Product: Sina Finance listed Company Research Institute

Author: IPO Refinancing Group / Zhong Wen

On November 29th, Chengdu Cisco Systems Rui Micro Electronics Co., Ltd. (hereinafter referred to as "Sikorui") will meet the exam again.

Data show that Cisco Systems Rui planned to "sell" aviation brocade technology to land A shares as early as 2019. In August this year, Cisco Systems Ruishi controls another enterprise controlled by Zhang Ya-Guoguang Electric has successfully landed on the Kechuang board. Cisco Systems Rui was not so lucky and was suspended during the review in September this year, mainly because of Science and Technology Innovation Board's positioning and the rationality of related party transactions in doubt.

In addition to the questions raised by the regulatory authorities, Cisco Systems Rui lacks a direct classification basis when discussing that it is in line with Science and Technology Innovation Board's industry positioning, and the indirect basis for its search is also open to question. When demonstrating whether Cisco Systems Rui is technologically advanced in essence, the company "out of its own pocket" organized a meeting to invite experts to demonstrate.

Although industry experts have given a positive evaluation of the technological advancement of Sikorui, Cisco Systems Rui has never been able to prove its technological advancement by comparing with its counterparts. In addition, combined with the company's small revenue scale (annual income between 100 million yuan and 200 million yuan), stubbornly high receivables (revenue over the same period), huge related purchases (necessity and rationality are questioned by supervision), it remains to be seen whether the company's technology can bring long-term, stable and real income to the company.

　　Lack of direct basis for industry positioning

According to the prospectus, Cisco Systems Rui's main business is reliability testing of military electronic components, including military electronic components testing and reliability screening test, destructive physical analysis (DPA), failure analysis and reliability management technical support. Among them, the income from testing and reliability screening tests of military electronic components accounted for more than 85%.

Scully believes that the company's industry classification belongs to the "7452 testing service" of "M science and technology research and technical services", "74 professional and technical services" and "745 quality inspection technical services" in the National Economic Industry Classification.

According to the examination and approval rules, the enterprises that intend to land on the Kechuang Board shall belong to the industries and fields listed in Article 4 of the interim provisions on the Application and recommendation of the issuance and listing of Science and Technology Innovation Board Enterprises of the Shanghai Stock Exchange (hereinafter referred to as the interim provisions). Scully believes that he belongs to the "new generation of information technology" listed in the interim regulations.

Cisco Systems Rui said that according to the catalogue of the Strategic emerging Industries Classification (2018) (hereinafter referred to as the "classified catalogue"), the "new generation information technology industry" includes "hardware testing". Cisco Systems Rui military electronic components reliability testing service is essentially a "hardware test" in the field of information technology, so Cisco Systems Rui believes that he belongs to the "new generation information technology field."

Source: Cisco Systems Rui prospectus

According to the Classification Catalog, each strategic emerging industry classification has the corresponding industry code in the National Economic Industry Classification (as shown in the following figure). However, looking through the "classified catalogue", it is found that there is no "hardware testing" industry segment in the strategic emerging industry classification, nor is there any industry segment corresponding to Sikori's "7452 testing service".

Source: strategic emerging Industries Classification (2018)

Therefore, Cisco Systems Rui did not find the most direct evidence that he is in line with Science and Technology Innovation Board's industry positioning. However, Cisco Systems Rui found two pieces of circumstantial evidence to prove that he belongs to the "new generation of information technology".

Cisco Systems also said that the company has integrated circuit testing technology, and uses these technologies to provide integrated circuit reliability testing services account for the highest proportion of revenue. According to Article 4 of the interim provisions, the "new generation information technology field" includes "electronic information." therefore, Cisco Systems Rui believes that it belongs to the "new generation information technology field."

In addition, the China Electronics Society issued a "description" that the industry of Chengdu Cisco Systems Rui Microelectronics Co., Ltd. is positioned as semiconductor and integrated circuit related industries in the field of electronic information technology.

With regard to "integrated circuit testing technology", investors first think of Huatian Technology, Changdian Technology, Tongfu Micro Power and other integrated circuit packaging and testing listed companies. If Cisco Systems Rui's main business "military electronic components reliability testing service" and the use of "integrated circuit testing technology" services belong to the same business, then why did Cisco Systems Rui not list the above three companies as comparable peer listed companies? Why does Cisco Systems Rui not directly divide himself into related industries such as semiconductors or integrated circuits, which is directly in line with Science and Technology Innovation Board's industry positioning?

　　"out-of-pocket" proves the advanced nature of technology.

According to the audit rules, the proposed IPO enterprise has the attribute of scientific innovation, which needs to meet three elements. The first aspect is the positioning of the industry, which is the biggest premise. If it does not meet the positioning of the industry, no matter how advanced the technology is, it will not help. The second aspect is the relevant indicators, such as R & D costs, the number of patents and so on meet the requirements. The third aspect is the advanced nature of technology, which is to judge whether the quasi-IPO enterprise really has the attribute of "hard technology".

Assuming that the essence of Sikorui's business is in line with Science and Technology Innovation Board's industry positioning, is the company's advanced technology up to standard?

As to whether Cisco Systems Rui is really technologically advanced, Science and Technology Innovation Board's listing committee questioned it in two rounds of inquiries and in the last meeting review, but the company's reply has not been recognized by regulators so far.

After the last meeting was suspended, Cisco Systems Rui spent 14400 yuan out of his own pocket to hold the "Symposium on testing Technology Development and Reliability Evaluation of military Electronic components" on October 16, 2021 (Note: the seminar was led by the China Electronics Society mentioned above).

At this seminar, a number of industry experts issued argumentation opinions: Chengdu Cisco Systems Rui Microelectronics Co., Ltd. broke through the automatic test vector generation, high-precision operational amplifier ring and other testing core technology, can complete millions of gate-level FPGA, multi-core DSP, DDR3, high-speed and high-precision operational amplifier, 16-bit 200MHz bandwidth AD/DA and other components testing, can meet the quality assurance requirements of military electronic components. Chengdu Cisco Systems Rui Micro Electronics Co., Ltd. has the core technology of reliability testing of military electronic components, is in a technologically advanced position in the reliability testing industry of military electronic components, and is an important technical force to ensure the reliability of weapons and equipment. "

However, investors should still note that Cisco Systems Rui said that he could not obtain the technical reserves of comparable companies (or units) in the same industry in terms of accuracy, parameters, timeliness, and so on, so he was unable to demonstrate his technological advancement by comparison.

Less compared with peers, the advanced technology proved by experts can only be used as a reference. What is puzzling is that Cisco Systems Rui claims to have integrated circuit testing technology, is there not a peer company in the market with similar technology?

Demonstrating the advanced nature of technology requires a very deep professional foundation, so it is difficult to subjectively judge the technical level of Skeri. But we can judge the advanced level of technology by the educational background of the company's R & D personnel.

According to the prospectus, by the end of June 2021, Cisco Systems Rui had 66 R & D personnel, including 47 with bachelor's degree, 5 with master's degree or above, and 14 with college degree or below (21%). As an enterprise related to integrated circuit testing technology, why are there still 21% of R & D personnel with college degree or below?

In addition, except for the five core personnel, the average salary of Cisco Systems Rui's other R & D personnel is significantly lower than that of the sales staff. Science and Technology Innovation Board's listing committee asked Cisco Systems Rui to explain the company's core technology and core competitiveness.

At the same time, the Science and Technology Innovation Board Municipal Committee also asked Cisco Systems Rui to explain that under the circumstances that there were only 36 to 65 R & D personnel during the reporting period, 11200 sets of test adapters and 17000 sets of test program software had been self-developed by the end of June 2021. Whether it is enough to show that these test software and test adapters have high technical content.