Will Semiconductor plans to increase its stake in Beijing Ingenic by no more than RMB 4 billion

On May 22, Weilan Technology Co., Ltd. issued an announcement stating that its wholly-owned subsidiary Shaoxing Weihao intends to increase its holdings of Beijing Junzheng shares by no more than RMB 4 billion through centralized bidding or block trading, and the cumulative number of Beijing Junzheng shares held after the increase will not exceed 50 million shares, which will not exceed 10.38% of Beijing Junzheng's total share capital.

As of the disclosure date of this announcement, in the past 12 months, Will Group participated in the subscription of Beijing Junzheng's shares issued to specific objects. After the completion of Beijing Junzheng's private placement, the company was allocated 5,300,183 shares of Beijing Junzheng at an issue price of 103.77 yuan per share, and paid a total of 550 million yuan for equity subscription; the company purchased a total of 18,604,904 shares of Beijing Junzheng through centralized bidding in the secondary market, and paid a total of 1.518 billion yuan for equity acquisition. In addition, the company did not have other related transactions with related parties.

Will Semiconductor believes that since December 2021, the capital market has experienced drastic fluctuations, and the stock prices of listed companies in the semiconductor industry have fallen sharply. The China Semiconductor Chip (990001.CSI) Index, which reflects the stock price performance of listed companies in the semiconductor industry in the A-share market, has fallen from a high of 12,212.46 points in December 2021 to a low of 6,678.09 points in April 2022, a drop of 45.32%. In the context of the global semiconductor market, especially the long-term sustained growth of China's semiconductor industry, the short-term sharp fluctuations in the capital market have led to some high-quality companies in the industry showing better advantages in valuation, bringing better industry investment opportunities.

Beijing Junzheng is an integrated circuit design company that mainly engages in the research and development and sales of integrated circuit chip products. Its main product lines include microprocessor chips, smart video chips, storage chips, analog and interconnect chips. Its products are widely used in automotive electronics, industry and medical care, communications equipment and consumer electronics.

Through years of R&D investment, Beijing Ingenic has developed a number of core technologies in the fields of embedded CPU technology, video codec technology, image signal processing technology, neural network processor technology, AI algorithm technology, high-performance memory technology, analog technology, interconnect technology, and automotive-grade chip design technology. These technologies are leading and independently controllable. In the field of smart video chips, Beijing Ingenic has developed rapidly and has become a mainstream supplier in the domestic consumer security monitoring market. In the field of memory chips, according to Omdia (former HIS), Beijing Ingenic's SRAM, DRAM, and Nor Flash product revenues ranked second, seventh, and sixth in the global market in 2021, respectively, and are at the forefront of the international market.

In May 2020, Beijing Ingenic completed the acquisition of Beijing Silicon Technology. Beijing Silicon Technology has been working in the memory field for more than 30 years and has formed a complete set of technical systems and engineering support systems. It can provide high-quality and high-reliability memory products for automotive electronics, industry, and medical fields, as well as chips for the communications industry and high-end consumer electronics industry.

At present, Beijing Junzheng has good technical advantages in memory technology, analog and interconnect technology, embedded CPU technology, etc., its core product technology is independently controllable, and it has an international integrated circuit design team. In 2021, Beijing Junzheng achieved operating income of 5.274 billion yuan, a year-on-year increase of 143.07%, and realized a net profit attributable to shareholders of listed companies of 926 million yuan, a year-on-year increase of 1,165.27%. Will Semiconductor believes that in the medium and long term, Beijing Junzheng's performance will show strong growth in line with the development of the semiconductor industry. With its product technology advantages and global market position, its operating performance will continue to improve in the medium and long term, and its overall valuation is expected to continue to improve.

Weier shares stated that this transaction will help the company strengthen its strategic business cooperation with Beijing Junzheng. At the same time, the company is expected to obtain certain investment returns through investing in Beijing Junzheng, which will help improve the intrinsic value of the company's assets and long-term investment benefits, actively return to the company's shareholders, and is in line with the company's development strategy.