Jangdian Technology has been frequently reduced by shareholders. What is its position as the leader in chip packaging and testing?

Packaging and testing in the chip field is an area where the domestic semiconductor field has relatively good competitiveness compared with its international counterparts. However, the leading stock Changdian Technology (600584.SH) has not performed very well recently. It has been dragged down by the performance of the target company of the merger and acquisition, and important shareholders have reduced their holdings of nearly 100 million shares in a year and a half. From June 12 to 14, the stock price of Changdian Technology continued to plummet, with a sharp drop of 6.34% on June 14, closing at 12.7 yuan.

On the evening of June 11, Changdian Technology announced that within 90 days after 15 trading days from June 12, 2019, Jiangsu Xinchao Technology Group Co., Ltd. (hereinafter referred to as "Xinchao Group") plans to The holdings will be reduced by no more than 16 million shares through centralized bidding transactions, accounting for 1.00% of the company's total share capital. As of June 12, Xinchao Group held 114 million shares of Changdian Technology, accounting for 7.13% of the total share capital.

The three shareholders "sold, sold, sold", and institutions frequently took over

This is not the first time for Xinchao Group to reduce its holdings in Changdian Technology.

On June 5, Changdian Technology announced that due to its own capital needs, Xinchao Group reduced its holdings in the company through bulk transactions from March 11, 2019 to June 5, 2019, without selling any shares. There are 29.8 million shares in total, accounting for 1.86% of the total share capital.

"The above equity changes will not lead to changes in the company's control. After this equity change, Xinchao Group will still be the company's third largest shareholder, holding 7.13% of the shares, and the largest shareholder National Integrated Circuit Industry Investment Fund Co., Ltd. holds 19.00% of the shares, and the second largest shareholder Core Semiconductor (Shanghai) Co., Ltd. holds 14.28% of the shares," the company announcement said. The 2018 annual report shows that the actual controller of the two shareholders of Changdian Technology is SMIC (00981.HK).

Among the bulk transaction records of Changdian Technology since 2019, there have been many incidents since February 28. The sellers are all "Huatai Securities Co., Ltd. Jiangyin Branch", and the buyers except 6 Except for the "Headquarters of China Galaxy Securities Co., Ltd." on March 11 and the "Securities Business Department of China Merchants Securities Co., Ltd. Shenzhen Yitian Road Duty Free Business Building" on March 11, the rest are all for institutional use, and the takeover price ranges from 12.35 yuan to Between 14.63 yuan.

In the past two years, Xinchao Group, controlled by Wang Xinchao, the former chairman of Changdian Technology, has continued to reduce its holdings. On November 14, 2017, Changdian Technology issued an announcement that Xinchao Group would reduce its holdings by no more than 13.5 million shares through centralized bidding transactions, accounting for 0.99% of the company's total share capital. Before the implementation of this share reduction plan, Xinchao Group held Changdian Technology 190 million shares of Electric Technology, accounting for 13.99% of the total share capital.

By June 2019, Xinchao Group had reduced its holdings by nearly 100 million shares within one and a half years. On September 25, 2018, Changdian Technology announced that the board of directors unanimously approved the resignations of Chairman and CEO Wang Xinchao and President Lai Zhiming respectively. This was less than a month after Changdian Technology completed the additional issuance.

In 2018, Changdian Technology privately issued 243 million shares to three companies including Big Fund, Core Semiconductor and Financial Investment Linghang at 14.89 yuan per share, raising approximately 3.6 billion yuan. It was completed in 2018 It was completed on September 1, and the new shares issued on that day began to be listed. Previously, Changdian Technology disclosed that the funds raised will be used for the annual production of 2 billion high-density integrated circuits and module packaging projects for communications, the industrialization project of road packaging technology in communications and Internet of Things integrated circuits, and the repayment of bank loans.

Tianfeng Securities analyst Pan Xian said that after Changdian Technology acquired STATS Chippeng, it became the third largest packaging and testing manufacturer in the world. It has extensive technology accumulation and product solutions. Changdian Technology’s subsidiary The products cover high-end, high-end and low-end products, with rich product categories. After private placement of funds, industrial funds settled in and became the largest shareholder. In addition, the members of the board of directors were re-elected, and SMIC Chairman Zhou Zixue, SMIC Chief Financial Officer Gao Yonggang, and Vice President of Industry Fund Zhang Chunsheng were elected as non-independent directors of the company.

"This change of board of directors makes the company's board of directors structure more consistent with the company's shareholder structure, which is conducive to the coordinated development of the company and SMIC, and is optimistic about the company's future profit release." On May 18, Zhou Zixue officially served as the chairman of Changdian Electronics Co., Ltd. Technology Chairman.

Liang Shuang, an analyst at Shenwan Hongyuan, believes that Changdian Technology’s undertaking of orders from chip design factories has always been the focus of the market. After the company changed its management, the overall business progressed smoothly, and the competition in product categories was neutral. Some of the leading competitors in the market are on par with each other, and we can expect greater support from Changdian Technology’s major customers in the future.

Ranked third in global packaging and testing share

On June 14, Changdian Technology responded to investor inquiries and stated that the company has customers both at home and abroad, and is among the top 20 semiconductor companies in the world. 85% are customers of Changdian Technology. Changdian Technology continues to strengthen its leading edge in advanced packaging and testing technology, and implements various advanced R&D projects to diversify its product portfolio. Its customers are integrated circuit design companies and system integrators. The design company designs chip solutions or system integration solutions. , entrusting integrated circuit manufacturers to produce wafers (chips), and then entrusting packaging and testing companies to package and test the chips, and then the above-mentioned customers will sell the sealed and tested products to electronic terminal product assembly plants.

According to the 2018 annual report of Changdian Technology, according to the Core Idea Research Institute report, ranked by global market share, the world's top three packaging and testing companies accounted for 57.7% of the market share, of which: ASE Silicon Products 29.3% , Amkor 15.4%, and Changdian Technology ranked third with 13%. According to a report by research institute Yole Développement, in terms of advanced packaging wafer share, the global market share rankings in 2017 were: Intel 12.4%, Silicon Products 11.6%, and Changdian Technology ranked third with 7.8%.

Among a group of chip design companies sprinting for the Science and Technology Innovation Board, the main suppliers of packaging and testing are mainly from Changdian Technology. For example, Amlogic Technology, the leader in set-top box chips, and Juchen Technology, the leader in EEPROM products for smartphone cameras, are all packaging and testing suppliers of Changdian Technology and its subsidiaries. The wafer foundry suppliers of these companies mainly come from SMIC and Taiwan Semiconductor Manufacturing Company (TSM).

Changdian Technology said that in 2018, due to the decline in the semiconductor market sentiment index, the weakening mobile communication product market, the premium required to redeem priority notes by STATS ChipPAC, and the one-time digestion of amortization expenses, etc. Financial expenses, coupled with the impact of factors such as changes in the fair value of some financial instruments and impairment of goodwill, led to a loss in the 2018 annual performance of Changdian Technology.

In the first quarter of 2019, Changdian Technology’s operating income was 4.514 billion yuan, down 17.77% year-on-year, and the net profit attributable to the parent company was -46.5168 million yuan; in 2018, operating income was 23.856 billion yuan, basically the same year-on-year; Net profit was -939 million yuan, a large year-on-year decrease. In 2018, the revenue of Changdian Technology Headquarters reached a new record high, with revenue of 7.946 billion yuan in 2018, a year-on-year increase of 7.62%. In 2018, the operating income of STATS ChipPAC acquired by the company was US$1.169 billion, the same as the previous year; net profit was -US$271 million. Changdian Technology’s performance in 2018 was mainly dragged down by STATS ChipPAC.

Everbright Securities analyst Yang Minghui said that the price of sealed and tested products has dropped due to the influence of terminal smartphone promotion strategies. For Changdian Technology, the future risk is that the semiconductor industry's prosperity continues to decline, and the integration of STATS ChipPAC falls short of expectations.