On the evening of February 19, which is also the first trading day after the Spring Festival of the Year of the Dragon in 2024, Shanghai Longcheer Technology Co., Ltd. (hereinafter referred to as Longcheer Technology) disclosed the issuance announcement. However, to the surprise of the market, Longcheer Technology, which claims to be the world's leading provider of intelligent products and services, has not been affirmed and sought after by the market in this IPO.
According to the prospectus, Longcheer Technology's IPO fund-raising projects are Huizhou intelligent hardware manufacturing project (to raise 800 million yuan), Nanchang intelligent hardware manufacturing center reconstruction and expansion project (to raise 400 million yuan), Shanghai R&D center upgrade and construction project (to raise 200 million yuan) and supplementary working capital (to raise 400 million yuan), the cumulative total investment of the above IPO fund-raising projects is 242.9 billion yuan, and the cumulative amount of funds to be raised is 18 billion yuan.
However, according to the announcement of Longcheer Technology's initial public offering** and listing on the main board, the preliminary inquiry period for this offering is from 9:30 to 15:00 on February 8, 2024 (T-3). As of 15:00 on February 8, 2024 (T-3), the joint lead underwriters have received preliminary inquiries** from 7,302 placing objects managed by 700 offline investors through the business management system platform (issuance and underwriting business) of the Shanghai Stock Exchange, with a range of 18$28 shares-4560 yuan shares, and the total number of shares to be subscribed is 8,926,500 shares.
After excluding the above invalids**, the remaining 7,204 placing targets managed by the remaining 695 offline investors all met the conditions of offline investors stipulated in the Announcement of Issuance Arrangements and Preliminary Inquiry, with a range of 18$28 shares-4560 yuan shares, corresponding to the total number of shares to be subscribed is 8,829,890,000 shares.
After excluding the invalid and the highest part, Longcheer Technology and the joint lead underwriter comprehensively evaluated the company's reasonable investment value, the valuation level of the secondary market of comparable companies, and the valuation level of the secondary market of the industry to which they belonged according to the offline issuance inquiry, and fully considered the factors such as the effective subscription multiple of offline investors, market conditions, the demand for raised funds and the underwriting risk, and determined that the company's issuance ** was 2600 yuan shares.
However, the number of Longcheer Technology's public offering is 60 million shares, and today's issuance is 26 yuan shares, so the company's actual total funds raised are only 15600 million yuan, and the company's prospectus is expected to raise 1.8 billion yuan of capital projects, a significant decrease of 2400 million yuan of funds, equivalent to a total investment of 2The 7.4 billion yuan pre-raised 200 million yuan Shanghai R&D center upgrade and construction project was directly "cut".
So, as the third largest ODM manufacturer in China, Longcheer Technology, which has customer resources such as Xiaomi, Samsung Electronics, Company A, Lenovo, Honor, OPPO, Vivo, China Post Communications, China Unicom, China Mobile, and Company B, why is the IPO fund-raising funds not only not sought after by the market, but also greatly discounted?
First: the company is obviously not bad for money
From 2020 to 2021, the company's monetary funds reached 183.1 billion and 195.7 billion yuan, and between 2022 and June 30, 2023, the company's monetary funds have skyrocketed to 446.3 billion and 404.7 billion yuan, such a huge amount of funds can be completely self-sufficient for IPO fundraising projects.
In addition, as of June 30, 2023, Longcheer Technology's long-term borrowings and short-term borrowings were 56.6 billion and 53.5 billion yuan, which is not too much debt pressure for a company with more than 4 billion yuan of monetary funds. So far, it can be seen that Longcheer Technology, which is not short of money, will raise 1.8 billion yuan in this IPO, which is not seriously convincing to the market.
Second: huge dividends but also need to replenish liquidity
Longcheer Technology disclosed in the prospectus that the company has developed rapidly, and the scale of operation has shown a rapid growth trend, and the company has achieved operating income of 1,642,099 in each period of the reporting period150,000 yuan, 2,459,581750,000 yuan, 2,934,315$150,000 and $1,079,956190,000 yuan, with a compound growth rate of 33 from 2020 to 202268%。With the continuous expansion of the company's business scale, the company needs to maintain a high level of working capital for the purchase of raw materials, product production and daily operation needs, so the company intends to use the raised funds of 400 million yuan to supplement working capital to better meet the company's business development and working capital needs.
To put it simply, Longcheer Technology's business has grown significantly in the past few years, with a compound annual growth rate of 3368%, so it is necessary to replenish liquidity. However, behind this far-fetched reason, Longcheer Technology did not mention that the capital account alone exceeded 4 billion in monetary funds, nor did it mention the cumulative net profit attributable to the parent company in 2021 and 2022 of 110.8 billion yuan but took out a total of 55.5 billion yuan in cash dividends.
According to the disclosure in the prospectus, Longcheer Technology has paid many large dividends on the eve of its IPO, with a cumulative cash dividend of 100 million yuan in 2021 and a cumulative dividend of 4 in 20225.5 billion yuan, of which the dividend in the first half of the year was 16.2 billion yuan, with a dividend of 2 in the second half of the year9.3 billion yuan. You must know that the net profit attributable to Longcheer Technology in 2022 is only 5600 million yuan, but the cash dividend reached 45.5 billion yuan, and the proportion of dividends to the net profit attributable to the parent company reached 8125%。Under such a large dividend, Longcheer Technology has supplemented its working capital by 400 million yuan in the IPO fundraising project, and it is also called the need for funds for operation, which is obviously a lack of market persuasiveness.
Third: over-reliance on Xiaomi has a worrying future
As the third largest ODM manufacturer in China, Longcheer Technology is also called "Xiaomi Foundry" by the industry, and the reason is that from 2020 to the first half of 2023, Longcheer Technology's smartphone product revenue accounts for eighty percent of the company's total revenue, of which sales from Xiaomi have increased from 68 in 2020$9.1 billion to $13.3 in 20225.7 billion yuan, accounting for half of the company's total sales, and the net profit from Xiaomi also increased from 56.8 billion yuan increased to 96.7 billion yuan, accounting for 54% of the company's total profit.
In addition to such a serious dependence, Longcheer Technology has not reached the top of Xiaomi mobile phones. According to public information, in December 2023, Xiaomi mobile phones will win all opponents indiscriminately, leading Apple, Honor, OV, and Huawei"Domestic first"Leap to"No. 1 in China"。According to the latest statistics from market research institutions, the number of new device activations in China's smartphone market reached 2,108 in December 2023170,000 units, a year-on-year increase of 22%。Among them, Xiaomi surpassed Apple with 16With a market share of 5%, Apple topped the list in China with 159% ranked second, down 17. year-on-year7%。Honor and vivo ranked first.
Three, four. However, Longcheer Technology, as a "foundry" that relies heavily on Xiaomi, has not hit new highs like Xiaomi. According to the data, in 2023, Xiaomi's annual mobile phone shipments will reach 14.6 billion units, becoming the world's first domestic mobile phone, but Longcheer Technology's revenue in the first half of the year fell by 29% year-on-year, and the proportion of sales from Xiaomi fell to 3783%, and the proportion of net profit fell to 2662%, and predicted that the company's full-year revenue will decline by 14 year-on-year74%。
Longcheer Technology is still in the latest prospectus**, and it is expected that the company will achieve an operating income of about 170 from January to September 20235.1 billion yuan, down 2573%；The company is expected to achieve an operating income of 240 for the full year9.1 billion -2508.7 billion yuan, down 1450%-17.90%。
In other words, as Xiaomi's "foundry" and deeply bound to Xiaomi, Longcheer Technology will have a serious performance divergence in 2023, on the one hand, it is the world's largest mobile phone shipment of Xiaomi, a major customer, and on the other hand, its own performance has declined sharply, which is a "fatal" impact on the company's IPO, and it further reflects the worries about the company's prospects.
Fourth, there is a severe bottleneck in the development of the smartphone industry
The growth of the smartphone industry has been hindered for a long time, and industry insiders are deeply affected by this. It is understood that the "Economy" previously published a chapter entitled "The Smartphone Market Shows a Continuous Trend", pointing out that the current development of smartphones has entered a bottleneck period, and the homogenization of products is serious.
The Nihon Keizai Shimbun reported that Japan's Mizuho Bank released a report ** that smartphones will disappear by 2050. According to the report, smartphone penetration is now 65% worldwide, and this figure will drop to 60% in 2030 and 0% in 2050.
It can be seen that with the continuous decline of the global smartphone market, the smartphone industry chain is facing an unprecedented development dilemma. From upstream merchants to terminal manufacturers, the entire industrial chain is under tremendous pressure. Industry experts are calling for new breakthroughs to meet current challenges.
According to data from market research institutions, the global smartphone market has continued to be sluggish in recent years, and the growth rate has slowed down significantly. This has directly led to a sharp decline in the order volume of upstream merchants in the smartphone industry chain, and many companies have to take layoff measures to cope with operating pressure.
The upstream of the smartphone industry chain mainly includes chip manufacturers, parts manufacturers, etc. The survival of these enterprises directly affects the stability of the entire industrial chain. However, due to the decrease in market demand, many upstream merchants are facing the dilemma of overstocking and declining gross profit margins. Some smaller companies are on the brink of survival.
In addition, the sluggish mobile phone market has also had an impact on terminal manufacturers. In order to compete for market share, many mobile phone brands have had to reduce their profits, further compressing their profit margins. As a result, some manufacturers are facing significant challenges in terms of cost control and product innovation.
In the face of changes in the complex market environment of the industry, Longcheer Technology's IPO, of which Huizhou Intelligent Project has been invested for 38.8 billion yuan, Nanchang intelligent project has been invested 16.7 billion yuan, and the R&D center project has also been invested 07.4 billion yuan, according to Longcheer Technology plan, the above three projects need to invest 800 million yuan, 400 million yuan, and 200 million yuan respectively to complete, and at least 30.8 million new mobile phone production capacity will be added every year. Under such a large expansion of production capacity, how to digest the mobile phone market that has had a severe bottleneck in the future?