The domestic TWS chip maker Zhongke Lanxun listed

Core things reported on July 15 that just now, China Science and Technology Lanxun landed on the Science and Technology Innovation Board at an issue price of 91.66 yuan per share. Zhongke Lanxun is another company after Actions Technology that specializes in local TWS chips and successfully landed in Science and Technology Innovation. board manufacturer.

Zhongke Lanxun broke the opening price, and the opening price was 69.96 yuan per share, a decrease of 23.67%. After the market opened, the share price of Zhongke Lanxun continued to drop slightly, and then its share price remained at around 65 yuan per share. As of 10 o'clock in the core, the stock price of Zhongke Lanxun was 66.56 yuan per share, down 27.38%, and the market value was 7.987 billion yuan.

Zhongke Lanxun, which started out as a white-label TWS headphone chip, has sold nearly 2 billion chips since 2019. Today, its products have also entered the supply chain of brand players such as Transsion, TCL, Philips, and Lenovo.

In September 2016, Apple's first-generation AirPods redefined the product form of wireless earphones and ignited the TWS earphone market. Huang Zhiqiang, who smelled business opportunities, established Zhongke Lanxun in December of the same year, and also made a lot of money due to the popularity of TWS headphones.

From 2019 to 2021, the revenue of Zhongke Lanxun will be 646 million yuan, 927 million yuan, and 1.124 billion yuan, respectively. The initial capital injection of 3 million yuan has now exceeded 1.1 billion yuan in revenue. In just 6 years, Lanxun has written a "myth of making wealth".

The prospectus shows that Lanxun plans to raise funds of 1.596 billion yuan this time, which are mainly used for the upgrade of smart Bluetooth audio chips, the research and development and industrialization of IoT chip products, the research and development and industrialization of Wi-Fi Bluetooth integrated chips and the construction of research and development centers. and other projects.

01. The chairman holds 35.16% and relatives hold 16.74%

The founder of Zhongke Lanxun, Huang Zhiqiang, was born in 1956. He has only a high school education. Since 1981, he has worked in Fujian Minxing Electronics Factory No. 2, Shenzhen Huansheng Electronics Group, Shenzhen Weimatai Electronic Technology, Haozhi Jie, and other companies' work, these experiences are closely related to electronic products.

Until 2016, 60-year-old Huang Zhiqiang set his sights on the TWS headset track. Huang Zhiqiang and a number of technicians who had previously worked in Jianrong Integration jointly invested and established Zhongke Lanxun Co., Ltd. Initially, Huang Zhiqiang and the founding technical team held 60% and 40% of the equity respectively.

The latest shareholding structure chart in the prospectus shows that the actual controller of Zhongke Lanxun is its chairman Huang Zhiqiang, holding 35.16% of the shares. In addition, other shareholders who individually or collectively hold more than 5% of the shares of Zhongke Lanxun are Zhuhai Lanxun. Management, Zhuhai Lanxun Technology, and Chuangyuan Century hold 16.74%, 16.74% and 15.07% of the shares respectively.

Among them, Zhuhai Lanxun Management and Zhuhai Lanxun Technology are the shareholding platforms for its founding technical team. The partners of Zhuhai Lanxun Management are Liu Zhuzhan, Liang Mingliang, Zhang Shibing and Kong Fanbo, all of which are the core technicians of Zhongke Lanxun.

Genesis Century is a shareholding platform for other members of the Huang Zhiqiang family. All of its partners have kinship with Huang Zhiqiang, and none of them work in Lanxun.

It is not difficult to see that the Huang Zhiqiang family's right to speak within Lanxun should not be underestimated. This IPO will allow the Huang Zhiqiang family to write a myth of benefit again.

02. In 3 years, the revenue exceeded 2.6 billion, and the R&D investment was less than 200 million

Thanks to the increase in the penetration rate of terminal products in the TWS headset market, Lanxun has shown impressive performance since its establishment.

From 2019 to 2021, Zhongke Lanxun's revenue was 646 million yuan, 927 million yuan, and 1.124 billion yuan, with a compound annual growth rate of 31.85%, and net profit was 149 million yuan, 215 million yuan, and 229 million yuan.

In the past three years, the company's R&D investment was 30 million yuan, 51 million yuan, and 77 million yuan, accounting for 4.64%, 5.52%, and 6.83% of the total revenue.

In 2019, 2020, and 2021, the comprehensive gross profit margins of Lanxun are 28.56%, 26.70%, and 25.78%, respectively.

Among them, the reason for the decline in the company's gross profit margin in 2021 is that the TWS Bluetooth headset chip market is booming in 2020, and it has increased the sales prices of some products, making the gross profit margin of TWS Bluetooth headset chips as high as 48.39%. In the quarter, the gross profit margin of Lanxun TWS Bluetooth headset chip was 25.48%.

Compared with 25.48%, the gross profit margin in 2021 will increase slightly, mainly due to the steady increase in the sales of high-end Bluetooth chips of the "Lanxun Xunlong" series at that time, the proportion of revenue has increased to 13.05%, and the average gross profit margin is 44.73%.

The gross profit margin of Zhongke Lanxun is lower than the average level of comparable companies in the same industry. The average gross profit margins of comparable companies in the same industry in 2019 and 2020 are 35.71% and 32.60%. The prospectus shows that the reason is that different companies have differences in specific chip product types, downstream application fields, product positioning, and market competition positions.

The product sales area of ​​Lanxun is mainly concentrated in southern China, accounting for 97.59%, 99.38% and 99.41% respectively, which also confirms that it has always been rooted in Huaqiangbei.

03. Nearly 2 billion chips were sold in 3 years, and the main business revenue exceeded 99%

The wireless audio SoC chip developed by Lanxun is mainly used as the main control chip of various wireless interconnection terminal equipment and can be widely used in various wireless audio terminals, smart wearable products, smart homes, and other terminal equipment. Currently, the company's products include TWS Bluetooth headset chips, non-TWS Bluetooth headset chips, Bluetooth speaker chips, and other chips.

The prospectus shows that in the future, Lanxun will use technologies such as Bluetooth, Wi-Fi, and edge computing to further expand the application field of wireless audio chips to more intelligent terminal devices.

The terminal application market of the wireless audio SoC chip is the brand market and the white brand market. During the reporting period, the main customers of Zhongke Lanxun were the white-label market, that is, "copycat goods without a brand".

In the early stage of the development of the TWS earphone market, white-brand earphones known for their appearance similar to brand earphones and high-cost performance occupied a large market share, but this market is now being squeezed by brand earphone manufacturers with strong technical and financial strength, white-brand earphone products The outstanding advantages in performance and price are weakening.

Therefore, in 2020, Lanxun began to expand terminal brand customers. In April of the same year, the "Bluetooth Xunlong" series of high-end Bluetooth chips BT889X was launched, which is a product for differentiated applications for well-known terminal brand customers. Eight months later, its iterative upgrade product BT892X was launched. In July 2021, this series of terminals The customer has mass-produced and shipped.

According to the prospectus, Lanxun's products have entered the supply system of terminal brands such as Transsion, Meilan, Philips, Lenovo, iFLYTEK, and Tmall Genie.

During the reporting period, the sales volume of Lanxun’s chips were 422 million, 675 million, and 857 million respectively, and the sales volume increased rapidly; the unit price of chips was 1.53 yuan/pc, 1.37 yuan/pc, and 1.31 yuan/pc respectively, the average selling price has also tended to stabilize.

The main business income of Zhongke Lanxun was 645 million yuan, 926 million yuan, and 1.122 billion yuan, accounting for 99.82%, 99.91%, and 99.89% of the total revenue, with a compound annual growth rate of 31.89%. Among them, TWS Bluetooth headset chips and Bluetooth speaker chips account for a higher proportion of revenue.

It can be seen from the proportion of business revenue that Bluetooth headsets and Bluetooth speaker chips are its main business, which also puts its future development at risk. Compared with Qualcomm, Luoda Technology, and other industry companies, its product types and terminal application fields are relatively single.

04. The R&D cost is much lower than the industry average, and the core technical team was born out of Zhuhai Jianrong

From the perspective of R&D investment, the R&D ratio of Lanxun is lower than the average level of comparable companies in the same industry. From the data disclosed by comparable companies in 2019 and 2020, the average R&D expense ratio of comparable companies is 16.69% and 16.04%. %, Zhongke Lanxun was 4.64% and 5.52% .

Different from mainstream chip design companies that use Arm architecture, Lanxun uses RISC-V instruction set architecture as the underlying architecture to develop and design products.

Based on this, Zhongke Lanxun has formed a RISC-V SoC chip core developed by itself, low-power Bluetooth dual-mode radio frequency technology, Bluetooth TWS technology, self-developed audio Codec technology, and audio processing technology, and intelligent power management technology. , the core technology system including integrated development environment technology.

From 2019 to 2021, its core technology products are also its main source of revenue, accounting for 99.82%, 99.91%, and 99.89% of total revenue, respectively.

From the perspective of specific products, Lanxun AB537X series chips are the products with the highest proportion of revenue in 2020. From 2019 to 2021, AB537X series chips will achieve revenue of 47 million yuan, 409 million yuan, and 224 million yuan respectively, accounting for each period. The proportion of operating income was 7.27%, 44.17%, and 19.94% respectively.

However, from the perspective of key technical indicators, compared with comparable companies in the same industry, the performance or technical level of some products of Lanxun is close to the industry-leading level. At present, its 22nm process TWS Bluetooth headset chip has successfully completed tape out, The product application SDK is being developed and perfected.

Taking mid-to-high-end models with more advanced technology as an example, both Lanxun and its competitors have achieved mass production, but their products do not have outstanding advantages in key technical indicators.

According to the prospectus, as of December 31, 2021, Zhongke Lanxun has a total of 111 R&D personnel, accounting for 76.02% of the total number of employees, and 7 core technical personnel, namely Liu Zhuzhan, Zhang Shibing, Liang Mingliang, Wu Hanping, Kong Fanbo, Lin Jinhong and Lu Wen have more than 10 years of work experience in the chip field.

Except for Zhang Shibing, the deputy general manager, the core technicians of Lanxun are all from Zhuhai Jianrong Integration. It is worth mentioning that the core technical personnel of Jerry Technology, the competitor of Zhongke Lanxun, are also from Zhuhai Jianrong Integration.

As of June 7, 2022, Lanxun has 83 patents, including 24 invention patents, 59 new-type patents, 26 computer software copyrights, and 78 integrated circuit layout designs.

05. The distribution model is mainly based on SMIC's procurement accounting for more than 50%

Zhongke Lanxun's sales model is "mainly distribution, supplemented by direct sales". Among them, the distribution model revenue accounted for 75.77%, 83.00%, and 89.32% respectively, which are increasing year by year.

During the reporting period, the sales amount of Zhongke Lanxun to the top five customers accounted for 58.23%, 61.60%, and 63.32% of the main business income respectively.

The concentration of the top five customers of Lanxun is relatively high. Enterprises such as Zhongxinlong and Qinlongxin have occupied the list of the top five customers for three consecutive years. The Shanghai Stock Exchange has asked Lanxun whether there is a special service company. However, , Zhongke Lanxun denies this.

The company adopts the Fabless business model, and the main raw materials purchased are wafers, packaging and testing, and memory chips. Among the top five suppliers, Lanxun's purchases from SMIC accounted for 59.92%, 71.81%, and 69.46%, respectively, and there was a situation in which a single supplier's purchases accounted for more than 50%.

According to the prospectus, this is mainly due to the fact that the wafer manufacturing industry is a capital and technology-intensive industry, with high barriers to entry and limited qualified suppliers.

06. TWS headphone chip players urgently need to find the next growth market

Compared with the market growth rate in previous years, the TWS headset market is moving from rapid growth to stable maturity, and the chip manufacturers behind TWS headsets have also begun to explore new growth paths.

As a relatively important Bluetooth audio chip manufacturer in the industry, Lanxun's products have promoted the popularity of wireless Bluetooth headsets and other devices to a certain extent. However, until now, the disadvantages of Lanxun's single business, lower gross profit margin and R&D than the average level of the same industry have gradually emerged. In addition, the high proportion of family control has also brought many controversies to it. These risks will become A sharp sword hanging over his head at all times.

In the future, whether Zhongke Lanxun can reproduce the myth of making wealth in the past is still worthy of the industry's attention

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