Since its establishment in 2009, Dongxin Communications has relied on government subsidies for its main income and survival. The semi-annual report showed that in the first half of this year, it realized an operating income of RMB 0.000, and the above financial management announcement showed that its 168 million yuan of “selling money†had been used and purchased wealth management products with idle self-owned funds.
On the evening of September 9, Quanzhi Science and Technology announced the suspension of the issuance of the inquiry announcement, and a financial announcement issued by the holding subsidiary Hefei Dongxin Communication Co., Ltd. (hereinafter referred to as Dongxin Communication) released on September 2nd led to It invested 168 million yuan in the holding of this chip concept company.
Since its establishment in 2009, Dongxin Communications has relied on government subsidies for its main income and survival. The semi-annual report showed that in the first half of this year, it realized an operating income of RMB 0.000, and the above financial management announcement showed that its 168 million yuan of “selling money†had been used and purchased wealth management products with idle self-owned funds.
At present, the technical products of Dongxin Communication have lagged behind, and industry experts are “not very optimistic about the future development of the companyâ€. Then, does Dongxin Communication use funds to buy financial management whether it affects subsequent research and development? Why did Quan Zhi Technology take over this company? Reporters conducted an investigation.
â— A large amount of government subsidies every year
According to public information, Dongxin Communications was established in Hefei in 2009. It is engaged in R&D and design of 4G/LTE terminal baseband chips. It operates in a fabless mode and commissions external manufacturers to produce chip products and modules through direct sales or Distribution methods, sales to terminal manufacturers and other customers to obtain revenue.
In 2014, the shareholding structure in the public transfer specification of Dongxin Telecom's listed New Third Board showed that at the time, among the top ten shareholders of Dongxin Communication's common stock, Zhao Hu and shareholding accounted for 6.94% of the shareholding ratio of 6.42%. Zhao Wei is a father-daughter relationship; Liu Yang and Zhao Wei, who hold 17.35% of the shares, are husband-wife relations; and Tang Xiangguo, who holds 10.76% of the shares, is Zhao Hu’s daughter-in-law. The controlling shareholder and actual controller of the company are Zhao Hu, Zhao Wei, Liu Yang and Tang Xiangguo, which together account for 58.47% of the total shares of the company.
According to the data, Zhao Hu was born in 1950, junior high school education, and vice president of Anhui Branch of the Software Association of Anhui Province. Tang Xiangguo was born in 1977, with a nationality and a doctorate. He has worked for ApaceWave in the United States, FutureWei in the United States, and CenTIllium CommunicaTIons. According to an article published in the 2010 Anhui Science and Technology News article, "Returning Dr. Tang Xiangguo: Rooted in Anhui R&D and Transformation", in 2009, Tang Xiangguo returned to China and founded Dongxin Communications to develop LTE (4G) mobile communication core. The chip completed the development of the prototype in only half a year, and obtained the application for seven invention patents. The public transfer specification also shows that the company has six invention patents and 18 patents pending.
However, the information shows that Dongxin Communication has not achieved success in business. Since its establishment, it has never been profitable, and it relies mainly on government funding to survive. From 2011 to 2014, the company's operating income was 100,000 yuan, 200,000 yuan, 105,000 yuan and 246,000 yuan respectively; and the net profit of the corresponding year was negative for 4 consecutive years, respectively -66.58 million yuan, -1142.5 Ten thousand yuan, -13.81 million yuan and -747,000 yuan. At the same time, a large number of government subsidies have become the basis of their survival. The announcement shows that Dongxin Communications received a government subsidy of 5.86 million yuan in 2011, a subsidy of 5.34 million yuan in 2012, and a subsidy of 2.62 million yuan in 2013. The subsidy was 3.13 million yuan, and it was 6.14 million yuan in 2015. The data disclosed in this year's China Daily is a subsidy of 6.55 million yuan.
Li Jiahe, an associate professor at the School of Accounting, Hubei University of Economics, said after reading the 2016 Interim Report of Dongxin Communications that Dongxin Communication is a high-tech enterprise. In the initial stage, it mainly relied on subsidies from the state and local governments for research and development. After the project was accepted, subsidies were available. Confirmed as non-operating income. In addition, from the report, the company has no production, mainly relying on technology transfer or technology joining to make profits (future). In the early stage, it relied heavily on subsidies, and its subsequent operational capacity was highly uncertain. Therefore, the acquisition of Quanzhi Technology allows the company to have the ability to continue to operate in the future; on the other hand, it also enables Quanzhi Technology to have the concept of communication chip design.
It is worth noting that Dongxin Communications had zero revenue in the first half of this year. For the reason, Dongxin Communications said that in the first half of 2016, the company provided some R&D trial products to customers in the process of chip and module development, which generated sales of 895,900 yuan, which reduced the development cost. Reflected as operating income.
â— Quanzhi Technology's take-over logic
In July 2014, Dongxin Communication listed the new three board. Although its revenue and market did not progress much, it successfully carried out multiple rounds of financing and made Quanzhi Technology a successor.
At the end of 2014, Dongxin Communications completed the first round of fixed financing in the New Third Board, and the actual net proceeds raised was 12 million yuan. Only half a year later, the second round of financing was launched. In April 2015, the company made three markets. Shangguoyuan Securities, Huaan Securities and Tianfeng Securities and other natural person investors issued 4 million shares, raising a total of 16 million yuan. In May of the same year, the company issued 230,000 shares by way of inquiry, raising a total of 2.415 million. yuan. In the whole year of 2015, the total financing of the company was 18.415 million yuan. According to the announcement issued by Dongxin Communication this year, in the first quarter of 2016, the company issued 70 million shares to Zhuhai Quanzhi Technology Co., Ltd., raising 168 million yuan. Quanzhi Technology became the successor of Dongxin Communication.
So why is Quanzhi Technology willing to take over Dongxin Technology? Xue Zhi, deputy general manager and secretary of the board of directors of Quanzhi Technology, told reporters that the company's investment in Dongxin Communication is mainly because Dongxin Communication is an emerging LTE baseband chip design enterprise, specializing in the research and development of high-end communication core chips and solutions. Industrialization, the acquisition will effectively fill the gap in Quanzhi Technology's LTE baseband chip communication technology, which is conducive to the extension of the company's chip products in communication functions and accelerate the technical layout of listed companies in the field of Internet of Things.
Zhou Xuefeng, the editor-in-chief of Dibebei, believes that the temporary revenue and profit of Dongxin Communication is relatively low. In fact, it is related to the industry in which the company is located, and it is not a problem of business capability. "Communication, bio-pharmaceutical and other industries are in the research and development period in the early stage. It is inevitable to invest heavily and have high risks. The New Third Board is still a new thing. Many management and systems are in the exploration period. It is normal to have various phenomena. â€
"The entry barrier of LTE terminal baseband chips is relatively high, and the collaboration between upstream and downstream enterprises is relatively high. Enterprises often need a long time to run through various technical and management issues. In addition, in the communications industry, technology accumulation is very high. Importantly, companies with no technology are difficult to establish in the communications industry. With the testing of the world's fifth-generation mobile phone mobile communication standard (5G) in the world, there will be huge space in the future 5G market, and companies with technology accumulation in 4G, Only have the opportunity to participate in depth (5G). Capital is more concerned about the strength of Dongxin Communication in the research and development, design and other aspects of 4G/LTE chips." Zhou Xuefeng said.
The level of profitability has little to do with whether the company can integrate funds. The financing mainly depends on the ability of enterprises to draw cakes. It is very important to bring confidence to investors. Jin Yinsong, the investment director of the company, said that although the New Third Board has no profit requirements for enterprises, in the process of sponsoring enterprises, each broker often prefers three types of enterprises, namely, stable operation, good growth and foundation. The number of users is relatively large. In addition, the basic situation of the company and the internal relationship between the company and the brokerage are also the basic considerations of the brokerage sponsorship.
The secretaries of another company in the New Third Board market also expressed their opinions: "The New Third Board undertakes a big task to nurture and support small and medium-sized enterprises. Therefore, we have seen that the New Third Board does not require the company's profit when it is listed. Only listed companies are required to continue to operate. These companies may still be in the early stage or market cultivation stage, and some investment institutions are more concerned with the medium and long-term profitability of the company."
â—Industry experts: not very optimistic about the future of the company
According to public information, at present, the scale of domestic TDLTE users has reached 100 million, and the equipment investment scale of the 4G/LTE private network market will increase from 1.287 billion yuan in 2014 to 6 billion yuan in 2016, with the continuous 4G/LTE technology. Mature, the corresponding baseband chip market will continue to develop.
Although the baseband chip market is widely optimistic by investors and the market prospect is huge, in fact, the baseband chip industry is a typical IC design industry. The market has long been firmly occupied by domestic and foreign large IC designers such as Qualcomm, Intel, MediaTek and TSMC. In addition, the chip development cycle is long, and mass production problems after successful development will play a key role in the company's core competitiveness. Obviously, Dongxin Communication does not have the advantage of being bright.
Although Dongxin Communication was established in 2009, the data shows that 2015 is the first year that the company's R&D chips have reached mass production and industrialized sales. The financial report data of the year showed that the company's revenue and net profit were 873,000 respectively. Yuan and 3.824 million yuan. It is worth noting that according to the securities research report issued by Guoyuan Securities in March 2015, "Dongxin Communication (430670) - Waiting for the production of fist products", the size design of the baseband chip of Dongxin Communication still stays at the level of 40nm, while IC The baseband chip size design and production capacity of Dachang has reached 20nm, so it is difficult for the company's products to enter the consumer electronics field. In addition, the company also faces problems such as the promotion of single-mode solutions and the progress of the 4G/LTE market, and the company's continuous innovation speed is less than the industry product update cycle.
Some analysts in the chip industry told reporters that 4G/LTE is mainly engaged in communication chips, which are more biased to industry users. These companies have higher technical barriers and higher profit margins, but now this market is relatively mature and competitive. It is also more intense. At present, more mainstream mobile phones use 28nm, more advanced chips, such as Qualcomm, Hisilicon and other large-scale chips are 14nm, 16nm, 40nm is the technology of the previous generation, it is expected that the 10nm specification will be realized early next year. Produced.
Gu Wenjun, the chief analyst of the core research, and Gu Wenjun also said that the time for mass production in the chip industry is about three years. After so many years, the commercialization of Dongxin Communications The road prospects are not yet clear, and it is not very optimistic about the future development of the company.
â—What should I do if I have bought funds for financial follow-up?
It is worth noting that Dongxin Telecom's 168 million yuan of funds raised from Quanzhi Technology in the first quarter of this year was fully in place on April 5, 2016.
On August 31, 2016, Dongxin Communications announced that the company used idle funds to purchase wealth management products from Hefei Science and Technology Rural Commercial Bank with a subscription amount of 30 million yuan and a product life of 91 days. In fact, this is not east. Core Communications first purchased bank wealth management products. On May 23, 2016, Dongxin Communications purchased two bank wealth management products totaling 160 million yuan, of which 100 million yuan of wealth management has expired, and the remaining 0.6 billion yuan of wealth will be in November this year. Expired on the 25th.
According to the announcement issued by Dongxin Communication on August 29, the raised funds have been used, and the current balance is 0 yuan, all of which are used to supplement the company's working capital. However, some insiders told reporters that with the actual fundraising and annual losses of Dongxin Telecom in the first few rounds, there is no extra idle self-owned funds. The funds for purchasing wealth management products should be the “selling money†of 168 million yuan. .
In this regard, Xue Wei said that Dongxin Communication will use the idle funds to purchase short-term guaranteed wealth management products based on the needs of subsequent R&D and operation, while ensuring that it does not affect the funds required for daily production and operation activities. Improve the efficiency of capital use and further improve the overall revenue of Dongxin Communications.
There is also a noteworthy problem. After Quanzhi Technology took over Dongxin Communications, Tang Xiangguo, the technical leader, only owned 3.62% of the shares. In the acquisition report of Quanzhi Technology, the company also stated that “Zhongzhi Technology is in the LTE baseband. There is no technical and personnel reserve for processor technology research and development." So, what if Tang Xiangguo leaves the company in the future? In fact, one of the core technical staff of Quanzhi Technology has left the company for personal reasons last year.
In this regard, Xue Yu replied to the reporter, "Since Tang Xiangguo has made outstanding contributions to the development of Dongxin Communication, its love and pursuit of Dongxin Communication and even the integrated circuit industry is obvious to all. We are confident and Tang. Mr. Xiang Guo and all of Dongxin Communication's colleagues work together to provide more excellent technologies and products for the company and the industry. Dongxin Communication is a team with rich operational experience and reasonable organizational structure, with sufficient resistance to risks and self-regulation. Even if there is a change in individual personnel, it will not have a serious impact."
In the face of no revenue in the first half of this year, government subsidies, a large amount of idle funds for the purchase of bank wealth management, and the current process of independent research and development of technology, the reporter repeatedly called the relevant staff of Dongxin Communications. The staff told reporters that the executives were on a business trip and came back about two or three days later. The follow-up reporters also need to wait another two weeks. As of press time, Dongxin Communications has not responded to the reporter's questions.
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