Core Viewpoint - Zhonglian Development Holdings plans to acquire up to 100% of Longteng Semiconductor for a price between HKD 4.5 billion and HKD 9 billion, marking a reverse takeover (RTO) transaction [1][17] Group 1: Acquisition Details - The acquisition is characterized as a reverse takeover, where an unlisted company gains control over a listed company by injecting assets [1][17] - Longteng Semiconductor previously attempted to go public on the STAR Market in June 2021 but withdrew its application in December 2021 after two rounds of inquiries, primarily due to concerns over its small scale and weak financial data [1][17] Group 2: Market Reaction - Prior to the announcement, Zhonglian Development's stock price increased from HKD 2.05 to HKD 2.53, a 23% rise over 14 trading days [1][17] - The market's reaction to the acquisition has been relatively muted, possibly due to concerns regarding Longteng Semiconductor's fundamentals [2][18] Group 3: Longteng Semiconductor's Financial Performance - Longteng Semiconductor's revenue from military products was minimal from 2018 to 2020, but the company shifted focus to military markets due to changes in international trade policies [3][19] - In 2020, the company's gross profit reached HKD 40.69 million, a nearly 300% increase from the previous year, with military clients contributing over 70% of this profit [4][20] - The gross margin for military power devices was significantly higher at 95.97% compared to 8.22% for civilian products in 2020 [4][20] Group 4: Accounts Receivable and Profitability - Longteng Semiconductor's accounts receivable grew to HKD 71.96 million in 2020, a nearly 150% increase year-on-year, indicating longer payment cycles from military clients [7][22] - The company transitioned from a low-profit, fast-turnover model to a high-profit, slow-turnover model, which introduces liquidity risks but also potential for better profit growth [7][22] - The net profit for Longteng Semiconductor improved from a loss of HKD 13.2 million in 2019 to a profit of HKD 24.53 million in 2020, but the company faced significant challenges in subsequent years [8][23] Group 5: Industry Context and Challenges - The military electronics sector entered a downturn after reaching a peak in 2022, with many companies facing declining revenues and profits [8][24] - Longteng Semiconductor reported revenues of HKD 614 million in the first three quarters of 2025, but incurred a net loss of HKD 58.69 million, highlighting ongoing profitability issues despite revenue growth [8][24] - The company’s R&D expenditures were significantly lower than its peers, raising concerns about its competitive position in the market [9][25] Group 6: Future Prospects - Longteng Semiconductor's planned investment in an 8-inch power semiconductor manufacturing project is underway, with the first phase already in production [16][29] - The company faces ongoing pressure from operational costs and depreciation associated with its manufacturing facilities, which could impact profitability [16][29] - The collaboration between Zhonglian Development and Longteng Semiconductor is currently based on a non-binding memorandum of understanding, indicating that the restructuring process is still in its early stages [16][29]
龙腾半导体赴港“借壳”的背后：失去军品红利后再陷亏损 行业上行期却打“价格战”竞争力何存？