Dongwei Semiconductor: issue price-to-earnings ratio of more than 400x bet on high-voltage super-junction MOSFET products

East Micro Semiconductor, a power device developer, is about to land on the Kechuang board. Today (January 24), East Micro Semiconductor officially launched the IPO purchase, the purchase code is 787261. The company's offering price is 130.00 yuan per share, and the corresponding price-to-earnings ratio is 429.30 times, which is higher than the average static price-earnings ratio of the industry for nearly a month, and also higher than the data of comparable companies in the same industry.

East Micro Semiconductor plans to issue 16.8441 million shares, which is expected to raise 2.19 billion yuan, 2.33 times more than the original plan. The focus of Dongwei Semiconductor's fundraising in Science and Technology Innovation Board IPO, includes super junction and shielded gate power device product upgrading and industrialization projects, as well as new structure power device research and development and industrialization projects, with plans to invest 204 million yuan and 1.08 yuan respectively.

Comparable companies are at the bottom of the market share.

In the first half of 2021, 74.55% of Dongwei Semiconductor's revenue came from sales of high-voltage super-junction MOSFET products, and 24.96% of revenue came from medium-and low-voltage shielded gate MOSFET.

Contrary to the company's revenue structure, the corresponding market size of the two main products is nearly 5 times different. According to the relevant data of Omdia, the market size of China's high-voltage super-junction MOSFET is about 440 million US dollars in 2024, while the market size of China's medium-and low-voltage MOSFET is expected to be 2.12 billion US dollars in 2024. This was questioned in the inquiry of the handing over office.

A reporter from Science and Technology Innovation Board Daily previously reported that the reason why Dongwei Semiconductor is betting on high-voltage super-junction MOSFET products stems from the company's judgment on the growth of its downstream application space.

According to Dongwei Semiconductor, high-voltage super-junction MOSFET products have been widely used in downstream emerging fields such as new energy vehicles, communication power supplies, photovoltaic inverters and so on. Taking the photovoltaic market as an example, high-voltage super-junction MOSFET is mainly used in high-efficiency photovoltaic micro-inverters to convert the direct current generated by solar cell modules into AC with adjustable frequency. The industry scale of photovoltaic micro-inverter is expected to reach 20.6 billion yuan in 2025, with a compound growth rate of 24.8% from 2020 to 2025.

However, a semiconductor industry researcher told Science and Technology Innovation Board Daily that as high-voltage superjunction MOSFET also faces competition from IGBT and silicon carbide devices, its competitive advantage in product performance is not significant.

Due to the choice in the direction of subdividing the business of power devices, the global market share of East Micro Semiconductor MOSFET power devices is "at the bottom" compared with companies in the same industry.

Data show that in 2019, in the global market share of MOSFET power devices, Huarun Weibo has a market share of 3.09%, Yangjie Technology has a market share of 1.8%, Huawei Electronics has a market share of 1.58%, Xinjieneng has a market share of 1.31%, Shilan Wei has a market share of 0.42%, while Dongwei's market share is only 0.34%.

In addition to high-voltage super-junction MOSFET products, including super silicon MOSFET and TGBT products, which account for only 0.42% and 0.07% of revenue respectively, industrial-grade downstream applications also correspond to popular sectors such as DC charging posts for new energy vehicles, 5G base stations and communication power supplies, data center server power supplies, photovoltaic inverters, and so on.

Among them, Super Silicon MOSFET products are independently developed by Dongwei Semiconductor. Li Lin, director of the company, said in the online debut roadshow that the performance of this product is comparable to that of standard gallium nitride power device products. At present, 18 models have been put into mass production.

The company's Super MOSFET products are close to the switching speed of gan power devices in power applications, and are suitable for high-density power systems, such as new energy vehicle charging posts, communication power supplies, industrial lighting power supplies, fast chargers, module converters, fast charge ultra-thin PC adapters and other fields. At present, the company is promoting the mass production of super silicon products in the 12-inch wafer manufacturing line to meet the increasing orders and demand. "

It is suspected that Huawei is the largest customer of the company.

The prospect of Dongwei semiconductor products in downstream applications attracted the attention of Huawei in 2019. In 2019, Hubble Investment communicated with Dongwei Semiconductor about potential investment intentions, and finally bought a stake in April 2020. So far, Hubble Investment holds 6.59% of Dongwei Semiconductor.

It is worth noting that East Micro Semiconductor's current final downstream customers are suspected to include Huawei, and in the first half of 2021, products sold to this customer through intermediate distributor Armenia Stone accounted for 15.42% of the revenue, while direct sales accounted for 1.38% of the total revenue.

Dongwei Semiconductor has disclosed that the company provided a small number of samples to customer A for testing and verification as early as 2019, and in August 2020, customer A began to purchase from the company through Armenia, and the company officially became a direct supplier to customer An at the end of the same year.

The reason why customer A needs to purchase power devices through dealers is due to the domestic and foreign trade environment such as growing trade frictions between China and the United States, as well as the long certification time of qualified suppliers.

It has been disclosed that the products purchased by suspected Huawei customer A from Dongwei Semiconductor will undergo further processing optimization compared with other customers, such as defining equipment and packaging process parameters in the packaging process to ensure the consistency of the process; in the finished product acceptance process, more stringent test specifications have been set and regular reliability sampling tests have been increased to reduce the risk of defective products. As a result, the price of the product sold to customer An is about 10% higher than the regular selling price.

The Shanghai Stock Exchange has made inquiries about the fairness of the sales prices of the above products. After verification by Dongwei Semiconductor and its sponsor China International Capital Corporation, it is confirmed that the sales price to Armenstone and customer An is fair and reasonable, and there is no potential benefit transfer or other benefit arrangement.

In addition, the list of East Micro Semiconductor shareholders shows that Juyuan Juxin holds 9.95% of the shares, and the latter investors include the National Integrated Circuit Industry Investment Fund Co., Ltd. (45.09%) and SMIC's equity investment institutions (31.63%).

The announcement shows that during the reporting period, East Micro Semiconductor mainly purchased wafers from Huahong Semiconductor, South Korean wafer foundry DBHitek, Yuexin Semiconductor and so on.