CIC Returns To A Countdown: Ke Chuang Board Fund-Raising Or Over 50 Billion Yuan Over Raised Funds Will Be Used For R & D And Project Construction.

In July 5th, SMIC disclosed the announcement that the issue price of Ke Chuang plate was 27.46 yuan / share. In July 6th, SMIC completed its online roadshow. In July 7th, investors will undertake online and offline applications. The chip giant SMIC's A process officially entered the countdown.

There has been much discussion in the industry about the issue price of SMIC, and a general reference is given to the "AH" premium level of the new issue issued by the science and technology board. The result was finally announced on the evening of 5: in fact, there is a discount relative to the current price of Hong Kong stock.

Judging from the exchange of 6 online roadshows, many investors expressed concern about the issuance price of SMIC and expected the share price trend after the listing. In addition, investors are concerned about the company's estimated net proceeds of 52 billion 503 million yuan, far exceeding the original 20 billion yuan plan to raise funds, the company will allocate the funds? In addition, as chip industry giants, SMIC's product development progress and other issues have been repeatedly asked.

Issue price is lower than Hong Kong stock price.

In July 2nd, the closing price of the Hong Kong stock was HK $31.60 / share (about 28.77 yuan / share), and the issue price of 27.46 yuan / share was 4.56% lower than the closing price.

Judging from previous discussions in the industry, we generally refer to the "AH" premium level issued by the science and technology board, and think that the SMIC issue price is higher than that of Hong Kong stocks. For example, Shen Wan Hongyuan had studied and expected that the range of issuing price of SMIC might be 27.62 yuan -30.59 yuan. The actual issuing price of SMIC is lower than that.

In response, Wang Jiyue, a senior investment banker, said, "as a listed company of Hong Kong stock, the price of IPO is an important reference for Hong Kong stock prices. This is also the main quotation strategy for investors to participate in the inquiry. IPO company's inquiry is also in the international market. For example, Alibaba and Jingdong go to Hong Kong to list. Investors will participate in the inquiry and refer to the US stock price.

"From the board of directors through the IPO to accelerate up to the present two months, the fundamentals and valuation of SMIC and the domestic semiconductor sector have seen positive changes, and the above pricing results are normal. In fact, before most brokerages gave the SMIC IPO price range, it also basically concentrated on 24 yuan / share - 30 yuan / share. Wang Jiyue said.

With the schedule of SMIC landing, the SMIC share price has surged in almost two months.

The closing price of HK $15.26 was announced to A in May 5th, closing to 117.9% in July 3rd. In July 6th, on the same day, the Hong Kong stock price soared again, hitting HK $40.25 / share at the SMIC IPO online roadshow. At the close, it was HK $40.1 / share, with a total market capitalization of HK $200 billion, reaching HK $228 billion 500 million.

As expected in the industry, the issuance of the SMIC's science and technology board is raising its valuation in Hong Kong stocks. The recent surge of Hong Kong stocks, such as the rainbow, also reflects international investors' expectations for SMIC's return to A shares.

Reporters learned that SMIC is a wafer manufacturing enterprise with capital intensive, technology intensive, and huge investment in early stage. The assets of the company have obvious attributes. Therefore, the choice of PB (city net rate) method can better reflect the valuation level of SMIC.

By the end of 2019, SMIC's net assets amounted to 43 billion 573 million yuan, and the net market rate before issuing was 3.44 times. The corresponding market rate after the issuance of green shoes was 2.20 times. When green shoes were fully exercised, the corresponding market price after the issuance of green shoes was 2.11 times. As of July 2nd, the average static market rate of the company was 4.27 times higher than that of the company, and the corresponding market price of the company's issue price was lower than that of the comparable company.

Regarding the issue price and price earnings ratio, Jiang Cheng Chun, assistant general manager of Haitong Securities and general manager of investment banking department, said in the roadshow, "referring to the current IPO market, taking into account the company's previous business performance, the development of the industry and the position of the company in the industry and the future growth space of the company, we think that the issue price and the P / E ratio are" It is reasonable to believe that it can be accepted by the market.

Gao Yonggang, chief financial officer and Joint Secretary of SMIC, replied: "SMIC is the leading producer of wafer foundry in China, and the issue price is reasonable, leaving room for the two tier market. We believe that stocks will have a good trend.

Fundraising or over 50 billion

In addition, the market is concerned, according to the issue price calculation, SMIC's fund-raising funds also greatly exceeded the previous expectations.

SMIC said that before the exercise of the excess placement option (commonly known as "green shoes"), the total amount of funds raised by the company was estimated to be 46 billion 287 million yuan, with a net issuance cost of 635 million yuan (including tax). The net proceeds of the proposed placement were 45 billion 652 million yuan. If the allotment option was fully exercised, the total amount of the company's total raised funds was 53 billion 230 million yuan, with a deduction of 727 million yuan (including tax) and the expected cost of the offering. The net amount of fund raising is 52 billion 503 million yuan.

If the final SMIC raised 52 billion 503 million yuan, it will become the largest fund-raising amount for the company. Looking at the entire A shares, 52 billion 500 million of the net amount of fund-raising is also rare, in the history of A shares IPO is expected to rank in the fifth place.

In Wang Jiyue's view, when the company's science and technology board IPO was accepted in June 1st, it was expected to raise 20 billion yuan. The fund-raising amount was estimated by the investment bank's share price at the time point approved by the board of directors (April 30th). But after more than two months, with the two phase of the national big fund and other billions of billions of billions of money injected into the South China core company, and the rapid development of the company's IPO, the fundamentals of SMIC and the domestic semiconductor industry have undergone positive changes.

In regard to the whereabouts of the funds raised after the fund-raising, SMIC chairman Zhou Zixue, in an interview with our reporter as an investor, said that the proceeds were still used in accordance with the prospectus for the main business, such as R & D investment or project construction. Specific project inputs will be carried out according to laws and regulations, and will be disclosed externally. SMIC will maintain cooperation with the upstream and downstream industries and continue to promote the development of the industrial chain.

In fact, the industry believes that the venture investment project set up by SMIC is only a short-term project for enterprises. In capital intensive foundry industry, if we want to maintain the current market position and catch up with the first tier, SMIC must increase the proportion of R & D investment, and the capital demand for future expansion of factories and R & D investment will be as high as nearly 100 billion yuan.

In online roadshows, investors are also concerned about the company's R & D progress, especially the impact of the relevant US restrictive measures on the company.

Zhou Zixue replies that the company's first generation FinFET 14 nm has entered mass production in the fourth quarter of 2019, and 12 nm has entered the stage of customer introduction. The second generation FinFET is still being developed. This year's business objectives and expansion plans will not be affected.

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