Shanghai Jingfeng Mingyuan Semiconductor Co., Ltd. was established in October 2008. Its main business is the development and sales of power management driver chips. The company's products include LED lighting driver chips, motor driver chips and other power management driver chips. The company adopts the Fabless model typical of the integrated circuit industry, namely the fabless line integrated circuit design mode, focusing on the R&D design and sales of integrated circuits, and outsourcing wafer fabrication, packaging and testing services to specialized wafer fabrication and chip packaging. And test vendors.
In 2018, Jingfeng Mingyuan achieved operating income of 767 million yuan, a year-on-year increase of 10.40%, and achieved net profit, a year-on-year increase of only 6.86%.
Low ceiling in the industry and limited development space
According to the disclosure of the prospectus, Jingfeng Mingyuan's 2016 LED lighting driver chip domestic sales volume was 2.304 billion. In 2016, the output of China's domestic LED lighting products was about 8 billion. The company's sales of LED lighting driver chips in 2016 were 2.304 billion. According to each LED lighting product, usually equipped with an LED lighting driver chip calculation, the company's domestic LED lighting driver chip market share in 2016 is about 28.80%, the market share is high.
However, it is worth noting that in 2016, Jingfeng Mingyuan's general LED lighting driver chip total revenue was 472 million yuan, intelligent LED lighting driver chip total revenue was 179 million yuan, and LED lighting driver chip total revenue was 551 million yuan. In 2016, Jingfeng Mingyuan's net profit was only 29.91 million yuan, and it has not yet exceeded 100 million yuan. In terms of sales volume, in 2016, Jingfeng Mingyuan accounted for nearly one-third of the domestic LED lighting driver chip market share. The LED driver chip market is small in volume, the industry ceiling is obvious, and the market space is limited in the future.
Moreover, the concentration of the industry is not low. In addition to Jingfeng Mingyuan, Mingwei Electronics, which reported the IPO of the main board with Jingfeng Mingyuan, had revenue of 312 million yuan in 2016. According to the prospectus submitted in 2017, among the “Top Ten Enterprises in China's LED Lighting Products Exports” in 2016, seven companies have applied Mingwei Electronics' lighting driver chips. The road to expansion of Jingfeng Mingyuan is not going forward.
Growth uncertainty
From the perspective of income structure, in 2018, the general LED lighting driver chip operating income was 579 million, accounting for 75.57% of the total revenue; the intelligent LED lighting driver chip operating income was 125 million yuan, accounting for 16.30% of the total revenue. The total revenue ratio of the company is nearly 91.95%, which is the core product of Jingfeng Mingyuan.
Kechuang board analysis | Jingfeng Mingyuan: not all chips, can be called "Chinese core"
As mentioned above, the overall growth rate of the industry is not high. Affected by it, the growth rate of Jingfeng Mingyuan itself slowed down.
According to Jingfeng Mingyuan's April 4, 2018 report to the CSRC's main board IPO prospectus and the latest Science and Technology Board prospectus, in 2014-2018, the sales revenue of general LED lighting driver chips was 309 million yuan respectively. 337 million yuan, 472 million yuan, 548 million yuan, and 579 million yuan. From 2015 to 2018, the year-on-year sales growth rate was 9.27%, 40.07%, 16.08%, and 5.66%, respectively. The growth rate showed significant fluctuations. After the growth rate reached its peak in 2016, it quickly fell back. In 2018, the growth rate dropped to 5.66%. It is worth noting that the company's IPO phase in 2017, the accounting statement period provided in the April 2018 report is 2015-2017. During this period, the company has the suspicion of sprinting through price cuts, and the high growth rate is difficult to sustain. (detailed analysis below)
Kechuang board analysis | Jingfeng Mingyuan: not all chips, can be called "Chinese core"
The growth rate of smart LED lighting driver chips is also worrying. In 2015-2018, the sales revenue of intelligent LED lighting driver chips were 39 million yuan, 179 million yuan, 117 million yuan, and 125 million yuan respectively. The year-on-year sales growth rate in 2016-2018 was 104.34%, 48.08%, and 6.68%, respectively. Jingfeng Mingyuan only entered the intelligent LED lighting driver chip market in 2015, so the previous base was small and the growth rate was large; and the subsequent growth rate quickly dropped to normal level. The year-on-year growth rate of sales revenue in 2018 has dropped to 6.68%.
Kechuang board analysis | Jingfeng Mingyuan: not all chips, can be called "Chinese core"
On the other hand, Jingfeng Mingyuan is still cultivating new business growth points. In 2015-2017, the sales revenue of motor drive chips was 15,800 yuan, 317,100 yuan and 2,158,100 yuan respectively. In 2018, motor drive chip revenue reached 5,704,600 yuan, accounting for 0.74% of operating income. The volume is very small and the market layout is still at a very preliminary stage.
The volume of revenue is small, the ceiling of the industry is low, and the growth rate of the original business is slow, and new business growth points have not yet been cultivated. Jingfeng Mingyuan’s sustainable profitability is doubtful.
The core competitiveness is not obvious, and the market share is gained by price war.
At present, the LED driver chip and power management chip of Jingfeng Mingyuan are highly market-oriented and the competition is fierce. With the continuous entry of many IC design manufacturers, chip products have a serious trend of homogenization, and price wars are not uncommon in the market of traditional chips.
And Jingfeng Mingyuan has the suspicion of sprinting IPOs through price to seize the market. During 2016-2018, the prices of general LED driver chips and smart LED driver chips of Jingfeng Mingyuan's main products all showed a downward trend. The average unit price of general-purpose LED driver chips dropped from 0.2201 yuan to 0.2046 yuan; the average unit price of intelligent LED lighting driver chips was from 0.3775 yuan fell to 0.3375 yuan.
Kechuang board analysis | Jingfeng Mingyuan: not all chips, can be called "Chinese core"
The gross profit margin of Jingfeng Mingyuan in 2016-2018 was 20.31%, 22.06% and 23.21%, respectively, which was much lower than comparable listed companies such as Silan Micro, Quanzhi Technology and Fuman Electronics. Among them, the aforementioned gross profit margin of Mingwei Electronics in 2016 was 26.85%, and the gross profit margin of Jingfeng Mingyuan was only 20.31%. Fuman Electronics (300671.SZ) LED lights, LED control and driver IC products, achieved total revenue of 222 million yuan in 2018, gross margin of 28.66%, higher than Jingfeng Mingyuan gross margin of more than 5pct.
As the absolute leader of the sub-sector, the lower gross profit margin than the same industry, the side shows that the company failed to have outstanding core competitiveness. The downstream demand for LED driver chips is price sensitive, and Jingfeng Mingyuan can only seize the market by lowering prices. The price cut effect has indeed led to an increase in sales volume and sales revenue. The sales volume of Jingfeng Mingyuan General LED lighting driver chip increased from 2.145 billion in 2016 to 2.832 billion in 2018, and the sales volume of intelligent LED lighting driver chips increased from 209 million in 2016 to 370 million in 2018; The corresponding product sales revenue has also increased significantly.
The price reduction strategy often kills one thousand and loses 500 yuan, which reduces the company's profit margin and future development potential. The price war is not a perpetual motion machine. In the long run, the price reduction effect cannot continue. In 2016, the sales revenue of general-purpose LED lighting driver chips dropped by 40.07% year-on-year, and then fell rapidly. The growth rate in 2018 dropped to 5.66%. The sales revenue of intelligent LED lighting driver chips also gradually declined. The year-on-year sales growth rate in 2016-2018 was 104.34%, 48.08%, and 6.68%, respectively. Without core competitiveness, the company would not have the foundation to settle down.
Strong dependence on suppliers, poor independence and risk resistance
Jingfeng Mingyuan adopts the Fabless business model commonly used in the chip design industry. The production lines of self-built products, wafer manufacturing, chip packaging and testing are commissioned by professional wafer manufacturing enterprises and chip packaging and testing factories. In 2018, Jingfeng Mingyuan's purchases from the top five suppliers were 387,346,600 yuan, 422,268,600 yuan and 451,477,000 yuan, accounting for 85.88%, 71.29% and 75.90% of the total purchases in the same period. Very high, not conducive to the independence of the company's business.
Kechuang board analysis | Jingfeng Mingyuan: not all chips, can be called "Chinese core"
Among them, the issue of wafer procurement is particularly prominent. The so-called wafer procurement is that Jingfeng Mingyuan has placed orders with integrated circuit manufacturers, and integrated circuit manufacturers are producing according to the chip design scheme of Jingfeng Mingyuan. In the chip industry chain, chip manufacturing has always been a pain point for China's technology. As a non-core technology downstream design company, it often faces a strong upstream chip manufacturer and has no bargaining power for upstream suppliers. From 2016 to 2018, the price of raw materials rose, and chip manufacturers transferred their costs to downstream companies. The wafer purchase price of Jingfeng Mingyuan rose. The average purchase price in 2017 increased by 6.46% compared with 2016.
At a time when chip manufacturing is in short supply, the price increase is a trivial matter, the delivery cycle is extended again, and the delay in capacity scheduling is a big problem. Since 2016, the wafer supply has been tight, and Jingfeng Mingyuan has been constrained by the fact that the original wafer supplier could not meet the growth demand of the business in a short period of time, so that the procurement demand cannot be effectively met.
Kechuang board analysis | Jingfeng Mingyuan: not all chips, can be called "Chinese core"
According to the data of the Science and Technology Board's prospectus, in 2018, Jingfeng Mingyuan's wafer procurement cost was RMB 250.85 million, accounting for 42.61% of the total cost, of which the purchase amount from Huahong Hongli was RMB 11.03 million. The international purchase amount was 105.66 million yuan, and the total purchase amount of the two was 216.69 million yuan, accounting for 86.38% of the total wafer procurement cost. The concentration was very high. Jingfeng Mingyuan relies heavily on confined suppliers, with limited independence and low risk resistance.
Conclusion
The biggest problem of Jingfeng Mingyuan is the lack of core competitiveness, and its core competitiveness is not enough to support his irreplaceability in the original segment. The problem of Jingfeng Mingyuan reflects the status quo of some Chinese semiconductor companies to some extent. From the perspective of the chip industry chain, Jingfeng Mingyuan is in the chip design enterprise. In the Chinese chip industry chain, design and packaging and testing have developed rapidly, and the gap with advanced companies such as the United States is gradually narrowing. In the field of chip design, the number of enterprises is growing rapidly. But behind the "flowering everywhere" is the situation of low-end chip design companies and the lack of structural imbalances in high-end chip design companies.
Chips have become a pain point for everyone in China, but high-tech and strategic chip companies are our scarce Chinese core.