Shenzhen China Micro Semicon (SH:688380) Xin Lang Zheng Quan·2025-09-26 09:48Core Viewpoint - Zhongwei Semiconductor (Shenzhen) Co., Ltd. has submitted an application for an IPO on the Hong Kong Stock Exchange, aiming to issue H-shares and list on the main board, which has attracted market attention due to its status as a leading domestic MCU chip design company [1] Financial Health - As of June 30, 2025, the company's debt-to-asset ratio is only 9.26%, significantly lower than the industry average, indicating a rare level of financial stability [2] - The company holds substantial cash and financial assets, with cash and cash equivalents amounting to 428 million yuan and total financial assets exceeding 2 billion yuan, primarily in bank wealth management products and large certificates of deposit [2] - The company's liquidity ratios are impressive, with a quick ratio of 9.60 and a current ratio of 10.70, reflecting strong short-term debt repayment capabilities [2] - In the first half of 2025, the company achieved operating revenue of 504 million yuan, a year-on-year increase of 17.56%, and net profit of 86.47 million yuan, up 100.99% year-on-year [2] Market Position and Revenue Sources - The company's business is highly concentrated in the domestic market, with negligible overseas revenue, contrasting with its stated goal of a "global strategic layout" [3] - In the first half of 2025, revenue from MCU solutions was 378 million yuan, accounting for 75.1% of total revenue, while SoC solutions contributed 112 million yuan (22.3%), and ASIC solutions only 11.05 million yuan (2.2%) [3] - The company's products are primarily focused on home appliances and consumer electronics, ranking first in the Chinese smart home appliance MCU chip market and second in the consumer electronics MCU chip market by revenue in 2024 [3] IPO Fund Utilization Concerns - The IPO proceeds are intended for enhancing R&D capabilities, strategic investments and acquisitions, global business development, and general corporate purposes [4] - Market analysts question the necessity of equity financing for a company with substantial cash reserves and low debt levels, suggesting that the company could fund its growth plans using its own resources [4] - Critics express concerns that large-scale equity financing could dilute existing shareholders' equity and reduce return on equity, given the company's already healthy financial status [4] Competitive Landscape and Market Growth - The domestic MCU market is highly competitive, with over 400 manufacturers, leading to intense price competition and low profit margins in the low-end market [5] - According to Frost & Sullivan, the Chinese MCU market is projected to grow from 56.8 billion yuan in 2024 to 96.9 billion yuan in 2029, with a compound annual growth rate of 11.3%, driven primarily by the automotive electronics sector [6] - The company is actively transitioning to the high-end market, focusing on automotive-grade control chips, with significant revenue growth in industrial control products (31.6% year-on-year) and automotive electronics (44.3% year-on-year) in the first half of 2025 [6] Strategic Considerations - Supporters of the IPO argue that it is part of the company's strategic layout, facilitating smoother connections with overseas investors and strengthening global business capabilities [7] - However, critics view it as a potential over-financing move, raising concerns about the efficient use of funds and the risk of idle capital if the company cannot effectively deploy the raised capital [7] - The company must demonstrate the rationale behind its financing plans and ensure efficient fund utilization to avoid falling into the "over-financing" criticism [7]