Furude's acquisition target is confirmed, not an IPO "failure" in Zhongxin Silicon.

On the evening of October 16, Furude disclosed a preliminary plan for reorganization, in which the company plans to issue shares and convertible bonds to 59 transaction counterparts, including Shanghai Shenhe, to purchase 100% of the equity of Jiangsu Furel Hua Semiconductor Technology Co., Ltd. (hereinafter referred to as Furel Hua), and plans to issue shares to no more than 35 specific investors to raise supporting funds.

Previously, Furude had announced the acquisition of assets under the indirect holding company, Japan Magnetic Control, which owns many assets such as Zhongxin Silicon, Dunyuan Poly Core, and Furel Hua.

Among them, Zhongxin Silicon had an earlier IPO failure, and the market believed that it might "indirectly go public" through Furude.

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Now, with the reorganization plan released, the acquisition target is Furel Hua, whose overall profitability is still higher than that of Furude, which may be another "snake swallowing an elephant" transaction.

Furude's shares will resume trading on October 17, 2024 (Thursday).

The profitability of the assets to be placed is objective.

As the indirect holding company of Furude, Japan Magnetic Control controls Furude through Shanghai Shenhe.

Furel Hua is a holding subsidiary of Shanghai Shenhe, with its main business being the research and development, design, production, and sales of power semiconductor copper-clad ceramic substrates.

Since its establishment, Furel Hua and its predecessor, Shanghai Shenhe Copper-Clad Ceramic Substrate Business Department, have always focused on the field of copper-clad ceramic substrate products, with more than twenty years of research and production experience. Furel Hua independently masters a variety of advanced manufacturing processes for copper-clad ceramic substrates and is one of the few copper-clad ceramic substrate manufacturers at home and abroad that have achieved full-process self-manufacturing, ranking at the forefront of the industry.Fu Le Hua has established long-term and stable cooperative relationships with leading domestic and international semiconductor component production enterprises such as BYD, STMicroelectronics, Infineon, BorgWarner, Star Semiconductor, CRRC, Fuji Electric, and Bosch.

Fu Le De believes that this acquisition will help the company integrate high-quality semiconductor industry resources within the group, promote the introduction of high-quality semiconductor component manufacturing business, and better provide customers with high added-value comprehensive one-stop services, helping the listed company to be better and stronger, and further enhance the core competitiveness of the listed company.

From a financial data perspective, Fu Le Hua is far superior to Fu Le De.

As of June 30, 2024, Fu Le Hua's total assets were 3.89 billion yuan, and net assets were 3.02 billion yuan. In the first half of this year, the company achieved a business income of 900 million yuan and a net profit of 130 million yuan.

In the first half of the year, Fu Le De achieved a business income of 338 million yuan, a year-on-year increase of 20.76%; the net profit attributable to the parent company was 50.012 million yuan.

In fact, Fu Le Hua has undergone listing guidance, but has not submitted a prospectus.

There are two other companies aspiring to go public.

Japan Magnetic Control holds many assets in China through Shanghai Shen He, in addition to Fu Le Hua, there are Dun Yuan Ju Xin and Zhong Xin Jing Yuan, both companies are interested in entering the capital market.

Dun Yuan Ju Xin is the "largest domestic silicon component manufacturer in China".

In June 2023, the application for Dun Yuan Ju Xin to go public on the Shenzhen Stock Exchange main board was accepted.According to the prospectus disclosed, Dunyuan Juxin plans to issue no more than 62.381174 million shares, accounting for not less than 25% of the total share capital after the issuance, and is expected to raise about 1.296 billion yuan.

At present, the IPO process of Dunyuan Juxin is still suspended.

Zhongxin Silicon's IPO was accepted earlier, but it has already announced "failure".

Zhongxin Silicon submitted the IPO prospectus and other listing application materials for the Science and Technology Innovation Board to the Shanghai Stock Exchange in August 2022, and then replied to the Shanghai Stock Exchange's review inquiries three times between 2022 and 2023.

In July this year, the Shanghai Stock Exchange announced that due to Zhongxin Silicon's financial information having expired and not being updated for three months, the review of its Science and Technology Innovation Board listing was terminated.

Zhongxin Silicon is quite famous in the industry and is a semiconductor material company in China that can mass-produce 12-inch large silicon wafers.

Frequent asset installation

For this acquisition of Fuleh Hua by Fuleh De, some industry insiders speculate that because the listing processes of Dunyuan Juxin, Zhongxin Silicon, and Fuleh Hua are not very smooth, Japan Magnetic Control wants to inject related assets into Fuleh De through this acquisition to complete the "indirect listing".

Fuleh Hua is not the first time Fuleh De has acquired semiconductor assets from Japan Magnetic Control.

In June this year, Fuleh De signed a conditional effective "Equity Transfer Agreement" with Hangzhou Daiwa Jiangdong New Material Technology Co., Ltd., acquiring its 100% equity in Hangzhou Zhixin, with a transaction transfer price of 68 million yuan, all paid in cash.The controlling shareholder of Jiangdong New Materials is also Japan Magnetic Control.

It is worth mentioning that Japan Magnetic Control's valuation on the Tokyo Stock Exchange is not high.

According to the latest closing price, Japan Magnetic Control's total market value is about 117.6 billion yen, approximately 5.6 billion yuan, and its dynamic price-to-earnings ratio is about 7 times.

Semiconductor mergers and acquisitions are heating up

After the release of the "Opinions on Deepening the Reform of the Mergers and Acquisitions and Restructuring Market of Listed Companies" (M&A Six Articles), the merger and acquisition actions of listed companies have significantly increased.

Among them, the M&A Six Articles mentioned that actively support listed companies to carry out mergers and acquisitions and restructuring around strategic emerging industries, future industries, etc., carry out cross-industry mergers and acquisitions based on transformation and upgrading targets, help to fill the chain and strengthen the chain, and improve the level of key technology acquisition of unprofitable assets, as well as support the "two innovation" board companies to merge and acquire upstream and downstream assets in the industry chain.

Some investment banking insiders analyzed that the policy strength of the "M&A Six Articles" exceeded expectations, and the enthusiasm for mergers and acquisitions of listed companies was significantly stimulated. It is expected that as the policy dividends are gradually released, A-shares are expected to usher in a new round of merger and acquisition tide.