Solve the situation through mergers and acquisitions? Ten billion yuan market value, research silicon hand in hand, old man, high-frequency technology

Photo source: Visual China

Blue Whale News, March 5 (Reporter Xu Xiaochun)On the evening of March 4, Youyan Silicon, a semiconductor materials company with a market value of 10 billion yuan, announced that it planned to acquire a 60% stake in HF Technology.

After an announcement, the next day opened. Youyan Silicon’s share price once hit a daily limit, and the closing price rose 14.64%. Among the 179 listed companies in the semiconductor sector, Youyan Silicon’s share price rose second only to Neusoft Carrier. The latest market value of Youyan Silicon reached 16.6 billion yuan.

The acquired target, High-Frequency Technology, is an old face in the capital market. As early as 2018, Xu Youzhi, the real controller of High-Frequency Technology, and others sold a total of 70% of the shares to Botian Environment at a premium of 1972%. Subsequently, the two parties to the transaction were divided due to consideration payment issues, and the transaction was abandoned. In 2023, High-Frequency Technology conducted guidance and filing for the first time in an attempt to impact an independent IPO, but so far failed.

It is no coincidence that High-frequency Technology and Youyan Silicon met. Blue Whale News reporter found that as a supplier of ultrapure water systems for core industries such as chip manufacturing, Youyan Silicon’s prospectus shows that as early as 2020, High-frequency Technology was once the fifth largest supplier of Youyan Silicon.

Hand in hand, our old buddy, High-Frequency Technology, was once the top five suppliers of Youyan Silicon

On the evening of March 4, Youyan Silicon announced that the company would acquire a 60% stake in HF (Beijing) Technology Co., Ltd.(hereinafter referred to as HF Technology) by paying cash. After the transaction is completed, Youyan Silicon will realize the control of HF Technology.

At present, Youyan Silicon has signed a “Share Acquisition Intention Agreement” with Xu Youzhi and Wang Xia, the actual controllers of HF Technology, and shareholder Wang Xiao. The three together hold 40.06% of HF Technology’s shares.

High-frequency Technology is a supplier of ultrapure water systems focusing on core integrated circuits such as chip manufacturing. Its business covers all aspects of the preparation, distribution, collection, processing and reuse of ultrapure water, and can ensure downstream customers ‘ultrapure water at all stages of production. Demand.

After an announcement, on March 5, Youyan Silicon opened sharply at the opening, and once hit the daily limit. As of the close of the afternoon, Youyan Silicon rose by 14.64%, closing at 13.31 yuan/share. Among the 179 listed companies in the semiconductor sector, Youyan Silicon’s share price rose second, with the company’s total market value of approximately 16.6 billion yuan.

HF Technology was established in November 1999. The company’s official website shows that HF Technology has customers from well-known manufacturers and customers in the chip field at home and abroad, including SMIC, Jinghe Integration, China Resources Micro, Youyan Silicon, Yongsi Electronics, Grofonde, and SK Hynix.

Prior to this transaction, Youyan Silicon and HF Technology had had many years of business cooperation projects. The prospectus disclosed by Youyan Silicon in 2022 shows that in 2020, High-Frequency Technology was once the fifth largest supplier of Youyan Silicon. During the year, Youyan Silicon purchased approximately 33.8314 million yuan in production equipment from it.

In June 2021, Youyan Silicon’s parent company RS Technologies (hereinafter referred to as RST) increased capital to the listed company with its equity stake in Shandong Youyan Ace. Later, Youyan Silicon deployed 12-inch silicon wafers through Shandong Youyan Ace. In 2022, High-frequency Technology won the bid for the pure water system project of Youyan Ace’s large silicon wafer industrialization project for 12-inch integrated circuits, with a bid price of 72.0805 million yuan.

After selling Botian Environment failed to sell itself and making an independent IPO, High-frequency Technology raised funds intensively in four years

This is not the first time that high-frequency technology has appeared in the A-share capital market.

In April 2018, Botian Environment extended an olive branch to high-frequency technology. Taking December 31, 2017 as the benchmark date for evaluation, the net book assets of HF Technology at that time were approximately 24.3121 million yuan, but the estimated value of shareholders ‘total equity was approximately 504 million yuan, and the evaluation value-added rate reached 1971.71%.

At that time, Botian Environment planned to purchase 70% of the equity of HF Environment held by Xu Youzhi, Wang Xia and Wang Xiao by issuing shares and paying cash. The transaction price was initially determined to be 350 million yuan, of which the share consideration was 200 million yuan and the cash consideration was 150 million yuan.

At the same time, Xu Youzhi, Wang Xia, and Wang Xiao signed a performance commitment, promising that during the period from 2018 to 2020, after deducting non-recurring gains and losses and deducting the impact of share-based payments after audit (within the above three years, the impact of share-based payment accounting treatment caused by the implementation of equity incentives on the high-frequency environment) will not be less than 138 million yuan.

In November 2018, after Botian Environment paid a deposit of 30 million yuan, Xu Youzhi and others completed the transfer change registration of 70% of the equity of High-Frequency Technology. Subsequently, Botian Environment sent directors, financial leaders, etc. to HF Technology, held the majority of its board of directors, and actually controlled HF Technology.

It is worth mentioning that Huijin Juhe (Ningbo) Investment Management Co., Ltd.(hereinafter referred to as Huijin Juhe), the controlling shareholder of Botian Environment, also signed an agreement of intent with Xu Youzhi and Wang Xiao, stipulating that within two years after HF Technology completes its three-year performance commitment, Huijin Juhe will acquire the remaining 30% stake in HF Technology.

However, before the second equity acquisition, a year later, a dispute arose between the two parties over the payment of equity consideration, and the differences were huge. In 2019, Xu Youzhi and others filed an arbitration application against Botian Environment, applying for a ruling to cancel the relevant contract, and required Botian Environment to return 70% of the shares of HF Technology. At the same time, Xu Youzhi applied to the Beijing Arbitration Commission for property preservation and froze the 70% stake in HF Technology held by Botian Environment for three years.

In the end, after several games, Botian Environment reached a settlement with Xu Youzhi and others in April 2020, and all the above-mentioned 70% equity transaction agreement was terminated. The unfulfilled part was no longer performed, and the fulfilled part was returned to each other. That is, Xu Youzhi and others returned a stock discount of 200 million yuan to Botian Environment, and Botian Environment returned a total of 70% of the equity of High-Frequency Environment. The deposit of 30 million yuan paid in the early stage by Botian Environment did not need to be refunded.

High-frequency technology has returned to the hands of Xu Youzhi and others. After that, Botian Environment went to delisting in April 2024, and HF Technology began planning to go public alone.

Tianyan App shows that in November 2020, HF Technology completed strategic financing of 100 million yuan. This round of financing was led by Kaihui Fund and jointly invested by Qingyu Capital. In April 2021 and August 2022, HF Technology is completing Series A and Series A+ financing. The investors include Qinke Capital, Jucheng Capital, Jiyuan Capital, and Beijing City Integrated Circuit Manufacturing and Equipment Fund. In April 2023, HF Technology completed its last round of financing so far. This round of investors includes more than ten institutional investors including CICC Capital, Shenzhen Venture Capital, CCB Investment, and China Power Fund.

Two months later, in June 2023, HF Technology filed for guidance, with Haitong Securities as the guidance institution.

Youyan Silicon’s profits continue to decline. Can continuous acquisition and expansion break the situation?

Youyan Silicon was established in June 2001. The company is mainly engaged in the research and development, production and sales of semiconductor silicon materials. Its main products include semiconductor silicon polishing sheets, silicon materials for etching equipment, and semiconductor zone fused silicon single crystals. In November 2022, Youyan Silicon will be listed on the Science and Technology Innovation Board.

In the past six months, Youyan Silicon has frequently made acquisitions. In November 2024, Youyan Silicon acquired the 70% stake in DG Technologies (hereinafter referred to as DGT) held by controlling shareholder RST Co., Ltd. in cash.

Data shows that DGT’s main business is the research and development, production and sales of parts for etching equipment (including silicon parts and quartz parts), and has mature silicon precision processing technology and surface treatment technology. The silicon material for etching equipment produced by the company is the main raw material for DGT to produce etching equipment components. The two parties have an upstream and downstream relationship in the industrial chain.

After broadening the industrial field and expanding the industrial scale through the acquisition of DGT, Youyan Silicon once again extends the semiconductor industry chain with the acquisition of High-Frequency Technology. Youyan Silicon believes that the acquisition of High-Frequency Technology will help the company’s long-term development and construction. New advantages form the second growth curve around the core industry.

Youyan Silicon will use cash payment to promote two consecutive acquisitions. Currently, the final purchase price of the two acquisition projects has not yet been determined.

Judging from the third quarterly report of 2024, Youyan Silicon has relatively abundant funds. As of the end of September 2024, Youyan Silicon holds 1.037 billion yuan in monetary funds and 1.846 billion yuan in trading financial assets, while the company’s interest-bearing debt balance is only about 3.88 million yuan.

However, due to intensified competition in the domestic market in the semiconductor industry and the influence of geopolitics on the export market, Youyan Silicon’s net profit has continued to decline after its listing in 2022. In 2023, the company’s parent net profit will decline by 27.65% year-on-year. In 2024, Youyan Silicon’s annual operating income will be approximately 996 million yuan, and its net profit attributable to the parent company will be approximately 233 million yuan, a decrease of approximately 8.37% from 2023.