Zhejiang Zhenlei Technology Co., Ltd. (hereinafter referred to as “Zhenlei Technology”) recently updated the first two rounds of review inquiries and reply materials to accelerate the sprint for IPO ON the Science and Technology Innovation Board.
Zhenlei Technology is mainly engaged in chip products and technical services, which are mainly used in military fields such as wireless communication terminals, communication radar systems, and Electronic system power supply and distribution. Among them, chip products include terminal RF front-end chips, RF transceiver chips, high-speed and high-precision ADC/DAC chips, power management chips, micro-systems and modules, etc., which are the company’s main source of income; the technical service business is mainly to provide customers with the above-mentioned chips. The product’s cutting-edge technology and technological development results of basic technology research.
Judging from the company’s overall operating conditions, Zhenlei Technology’s recent performance has risen. In the past three years, the company has achieved revenue of 3.99 million yuan, 55.45 million yuan, and 152 million yuan respectively, with a compound growth rate of 517.2%. The net profit attributable to the parent was -48.98 million yuan, 4.19 million yuan, and 76.94 million yuan respectively, and the profitability was significantly improved.
Zhenlei Technology said that the substantial increase in revenue is mainly due to the continuous increase in my country’s military equipment investment and the gradual finalization of the company’s main chip products and the realization of mass production. It is reported that Zhenlei Technology was established in September 2015. It has been in the stage of technology accumulation and sample delivery verification in the early stage. After 2019, some major products began to be mass-produced and released.
Global semiconductor Watch noted that in 2019, the company’s terminal RF front-end chips, RF transceiver chips, high-speed and high-precision ADC/DAC chips, and power management chips all contributed more than 10 million revenue, which helped Zhen Lei Technology get out of the incubation stage. In particular, the rapid increase in volume of RF transceiver chips, high-speed and high-precision ADC/DAC chips and power management chips has become the main driving force for the company’s high performance. As of the end of June 2021, the above two types of products accounted for about 30% of the revenue.
In addition, the high gross profit margin of Zhenlei Technology has also attracted market attention. The company’s gross profit margin at the end of 2020 was as high as 88.16%, which was significantly higher than that of peer companies. Among them, the company’s terminal RF front-end chip gross profit margin was 84.97%, a year-on-year increase of 30.03 percentage points. The RF transceiver chip and high-speed and high-precision ADC/DAC chip reached 96.17%, and the gross profit margin exceeded that of Kweichow Moutai.
Zhenlei Technology explained that the company’s products and services are mainly in the military field, and the gross profit margin of military products is higher than that of civilian products, which is due to the industry characteristics of military products. On the one hand, the military industry group and its subordinate enterprises and scientific research institutes will fully consider the initial investment of the manufacturer when purchasing from the supplier, and the price sensitivity is relatively low. On the other hand, the technical content and quality standards of military products are higher, and the value content of their products is also higher.
In terms of customers, Zhenlei Technology is mainly based on the subordinate units of the National Defense Science and Industry Group, and the customer concentration is relatively high. The sales revenue of the top five customers in the past three years accounted for 90.71%, 83.92% and 74.19% respectively.