On December 30, Shenzhen Konka A (000016.SZ) announced that the company intends to issue shares to purchase the controlling stake of Hongjing Microelectronics Technology Co., Ltd. (hereinafter referred to as "Hongjing Microelectronics") and raise supporting funds.

At the same time, the company's securities will be suspended from the date of the announcement, and it is expected to disclose the transaction plan within no more than 10 trading days. The company emphasized that this transaction is not expected to constitute a major asset reorganization.

At present, Shenzhen Konka A is in contact with Liu Wei, the actual controller of Hongjing Microelectronics, who directly holds 25.13% of the equity of Hongjing Microelectronics. The company has preliminarily determined that the main counterparty for issuing shares to purchase assets is Liu Wei, and the transaction intentions of the remaining shareholders have not yet been finalized.

Who is Hongjingwei?

Hongjingwei was established on August 31, 2009, with a registered capital and paid-in capital of 92.7565 million yuan each, and its legal representative is Liu Wei. On April 1, 2015, the company's shares were listed on the National Equities Exchange and Quotations (NEEQ) and publicly transferred. On January 9, 2019, its shares were delisted.

Tianyancha shows that Liu Wei, chairman and general manager, directly holds 25.59% of the shares and ultimately benefits from 33.00579% of the shares, making him the controlling shareholder of the company; Hefei New Economic Industry Development Investment Co., Ltd. completed a subscribed capital contribution of 3.5 million yuan on December 23, 2019, holding 3.77% of the shares, making it the tenth largest shareholder of Hongjingwei; Anhui Science and Technology Achievement Transformation Guidance Fund Co., Ltd. completed a subscribed capital contribution of 2.38 million yuan on July 15, 2020, holding 2.57% of the shares, making it the thirteenth largest shareholder of Hongjingwei. The above two companies are state-owned capital at the Hefei municipal and Anhui provincial levels, respectively.

Liu Wei, the actual controller of Hongjing Micro, was born in May 1978. He received a bachelor's degree in electronic engineering from Anhui University, a master's degree in business administration from the University of Science and Technology of China, and a master's degree in business administration from Tsinghua University. He has worked in many listed IC design companies. After graduating in 2000, Liu Wei joined a foreign-funded enterprise and engaged in chip design and integrated circuit development.

In August 2009, Liu Wei initiated the establishment of Hongjing Microelectronics Technology Co., Ltd., which focuses on multimedia chip design, mainly focusing on technical directions such as audio and video acquisition, transmission, and processing. Its products cover new flat-panel, high-speed rail, automobile, radio and television, medical, intelligent manufacturing and other fields. In 2011, Hongjing Micro designed and completed the first multimedia chip.

The reporter of "Science and Technology Innovation Board Daily" found that on February 9, 2018, the General Office of the People's Government of Anhui Province issued the "Anhui Semiconductor Industry Development Plan (2018-2021)", and Hongjing Micro was included in the development plan as a key supporting enterprise. At that time, the company's operating model was Fabless, focusing on integrated circuit design with independent intellectual property rights, engaging in the design and sales of project products, and outsourcing the production and packaging of chips.

According to the financial report disclosed by Hongjingwei on the New Third Board, in 2018, the company's revenue was 73.85 million yuan, a year-on-year increase of 118.56%, and the gross profit margin was 35.2%; the net profit attributable to the parent was 10.37 million yuan, and the net profit excluding non-recurring items was 8.752 million yuan; the total assets at the end of the year were 137 million yuan, the liabilities were 49.62 million yuan, and the parent company's asset-liability ratio was 34.31%; the research and development expenses for the year were 8.08 million yuan, an increase of 73.76% from the end of 2017.

In 2023, Hongjingwei also handled the registration of tutoring with the Anhui Securities Regulatory Bureau, and planned to issue shares for the first time and go public, and the tutoring institution was Wugang Securities. In terms of performance, according to the tutoring registration report, in the past two years, Hongjingwei's operating income was 291 million and 286 million respectively, and the net profit attributable to the parent company's owners was 19.41 million yuan and 27.64 million yuan respectively.

Shenzhen Konka is a leading enterprise in China's color TV and mobile phone industries. Its business involves consumer electronics and semiconductor business, and it produces and sells color TVs, white appliances, optoelectronic displays, storage and printed circuit boards.

In terms of performance, from 2021 to 2023, Shenzhen Konka achieved operating income of 49.107 billion, 29.608 billion, and 17.849 billion; net profit of 905 million, -1.47 billion, and -2.164 billion. In the first three quarters of this year, Shenzhen Konka achieved operating income of 8.12 billion, a year-on-year decline of 45.42%; net profit loss of 1.606 billion, and loss increased by 124.67% year-on-year.

According to Shenzhen Konka A in its semi-annual report, in terms of semiconductor and storage chip business, the company has made layouts in the fields of storage, optoelectronics, etc., among which the storage field mainly carries out packaging, testing and sales of storage-related products; the optoelectronic field mainly focuses on the three major business segments of Micro LED and Mini LED chips, mass transfer, and display, and promotes the transformation of optoelectronic business from technology research and development to industrialization development. After industrialization, the operating profit comes from the price difference between product cost and sales price.

This merger will open up a new path for their development.

Source: Content from Semiconductor Industry Observation

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