Currently, China has become the largest market for the global semiconductor industry.

However, due to external blockades, achieving autonomy and control has become an urgent issue to be resolved in the development of China's domestic semiconductor industry.

The domestic replacement of semiconductor equipment and precision components is accelerating.

At the same time, the state has introduced relevant policies to encourage some qualified semiconductor industry chain companies to go public, leveraging capital to grow stronger and achieve full domestication of the semiconductor industry as soon as possible.

On August 16th, Jiangsu Pioneer Precision Technology Co., Ltd. (hereinafter referred to as "Pioneer Precision") successfully passed the IPO review on the STAR Market of the Shanghai Stock Exchange.

On the same day, Comtech Technology (301611.SZ) was listed on the ChiNext board of the Shenzhen Stock Exchange.

Before Comtech Technology went public, only Fuchuang Precision (688409.SH) had listed on the STAR Market in October 2022.

On August 23rd, Pioneer Precision submitted its registration.

Ultimately, whether Pioneer Precision can become the third A-share listed company in the semiconductor equipment components industry remains to be seen.

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With two major leading customers, it is understood that semiconductor equipment refers to the production equipment used to manufacture various semiconductor products.

As an important part of semiconductor equipment, the quality, performance, and precision of precision components directly determine the reliability and stability of semiconductor equipment.

Pioneer Precision stated that the company is a manufacturing expert in key components for domestic semiconductor etching equipment and thin film deposition equipment, especially in the etching equipment field, where the technical difficulty is second only to lithography equipment.

The company is one of the few domestic suppliers that have mass-produced and supplied key components for domestic etching equipment of 7nm and below, competing directly with international manufacturers.

Revenue composition shows that from 2021 to 2023 and the first three months of this year, the revenue from Pioneer Precision's products applied to etching equipment and thin film deposition equipment accounted for 82%, 89%, 77%, and 82% of its total revenue, respectively, with other income coming from the medical and photovoltaic fields.

Pioneer Precision also mentioned that the semiconductor equipment components market has many sub-segments, and the technical requirements and difficulties of different sub-segments vary.

The company has grown together with domestic semiconductor equipment leading enterprises since its establishment and has a first-mover advantage.

The industry's particularity has deeply bound Pioneer Precision with major customers.

The customer list shows that since 2021, CMC (688012.SH) and North HuaChuang (002371.SZ) have always been the top two customers of Pioneer Precision, with income from these two companies accounting for more than 50% of Pioneer Precision's revenue in each period, reaching 68% at its highest (in 2022).

Public information shows that CMC once developed the first dielectric etching machine in China and is a leading enterprise in China's integrated circuit equipment industry.

North HuaChuang is currently the largest semiconductor equipment company in China, with products including plasma etching equipment, physical vapor deposition equipment, chemical vapor deposition equipment, etc.

It is worth mentioning that CMC is also a shareholder of Pioneer Precision.

In December 2021, during the third equity transfer of Pioneer Precision, CMC invested 10 million yuan to obtain 0.59% of the shares.

Before this IPO, CMC held 1.93% of the shares of Pioneer Precision, making it the ninth largest shareholder.

Although the company has always been supported by two major customers, its performance has also fluctuated in the past few years.

Financial data shows that from 2020 to 2023, Pioneer Precision achieved revenues of 202 million yuan, 424 million yuan, 470 million yuan, and 558 million yuan, respectively, with net profits attributable to the parent company of -38.4493 million yuan, 105 million yuan, 105 million yuan, and 80 million yuan, respectively.

In 2021, Pioneer Precision turned a loss into a profit.

However, in 2023, Pioneer Precision "increased revenue but not profit".

With the revenue increasing by nearly 100 million yuan compared to 2022, the net profit attributable to the parent company decreased by 25 million yuan.

Regarding the performance change, Pioneer Precision stated in the reply to the second round of review inquiries that in the first half of 2023, the company's performance fluctuated due to the cyclical fluctuation of the industry.

Starting from the second half of 2023, as the downstream market picked up, the company's performance improved.

Pioneer Precision believes that the company's business does not have risks such as a small market space and insufficient growth potential.

In the latest prospectus (registration draft), Pioneer Precision disclosed the financial data for the first half of 2024, with operating income of 548 million yuan, a year-on-year increase of 147%; net profit attributable to the parent company was 112 million yuan, a year-on-year increase of 314%.

Regarding the reason for the significant increase in performance in the first half of the year, Pioneer Precision stated that since the second half of 2023, as the downstream semiconductor equipment market has re-entered the upward cycle and the domestication process has continued to advance, the company's operating income and net profit levels have increased significantly in the first half of 2024.

Among peer companies, Fuchuang Precision's revenue and net profit for the first half of the year were 1.506 billion yuan and 122 million yuan, respectively, with year-on-year increases of 82% and 27%, respectively; Comtech Technology's revenue was 385 million yuan, and net profit was 139 million yuan, respectively, with year-on-year increases of 64% and 309%, respectively.

Looking at the first half of the year, the semiconductor equipment components industry has warmed up as a whole.

At the same time, Pioneer Precision also disclosed the 2024 full-year performance forecast, expecting to achieve operating income of 1 billion to 1.1 billion yuan, a year-on-year increase of 79% to 97%; it is expected to achieve net profit of 190 million to 200 million yuan, a year-on-year increase of 138% to 151%.

Pioneer Precision stated that the significant increase in full-year performance in 2024 mainly comes from the continuous growth of core products in the semiconductor field.

However, Pioneer Precision also mentioned that the financial data for 2024 is a preliminary estimate of the company, which has not been audited or reviewed by the accountant, and does not constitute a profit forecast or performance commitment of the company.

Before the IPO, the company distributed dividends of more than 100 million yuan.

The use of funds raised showed that Pioneer Precision plans to raise 587 million yuan in this IPO, of which 94.9494 million yuan is used to replenish working capital, which is noteworthy.

During the IPO period, Pioneer Precision carried out multiple dividends.

According to the prospectus, in 2020, Pioneer Precision lost 38.4493 million yuan and distributed dividends of 305.1 thousand yuan.

In 2021, Pioneer Precision made a profit of 105 million yuan and distributed dividends of 82.675 million yuan, accounting for 79% of the net profit for that year.

In 2022, Pioneer Precision made a profit of 105 million yuan and distributed dividends of 25 million yuan, accounting for 24% of the net profit for that year.

Statistics show that Pioneer Precision distributed a total of 108 million yuan in dividends before the IPO, which is roughly equivalent to the net profit in 2021.

The equity relationship shows that the founder of Pioneer Precision, You Li, and his family hold about 35% of the shares of Pioneer Precision through direct and indirect means, and thus, You Li and his family will receive nearly 40 million yuan.

In the use of dividends, Pioneer Precision mentioned that it is used for related shareholders to pay the investment in the company.

In the first round of inquiries, regarding the necessity and rationality of having a large amount of cash dividends during the IPO period and raising funds for "supplementary flow", Pioneer Precision replied that the expansion of the business scale has led to a continuous increase in the company's demand for working capital.

Part of the funds raised this time is used to replenish working capital, which can effectively replenish operating funds, meet the company's continuous R&D investment and business scale expansion needs, and provide financial security for the company's continuous operation and development.

This year, the supervision has strengthened the management of "dividends on one side, and raising funds to replenish working capital on the other side".

On April 30th, the Shanghai Stock Exchange and Shenzhen Stock Exchange proposed to implement a negative list management for matters such as reputation and "clearing-style" dividends before listing.

Affected by this, some IPO companies have withdrawn voluntarily.

The tightening of supervision has also had a certain impact on the financing needs of Pioneer Precision.

The prospectus in June 2023 showed that Pioneer Precision planned to raise 208 million yuan to replenish working capital, which was later adjusted to 94.9494 million yuan.

However, Pioneer Precision is also "not short of money".

Financial data shows that as of the end of March this year, Pioneer Precision's monetary funds were 279 million yuan, and the net cash flow from operations for the same period was 10.97 million yuan.