As the fourth largest wafer foundry in the world, SMIC accounts for 6% of the global market share, which is quite competitive. Under the background that the United States has blocked Huaweis chip purchase, SMIC, as Huaweis strongest OEM spare wheel, has also been highly concerned by Chinese people. With the support of large amount of raised funds, the strength of SMIC is expected to further improve.
In the near future, the chip industry has just begun to heat up, and the return of SMIC international, whether it can cause a new round of core market again, has become the focus of market attention.
When you are strong enough, the world will make way for you. For SMIC, this sentence Chicken Soup for the soul is a fact.
On the afternoon of June 19, the Municipal Committee of science and Technology Innovation Board announced the results of the 47th review meeting and approved the IPO application of SMIC. According to the time node of SMICs application, on May 5, Hong Kong stock official announcement and June 1, the application was accepted. After only one round of inquiry, the meeting was arranged and successfully cleared. From putting forward the concept to landing, SMICs road back to a took only one and a half months, setting a record for the clearance of science and technology innovation board and even the whole A-share.
From the perspective of intermediary agencies, Haitong Securities and CICC are the recommended agencies hired by SMIC. The reasons are self-evident. Both Chinese securities companies have the top position in the Hong Kong stock market in terms of project experience and company strength. In addition, the joint lead underwriters of SMIC include Guotai Junan, CSCI, Guokai securities and Morgan Stanley Huaxin securities. In terms of accounting firms and law firms, SMIC has chosen PricewaterhouseCoopers Zhongtian and jintiancheng respectively, and also has rich experience in the capital market.
According to the prospectus, SMIC plans to raise 20 billion yuan, more than 10.5 billion yuan from the IPO of China Telecom. Considering the status of SMIC in the industry and the over raising of sci-tech innovation board, SMIC is expected to become another king of attracting funds of sci-tech innovation board, setting a record for initial fundraising.
However, even before the clearance, the listing committee still raised several questions about SMICs red chip identity and chip business.
In response to the jurisdiction issue, Shanghai municipal Party Committee requested SMIC to make further disclosure on the application of mainland Chinas laws and the commitment submitted to mainland Chinas courts for jurisdiction, including derivative actions brought by domestic investors when the legitimate rights and interests of the issuer are infringed by directors, senior executives or others; and losses caused by false records, misleading statements or major omissions of the issuers information Civil compensation lawsuit against the company or other responsible person brought by the domestic investor.
In addition, SMIC also needs to further remind in the prospectus that after the listing of science and technology innovation board, it is different from the securities laws and regulations of mainland Chinas leading companies in terms of share limited subscription arrangement, independent directors equity incentive, etc.
The fourth largest manufacturer in the world
In recent years, the development of Chinas core industry and Huaweis ups and downs are closely related to the great attention of SMIC international.
According to the prospectus, SMIC was founded in 2000 with a total legal share capital of US $42 billion and is a limited company registered in the Cayman Islands. In March 2004, SMIC was listed on the Hong Kong Stock Exchange and NYSE simultaneously, and delisted from NYSE in June 2019.
SMIC is not only one of the leading integrated circuit foundry enterprises in the world, but also the most advanced and largest Chinese mainland professional foundry company with the largest supporting services and multinational operation. At present, SMIC mainly provides customers with 0.35-14nm multi technology nodes, different process platforms of IC wafer foundry and supporting services.
Just last month, the US Department of Commerces Bureau of industry and security (BIS) officially announced that it would strictly restrict Huaweis use of US technology, software to design and manufacture semiconductor chips, cut off Huaweis attempts to break away from US export controls and block Huaweis global chip procurement. At the same time, TSMC also announced that it would invest 12 billion US dollars to build a factory in the United States.
In the face of strict defense, the identity of SMIC as Huaweis strongest OEM spare tire has also been highly concerned by Chinese people. Although the scale cannot be compared with TSMC, which is the first in the world, SMIC, with its advanced technology, ranks the fourth largest manufacturer in the world in terms of market sales, accounting for 6% of the global market share, and has become quite competitive.
From the perspective of employment performance, in 2017-2019, SMIC achieved operating revenue of 21.390 billion yuan, 23.017 billion yuan and 22.018 billion yuan, and realized net profit attributable to the parent of 1.245 billion yuan, 747 million yuan and 1.794 billion yuan, with rapid growth. In addition, the listing standard chosen by SMIC is with a market value of more than 20 billion yuan, independent research and development, international leading technology, strong scientific and technological innovation ability and comparative advantage in the competition of the same industry.
In the first quarter of 2020, the operating revenue of SMIC was 6.401 billion yuan, an increase of 38.42% year on year; the net profit attributable to the parent company after deducting non profits was 143 million yuan, an obvious increase compared with the same period of last year. According to the data disclosed by Hong Kong stocks, it is predicted that the increase of 3% to 5% in the second quarter is mainly due to the scale effect brought by the increase of the companys production capacity and output and the optimization of its product portfolio.
In terms of the use of the raised funds, of the 20 billion raised by SMIC, 8 billion will be invested in the 12 inch chip SN1 project to meet the capital demand for the construction of a 12 inch production line project with a monthly production capacity of 35000 chips, and the production technology level will be raised to 14nm or below; 4 billion yuan will be used for the reserve fund project of advanced and mature process R & D projects, and the remaining 8 billion yuan will be used for supplement working capital.
In response, Guoxin Securities issued a review on the research report, saying that financing 20 billion yuan is conducive to the construction of semiconductor cash process, financing 20 billion yuan is too small, and 200 billion yuan is not much, so we need to do large-scale cost sharing. To catch up with TSMC, it is necessary to catch up with capital expenditure first.
The clearance of A-share market is smooth, and the performance of H-share of SMIC is also popular, and the recent share price has gone all the way up. On June 19, SMIC closed at HK $22.90 per share, up 35.34% in the last 20 days.
Policy guarantees the return of red chips
After the successful meeting and registration of SMIC, it will become the first a + H red chip company, which will also play an exemplary role in the return of other red chips.
Industrial Securities research report pointed out that, compared with the secondary listing of SMIC on science and technology innovation board in Hong Kong stock market, or the listing of privatized or split assets in China, the additional issuance of science and technology innovation board has a relatively small impact on the rights and interests of existing shareholders, has more room for improvement of valuation, and is in line with the common interests of the company and investors.
In fact, the return of red chip enterprises is often welcomed by the market. However, previously limited by policy restrictions, red chip enterprises often have difficulties in going back to A. they need to dismantle the red chip structure and transfer the control right back to China, facing a large number of regulatory issues both at home and abroad. Fortunately, the birth of science and technology innovation board has left a shortcut for red chip enterprises.
On April 30, China Securities Regulatory Commission issued and implemented the announcement on relevant arrangements for domestic listing of innovative pilot red chip enterprises, which lowered the threshold for red chip enterprises, reduced the market value standard of overseas listed enterprises from 200 billion yuan to 20 billion yuan, and required the companys independent research and development ability, which is just tailor-made for SMIC.
Since then, on June 5, the Shanghai Stock Exchange issued the notice on matters related to the application of red chip enterprises for the issuance and listing of science and technology innovation board, which further improved and refined the matters related to the treatment of gambling agreement, the calculation of total capital stock, the recognition of rapid growth of business income, the application of delisting indicators, etc., so as to clear the obstacles for more red chip enterprises to return to a.
The continuous protection of the policy has created a miracle of the three week meeting of SMIC. Under the good demonstration effect, Geely, which recently listed on Hong Kong stock market, is also preparing to go to the science and technology innovation board for listing. On the evening of June 17, Geely Automobile issued a notice saying that the board of directors approved the preliminary proposal for the possible issuance of RMB shares and the listing on the science and technology innovation board.
It is worth mentioning that on June 12, the CSRC issued a series of documents on the implementation of the gem registration system, which are open to red chip enterprises. Accordingly, on June 17, China injection association also issued new audit guidelines, expanding the scope of application of audit guidelines from innovation pilot red chip enterprises in science and technology innovation board to innovation pilot red chip enterprises under the ownership registration system. When both the technology innovation board and the growth enterprise board allow red chip companies to go public, it may lead to a new wave of return of red chip companies.
According to the research data of CICC, after combing the overseas listed red chips (including Zhongjia shares and Hong Kong listed red chips), it is found that the total market value of enterprises with a market value of more than 200 billion yuan is 12.3 trillion yuan; the total market value of innovative enterprises with a market value of more than 20 billion yuan (and in line with the listing conditions of gem and / or sci tech Innovation Board) is 1.5 trillion yuan. If these enterprises return to an average of 5% newly issued a shares, the total financing amount will reach 680 billion yuan, and it is expected to gradually become a bank in the next 2-3 years. The return of large market value red chips and some innovative red chips to a shares will promote the capital market to support the real economy, support innovation and upgrading, enrich the investment varieties of a shares, and improve the quality of the overall listed companies. It will continue to further dilute the capital and promote the survival of the fittest for those small market value stocks with poor quality, which will improve the ecology of Chinas stock market in the medium and long term. Source: responsible editor of Securities Times: Yang Bin_ NF4368
According to the research data of CICC, after combing the overseas listed red chips (including Zhongjia shares and Hong Kong listed red chips), it is found that the total market value of enterprises with a market value of more than 200 billion yuan is 12.3 trillion yuan; the total market value of innovative enterprises with a market value of more than 20 billion yuan (and in line with the listing conditions of gem and / or sci tech Innovation Board) is 1.5 trillion yuan.
If these enterprises return to an average of 5% newly issued a shares, the total financing amount will reach 680 billion yuan, and it is expected to gradually become a bank in the next 2-3 years. The return of large market value red chips and some innovative red chips to a shares will promote the capital market to support the real economy, support innovation and upgrading, enrich the investment varieties of a shares, and improve the quality of the overall listed companies. It will continue to further dilute the capital and promote the survival of the fittest for those small market value stocks with poor quality, which will improve the ecology of Chinas stock market in the medium and long term.