on schedule.
(2) Propose supplementary commitments or alternative commitments to investors in order to protect the rights and interests of investors as much as possible, and agree to submit the above supplementary commitments or alternative commitments to the shareholders’ meeting for deliberation.
(3) If the company violates the relevant commitments, causing investors to suffer losses in securities trading, the company will compensate the investors for the relevant losses according to law, and the investors will lose according to the amount determined through consultation with investors.
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Or according to the way identified by the securities regulatory authorities and judicial organs. If the Company fails to perform, indeed fails to perform or fails to perform all the obligations and responsibilities in the relevant commitments due to force majeure, it will publicly explain the specific reasons for the failure in the disclosure media designated by the shareholders’ meeting and the China Securities Regulatory Commission, apologize to the shareholders and the public investors, study the treatment scheme to minimize the loss of investors’ interests as soon as possible, and protect the interests of the Company’s investors as much as possible.
In addition to the above restraint measures, the company is willing to accept other restraint measures required by relevant laws, regulations and relevant regulatory agencies. "
2. Constraint measures when the actual controller of the issuer fails to fulfill its promise.
"If I fail to perform, indeed fail to perform or fail to perform the obligations and responsibilities in the relevant commitments on schedule due to force majeure, I will take the following measures to restrain myself:
(1) I will publicly explain the specific reasons for my failure to fulfill my promise at the shareholders’ meeting and the newspapers designated by China Securities Regulatory Commission, and apologize to shareholders and public investors, and fully disclose the specific reasons for my failure to fulfill my promise, my failure to fulfill it, or my failure to fulfill it on time.
(2) Propose supplementary commitments or alternative commitments to investors in order to protect the rights and interests of investors as much as possible, and agree to submit the above supplementary commitments or alternative commitments to the shareholders’ meeting for deliberation.
(3) If the investor suffers losses in securities trading due to my violation of relevant commitments, I will compensate the investor for the relevant losses according to law, and the investor’s losses will be determined according to the amount determined through consultation with the investor, or according to the method determined by the securities regulatory department and the judicial organ.
(4) If I have not assumed the aforesaid liability for compensation, the shares I held before the initial public offering of the company shall not be transferred before I have fulfilled the aforesaid liability for compensation.
If I fail to perform, indeed fail to perform, or fail to perform all the obligations and responsibilities in the relevant commitments on schedule due to force majeure, I will publicly explain the specific reasons for my failure in the disclosure media designated by the shareholders’ meeting and the China Securities Regulatory Commission, apologize to shareholders and public investors, study the treatment scheme to minimize the loss of investors’ interests as soon as possible, and protect the interests of investors in the company as much as possible. "
3, the issuer’s controlling shareholder, shareholders holding more than 5% of the shares failed to fulfill their commitments.
If the enterprise fails to perform, does fail to perform or fails to perform on schedule due to force majeure.
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I will take the following measures to restrain the obligations and responsibilities in the commitments:
"(1) This enterprise will publicly explain the specific reasons for failing to fulfill its commitments in the newspapers designated by the shareholders’ meeting and China Securities Regulatory Commission, apologize to shareholders and public investors, and timely and fully disclose the specific reasons for failing to fulfill the relevant commitments, indeed failing to fulfill them or failing to fulfill them on schedule.
(2) Propose supplementary commitments or alternative commitments to investors in order to protect the rights and interests of investors as much as possible, and agree to submit the above supplementary commitments or alternative commitments to the shareholders’ meeting for deliberation.
(3) If investors suffer losses in securities trading due to the violation of relevant commitments by the enterprise, the enterprise will compensate the investors for the relevant losses according to law, and the losses of investors will be determined according to the amount determined through consultation with investors, or according to the methods determined by the securities regulatory authorities and judicial organs.
(4) If the enterprise fails to bear the aforesaid liability for compensation, the shares held by the enterprise before the initial public offering of the company shall not be transferred before the enterprise has fulfilled the aforesaid liability for compensation, and it shall stop receiving the shareholders’ dividends from the company.
If the Company fails to perform, indeed fails to perform or fails to perform the obligations and responsibilities in the relevant commitments on schedule due to force majeure, the Company will publicly explain the specific reasons for failure in the disclosure media designated by the shareholders’ meeting and the China Securities Regulatory Commission, apologize to the shareholders and the public investors, study the treatment scheme to minimize the loss of investors’ interests as soon as possible, and protect the interests of the Company’s investors as much as possible. "
4. Constraint measures when the issuer’s directors, supervisors, senior managers and core technicians fail to fulfill their commitments.
If I fail to perform, really fail to perform or fail to perform the obligations and responsibilities in the relevant commitments on schedule due to force majeure, I will take the following measures to restrain myself:
"(1) I will publicly explain the specific reasons for my failure to fulfill my promise at the shareholders’ meeting and the newspapers and periodicals designated by China Securities Regulatory Commission, and apologize to shareholders and public investors, and fully disclose the specific reasons for my failure to fulfill my promise, my failure to fulfill it, or my failure to fulfill it on time.
(2) Propose supplementary commitments or alternative commitments to investors in order to protect the rights and interests of investors as much as possible, and agree to submit the above supplementary commitments or alternative commitments to the shareholders’ meeting for deliberation.
(3) If the investor suffers losses in securities trading due to my violation of relevant commitments,
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I will compensate investors for relevant losses according to law, and the losses of investors shall be determined according to the amount determined through consultation with investors, or according to the methods determined by securities regulatory authorities and judicial organs.
(4) If I don’t undertake the aforementioned compensation liability, the shares I held before the initial public offering of the company shall not be transferred before I fulfill the aforementioned compensation liability, and I shall not ask the company to increase my salary or allowance in any way, nor shall I accept the increased salary or allowance paid by the company in any form. If I fail to perform, indeed fail to perform, or fail to perform all the obligations and responsibilities in the relevant commitments on schedule due to force majeure, I will publicly explain the specific reasons for my failure in the disclosure media designated by the shareholders’ meeting and the China Securities Regulatory Commission, apologize to shareholders and public investors, study the treatment scheme to minimize the loss of investors’ interests as soon as possible, and protect the interests of investors in the company as much as possible. "
(eleven) other commitments.
According to the requirements of the Guidelines for the Application of Regulatory Rules-Information Disclosure of Shareholders of Enterprises Applying for Initial Public Offerings, the issuer promises that:
"1. All the existing shareholders of the Company have the qualification to hold the shares of the Company, and there is no situation that the subject prohibited by laws and regulations holds the shares of the Company directly or indirectly. There is no direct or indirect holding of the company’s shares or other rights and interests by the intermediary agency or its responsible person, senior management personnel or handling personnel. The shareholders of the Company do not transfer improper benefits with the equity of the Company.
2. The Company and its shareholders have provided authentic, accurate and complete information to the intermediary institutions of this offering in a timely manner, actively and comprehensively cooperated with the intermediary institutions of this offering to carry out due diligence, and truthfully, accurately and completely disclosed shareholders’ information in the application documents of this offering according to law, thus fulfilling the obligation of information disclosure. "
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Section 11 Other Important Matters
I. Major contracts
As of the signing date of this prospectus, the contracts being performed by the Company that have a significant impact on the business activities, financial status or future development during the reporting period are as follows:
(1) Purchase contract
The company mainly purchases from major suppliers by signing framework agreements and placing orders. As the procurement proportion of suppliers with current transaction amount of more than 20 million is 78.76%, 74.82% and 76.34% respectively, the company regards the procurement framework agreement signed by important suppliers with current transaction amount of more than 20 million or other important influences on business activities, future development or financial status as a major procurement contract. During the reporting period, the major procurement contracts that the Company is performing or has performed are as follows:
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(2) Sales contract
The company mainly signs framework agreements and obtains orders to supply to major customers. As the proportion of sales between the company and the customers with the current transaction amount of more than 20 million reached 81.17%, 81.27% and 77.26% respectively, the company took the sales framework agreement signed with the important customers with the current transaction amount of more than 20 million or other important customers that have an important impact on business activities, future development or financial status as a major sales contract. During the reporting period, the major sales contracts that the Company is performing or has performed are as follows:
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(3) loan contract
As of the signing date of this prospectus, the working capital loan contracts being performed by the issuer are as follows:
Note: On December 9, 2020, Mr. Yuan Minmin (the actual controller of the company) and Mr. Yu Mingfan signed the Maximum Guarantee ContractNo. "32100520200025776" with Wuxi Science and Technology Sub-branch of Agricultural Bank of China to provide a guarantee for the bank loan of the above-mentioned subsidiary, Xi Ruiwei, with the guarantee period from December 9, 2020 to December 8, 2023.
(4) Guarantee contract
As of the signing date of this prospectus, there is no guarantee contract being performed by the issuer.
Second, the external guarantee situation
As of the signing date of this prospectus, the issuer has no external guarantees.
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III. Major litigation or arbitration matters
As of the signing date of this prospectus, there are no outstanding or foreseeable major litigation or arbitration matters that have a significant adverse impact on the company’s production and operation.
As of the signing date of this prospectus, there are no criminal litigation, major litigation or arbitration matters that the controlling shareholder, actual controller, holding subsidiary, directors, supervisors, senior managers and core technicians of the company may affect the company as a party.
Four, directors, supervisors, senior management personnel and core technical personnel involved in administrative punishment, by the judicial organs for investigation, by the China Securities Regulatory Commission for investigation.
During the reporting period, the directors, supervisors, senior managers and core technicians of the Company were not involved in administrative punishment, filed for investigation by judicial organs or filed for investigation by China Securities Regulatory Commission.
V. Major violations of laws by the controlling shareholder and actual controller during the reporting period.
During the reporting period, there was no major violation of laws by the controlling shareholder or actual controller of the company.
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Section 12 Statement
1. All directors, supervisors and senior management of the issuer declare that all directors, supervisors and senior management of the Company promise that there are no false records, misleading statements or major omissions in this prospectus, and they will bear individual and joint legal responsibilities for its authenticity, accuracy and completeness. All directors:
Yuan Minmin Mao Chenglie Liu Jibin
Yu Peng Zhao Zhidong Li Ming
Yao Wangxin, Yu Xiekang, Chen Peng
All supervisors:
Xia Yongjie and Wu Min, all senior managers of Chloe Wang:
Yuan Minmin Mao Chenglie Zhou Baoming
Wang Dong Sean Dong Hong
无锡力芯微电子股份有限公司
Year month day
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二、发行人控股股东、实际控制人声明
本公司或本人承诺本招股说明书不存在虚假记载、误导性陈述或重大遗漏，并对其真实性、准确性、完整性承担个别和连带的法律责任。
公司控股股东：无锡亿晶投资有限公司
Legal representative:
袁敏民
Year month day
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三、保荐机构（主承销商）声明
本公司已对招股说明书进行了核查，确认不存在虚假记载、误导性陈述或重大遗漏，并对其真实性、准确性、完整性承担相应的法律责任。
光大证券股份有限公司
年 月 日
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保荐机构（主承销商）总裁声明
本人已认真阅读无锡力芯微电子股份有限公司招股说明书的全部内容，确认招股说明书不存在虚假记载、误导性陈述或者重大遗漏，并对招股说明书真实性、准确性、完整性、及时性承担相应法律责任。
总裁：
刘秋明
Everbright Securities Co., Ltd. (official seal)
Year month day
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保荐机构（主承销商）董事长声明本人已认真阅读无锡力芯微电子股份有限公司招股说明书的全部内容，确认招股说明书不存在虚假记载、误导性陈述或者重大遗漏，并对招股说明书真实性、准确性、完整性、及时性承担相应法律责任。
Chairman:
Yan jun
Everbright Securities Co., Ltd. (official seal)
Year month day
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4. Statement by the issuer’s lawyer
The firm and the handling lawyer have read the prospectus and confirmed that there is no contradiction between the prospectus and the legal opinion issued by the firm. The firm and the handling lawyer have no objection to the contents of the legal opinions quoted by the issuer in the prospectus, and confirm that the prospectus will not contain false records, misleading statements or major omissions due to the above contents, and bear corresponding legal responsibilities for its authenticity, accuracy and completeness.
Person in charge of law firm:
Ma Guoqiang
Handling lawyer:
Yu Wei Zhu Junhui
Guo Hao Lawyer (Nanjing) Office
Year month day
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V. Statement of accounting firm
The institution and the certified public accountant in charge have read the prospectus of Wuxi Lixin Microelectronics Co., Ltd., and confirmed that there is no contradiction between the prospectus and the audit report, internal control verification report and non-recurring profit and loss statement verified by the firm. The institution and the handling personnel have no objection to the contents of the professional report quoted by the issuer in the prospectus and the prospectus, and confirm that the prospectus will not contain false records, misleading statements or major omissions due to the above contents, and bear corresponding responsibilities for its authenticity, accuracy and completeness.
Person in charge of accounting firm:
Xiao houfa
Handling CPA:
Song Wen liuyong
Huang Xiaoyun
Rongcheng Certified Public Accountants (Special General Partnership)
Year month day
1-1-388
Vi. Statement of assets appraisal agency
Our institution and the signed appraiser have read the prospectus of Wuxi Lixin Microelectronics Co., Ltd. and confirmed that there is no contradiction between the prospectus and the asset appraisal report issued by our institution. The institution and the handling personnel have no objection to the contents of the professional report quoted by the issuer in the prospectus, and confirm that the prospectus will not contain false records, misleading statements or major omissions due to the above contents, and bear corresponding responsibilities for its authenticity, accuracy and completeness.
Legal representative:
Chen Shenglong
Handling certified asset appraiser:
Yu Bin Li Hua (Note: Yu Bin, the above-mentioned signature registered asset appraiser, has left his post)
Zhongjing Minxin (Beijing) Assets Evaluation Co., Ltd.
Year month day
1-1-389
Explanation on renaming of asset appraisal institutions
Hubei Minxin Assets Appraisal Co., Ltd. changed its name to Zhongjing Minxin (Beijing) Assets Appraisal Co., Ltd. on August 13, 2009. After the change, the relevant business qualifications and rights and obligations were inherited by Zhongjing Minxin (Beijing) Assets Appraisal Co., Ltd.
Zhongjing Minxin (Beijing) Assets Evaluation Co., Ltd.
Year month day
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employment separation certificate
Yu Bin used to be the registered asset appraiser of this unit and issued the Asset Appraisal Report for Wuxi Lixin Microelectronics Co., Ltd. (E Xin Ping Bao Zi (2008) No.0134), and has left his post.
This is to certify that.
Zhongjing Minxin (Beijing) Assets Evaluation Co., Ltd.
Year month day
1-1-391
VII. Statement of the capital verification and review institution
The institution and the signed certified public accountant have read the prospectus and confirmed that there is no contradiction between the prospectus and the capital verification review report (Hui Yan Zi [2016] No.2388) issued by the institution. The institution and the signed certified public accountant have no objection to the contents of the capital verification review report (Hui Yan Zi [2016] No.2388) quoted by the issuer in the prospectus, and confirm that the prospectus will not contain false records, misleading statements or major omissions due to the above contents, and bear corresponding legal responsibilities for its authenticity, accuracy and completeness.
Person in charge of accounting firm:
Xiao houfa
Handling CPA:
Song Wen liuyong
Chen Xuelu (Note: Chen Xuelu, the above-mentioned signed certified public accountant, has left his post)
Rongcheng Certified Public Accountants (Special General Partnership)
Year month day
1-1-392
Explanation on renaming the capital verification review institution
Huapu Tianjian Certified Public Accountants (special general partnership) changed its name to Rongcheng Certified Public Accountants (special general partnership) on May 30, 2019. After the change, the relevant business qualifications and rights and obligations were inherited by Rongcheng Certified Public Accountants (special general partnership).
Rongcheng Certified Public Accountants (Special General Partnership)
Year month day
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employment separation certificate
Chen Xuelu used to be the certified public accountant in charge of this unit, and issued the Capital Verification Review Report (Hui Yan Zi [2016] No.2388) for Wuxi Lixin Microelectronics Co., Ltd., and has left his post.
This is to certify that.
Rongcheng Certified Public Accountants (Special General Partnership)
Year month day
1-1-394
Section 13 Annex
I. List of documents
(1) Issuing a letter of recommendation;
(2) a listing recommendation letter;
(3) Legal opinions;
(4) Financial report and audit report;
(5) Articles of Association (draft);
(6) Commitments made by the issuer and other responsible entities related to the issuer’s current issuance and listing;
(seven) internal control verification report;
(8) A list of non-recurring gains and losses certified by a certified public accountant;
(nine) the China Securities Regulatory Commission agreed to the issuer’s registration of this public offering;
(10) Other important documents related to this issuance.
Second, the time and place of document inspection
Investors can check the above documents at the following locations from 9: 00 am to 11: 30 am and from 2: 00 pm to 5: 00 pm every working day during the underwriting period:
1. Issuer: Wuxi Lixin Microelectronics Co., Ltd.
Office Address: No.8 Xinhui Ring Road, wuxi new district
Contact: Mao Chenglie
Tel: 0510-85217779
(2) Sponsor (lead underwriter): Everbright Securities Co., Ltd.
Office Address: No.1508 Xinzha Road, Jing ‘an District, Shanghai
Contact: Wang Ruyi
Tel: 021-52523103
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(3) Website of information disclosure designated by Shanghai Stock Exchange: http://www.sse.com.cn.