The pace of the meeting tends to be normalized, and on May 30th, Lancel Technology disclosed its response to the third round of inquiries.

Four days later, on June 3, Lancel Technology disclosed the draft of the meeting, which will be held on the 11th of the third listing of the Board's examination.

As a microchip unicorn on the SGX-STB, "heavyweights" such as Lancel Technology have been attracting a lot of attention.

Three rounds of questioning in the past, from the beginning of the 49 questions to six questions, from the core technology to the disclosure of information, the SSE audit center of the question comprehensive and in-depth.

Sina Finance noted that the valuation of the issue of Mission Hills Technology was adjusted downward from the initial 22 billion yuan to 12 billion yuan.

In addition, from the technical level as well as the independence of the company, the relationship between Lancel Technology and Intel has been repeatedly asked. And the latest response shows that there is a risk of decline in the company's performance in 2019.

The valuation is expected to be adjusted downward by 10 billion yuan

The prospectus shows that Mission Hills Technology was founded in 2004, and was listed on the Nasdaq in the U.S. stock market in September 2013, with an issue price of $10/share.

Less than a year later, the company was privatized and delisted from the U.S. stock market at a price of $22.6/share, with a total privatization amount of $693 million, or RMB 4.78 billion.

After delisting from the U.S. stock market, Lancel Technology completed its shareholding reform in 2018, and then filed a prospectus for KSC.

During this period, Lanci Technology has had a number of capital increases and equity transfers.

In terms of time, the most recent capital increase occurred in late November 2018, when Intel Capital subscribed 101.68 million new shares for $175 million, and SVIC No. 28 Investment subscribed 11.3 million new shares for $20 million.

The overall valuation of the transaction was $1.751 billion, equivalent to 12.06 billion yuan.

At this point, it was four months before the impact of Lancel Technology on the Science and Technology Innovation Board, Intel hitched a ride on the "surprise shareholding" of the shuttle bus.

It's worth noting that before this deal happened, the overall valuation of Lancel Technology's second equity transfer was only 5.134 billion yuan, a 135% increase in value in only six months.

Not only that, the sponsor will issue the expected market value of not less than 22 billion yuan, half a year, the valuation of Mission Hills Technology is higher than the sixth capital increase of 10 billion yuan.

The Board asked Lancel to explain the reasons for the rapid increase in valuation, and whether the intermediary's assessment of the estimated market value of the offering was based on sufficient evidence and whether the assessment was prudent.

The reply from Lanci Technology said that the P/E multiple of 5.134 billion yuan valuation corresponding to 2017 net profit after deduction is 18.71, and the P/E multiple of 12 billion yuan valuation corresponding to 2018 net profit after deduction is 17.18, and the P/E multiples of the two capital increases are basically the same.

As for the rapid growth in valuation there are two reasons, one is the company's performance growth is faster, and the other is that investors recognize the value of the company's business and future performance growth.

And 22 billion of the expected market value of the issue, the sponsor analysts refer to the same industry listed companies Huitian technology and Zhaoyi innovation average price-earnings ratio of 78.18 and average price-sales ratio of 12.53.

According to the two valuation methods, the valuation of the Mission Hills Technology was calculated to be 57.609 billion yuan, and 22 billion yuan, respectively.

And said the company is not yet listed on the capital increase and equity transfer prices and listed after the issue of valuation is not comparable, the issue of the expected market value of the theory can not be lower than the price of the latest capital increase.

But this argument clearly did not convince the SSE audit center.

It asked in the second inquiry, Intel post-investment valuation of $ 1.751 billion (12 billion yuan), the issuer's expected market value of not less than 22.01 billion yuan, Intel shares whether there has been a clear expectation of listing, the price of shares is fair.

This time, Lancel Technology denied that there is a listing expectation in the short term, and had to move out the valuation level of the listed company's acquisition of companies in the same industry, as well as the valuation level of Intel's investment in other projects in the same industry during the same period, and the price-earnings ratio is at 15.87-18.57 times, with no discrepancy, which is fair.

Intel's post-investment valuation of 12 billion is sort of explained.

As for the projected market value of the issue of 22 billion yuan, in the second reply of the Mission Hills Technology, the sponsor will issue the projected market value of the issue updated to not less than 12 billion yuan.

In this regard, some investment bankers said that the first projected valuation gave a very high valuation, but the reason for the explanation is very far-fetched.

In view of the previous case of unauthorized modification of the questioning of the science and innovation board, the second choice is not less than the last round of investment in the post-investment valuation of the safest statement, is to declare the safety card played through.

Relationship with Intel has been questioned many times

In the same year that Intel became a shareholder, the purchases of Intel by Mission Hills Technology increased dramatically. That is, customers and suppliers, but also shareholders, Intel and Lancel Technology's complex relationship was asked three times by the KTC Board of Review, which includes both the technical aspects and the company's independence.

In 2018, Mission Hills Technology's sales to Intel were 5.6 million dollars, and purchases surged by 27.09 million dollars. This is related to another product of Lanqi Technology, Jin caught server CPU.

During the reporting period, Lancel Technology cooperated with Tsinghua University and Intel to develop the Jin Catch? The product requires the purchase of general-purpose CPU core chips from Intel, which accounts for about 90% of the cost.

Currently still in the research and development stage, sales revenue is mainly engineering samples, accounting for a small percentage. The 2.3 billion fundraising project, there will be 750 million yuan for the product's research and development.

Based on this background, Lancel Technology and Intel have a procurement of related transactions, the future plans to increase the scale of sales of Jin caught server CPUs and hybrid security memory modules.

There are two sides to this.

On the one hand, there is the issue of attribution of R&D results and technology dependency. Mission Hills is responsible for the design of the overall module and some of the chips, Tsinghua University provides the algorithms for the Reconfigurable Computing Processor (RCP), Intel provides its general-purpose CPU core chip, and Mission Hills commissions a third party to carry out chip manufacturing, packaging and testing.

What are the R&D results? The ownership of the intellectual property rights is allocated on a tripartite basis, with independent development enjoying separate ownership.

On the other hand, Intel's general-purpose CPU core chips account for a relatively large portion of the cost of server CPUs. server CPU cost is relatively high.

With Intel's new server CPU and platform technology upgrades, the company is able to offer a wide range of products and services to its customers.

With the implementation of the server CPU and its platform technology upgrade project, the scale of the related transactions will be expanded, and whether Lanqi Technology will form a significant dependence on Intel.

Moreover, Intel, as a shareholder of Lancel, is expected to increase the scale of its connected transactions with Intel after the implementation of the above investment projects, and is the pricing of the transactions fair? Will the pricing of the transaction be fair? Will it have an adverse impact on the independence of Lancel Technology?

In 2018, when Intel increased its share capital, the two parties agreed on corporate governance, restrictions on share transfers, pre-emption rights, *** rights to sell the same, and other aspects of the rights.Intel enjoys rights including one-vote veto on major matters and the right to repurchase. The specific agreements are as follows:

i. Right to financial information (right to obtain annual and quarterly reports within a reasonable time);

ii. Appointment of board observers (right to appoint a board observer to attend the board meeting without any voting rights);

iii. Other protective matters (veto rights), i.e., the company shall not engage in the following behaviors without Intel Capital's consent:

iv. The Company shall not engage in the following acts without Intel Capital's consent:

a. Acts leading to the dissolution or liquidation of the Company or the institution of bankruptcy or receivership proceedings for the benefit of creditors;

b. Acts leading to a change in the control of the Company or the sale, pledge or transfer of all or substantially all of the Company's assets;

c. Acts of connected transactions requiring the consent of the Board of Directors of the Company in accordance with the Articles of Incorporation of the Company;

d. Changes in the scope of the Company's business that would adversely affect the Company's performance of commercial agreements.

Lantech described these as "negative protection" rights to protect the investors' own investment interests and emphasized that this was not a betting agreement.

It was agreed that if the company was not listed by May 2021, the shareholders would have the right to ask the company to buy back their shares at the cost of their investment.

If the listing is successful, the relevant protective rights enjoyed by Intel will cease.

From this perspective, Intel's role as a financial investor seems clear. However, during the reporting period, Intel regularly paid R&D support fees to Lancel, totaling about $2.1 million.

The transaction between the two sides, Lancel Technology needs to explain in detail in the reply.

Downstream customer shipment decline

In addition to this, according to Lancel's latest reply, the company is facing the risk of a decline in shipments from downstream customers in 2019.

The first quarterly results show that Lancel Technology's downstream customers' shipment revenues have declined by more than 20%: Samsung Electronics has declined by 33.81%, Hynix has declined by 22.24%, and Micron Technology has declined by 27.87%.

Samsung Electronics said by the main customers to inventory the impact of weak demand, the first quarter of 2019 storage products revenue year-on-year decline;

Hynix's DRAM products of which the unit price decline is the main reason;

Micron Technology is mainly affected by the seasonal demand in the mobile communications market is weak and the market environment, resulting in the decline in unit price of DRAM products and the sales volume of the minor The decline in DRAM product unit prices and sales volume was small.

This is consistent with the viewpoints of relevant industry research reports: DRAM prices have entered a downward cycle since the second half of 2018, and the DRAM market is expected to digest inventory in 2019 and drive demand growth around 2020 with the application of 5G, AI, and big data.

And in the DRAM market, Samsung Electronics, Hynix, Micron Technology The top three in the industry have a combined market share of more than 90%.

According to the first round of questioning, these three companies are also the top five customers of Lancel Technology. During the reporting period, Lancel's sales to the top five customers accounted for 70%, 84% and 90% respectively.

The decline in shipments from the more concentrated downstream customers may have an adverse impact on Lancel.

Although Lanqi Technology said that the company's revenue and shipments in the first quarter of 2019 increased year-on-year, so far it has not had a significant adverse impact on the company. However, the conduction of the industrial chain may have a lag.

If the DRAM industry boom further declines or rebounds less than expected, it may lead to a synchronized decline in the market size of the main product memory interface chips or slowdown in growth, which may have a certain adverse impact on the company's future performance.

(Wen/Company Watch)

Previously Reviewed

Copyright Note: If you are involved in a copyright issue, please contact us by sending a message to the background of the public number, we will deal with it at the first time!

For submission and business cooperation, please contact:

wujian1@staff.sina.com.cn