Ganzhao Optoelectronics IPO first paid a bite to eat 1.1 billion yuan fat man


His old man said that Deng Xiaoming is a "man who is destined to engage in LED (Light Emitting Diode)", his name is like a business card.

The name Deng Dengming has been re-focused, and its founding company, Ganzhao Optoelectronics (300102), landed on the GEM market: the company that started in Xiamen, Fujian Province was “almost unknown” before this, but The IPO's stock issuance price is 45 yuan per share.

Among the three new stocks that landed on the GEM on August 12, the company's P/E ratio was the highest, but it still led the way, and the stock price doubled.

In the past three years, Ganzhao Optoelectronics has achieved a compound annual growth of 100.18%, with gross margins of 40.34%, 52.88% and 57.01%, respectively, which are “higher than comparable listed companies”.

According to public information, Ganzhao Optoelectronics is not only the leader of domestic gallium arsenide LED, but also one of the two suppliers of domestic high-efficiency triple-junction gallium arsenide battery epitaxial wafers. The latter is the basis of small satellite batteries.

Perhaps even more interesting is the fact that in the short period of four and a half years after the establishment of the company, a number of billionaires have been created by IPO. This is in stark contrast to the fact that most companies listed on the GEM have had more than 10 years of entrepreneurial history.

The original intention of Ganzhao Optoelectronics is to use the IPO to unlock the funds.

"The first thing after getting the money is to pay the bank money." Zhou Wei, a partner of Sequoia Investment and vice chairman of Ganzhao Optoelectronics, said: The company is owing a lot of money to the bank. This is a good thing in his eyes. All the “good companies” in China's rising market are short of money: because of the rapid expansion of production capacity, the demand for cash flow has increased. The last time, Sequoia China shot a booster.

Angel's 4 million

February 21, 2006. When getting a business license from the industrial and commercial registration office, Deng Dianming and his party confirmed that there was a mixed feeling. At that time, the dry photo photoelectric was also called the dry photo.

In the previous month, “In order to promote Lin Kezhen as the general manager of Sanan Electronics”, Deng Dianming left the position of the general manager of Sanan Electronics. At that time, Deng Dianming was 51 years old. It was nearly 4 years since the steel man was introduced as a talented person in Xiamen City in 2002. Things seem to be getting too fast, just in August 2005. At the Sanan Electronics Shareholders' Meeting, Deng Dianming also obtained a 1% stake in Sanan Electronics for 2 million.

In March and April of 2006, Deng Dianming talked with Lin Xiucheng, then chairman of Sanan Electronics, for three times, “for space” for Ganzhao Optoelectronics. The final result is that Sanan Electronics “approves no more than seven people in the grassroots management and technical personnel to work in the dry position”, and agrees that the domestic LED authority Wang Xiangwu “optional” after the expiration of the employment contract with Sanan Electronics, It is acquiescence that it can serve as a photo. However, the condition is that the dry photos cannot use the existing business channels and core technical materials of Sanan, nor can they dig the market personnel of Sanan. At the same time, the dry photos cannot produce blue-green LEDs within 5 years.

Compared with red and yellow LEDs, blue-green LEDs and even white LEDs are “updated”, and the market for low-brightness red-yellow LEDs is shrinking. However, Deng Dianming still promised that the current pillar products of Ganzhao Optoelectronics are red and yellow LED chips and epitaxial wafers.

A data may be able to look at the prospects Deng Dengming sees: the domestic LED chip market has grown from about 280 million yuan in 2002 to 1.9 billion yuan in 2008, and is growing at a compound annual growth rate of 42% every year. Even in the field of architectural landscapes and decorative lighting where blue-green light is applied more, "there is also a need to match a certain amount of red-yellow light" in order to form a colorful effect. Therefore, Sanan and other investment in blue-green LEDs will actually drive the demand for red and yellow LEDs in the market. The market size of single architectural landscape and decorative lighting has reached 12.6 billion yuan in 2008.

"Not to mention that LED is a new generation of lighting tools is also a trend." Sequoia investment partner Zhou Wei said that red and yellow LEDs are more suitable for indoor lighting because of their warm colors. National Semiconductor Lighting Engineering R&D and Industry Alliance expects that the domestic LED application market will be more than 500 billion yuan in 2015, of which home lighting accounts for 8%.

Although the prospects are good, the problem is that the founder of Ganzhao Optoelectronics has no money to shake this opportunity.

Thus, in February 2006, Deng Dianming transferred the shareholding of 1% of Sanan Electronics held by him to the original price of 2 million yuan. The money was invested in a limited amount of money; he is already the richest team. .

At this time, Wang Zhaoyong, the “joining major shareholder” of Ganzhao Optoelectronics, appeared. “He is actually an angel investor.” He initially invested 4 million yuan in Ganzhao Optoelectronics and increased to 1510.08 at the peak of November 2008. Ten thousand yuan. He now holds more than 22.6% of the shares of Ganzhao Optoelectronics, but only serves as a director of the company.

Wang Weiyong previously served as the production manager of Tsann Kuen Industrial Co., Ltd. and the general manager of Xiamen Jinlu Paper Co., Ltd. These experiences have made him a good intersection with Xiamen Industrial and Commercial Circle; Deng Dianming is also a celebrity in Fujian, from the last century. Since the 1980s, he has served as the deputy director of Sangang (now Sangang Group).



Where is the money for buying equipment?

Registered capital is in place, but it is only the first step in the Long March.

They still lack money: the German MOCVD epitaxial furnace used by Ganzhao Optoelectronics, the price of a single unit is more than 15 million yuan. The MOCVD epitaxial furnace is a necessary equipment, and the comprehensive supporting capacity of “connected to the production capacity” will exceed 20 million.

Where does the money come from? In fact, until November 2006, two MOCVD furnaces, which were the core equipment of Ganzhao Optoelectronics, arrived in Xiamen. At the beginning of the month, the Bank of Communications (601328, shares it) Xiamen Branch gave it 15 million yuan in loans, and in April 2007 gave another 20 million yuan loan.

After the equipment was commissioned, production began on January 18, 2007, and official orders were sold in February of that year. It is recalled that in the first few months, the company’s “the daily shipments were only tens of thousands of tablets”.

However, Ganzhao Optoelectronics still has a large amount of borrowing during the initial two years. According to its prospectus, in 2006 and 2007, Ganzhao Optoelectronics borrowed 13 million yuan from the natural person Zhou Yi; and in 2007 and 2008, there were several short-term loans to Xiamen Jinlu Paper Co., Ltd. where Zhou Yi is located. The accumulated loan amount was 46.625 million yuan. The annual weighted interest rate of the funds paid by the company is more than 10%, and some even as high as 18.5%.

However, many entrepreneurs are not convinced of this situation. "Which company is not in this stage? In the rising stage of the market, good companies are especially short of money."

In fact, this phenomenon, which is criticized by the outside world, is "a good thing" in the eyes of its investor Sequoia China. Its partner Zhou Wei believes that this indicates that the demand for products of Ganzhao Optoelectronics continues to increase.

In 2007, the production of LED chips and epitaxial wafers of Ganzhao Optoelectronics reached 2.523 billion, and the capacity utilization rate reached 91.42%. However, this seemingly very profitable company has no money in hand, and its prospectus shows that in 2007, the amount of accounts receivable of Ganzhao Optoelectronics accounted for 78.91% of the operating income.

This seems to have fallen into a strange circle: only the insistence can wait until the day of victory, but suffers from the lack of money to expand reproduction. When Sequoia China found the dry photo optoelectronics at the end of 2007, it was in this strange circle: in the celebration of the first anniversary of production in January 2008, Ganzhao Optoelectronics has decided to expand production, which means buying more MOCVD furnace. But it was not capable of its own: at the time all three of its MOCVD furnaces were crowded into the “Building 19” of the dry-light population, operating almost at full capacity; and the plant was rented. This situation also seems to have created the personality of the dry person: Deng Dianming and the technical core Wang Xiangwu are considered to be "very conservative". For example, Professor Wang Xiangwu will often put a lot of insurance before proposing a goal.

Although “reinvestment is risky at this time”, there is still no virtuous cycle in Ganzhao’s revenue; Zhou’s team “rapidly responded” and obtained the total share capital of Qianzhao Optoelectronics in 2008 for US$10.22 million. 20.56%. After 2 months, the number of MOCVD of dry photo photoelectrics increased to five. Prior to this, Sequoia China had already seen many LED companies in China. "A friend later introduced this company," Zhou said.

The beauty of Ganzhao Optoelectronics is not only that its chip and epitaxial wafer business is the sector of profit concentration in the LED industry chain; this team from Sanan Electronics not only makes the red and yellow LEDs "profitable", Technology is also in the middle and upper reaches of Taiwan's LED industry chain; its other product, the three-junction GaAs solar cell technology, is leading the world, and the future market prospects are unpredictable.

Photoelectric field analysis company McCann Bridge forecast: As of 2015, only Beidou Global Positioning System will launch more than 30, and each satellite requires 4 pieces of 3-inch GaAs epitaxial wafers, then In the next five years, the number of epitaxial wafers of triple-junction gallium arsenide batteries required by Beidou Satellite alone will exceed 150,000. As of the end of 2009, Ganzhao Optoelectronics' GaAs solar cell epitaxial wafer production capacity was only 18,000.

IPO has become a "big fat man"

The investment in Sequoia is undoubtedly a timely rain, but it is impossible to make timely rain forever.

At the end of 2009, Ganzhao Optoelectronics once again encountered a “difficult situation”: in October-December of that year, its capacity utilization rate was even as high as 103%, and expansion is imperative. Is it another redwood, or is it listed? At that time, there was also discussion inside the dry photos, but it was thought that the introduction of private equity investors "can only solve the thirst of the moment", not to mention which fund is willing to invest up to 450 million yuan?

According to close sources, Ganzhao Optoelectronics originally wanted to “list the first batch of listings on the GEM”. “In September last year, they had already completed all the listings.”

Even with the financial data as of the end of 2008, Ganzhao Optoelectronics has already met the first indicator of the GEM, namely “continuous profit in the last two years, accumulated profits of not less than 10 million yuan in the last two years, and continued growth”. In 2007 and 2008, the operating income of Ganzhao Optoelectronics was 70.546 million yuan and 152.5761 million yuan respectively; the corresponding profits were 2,17.92 million yuan and 61.834 million yuan respectively.

In the end, it had to stop, but it was because of another rule of the GEM. “The management method stipulates that the issuer should have a certain record of continuing operations, and specifically require the issuer to be a joint stock limited company established according to law and continuing to operate for more than three years.”

Perhaps the greater benefit of listing is to better cope with future competition. The domestic LED war seems to be on the verge of a flash: LED giants including Sanan are all making big investments, and the world's first LED photocell has also decided to set up factories in China.

Although I think that I have enough advantages: compared to the wafer, the localization advantage of dry photography is that it can be close to the service "downstream device companies." This is especially critical in the field of electronic devices. Moreover, the relatively high gross profit margin also indicates that dry photos are more efficient in manufacturing than in wafers.

To maintain this trend, "the key is in people", the rapid rise of dry photo optoelectronics is also considered to be extremely related to "no loss of technicians." Listings provide a better means of retaining people and "finding the right people." On the eve of the listing, Ganzhao Optoelectronics “sudden dividends” to the entrepreneurial shareholders.

On February 7, 2009, the board of directors of Ganzhao Optoelectronics decided that the company allocated 2008 annual profit of 12 million yuan to the Chinese shareholders. This fund is equivalent to all the investment of the entrepreneurial team. "This is an incentive for the entrepreneurial team, and we are willing to do it," said Zhou Wei, a partner at Sequoia Investment.

Also in this month, the company was established. The company, which is controlled by the main technical staff and middle management personnel, has a 4% stake in Ganzhao Optoelectronics. This decision was also decided at the time of Sequoia's shareholding in 2008. The shares were transferred from the original shareholders. In addition, there is still an option pool inside the company, "prepared for the later backbone employees."

But there are always advantages and disadvantages. In the recent period, the most discussed issue on the board of the company was how to use the super-raised funds. Even at the issue price of 45 yuan per share, the amount of funds raised by the company's IPO has exceeded 1.1 billion, but its initial purpose is only 450 million yuan.

The CEO of a company listed on the GEM said that it was too thin before it went public. It was fat on the market, but the result was unhealthy puffiness.

Why is the dry photo photoelectric coming out of this strange circle?

"We have already realized this problem," Zhou Wei did not think that this is a problem: the money was not capital before it went out, but it was only the cost to spend it. "So finding the right way to spend money is the key. ".

However, this may be only the most ideal situation. How can Deng Jianming and Wang Xiangwu, who have always been used to it, use these money? This is still a problem.