On June 19, MediKai announced that the company plans to bring in strategic investors through its wholly-owned subsidiary, Zhejiang MediKai Optoelectronic Semiconductor Co., Ltd. (hereinafter referred to as "Zhejiang MediKai"), based on its industry characteristics, its own technological advantages and market positioning, current development stage, and future development potential comprehensively. The investment will be funded by the Service Trade Innovative Development Guidance Fund (Limited Partnership) (hereinafter referred to as the "Service Trade Fund").

According to reports, the Service Trade Fund plans to increase its stake in Zhejiang MediKai by 10% by cash injection of CNY 200 million, based on a pre-investment valuation of CNY 1.8 billion. After this capital increase, the registered capital of Zhejiang MediKai will increase from CNY 908 million to about CNY 1.009 billion.

According to a MediKai spokesperson, the funding will mainly focus on the company's main business, such as equipment construction required for product production, and funding for the research and development of new projects.

According to insiders, the reason why the Service Trade Fund chose to invest in Zhejiang MediKai is mainly because it is bullish on the technical advancement, unique advantages in cross-border import and export business and broad downstream application prospects of the subsidiary in the field of optoelectronic semiconductors and optical packaging testing.

Zhejiang MediKai was established in October 2018, with a registered capital of CNY 908 million. Its main businesses include manufacturing of optoelectronic devices, manufacturing of electronic components, manufacturing of integrated circuit chips and products. In 2023, Zhejiang MediKai had a revenue of CNY 205 million and a net loss of CNY 40.66 million; in the first quarter of 2024, it achieved revenues of CNY 87.22 million, and a net loss of CNY 7.72 million, which was a narrower loss than in the previous year.

Regarding the reason for the loss, the MediKai spokesperson stated that Zhejiang MediKai is the location where the funds raised from the IPO are invested, and the depreciation of the plant and equipment is higher, which has resulted in the subsidiary not yet being profitable.

It is worth noting that the funding agency introduced this time is a financial investor.

Public information shows that the Service Trade Fund is an investment company registered in Beijing with registered capital of approximately CNY 10 billion, and China Merchants Capital Management (Beijing) Co., Ltd. is the executing general partner of the company. In 2023, the Service Trade Fund had a revenue of CNY 502 million and a net income of CNY 424 million. In the first quarter of 2024, the investment institution had revenues of CNY 980,500 with a net loss of CNY 35.02 million.

"Different from the general introduction of financial investors, in addition to the financial investment, the Service Trade Fund will also enable Zhejiang MediKai's business based on its resource accumulation in the semiconductor field, to achieve higher investment returns," said an industry insider.

Journalists from Kechuangban Daily noted that as a national industry guidance investment fund, the Service Trade Fund has had several investment cases in the semiconductor field before investing in Zhejiang MediKai. According to Tianyancha data, from 2021 to 2022, the Service Trade Fund directly participated in and invested in upstream and downstream companies on the semiconductor industry chain such as Changjing Technology and Silicon Valley Digital Modeling.

MediKai also stated that after this capital increase, the company would still be the controlling shareholder of Zhejiang MediKai, and Zhejiang MediKai would still be included in the company's consolidated statements. If the current round of investors chooses to exit through a buyback according to agreed terms in the future, the company can repurchase or transfer equity according to the relevant agreements.

Economist Pan Helin analyzed in an interview with Kechuangban Daily: "As a financial investment fund, there is a certain exit year requirement, generally up to 5 years, and subsequent exit methods will also be considered diversely. One of the more common exit methods is to realize capital gains for investors through issuance of shares and repurchase of equity."

It is worth mentioning that since the fourth quarter of 2023, the semiconductor industry market has been steadily improving. Recently, the market three-party institution WSTS raised the global semiconductor 2024 growth rate to 16%, and raised the forecast of the 2024 semiconductor market size from USD 588.364 billion to USD 611.231 billion.

On June 18, Tianfeng Securities stated in a research report that the semiconductor industry will enter the traditional peak season in the second half of the year. With the release of new consumer electronics products and breakthroughs in the research and development of domestic servers, it is determined that the demand for domestic semiconductors will continue to recover, and the growth potential of domestic semiconductor companies will be demonstrated under the promotion of policies to accelerate local substitution.

MediTech is mainly engaged in the research and development, manufacturing, and sales of precision optics, semiconductor optics, semiconductor micro-nano circuits, semiconductor packaging, and smart terminals. In 2023, the company achieved a total revenue of 321 million yuan, a year-on-year decrease of 22.48%; net income was -84.451 million yuan. As of the first quarter of 2024, MediTech achieved operating income of 116 million yuan, a year-on-year increase of 22.3%; net income was -24 million yuan.