Global CMOS leader GalaxyCore goes public: market value of 88 billion yuan

Today, GalaxyCore Co., Ltd. (hereinafter referred to as "GalaxyCore", 688728.SH) was listed on the Science and Technology Innovation Board of the Shanghai Stock Exchange. As of today's close, GalaxyCore reported 35.25 yuan, an increase of 145.13%, a turnover of 4.097 billion yuan, a turnover rate of 70.37%, an amplitude of 56.88%, and a total market value of 88.086 billion yuan.

GalaxyCore is a company registered in the Cayman Islands. It is one of the leading domestic and internationally renowned semiconductor and integrated circuit design companies. Its main business is the research and development, design and sales of CMOS image sensors and display driver chips. The company currently mainly provides CMOS image sensors with QVGA (80,000 pixels) to 13 million pixels and LCD driver chips with resolutions between QQVGA and FHD. Its products are mainly used in the mobile phone field, and are also widely used in consumer electronics and industrial applications including tablets, laptops, wearable devices, mobile payments, automotive electronics, etc.

As of May 26, 2021, Uni-sky directly held 1.05 billion shares of the company, accounting for 46.69% of the total issued shares of the company, and indirectly held 0.18% of the company's shares through New Cosmos, and indirectly held 0.0167% of the company's shares through Cosmos, totaling 46.89% of the company's shares.

In addition, Cosmos GP Ltd., which is wholly owned by Uni-sky, is the general partner of Cosmos (holding 13.81% of GalaxyCore's shares) and New Cosmos (holding 0.65% of GalaxyCore's shares). Therefore, Uni-sky controls a total of 61.15% of GalaxyCore's shares and is the company's controlling shareholder.

The general partners of Cosmos and New Cosmos are both Cosmos GP Ltd., which is a wholly-owned subsidiary of Uni-sky. Therefore, Cosmos and New Cosmos are controlled by Uni-sky and are persons acting in concert with Uni-sky. In addition, LIHUI ZHAO (Zhao Lihui) is the sister of Zhao Lixin, so Fortune Time, wholly owned by LIHUI ZHAO (Zhao Lihui), and Uni-sky, wholly owned by Zhao Lixin, are persons acting in concert with each other. Cosmos, New Cosmos, and Fortune Time hold 13.81%, 0.65%, and 0.42% of the company's shares, respectively.

As of May 26, 2021, Zhao Lixin holds all the issued shares of Uni-sky, indirectly holds 46.69% of GalaxyCore shares through the GalaxyCore shares directly held by Uni-sky, indirectly holds 0.18% of GalaxyCore shares through the property share of New Cosmos held by Uni-sky, and indirectly holds 0.68% of GalaxyCore shares through Cosmos (Zhao Lixin directly holds 4.83% of the property share of Cosmos and holds 0.12% of the property share of Cosmos through the indirectly wholly-owned Cosmos GP Ltd.). Zhao Lixin indirectly holds 47.55% of the company's shares in total, and controls 61.15% of GalaxyCore shares through Uni-sky, Cosmos and New Cosmos.

Cao Wei indirectly holds a 1.75% stake in Gpixel through Cosmos (he directly holds a 12.69% property share in Cosmos).

Zhao Lixin is the founder of the company and has been serving as the company's chairman and CEO, with a decisive influence on the company's major decisions and business management. Cao Wei serves as the company's director, secretary of the board of directors, and vice president, and participates in the company's actual business decisions. Zhao Lixin and Cao Wei are husband and wife and are the company's joint actual controllers.

GalaxyCore passed its IPO review on November 6, 2020. The 98th review meeting of the Science and Technology Innovation Board Stock Listing Committee in 2020 gave the following review opinions on GalaxyCore:

1. Please ask the issuer to disclose whether there are potential obstacles in its development in the high-pixel field. Please ask the sponsor to issue a clear verification opinion.

2. Please disclose the remedial measures that the issuer intends to take if there are major changes in the laws of the issuer's place of registration or if the issuer is unable to meet the economic substance test requirements. Please ask the sponsor to issue a clear verification opinion.

The main questions raised by the Science and Technology Innovation Board Stock Listing Committee at its 98th review meeting in 2020 to GigaDevice were:

1. Please ask the issuer representative to explain whether the issuer has market competitiveness in the high-pixel field and whether there is a risk of low-pixel technology iteration. Please ask the sponsor representative to express a clear opinion.

2. Please ask the issuer representative to explain the commercial rationality of the agency sales model with the main purpose of advance payment in light of the product's industry positioning, and its impact on the cash flow from operating activities during the reporting period. Please ask the sponsor representative to express a clear opinion.

3. According to the application documents, in accordance with the Enterprise Income Tax Law and its implementing regulations, enterprises established in accordance with the laws of foreign countries/regions but with their "actual management bodies" in China may be regarded as Chinese resident enterprises and may be required to pay corporate income tax in China on their global income at the issuer's statutory tax rate. Please ask the issuer's representative to explain whether there are potential tax risks in the establishment and pricing arrangements of the Hong Kong company in the current business structure. Please ask the sponsor representative to express clear opinions.

4. Please ask the issuer representative to explain what risk response and relief measures the issuer intends to take to reduce adverse effects and avoid possible operating risks if there are major changes in the laws of the issuer's place of registration, or if there is an extreme situation where the issuer cannot meet the requirements of the economic substance test. Please ask the sponsor representative to express clear opinions.

GalaxyCore is listed on the Sci-Tech Innovation Board of the Shanghai Stock Exchange this time, with the number of shares issued being 250 million shares. This issuance does not involve the public sale of the company's shares held by old shareholders, nor does it use the over-allotment option. The number of shares issued this time accounts for approximately 10.00% of the company's total share capital after issuance. GalaxyCore's listing price this time is 14.38 yuan per share. The sponsor is China International Capital Corporation Limited, the sponsor representatives are Sun Yuan and Zhang Zhihao, and the joint lead underwriters are Goldman Sachs Gaohua Securities Co., Ltd., CITIC Construction Investment Securities Co., Ltd., and Morgan Stanley Securities (China) Co., Ltd.

The total amount of funds raised by GalaxyCore this time is 3.593 billion yuan. After deducting the issuance expenses, the net amount of funds raised is 3.508 billion yuan. The net amount of funds raised by GalaxyCore is 3.452 billion yuan less than the original plan. The prospectus disclosed by GalaxyCore on August 13 shows that the company plans to raise 6.96 billion yuan, which is planned to be used for the 12-inch CIS integrated circuit characteristic process research and industrialization project and CMOS image sensor research and development project.

The IPO cost of Gpixel was 85.8237 million yuan. China International Capital Corporation Limited, Goldman Sachs Gaohua Securities Co., Ltd., CITIC Construction Investment Securities Co., Ltd., and Morgan Stanley Securities (China) Co., Ltd. jointly received underwriting and sponsorship fees of 53.9010 million yuan.

The sponsor, China International Capital Corporation Limited, arranged for its subsidiary, China International Capital Corporation Limited, to participate in the strategic placement of this issuance. The number of shares to be invested is 3% of the number of shares issued in this public offering, and shall not exceed RMB 100 million, i.e., 6.9541 million shares, with an investment amount of RMB 100 million. The lock-up period for the shares allocated to China International Capital Corporation Limited in this follow-up investment is 24 months, which shall be calculated from the date when the shares issued in this public offering are listed on the Shanghai Stock Exchange.

Source: China Economic Net