Nanjing Seg Micro terminated its listing, why did the New Third Board end up being delisted?

Another semiconductor company announced the termination of its listing. On September 12, Nanjing SEG Microelectronics Technology Co., Ltd. (hereinafter referred to as "SEG Micro") issued an announcement stating that in order to cooperate with the company's business development strategy adjustment, plan long-term development goals, improve the company's operating efficiency and reduce the company's listing maintenance costs, after careful consideration, the company intends to apply to the National Equities Exchange and Quotations for the termination of the company's stock listing.

Nanjing SEG Microelectronics Technology Co., Ltd. is a high-tech enterprise registered in Nanjing National High-tech Development Zone. It was established in August 1997 and was restructured from a limited liability company to a joint stock company at the end of 2012. It was listed on the National Equities Exchange and Quotations (NEEQ) on May 30, 2014. The stock code is 430751.

Segway is a technology-based enterprise integrating R&D, production, sales and service of RF & microwave products. Its products are divided into three series: microwave passive products, microwave active products and automotive electronic products. They are widely used in mobile communication systems, microwave communication systems, satellite communication systems, digital TV signal transmission systems, instruments and meters, and automotive electronics.

In the first half of 2019, Seg Micro's main business revenue was 16,653,475.01 yuan, a year-on-year decrease of 40.02%; the net profit attributable to shareholders of the listed company was -3,523,014.51 yuan, a year-on-year decrease of 240.11%.

Delisting of semiconductor companies on the New Third Board has become a normal practice

This situation also exists among semiconductor companies listed on the New Third Board. During 2018-2019, more than 20 semiconductor companies announced or had already delisted from the New Third Board, including Xinpengwei , Walter Gas, Huazhuo Jingke, Suzhou Guoxin, Wuxi Xinjie Energy, Zhanxin Micro, Lingdong Microelectronics, and Si Rui Shares.

According to data from Tonghuashun, there are 82 semiconductor industry chain companies listed on the New Third Board. It is worth mentioning that among these 82 companies, Li Yang Chip has started the main board listing guidance, and Hualong Microelectronics, Hualan Microelectronics, Xiangshi Electronics, Meijing Technology and other companies have submitted applications to terminate their listing on the New Third Board, and may be delisted from the New Third Board soon.

Why did it go down the road of delisting?

The author analyzed the former NEEQ companies that have been delisted and found that the main reasons why semiconductor companies choose to delist from the NEEQ include listing on the main board, listing on the Science and Technology Innovation Board , mergers and acquisitions, cost reduction, strategic development, and performance changes.

Among them, the main board IPO is the main reason for the semiconductor companies on the New Third Board to be delisted, and it is also the reason with the least controversy. It is understood that there are two ways for New Third Board companies to apply for main board IPO listing: apply as a New Third Board listed company, or apply as a non-New Third Board listed company after being delisted from the New Third Board.

Among the above-mentioned companies, Xinpengwei has always been a star company on the New Third Board due to its excellent performance. However, on the road to IPO, Xinpengwei has not been smooth sailing. As early as March 2017, Xinpengwei started the IPO process and entered the listing guidance period. However, in April 2018, Xinpengwei took the initiative to withdraw its listing materials.

Until March 2019, Xinpengwei announced that it would apply to terminate its listing on the New Third Board and restart its IPO. This time, Xinpengwei has no way out. If the IPO is rejected or the materials are withdrawn, it will not be able to continue to list on the New Third Board for financing transactions. It can only go all the way with the IPO.

Since 2018, listing on the Science and Technology Innovation Board has become another option for companies on the New Third Board to switch to other listing sectors, and has also become the first choice for semiconductor companies to go public. Companies such as Walt Gas, Suzhou Guoxin, and Huazhuo Jingke have started the listing process on the Science and Technology Innovation Board. As one of the few specialty gas suppliers in China, Walt Gas is currently in the inquiry stage, waiting for the review of the Science and Technology Innovation Board Listing Committee, and may be listed on the Science and Technology Innovation Board in the near future.

It is understood that being acquired is the second most direct reason for NEEQ companies to delist. Excellent NEEQ companies have always been the target of mergers and acquisitions by A-share listed companies. Acquisitions in the semiconductor field are generally based on industrial integration. In 2017, Shanghai Belling acquired 100% of the equity of Renergy for RMB 590 million; in 2018, Wanye Enterprise acquired 100% of the equity of Kaishitong for RMB 398 million, and Will Technology acquired Sipico. After the acquisition is completed, the listed company will become the sole shareholder of the listed company and no longer meet the listing conditions. The company will naturally transition to delisting.

Among the above reasons, strategic development or listing adjustments are the biggest variables. After the adjustment, such companies may choose to list on a new board, be acquired by a listed company, or merge and reorganize with a non-listed company.

In addition, some companies have continued to decline in performance or even continued losses, and their operating capabilities cannot be improved. Listing is meaningless for these companies, and they still have to bear the costs of listing and supervision. Therefore, voluntarily delisting is undoubtedly their best option.