On March 23, the website of the China Securities Regulatory Commission released the prospectus of Suzhou Zhuosheng Microelectronics Co., Ltd. (hereinafter referred to as 'Zhuosheng Microelectronics'). Along with the domestic substitution trend in the RF field and the popularity of 4G and expectations for 5G, this radio frequency The front-end manufacturers carried the brilliant performance of nearly three years and rang the door of the A-share capital market.
At the same time of high performance growth, the company also has high customer concentration, reduced R&D costs, and relaxed credit policies.
According to institutional studies, after the rapid growth of the global RF switch market at an average annual growth rate of nearly 15%, the growth rate has slowed down, and it is expected that the growth rate will decline to 8.93% by 2019. This may intensify the market for Zhuosheng Microelectronics. Post-listed performance continued to grow.
In addition, the company's R&D expenditures in recent years have also been far lower among listed companies in the same industry.
Zhuosheng Microelectronics Responsive to Economic Observer reported that, in the domestic market, the chip products provided by local competitors tend to be homogenized, resulting in declining market prices and shrinking profits of the industry. In the mid-to-high end chip design field, there will be certain progress. The threshold, the company's comprehensive and efficient research and innovation capabilities become the most important part of the core competitiveness, but also a key factor in maintaining a higher level of gross profit.
The largest customer contribution revenue 68%
According to the Zhuo Sheng Microelectronics prospectus updated by the China Securities Regulatory Commission on March 23, the company was established in August 2012 and reformed in August 2017. Currently, the main business is research, development and sales of RF front-end chips. The market provides radio frequency switches, RF low noise amplifiers and other RF front-end chip products, and provide IP licensing.
According to statistics, in 2014, Zhuosheng Microelectronics' main revenue was derived from RF switches. In 2015, 2016 and January-September 2017, the overall revenue of RF switches and RF LNAs accounted for 72.58% of the company’s operating revenue. , 88.52%, 97.09% and 97.73%.
The so-called radio frequency switch refers to the selection and switching of different receiving/transmitting paths to the antenna to achieve the purpose of sharing the antenna and saving the terminal product cost. The core market of the RF front-end field is mainly in the filter market, and there are currently a few manufacturers engaged in the domestic market. Sun Sunfeng, an analyst at Sunson Securities, reported that the RF switch produced by the company is the third largest business segment of the RF front-end. The driving force for growth comes from the growth of the antenna switching business.
Zhuosheng Microelectronics stated that the current products are mainly used in mobile smart phones such as smart phones. During the reporting period, Samsung, as the largest customer, contributed during the reporting period of 2014, 2015, 2016 and January-September 2017 The company's overall revenue was 31.25%, 40.01%, 76.23% and 68.01%.
When Zhuosheng Microelectronics replied to the reporter, the company became a Samsung supplier in 2012 to meet the customer's demand for products, and gradually established a long-term and stable cooperative relationship with customers to realize revenue through large-scale mass production.
In terms of customer concentration, with the increase in the amount of cooperation with Samsung, Zhuosung Microelectronics' customer concentration has further increased, and the company’s top five customers accounted for 93.41% of revenue in the first three quarters of 2017. In addition, domestic brands Xiaomi 4.28.858 million yuan became its second largest customer.
An East China private equity analyst said that from the perspective of the prospectus, the company's suppliers and customers have a high degree of concentration, and Zhuosheng Microelectronics is relatively high-quality in terms of customers. 'The overall threshold for this technology is not too high, and the probability of domestic substitution is high. Gao Hui, the rise of domestic mobile phone manufacturers will also promote the development of upstream suppliers. ' Because of this, Zhuosung Microelectronics's performance in the past three years showed an explosive growth. From 2014 to the first three quarters of 2017, its revenue was respectively 4370.08. Ten thousand yuan, 111 million yuan, 385 million yuan (+285% year-on-year), 4.8 billion yuan (+24% year-on-year), net profit attributable to the mother from a loss of 165,800,000 yuan, an increase of 11,250,200 yuan, 84,149,400 yuan (an increase of 648 %), 1.44 (+71.4%) billion.
However, Zhuosung Microelectronics' cash flow from its operating activities has deviated from revenue and profit growth. In the first three quarters of 2014-2017, the cash flow from operating activities of the company was -690,100 yuan, 9,407,400 yuan, 9451.07 Ten thousand yuan (a year-on-year increase of 905%), 8659.04 (-8.4% year-on-year).
The above situation of operating cash flow may be related to the adjustment of the company's credit policy. With the increase in the sales scale, during the reporting period, the accounts receivable of the company accounted for 14.54%, 17.35%, and 15.96% of the current assets respectively. 24.58%; Net accounts receivable accounted for 9.69%, 10.79%, 8.25% and 16.63% of operating income for the current period. The prospectus shows that the company has indeed liberalized its credit policy based on dealers since 2017. Some dealers with good reputation, large business scale, and long cooperation time will be given a credit policy of 5 days a month to 15 days a month. 'At the same time, Zhuosheng Microelectronics stated that net accounts receivable accounted for business in 2017. The proportion of income has risen sharply, mainly due to the core direct sales customers whose credit terms are longer.
Zhuosheng Microelectronics responded to the report and said that there was a clear deviation between the company's cash flow and net profit in 2017, which was mainly due to the rapid increase in business scale, which led to a substantial increase in inventory and accounts receivable.
R&D costs are much lower than peers
From the perspective of the prospectus, part of the reason for maintaining the rapid growth of Zhuosheng Microelectronics comes from the company's cost control and high gross margins.
The prospectus shows that during the reporting period, the company's gross profit margins were 64.27%, 56.80%, 62.11% and 56.56%, respectively, which remained at a relatively high level. Taking January-September 2017 data as an example, compared with the listed companies in the same industry Average 44.64% gross margin, Zhuo Sheng Microelectronics is nearly 11% higher than peers.
Zhuosheng Microelectronics stated that the 2016 gross profit margin has increased, mainly due to the current RF switch. The sales structure of the RF LNA has changed, and the average unit price of product sales has increased. At the same time, the unit cost of RF switch has decreased slightly compared to the previous year. The unit cost of the RF LNA is basically the same, making the gross profit margin of the RF switch and the RF LNA both improved. From January to September 2017, the average sales unit price of the existing products has decreased, and the gross margin has declined.
For the company's products to maintain high gross profit and product unit price and industry deviation, the company said 'in terms of the unit price of the main products, the price of RF switches, RF low noise amplifiers and other products in the reporting period decreased as a whole, mainly due to the chip area products. Faster replacement, after the launch of the same series of chip products, with the increasingly fierce market competition, unit price showed a downward trend.
In 2015 and 2016, the increase in the unit price of the company's products was mainly due to the change in the structure of sales products, the complexity of some products, and the increase in sales of models with higher unit price levels.
In addition, from the perspective of technical upgrading, the technology of radio frequency front-end chip design industry is rapidly updated. Every participant in the industry needs continuous R&D to ensure the competitiveness of products in the industry.
However, the R&D expenditures of Zhuosung Microelectronics' management expenses are much lower than those of its peers. Therefore, the company’s expenses have been reduced during the period. During the reporting period, its R&D expenses were RMB 16.9946 million, RMB 25.5753 million, RMB 59.015 million and RMB 34.917 million, respectively. They accounted for 38.79%, 23.2%, 15.3%, and 7.23% of revenue, respectively; period expenses accounted for 61.64%, 48.59%, 36.30% and 17.95% of the revenue, showing a downward trend year by year.
This makes the company's management fee rate from January to September 2017 is lower than the average value of the listed companies in the same industry by about 20%. For example, in the above-mentioned company, Guoke Microelectronics, the company is an integrated circuit design company, and a large amount of R&D investment occurs every year. In 2016, revenue was 181 million yuan, 367 million yuan, and 489 million yuan. During the reporting period, the research and development expenses were 51.106 million yuan, 881.6994 million yuan and 106 million yuan respectively, accounting for 78.17% of the total administrative expenses for the period, 74.66% And 71.08%, accounting for 27.6% of the revenue, 23.98%, 21.78%.
According to the company, the reason for the decline in R&D expenses as a percentage of revenue is due to the gradual adoption of new products by customers and the mass production of products entering the production stage. Revenues have risen rapidly, and economies of scale have emerged. R&D expenses have decreased as a percentage of operating revenue. . '
An executive of a listed company in the RF front-end industry told the reporter that this piece of technology is updated quickly, and there are still some thresholds for doing it well. If it fails to keep up, there is a risk.