Beijing Junzheng's holdings increased by 4 billion yuan, and chip leader Vail Co., Ltd. surpassed 200 million a day. Shareholders: sit back and wait to lift cars

Beijing Junzheng (300223.SZ) received a large increase in holdings, which caused a stir in the capital market.

On the evening of May 22, Vail Co., Ltd. (603501.SH) announced that Shaoxing Weihao, the company's wholly-owned enterprise, plans to increase its holdings of Beijing Junzheng shares through centralized bidding or bulk trading. The total investment amount will not exceed RMB 4 billion, and the cumulative number of shares held in Beijing Junzheng after the increase will not exceed 50 million shares, not more than 10.38% of Beijing Junzheng's total share capital.

Weir Co., Ltd. specifically pointed out that since Huachuang Xinyuan and Lu Dalong hold shares in Beijing Junzheng respectively, if the company increases their holdings in Beijing Junzheng to 5% or more, the continued increase in holdings may have a resource bias against related parties or influence their investment decisions. Therefore, the company will carry out relevant decision-making procedures on the matter of continuing to increase its holdings in Beijing Junzheng shares in accordance with related transactions involving joint investment with related parties.

In early trading on May 23, Beijing Junzheng once rose nearly 17%. At the close of the day, it was 95.96 yuan/share, closing up 12.95%. The full-day turnover was 1,875 billion yuan, with a total market value of 46.21 billion yuan.

In contrast, Vail shares began a decline in early trading. It fell 2.25% before midday trading, then rebounded in the afternoon and finally closed up 1.1%, closing at 165.47 yuan/share, with a total market value of 145.1 billion yuan.

This is not Vail's first investment in Beijing Junzheng.

Times Finance notes that since November of last year, Shaoxing Weihao has spent 550 million yuan and 1.5 billion yuan respectively to participate in Beijing's Junzheng Ding increase and centralized bidding purchases. Up to this increase in holdings, Shaoxing Weihao held a total of 4.96% of Beijing Junzheng's shares. However, after this increase in holdings, its shareholding ratio was more than 10%.

On the afternoon of May 23, a relevant person from Beijing Junzheng responded to Times Finance and said, “(Well Co., Ltd.) participated in the company's fixed increase last year, and the subsequent increase in holdings was also due to optimism about the company's business. Currently, there are no control issues. If (shareholding) is limited to a certain limit, the announcement of the disclosure will be disclosed.”

“Sit back and wait for Weir shares to lift the car”
The increase in holdings of chip leaders is indeed good news for Beijing Junzheng.

Some investors posted at the stock bar saying, “Sit back and wait for Weir to lift the car” and “I'm sorry if you don't stop the rise,” but at the same time, there are also concerns among shareholders, “Is this a profit margin that boosts shipping?”

Beijing Junzheng is mainly engaged in the semiconductor industry. It has various product lines such as microprocessor chips, smart video chips, memory chips, analog and interconnection chips, etc., and is a leader in the field of in-vehicle storage.

According to financial reports, the company achieved revenue of 1,414 billion yuan in the first quarter of 2022, an increase of 32.37% over the previous year, and realized net profit of 232 million yuan, an increase of 92.42% over the previous year.

The profit for the full year of 2021 is also very impressive. Annual revenue was 5.274 billion yuan, up 142.07% year on year; net profit was 926 million yuan, up 1165% year on year.

Times Finance noticed that as early as November of last year, Shaoxing Weihao spent 550 million yuan to participate in Beijing's Junzhengding increase. At that time, the latter was allocated about 5.3 million shares at an issue price of 1,0377 yuan/share; from March 24 to May 19, 2022, Shaoxing Weihao also increased its holdings of Beijing Junzheng by about 18.6 million yuan through centralized bidding in the secondary market with its own capital of about 1,518 billion yuan, with an average price of about 81.61 yuan.

As of May 20 this year, Vail Co., Ltd. held a total of 4.96% of Beijing Junzheng's total share capital. After the transaction was completed, it held more than 10% of the latter's shares.

Furthermore, as of the end of the first quarter of this year, Lu Dalong, chairman of Haowei Technology, an affiliate of Well Co., Ltd., held 0.67% of Beijing Junzheng's total share capital, while related parties controlled by Lu Dalong held a total of 3.29% of Beijing Junzheng's total share capital.

As Vail shares continue to increase, is there any intention of seeking control over Beijing Junzheng?

On the afternoon of May 23, Times Finance called Weir Shares several times. As of press time, no relevant response has been received. However, in response to Times Finance, a relevant person from Beijing Junzheng said, “(Well Co., Ltd.) participated in the company's fixed increase last year, and the subsequent increase in holdings was also due to optimism about the company's business. Currently, we believe that there is no question of seeking control. If (shareholding) is limited to a certain limit, the announcement of the disclosure will be disclosed.”

The shareholding structure of Beijing Junzheng is scattered.

By the end of the first quarter, Tang Shengxin's semiconductor industry investment and Wu Yuefeng's integrated circuit equity investment had both ranked 12.57% among the first and second largest shareholders, while Shuangchuang Investment held 11.18% of the shares as the third largest shareholder. The company's actual controllers, Liu Qiang and Li Jie, were co-actors, with shareholding ratios of 8.4% and 4.68%, respectively.

Regarding the considerations behind this increase in holdings, open source securities analyst Ren Lang analyzed that Vail Co., Ltd. is a leader in image sensors and continues to expand display and simulation product lines in the automotive field. Beijing Jun is widely deployed in the fields of computing, storage, simulation, and interconnection chips, and has a stable position as a leader in in-vehicle storage. This shareholding is expected to enable the two sides to achieve a strong alliance and produce good synergies.

According to Wind data, the number of shareholders of Beijing Junzheng was 46,800 on May 10, rose to 48,000 on May 20, and increased by more than 1,000 within 10 days, an increase of 2.35%.

However, looking at the secondary market, Beijing Junzheng's performance was not as good as expected. On July 29, 2021, Beijing Junzheng reached a high of 199.97 yuan in the trading session. As of May 23, the closing price was 95.96 yuan, a decrease of 49.04%. As a result, there are also investors in stock bars complaining that “opening is the highest price” and “retail investors are deeply held in this way.”

The stock price of a leading chip company is close to being cut short
Standing from the standpoint of small to medium shareholders, this kind of concern always arises: is it cost-effective for a leader to spend a large amount of money to increase its holdings or acquire another company? Is the company spending money indiscriminately?

4 billion is not a small amount. If performance is used as a reference, this amount of money accounted for more than 70% of Vail's first-quarter revenue, while at the same time being equivalent to more than four times its net profit.

Vail Co., Ltd. pointed out that the source of capital for this transaction is about 40% of its own capital and about 60% of the capital raised by bank loans and other financing methods permitted by laws and regulations, and does not involve the use of raised funds. As of the end of the first quarter of this year, Vail shares had a book capital of 6.016 billion yuan, of which 40% would be about 2.4 billion yuan if taken out.

It is worth noting that if we use the closing price on May 20, the corresponding market value of the 23.9 million shares of Beijing Junzheng held by Vell Co., Ltd. is about 2.03 billion yuan, with a floating loss of about 37 million yuan; based on the closing price on May 23, the market value of Weir shares held is about 2.29 billion yuan, with a one-day surplus of 260 million yuan.

Weir Co., Ltd. explained the considerations of this transaction in its shareholding increase announcement, “It is beneficial for the company to strengthen strategic cooperation with Beijing Junzheng in terms of business. At the same time, it is expected that investment income will be obtained through investment in Beijing Junzheng, which will help increase the intrinsic value of the company's assets and long-term investment efficiency, positively return the company's shareholders, and is in line with the company's development strategy.”

Times Finance noticed that in terms of business relationships, Vail Co., Ltd. mentioned in its 2021 financial report that for the automotive sector, due to the comprehensive increase in the penetration rate, loading rate, and pixels of image sensors, the company made full use of the opportunities brought about by the sharp rise in volume and price, and achieved a significant increase in sales scale and market share.

At the same time, it said that in the automotive camera market, the company has significant technical advantages compared to competitors. For a long time, the company's car cameras have been mainly used by European and American car brands. In the future, the company will increase its development efforts in the Asia-Pacific market and increase the penetration rate of the company's products in the Asia-Pacific market.

Times Finance notes that a research report from Everbright Securities on May 8 maintained the “buy” rating of Weir shares, but at the same time suggests that considering the weak smartphone boom, the automobile industry affected by the epidemic and logistics, and the current intense CIS (contact image sensor) competition, the net profit of Hewell shares from 2022 to 2023 was 5.46 billion yuan (-7.1% year over year) /6.82 billion yuan (-4.3% year over year), respectively. The original forecasts were 5.88 billion yuan and 7.13 billion yuan, respectively.

According to the latest financial report, the revenue and profit of Vail shares is showing a slowing trend. In the first quarter of this year, its revenue was 5,538 million yuan, down 10.84% year on year; net profit was 896 million yuan, down 13.9% year on year.

Stock prices also declined along with performance. From December 27, 2021 to May 23, 2022, the stock price of Vail shares fell from a high of 321.9 yuan to 165.47 yuan, a decline of 46.28%, close to a drop of 46.28%.

On the institutional side, Vail shares were reduced by about 2.73 million shares from mainland stocks in the first quarter, with a change ratio of 0.33%. Currently, they hold 8.26% of shares. Meanwhile, Qingdao Rongtong Minhe Investment and Shanghai Tangxin Enterprise Management Partnership have all reduced their holdings. After the latter's equity penetration, the largest shareholder was the National Integrated Circuit Industry Investment Fund.

However, Times Finance noticed that the Nuoan Growth Hybrid Fund, managed by well-known fund manager Cai Songsong, increased its holdings of Weir shares, Beijing Junzheng 3.5 million shares, and 92,300 shares respectively in the first quarter. The current shareholding ratios are 1.4% and 3.27%, respectively, ranking as the sixth and fourth largest tradable shareholders of the two sides. Vail shares are the third largest shareholding stock grown by Novan, accounting for more than 10% of its stock market value.

Meanwhile, in the first quarter, Huaxia Fund joined its top ten tradable shareholders, buying 7.73 million shares and currently holding 0.98% of the shares.