Shulou(Shulou.com)05/31 Report--

On January 6,2022, Suzhou Guoxin Technology Co., Ltd.(hereinafter referred to as Guoxin Technology), an embedded CPU design company, was released at the issue price of 41.98 yuan/share.

The opening price of Guoxin Technology was 44 yuan/share. After the opening, the stock price fluctuated, with the lowest price falling below the issue price of 41.26 yuan/share and the highest price of 45.92 yuan/share. As of the core east and west writing, the share price of Guoxin Technology is 42 yuan/share, up 1.29%, with a total market value of 10.1 billion yuan.

Based on Motorola's "M*Core instruction set," IBM's "PowerPC instruction set" and open source "RISC-V instruction set," Guoxin Technology has designed more than 40 CPU cores in 8 series, and has experience in 14nm chip streaming.

Guoxin Technology originated from a technology transfer memorandum signed by the Ministry of Industry and Information Technology and Motorola in 2000, in which Motorola transferred the 32-bit microprocessor instruction set M-Core to China. In June 2001, Shanghai Science and Technology, Nanjing Sweet and Shenzhou Information jointly funded the establishment of Guoxin Technology.

The revenue of Guoxin Technology shows an increasing trend, with revenues of 195 million yuan, 232 million yuan, 259 million yuan and 140 million yuan respectively from 2018 to the first half of 2021.

In this IPO, Guoxin Technology plans to issue no more than 60 million shares publicly, raising a total of 602.51 million yuan. The funds will be used for three projects: "cloud-end information security chip design and industrialization,""SoC chip design platform design and industrialization based on C*Core CPU core," and "CPU core design based on RISC-V architecture."

I. The chairman of the board once guided the doctoral program of Southeast University. In 2003, he launched China C*Core Industry Alliance.

When it comes to the establishment of Guoxin Technology, Zheng Wei, the current chairman of Guoxin Technology, is inseparable. Zheng was born in 1966 and stayed in Southeast University after graduation in 1985. In 1994, Zheng was promoted to professor. In 1996, he became a doctoral supervisor and served as vice president of Southeast University Wuxi Branch.

After teaching at Southeast University for many years, Zheng found that there was a big gap between China's integrated circuit design level and foreign companies. It happened that Motorola wanted to build an integrated circuit design center in Suzhou, China, so Zheng joined Motorola. In 1999, Motorola established China's first national IC design center in Suzhou, and Zheng Wei served as the manager of the design center.

Later, Zheng said in an interview that when he worked at Motorola, he needed to obtain the CPU authorization of Arm in Britain, which made him further see the difficulty of CPU localization and determined to build a domestic processor. In August 2000, Motorola signed a technology transfer memorandum with the Ministry of Industry and Information Technology, agreeing to transfer the 32-bit microprocessor M*Core and related technologies to China.

In June 2001, Shanghai Science and Technology, Nanjing Sweet and Shenzhou Information each invested 5 million yuan to establish Guoxin Co., Ltd., and Zheng Wei served as chairman of the board. Based on Motorola's M*Core, Guoxin Limited R & D has designed C*Core(32-bit embedded CPU) technology.

In April 2003, more than 60 units such as Guoxin Technology, SMIC, Shanghai Hongli and National Integrated Circuit Industrialization Base jointly initiated and established "China C*Core Industry Alliance," of which China Core Technology is the core initiator of the industry alliance.

In 2019, Guoxin Co., Ltd. was changed into a joint-stock company. The National Integrated Circuit Fund held 15.5306 million shares, accounting for 8.63%, which was the third largest shareholder of Guoxin Technology at that time.

II. Steady revenue growth, Zhongyun Xin 'an as a major customer of financial security chips

During the reporting period, the revenue of Guoxin Technology showed an increasing trend. The revenue of each period from 2018 to the first half of 2021 was CNY 195 million, CNY 232 million, CNY 259 million and CNY 140 million respectively, and the compound growth rate of 2018 - 2020 was 15.42%.

In terms of profit, the net profit of Guoxin Technology in 2018 was CNY 3,196,600, which rose to CNY 3,136,400 in 2019; the net profit of Guoxin Technology in 2020 was CNY 45,744,600; and the net profit of Guoxin Technology in the first half of 2021 was CNY 3,173,900.

The main products and services of Guoxin Technology are IP licensing, chip customization services and independent chip and module products, among which chip customization services include customized chip design services and customized chip mass production services.

During the reporting period, independent chip and module products and chip customization services were the main revenue sources of Guoxin Technology, accounting for more than 70% of Guoxin Technology's revenue.

In terms of customers, Zhongyun Xin 'an has been the top five customers of Guoxin Technology from 2018 to the first half of 2021, mainly purchasing financial security chips of Guoxin Technology.

In addition, Shenzhen Huazhirong Technology Co., Ltd. is also purchasing through Zhongyun Xin 'an after supporting modules on the basis of financial chips of Guoxin Technology.

Top five customers of Guoxin Technology from 2018 to the first half of 2021

▲ Top five customers of Guoxin Technology from 2018 to the first half of 2021

As a company adopting Fabless mode, Guoxin Technology mainly purchases wafers, package testing, electronic components, etc. During the reporting period, TSMC was the main wafer supplier of Statechip Technology, while Huatian Technology was its main package test supplier.

Third, build a domestic CPU based on three instruction sets

As an old chip design manufacturer in China, Guoxin Technology is positioned as a chip design company focusing on the R & D and industrial application of domestic independent controllable embedded CPU technology.

According to the prospectus, Guoxin Technology has realized 8 series of more than 40 CPU cores based on Motorola authorized "M*Core instruction set," IBM authorized "PowerPC instruction set" and open source "RISC-V instruction set."

Although the previous products of Guoxin Technology are based on the licenses of Motorola and IBM, IBM has opened the PowerPC instruction set in 2019, and Guoxin Technology products are no longer limited to instructions and architecture licenses; Motorola's microprocessor architecture is mainly used for existing mature products of Guoxin Technology.

Since 2017, the CPU core of Guoxin Technology based on the open source "RISC-V instruction set" has been gradually developed to meet the domestic replacement demand in the future. Guoxin Technology also plans to continue to develop CPUs based on the "RISC-V instruction set" to achieve comprehensive coverage of RISC-V CPUs for Internet of Things nodes, financial security and end-security application chip products.

The main competitive target of Guoxin Technology is Arm, the global CPU architecture leader. Compared with it, Guoxin Technology has certain gaps in market share, historical accumulation, operation scale, product richness and technical level. However, with its independently developed CPU technology, Guoxin Technology has a certain market share in the field of major national demand and information security, and has achieved breakthroughs in the field of automotive electronics.

At present, Guoxin Technology has 14nm FinFET chip experience and 40nm eFlash / RRAM and other process node chips scale production experience. As of June 30,2021, Guoxin Technology has provided more than 130 CPU IP licenses to more than 90 customers and more than 140 chip customization services to more than 70 customers.

Compared with comparable listed companies in the industry, the gross profit margin of the three major businesses of Guoxin Technology is slightly higher than the average level.

During the reporting period, Guoxin Technology invested 252 million yuan in R & D, accounting for 30.45% of revenue. As of June 30,2021, Guoxin Technology has obtained 116 authorized patents, 126 software copyrights and 33 integrated circuit layout designs.

By the end of 2020, there are 137 R & D personnel of Guoxin Technology, accounting for 55.47% of the total number of the company. There are 6 core technical personnel in total, among which Zheng Wei, Xiao Zuonan and Kuang Qihe are the actual controllers of the company.

Specifically, Zheng was born in Southeast University. From 1985 to 1997, he served as lecturer, associate professor, professor and doctoral supervisor of Southeast University; from 1998 to 2002, he served as manager of Motorola China Integrated Circuit Design Center.

Xiao Zuonan was selected into the national "Ten Thousand People Plan." From 1994 to 1998, he served as engineer of China Huada Integrated Circuit Design Company; from 1998 to 2003, he successively served as engineer and department manager of Motorola Suzhou Design Center; since then, he served as IC Design Department Manager, General Manager and Director in Guoxin Technology.

Kuang Qihe studied for doctor's degree at Nanjing University of Aeronautics and Astronautics from 1999 to 2002; served as department manager of Jiangsu Yiyuan Technology Co., Ltd. from 2002 to 2003; successively served as department manager and deputy general manager of Guoxin Technology Co., Ltd. from 2003 to 2019; currently serves as director and deputy general manager of Guoxin Technology.

IV. The large fund is the third largest shareholder, and the three core technical personnel are the actual controllers.

Since Ningbo Qiyue Equity Investment Fund Partnership (Limited Partnership), the largest shareholder of Guoxin Technology, holds 13.38% of the shares, Jinsheng Taida Venture Capital Co., Ltd., the second largest shareholder, holds 10.79% of the shares. Because the shareholding ratio of the two major shareholders is similar, and neither of them exceeds 30%, Guoxin Technology has no controlling shareholder.

In addition, the National Integrated Circuit Fund also holds 8.63% of the shares with an amount of 15.2975 million yuan, making it the third largest shareholder of Guoxin Technology. Zheng Wei, chairman of Guoxin Technology, Xiao Zuonan, director and general manager, and Lianchuang Investment also hold more than 5% of the company's shares, with 7.34%, 5.14% and 5.13% respectively.

Guoxin Technology Equity Structure

The actual controllers of Guoxin Technology are Chairman Zheng Wei, Managing Director Xiao Zuonan and Deputy Managing Director Kuang Qihe, who hold 28.37% equity of the Company in total and have signed a concerted action agreement. If no agreement can be reached, Zheng Wei's opinion shall be taken as the opinion of concerted action.

Share capital of Guoxin Technology

Conclusion: Guoxin Technology listed or expanded domestic CPU ecosystem

As a domestic CPU developer, Guoxin Technology cannot compete with Intel or Arm in terms of market share or technology level, but its self-developed CPU provides an independent and reliable choice for key areas such as information security and plays a unique role in some markets.

At the same time, since its establishment in 2001, Guoxin Technology has passed more than 20 years, and its revenue situation is relatively stable. This IPO may help it make certain breakthroughs in technology research and development, realize C* Core-based SoC chips and RISC-V-based CPU cores, expand the domestic CPU ecosystem, and provide new options for key fields such as automotive electronics and information security.

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