Application for IPO related to lithography business incomplete Huazhuo Jing Science and Technology Entrepreneurship Board has been suspended.

A few days ago, according to the official website of the Shanghai Stock Exchange, Science and Technology Innovation Board IPO, a semiconductor processing equipment R & D enterprise Beijing Hua Zhuo Jingke Technology Co., Ltd. (hereinafter referred to as "Hua Zhuo Jingke"), applied for suspension of consideration by the listing Committee.

Since submitting the prospectus in June 2020, Huazhuojingke has so far experienced two rounds of Shanghai Stock Exchange inquiries and responses and twice suspended the listing review due to the expiration of its financial statements. The main reason for the long review process seems to have fallen back to the initial prospectus submitted by Hua Zhuo Jingke.

In the prospectus, the concept business of lithography machine, which accounts for a low proportion of revenue and high market heat, is first analyzed in the chapters of business technology and management discussion, which is suspected of being overemphasized. At the same time, it also avoids the necessary industry prospects, subdivided business revenue and patent technology-related information disclosure.

Enterprises need to implement fuzzy problems within two months

According to the latest announcement, there are mainly two aspects that Wazhuo Jingke needs to actively implement: first, it should be combined with the current industrialization of the company's dual-worktable business of lithography machines. demonstrate whether its main business during the reporting period meets Science and Technology Innovation Board's positioning and listing conditions; second, whether the relevant information disclosure of lithography dual-workpiece table business meets national laws and regulations and Science and Technology Innovation Board issuance and listing information disclosure requirements.

The suspension of consideration can be seen as the Shanghai Stock Exchange's final defense opportunity for companies to apply for this listing, but there is really not much time left for Wazhuojingke. According to the regulations, the suspension of deliberation shall not exceed two months.

According to the announcement of the results of the 51st Review meeting of the Shanghai Municipal Committee disclosed on July 29, the on-site inquiry of the Shanghai Municipal Committee on Huazhuo Jingke is mainly focused on three aspects. they are where is the prospect of the industrialization of its lithography machine double workpiece table business, whether the company is heavily dependent on Tsinghua University, whether the disclosure of large product transaction information during the reporting period is complete and whether the transaction is in compliance.

Zheng Shenghao, a lawyer engaged in corporate listing and mergers and acquisitions at Beijing Guohao Law firm, said in an interview with Science and Technology Innovation Board Daily that in the remaining two months, enterprises should not cooperate with the municipal committee-- but enterprises should lead the argumentation of disputes and vague issues. "Enterprises that have resumed their meetings after a moratorium in the past are basically out of date," he said.

Incomplete disclosure of information stored in the dual worktable business of the prospectus lithography machine

According to the prospectus, Huazhuojingke is a high-tech enterprise engaged in integrated circuit manufacturing equipment and its core components, precision / ultra-precision sports system research and development, production, sales and technical services.

In the earliest prospectus submitted by the enterprise, the most eye-catching part is Huazhuojingke's description of its core product "lithography machine double workpiece table" and the company's current situation: "the company's core product is lithography machine double workpiece table. And on the basis of its core technology, we have developed derivative products such as ultra-precision measurement and control equipment, complete machines and components. At present, the company is the first domestic enterprise to independently develop and realize the commercial production of double worktable lithography machine, and it is the supplier of dual worktable product and technology development of Shanghai Microelectronics, a leading domestic high-end lithography machine. "

It is understood that the lithography machine workpiece table is one of the core subsystems of the lithography machine, and its main function is to carry the wafer to do high-speed and ultra-precision movement according to the specified trajectory and to complete a series of actions required for exposure. The double worktable of Huazhuo Jingke's "core product" lithography machine is one of the core components of the chip manufacturing IC lithography machine, and its performance plays a decisive role in the lithography of the wafer.

From the Shanghai Stock Exchange's inquiry to Huazhuojingke and the company's reply, the prospectus seems to have the problem of incomplete disclosure of information on the company's lithography workpiece desk business.

In the prospectus submitted by Hua Zhuo Jingke in 2020, the business income related to the double worktable of lithography machine accounted for 28.12%, 9.28% and 0% of the operating income of each period from 2017 to 2019, and accounted for 8.88% of the total operating income in three years.

The double workpiece table of lithography machine is the main business which accounts for a low proportion of revenue, but Hua Zhuo Jingke "focuses on the analysis of business technology and management discussion and analysis", which is specially taken care of by the first round of inquiries of the Shanghai Stock Exchange. In response to this, the Shanghai Stock Exchange specifically requested to further sort out and adjust the disclosure order and focus of the main products and business throughout the prospectus in accordance with the order of the proportion of income from the main business products during the reporting period.

Then in the reply of Huazhuo Jingke, after the introduction order of the original main product "lithography machine double workpiece table", the expression was also adjusted to "lithography machine double workpiece table module", and the related business was adjusted to "lithography machine double workpiece table module and technology development".

However, the disclosure of the quality of the "main products" has not yet come to an end. In the second round of inquiries about the company on the Shanghai Stock Exchange, Huazhuojingke was further asked to "distinguish between product sales and the provision of technical services in the composition of product revenue."

The company replied that the lithography machine dual worktable module and technology development of a business, actually only technology development revenue: revenue in 2020 reached 17.3774 million, accounting for 11.42% of the total revenue. In other words, Huazhuo Jingke unparalleled worktable module product sales.

"whether there is a final product and mass production on a large scale is not the core reference index to consider the technical content." Step Rixin, executive director of Chuangdao Investment Consulting, told Science and Technology Innovation Board Daily that in order to highlight scientific and technological content, chase hot spots and improve valuation, there will indeed be some inappropriate phenomena, such as too much emphasis on less business, catering to the concept of high market attention, and so on.

All these will mislead investors and make inaccurate judgments about the value of the company. "the detailed disclosure required in the inquiry of the Shanghai Stock Exchange reflects the most essential requirements of the registration system," Bu Rixin said. "if companies want to disclose the truth of their business to the outside world, they should not confuse different types of business and make it difficult for investors to make appropriate investment decisions."

The double worktable market is in the early stage and the industrialization cycle is long.

In fact, in terms of the overall business of Huazhuo Jingke, in terms of R & D investment, main business patents, and compound revenue growth in the past three years, it meets Science and Technology Innovation Board's attribute standard for listed enterprises; in terms of national projects, main product classification and patent status undertaken by the company, it also meets most of the requirements in the second attribute standard of science and technology.

However, according to the Huazhuo Jingke prospectus, in addition to self-research, almost all of the core patents held by the company come from Tsinghua University.

According to the announcement, in 2014, Huazhuo Jingke and Tsinghua University signed a technology transfer contract with a total contract amount of 8 million yuan (plus follow-up revenue commission) and a validity period of 20 years for double worktable products of lithography machines. According to Huazhuojingke's response to inquiries from the Shanghai Stock Exchange, as of June 30, 2021, the company and Tsinghua University have a total of 162 patents as co-patentees.

Even in the self-developed patents, it also includes 15 authorized patents and 4 pending patents formed by the part-time staff and entrepreneurs of Tsinghua University who participated in the research and development of the company. Huazhuojing is the patent right (applicant) of the above patents and patents under examination. In order to prevent the relevant patent rights from being affected, Huazhuo Jingke disclosed that it was negotiating with Tsinghua University to deal with the relevant matters.

Although in the on-site inquiries of the Shanghai Municipal Committee and the two rounds of written inquiries of the Shanghai Stock Exchange, Huazhuojingke was repeatedly asked to disclose in detail the company's ability in independent research and development, excluding the company's significant risk of technological dependence on external institutions, however, through written and on-site replies, after this suspension of consideration, the issues that need to be further implemented by Huazhuojingke within a two-month period will no longer include relevant issues.

Therefore, the first point that Huazhuo Jingke needs to implement seems to focus on the industrialization prospect of the company's lithography machine double workpiece table business.

According to a number of announcements, the only customer of this product is Shanghai Microelectronics. In 2017 and 2018, the company only developed and produced dual workpieces for 65nm front lithography machines for Shanghai Microelectronics.

Among them, due to the increase in the acceptance cycle of Shanghai Microelectronics, Shanghai Microelectronics did not complete the acceptance of the contents of the contract in 2019 and 2020. as a result, Huazhuojingke was unable to confirm the revenue of the product in that year.

Since Huazhuojingke first submitted its prospectus on June 24, 2020, it has twice "due to the expiration of the financial information recorded in the IPO application documents" on September 30, 2020 and June 30, 2021, respectively. it is necessary to suspend the examination of the issue and listing in accordance with Article 64 (6) of the Audit rules.

It is understood that Shanghai Microelectronics, as the only lithography machine double workpiece business customer of Huazhuo Jingke, is the only manufacturer of lithography machine equipment in China, and its scheduling process has a great impact on the growth of the company's lithography machine dual workpiece business.

At present, China's IC front lithography machine market is still in the early stage, has not yet formed a large-scale domestic lithography machine production, accordingly, China's IC front commercial lithography machine double workpiece market is also in the early stage, has not yet formed a large-scale market capacity.

Step Rixin said that the duplex table is one of the core components of the lithography machine, and domestic customers are relatively simple, so it is more difficult to enter international customers, so it is not easy to take the first step, so a company can only provide technical services. to the development of self-produced lithography machine dual-workpiece table modules and even the whole machine products, it must be a long-term thing.