IPO News | Tianyu Semiconductor's (02658) margin subscription has exceeded HK$2.16 billion by 11.4 times

The Zhitong Finance App learned that Tianyu Semiconductor (02658), a manufacturer of silicon carbide epitaxial wafers, offered shares from November 27 to December 2. As of around 10 a.m. on November 28, Tianyu Semiconductor had been loaned at least HK$2.16 billion in margin loans from the brokerage firm, which was 11.4 times the overpurchase amount of HK$174 million.

Tianyu Semiconductor plans to issue 3.705 million H shares, of which the Hong Kong public sale accounts for 10%. The sale price is HK$58 per share, 50 shares per lot, and an entry fee of $2929.2 for the first lot. The company is expected to be listed for sale on December 5, with CITIC Securities as its sole sponsor.

Tianyu Semiconductor introduced private equity investment funds Guangdong Primeval Forest, Guangfa Global (in terms of OTC swaps) and Glory Ocean as cornerstone investors, subscribing for RMB 120 million and HK$30 million respectively, for a total of 2,784,900 shares.

According to the prospectus, Tianyu Semiconductor was founded in 2009 and is a silicon carbide epitaxial sheet manufacturer that mainly focuses on making silicon carbide (“silicon carbide”) epitaxial sheets.

Based on the revenue and sales volume generated by homemade silicon carbide epitaxial sheets in the global market in 2024, Tianyu Semiconductor is the third largest manufacturer of silicon carbide epitaxial wafers in China, with market shares of 6.7% (in terms of revenue) and 7.8% (in terms of sales volume), respectively. Based on the revenue and sales volume generated by homemade silicon carbide epitaxial sheets in the Chinese market in 2024, the company is also the largest manufacturer of homemade silicon carbide epitaxial wafers, with market shares of 30.6% (in terms of revenue) and 32.5% (in terms of sales), respectively.

During the track record period, Tianyu Semiconductor mainly provided 4 inch, 6 inch and 8 inch silicon carbide epitaxial wafers. In order to meet the evolving needs of downstream customers in demand for larger and more cost-effective semiconductor materials and maintain the company's market position, the company has continuously iteratively upgraded the company's manufacturing process and R&D technology, and gradually increased production capacity to keep up with the industry trends of silicon carbide epitaxial film suppliers. Specifically, the company's newly built Dongguan Ecological Park base has been completed and is expected to be mainly used for mass production of 6 inch and 8 inch silicon carbide epitaxial wafers. The base will be put into use by the end of 2025.

By utilizing the company's ability and expertise to develop and mass-produce silicon carbide epitaxial wafers, Tianyu Semiconductor provides value-added services related to silicon carbide epitaxial wafers, including silicon carbide epitaxial foundry services, epitaxial sheet cleaning services, and silicon carbide-related testing services. The company's main customers for services related to silicon carbide epitaxial wafers include scientific research institutions, universities and other upstream and downstream industry participants.

On the financial side, the company's revenue increased from RMB 437 million in 2022 to RMB 1,171 million in 2023, but declined to RMB 519.6 million in 2024. Net profit surged from RMB 2.8 million in 2022 to RMB 95.9 million in 2023.

According to the prospectus, Tianyu Semiconductor plans to use 62.5% of the net proceeds from the global sale to expand the company's overall production capacity, 15.1% to enhance the company's independent R&D and innovation capabilities, 10.8% for strategic investments or acquisitions, 2.1% to expand the company's global sales and marketing network, and 9.5% for working capital and general corporate purposes.