“Science and Technology Innovation Board Daily”, September 4 (Reporter Guo Hui) On the evening of today (September 4), Xinlian Integrated announced that its proposed restructuring to acquire the remaining 72.33% of the shares of the holding subsidiary Xinlian Yuezhou Integrated Circuit Manufacturing (Shaoxing) Co., Ltd. (hereinafter referred to as “Xinlian Yuezhou”) passed a board resolution.

The restructuring draft released this time, compared with the plan released in June of this year, updated the specific plan for this transaction, and additionally disclosed the underlying asset evaluation and pricing, as well as the historical evolution of the underlying company, business conditions and financial data for the past three years, and debt transfers.

According to the announcement, the transaction price of assets corresponding to 72.33% of Xinlian Yuezhou shares was 5.897 billion yuan.

The specific transaction plan for the acquisition is that Xinlian Integration will pay 5.307 billion yuan by issuing shares, accounting for 90% of the total transaction price, and the rest will pay 0.59 billion yuan in cash payments, accounting for 10% of the total transaction price.

According to the issuance plan, the number of shares to be issued by Xinlian Integration is about 1.314 billion shares, accounting for 15.70% of the total share capital of listed companies after issuance. The issue price is 4.04 yuan/share. This price is not lower than the average trading price of listed companies' stocks on the 20 trading days before the pricing benchmark.

The trading partners that issued shares in this transaction were 15 counterparties, including Binhai Xinxing, Yuanzhi 1, Chentu Huahui, Shangrong Innovation, Zhangjiagang Yibo, Qiangke 2, Huamin Kewen, Jinggangshan Fupu, Xinpeng, Diaoyuan Technology, and Ruishi Chuangxin. Their status covers state-owned enterprises in Shaoxing, Nanchang, Ningbo, etc., as well as private equity institutions, companies listed on the Science and Technology Innovation Board, and technology startups.

After the transaction is completed, the shares of the two major shareholders, Yuecheng Fund and SMIC Holdings, which have a shareholding ratio of more than 10%, will be diluted from 16.33% and 14.09% before the transaction to 13.77% and 11.87%. At the same time, many of the counterparties mentioned above will enter the list of the top ten shareholders of Xinlian Integration, and the lockdown period will be 12 months.

Since there is no controlling shareholder or actual controller, the transaction will not result in a change in control of the listed company.

According to the restructuring draft, as assessed by the Asset Foundation Law, the book value of Xinlian Vietnamese owners' equity as of the evaluation reference date (April 30 this year) was 3.502 billion yuan, the total shareholders' equity value was 8.152 billion yuan, and the value-added rate was 132.77%.

Xinlian Vietnam's total asset book value is 10.541 billion yuan, assessed value 12.968 billion yuan, value-added value of 2.427 billion yuan, value-added rate 23.02%; total debt book value 7.039 billion yuan, assessed value 6.951 billion yuan, impairment amount 87.6574 million yuan, impairment rate 1.25%; owners' equity (net assets) book value 3.502 billion yuan, assessed value 6.016 billion yuan billion yuan, value-added 2.514 billion yuan, value-added rate 71.79%.

According to the financial data of Xinlian Yuezhou from January to April of this year announced in the draft acquisition, its operating income was 0.618 billion yuan, and net profit to mother was -0.45 billion yuan. In January-April of this year, the net profit from Xinlian Integration was -0.493 billion yuan. This means that after the acquisition is completed and consolidated, the listed company's net profit and earnings per share will be affected to a certain extent.

Xinlian Integration said that although Xinlian Yuezhou is currently still in a state of loss due to high depreciation and high R&D investment, it is expected that with the increase in Xinlian's business volume, continuous optimization of product structure, and the gradual end of the depreciation period of machinery and equipment, it is expected that it will improve profitability and become one of the important sources of profit for listed companies in the future. In the long run, this transaction is conducive to improving the asset quality of listed companies and optimizing the financial situation of listed companies.

According to VeriConnect, the acquisition will help VeriConnect concentrate superior resources to promote the rapid development of the two major product lines of silicon carbide and analog ICs. After the acquisition is completed, it will achieve unified management of 8-inch silicon-based production capacity, which will promote deep integration of internal management, process platforms, custom design, supply chain, etc., simplify management processes, and improve operational efficiency.

Xinlian Yuezhou currently has a silicon-based production capacity of about 0.07 million wafers per month and a 6-inch SiC MOSFET production capacity of 50,000 wafers per month, and has also strategically laid out on high-tech platforms such as VCSEL (GaAs) and power drives (high voltage analog ICs).

In 2023 and the first half of 2024, the shipment volume of 6-inch SiC MOSFETs used in automotive main drives was the highest in China. In April 2024, the Xinlian Yuezhou 8-inch SiC MOSFET project was successfully launched. Mass production is expected to be achieved in 2025, and it is expected to become the first large-scale domestic enterprise to mass-produce 8-inch SiC MOSFETs.

In the field of analog ICs, the domestic industry currently focuses on low-voltage BCD process technology for consumer-grade and industrial-grade applications. Few breakthroughs have been achieved in the medium and high voltage field, and Xinlian Yuezhou has the current production capacity of high-voltage analog ICs with a low localization rate, which can provide complete simulation and power solutions for high-voltage, high-current and high-density technology for applications such as new energy vehicles and high-end industrial control.

However, Xinlian Yuezhou initially formed mass production capacity in the fourth quarter of 2022. Large-scale mass production will begin in 2023, and the capacity utilization rate of silicon-based production lines in 2023 and January-April 2024 is still at a low level. In the draft acquisition, Xinlian Integration made a risk warning. In the process of future production capacity climbing, if the market growth falls short of expectations, or if competition intensifies due to excessive expansion of the overall production capacity of the industry, the target company is at risk of insufficient capacity utilization.

There are no performance promises set for this transaction. According to Xinlian Integration, the transaction is a listed company acquiring minority shares in a holding subsidiary. The target company was already controlled by the listed company before this transaction, and the evaluation method for the underlying assets did not use the income method.