The IPO Of Rouyu Science And Technology Innovation Board Plans To Raise 14.4 Billion Yuan

Last weekend, the IPO application of Ruoyu technology innovation board, a small and famous Unicorn enterprise in the investment circle, was accepted.

According to the prospectus, the core technology products of Ruoyu technology are mainly flexible display screen and flexible sensor. In addition to folding mobile phones, the application products also include rouji intelligent handwritten book, Ruoyu intelligent conference display terminal, e-book, car safety intelligent screen, curved elevator central control, etc.

Rouyu technology plans to issue no more than 120 million ordinary shares (accounting for no less than 10% of the total share capital after the issuance), and raise a capital of 14.434 billion yuan. Among the listed science and technology innovation board stocks, the amount of fund raised is second only to SMIC international.

Ruoyu technology said that the fund-raising amount will be used to supplement working capital, flexible display base upgrading and expansion construction project, enterprise solutions of flexible technology, flexible frontier technology R & D project and new generation flexible intelligent terminal development project.

It is worth mentioning that if the total share capital of 480 million shares after the issuance is calculated according to the plan of raising funds of 14.434 billion yuan, if Rouyu technology is successfully listed, the valuation will reach 57.736 billion yuan, and the issuance price of Rouyu technology will also reach 120.28 yuan per share.

However, from the perspective of performance, as of June 30, 2020, Ruoyu technology has an outstanding loss of 2.427 billion yuan, and its revenue in 2019 is only 227 million yuan, and the net profit is - 1.073 billion yuan.

As of January 4, the Cambrian, one of the four small dragons of AI, which has not made up for the losses, has a total market value of only 59 billion yuan as of January 4.

At present, the research and development of flexible display screen of Ruoyu technology has made great progress. -Photo by Gan Jun

Bright spots in R & D and technology reserve

According to the public information, Ruoyu technology was established in 2012, mainly engaged in the research and development of flexible display materials, technology, components, circuit design, system design, etc.

At present, the research and development of flexible display screen of Ruoyu technology has made great progress. In 2014, Ruoyu technology produced a full-color AMOLED flexible display screen with a thickness of only 0.01 mm, with a minimum bending radius of 1 mm, and successfully connected to the mobile phone platform. The flexible screen is the thinnest display screen in the industry.

In 2018, Ruoyu Technology launched the world's first large-scale production line of full flexible display screen. In October of that year, the company released the world's first mass-produced flexible screen folding mobile phone flexpai, which was first shipped in the first quarter of 2019.

In March 2020, the company's second-generation folding screen mobile phone flexpai 2 made its debut, and was officially released in September 2020 and fully shipped to the market.

It is understood that flexpai 2 is a 5g folding screen mobile phone with retail price less than 10000 yuan. Compared with flexpai roupai, flexpai 2 has fully upgraded its screen, hinge and operating system.

According to the public data, from January to June of 2018, 2019 and 2020, the output of full flexible display screen of Ruoyu technology is 1.76000, 14.56000 and 1.23000 respectively.

In the view of some market participants, the flexible screen products dominated by Rouyu technology are not just needed by the market. "At present, the market space of large screen is still relatively large, but the large screen is generally splicing screen, but the cutting requirements in this respect will be higher, but the advantage of Ruoyu is not so obvious."

This trend can also be seen from the prospectus. Due to the limited market space and production capacity, the sales scale of Rouyu technology has been small, but it has grown rapidly in the past three years.

According to the prospectus, during 2017-2019, the revenue of Ruoyu technology was 64.7267 million yuan, 109 million yuan and 227 million yuan respectively, with a compound growth rate of 87.26% in the three years. We invest a lot in R & D. From 2017 to June 30, 2020, the R & D expenditure of Ruoyu technology reached 1.817 billion yuan, 3.5 times of the total revenue in the three and a half years.

However, it is worth mentioning that some market participants quite agree with the track and technical reserves of Rouyu technology. The prospectus also shows that, as of November 30, 2020, 1102 patents have been authorized by Ruoyu technology and its holding subsidiaries at home and abroad, and 1326 applications have been filed; among them, 720 domestic patents have been authorized, 152 invention patents have been granted; 382 overseas patents have been authorized and 200 patents have been issued.

Cash flow tight due to loss

As a star enterprise in Shenzhen, Ruoyu technology has been brilliant since its birth and won the favor of many first-line institutional investors.

Its founder, Liu Zihong, is a post-80s Stanford doctor. Since its establishment in 2012, Ruoyu has been on the road of financing. In August 2015, CITIC Capital and Shanghai Pudong Development Bank participated in round C financing of Rouyu technology, with a total investment of 1.1 billion yuan.

The C + round of financing was launched in November 2016, with an investment of 500 million yuan. At this time, the valuation of Rouyu technology has reached 20 billion yuan.

In September 2017, Rouyu signed a contract with China CITIC Bank, Agricultural Bank of China, ICBC, Bank of China and Ping An Bank, adding a total of US $800 million in round D financing.

In March 2018, Yuexiu industrial fund and Hong Kong Shangcheng group under Li Jiacheng invested in Rouyu technology through strategic investment. After the completion of round e financing, the investment institutions of Ruoyu technology covered the real estate industry.

In August 2018, the e + round financing of Rouyu technology was joined by China Merchants Bank, whose valuation has reached as high as US $5 billion.

After several rounds of financing, Ruoyu technology's investor portfolio covers many first-line investment institutions at home and abroad, such as Shenzhen Venture Capital, IDG capital, cornerstone capital, alpha wealth, CITIC Capital, Yuanzheng investment, Fuhui venture capital, Jack and Fischer investment, Knight capital of the United States, former master fund, Shangcheng group, Yuexiu industrial foundation, and Yingke capital.

According to the prospectus, before the offering, the top ten shareholders of Ruoyu technology were Liu Zihong (38.61%), CITIC Capital (6.05%), Wei Peng (4.97%), Shenzhen Venture Capital (4.64%), Yu Xiaojun (4.47%), Shenzhen Huigang (4.06%), Jack and fishcher (3.79%), Shenzhen Songhe (3.60%), Xiangsheng (2.53%) and Yang Leyi (2.17%).

Although several rounds of financing have been completed, the continuous loss of Ruoyu technology's cash flow is highly strained.

From 2017 to 2019 and from January to June 2020, the net profit of Ruoyu technology to its parent company is about - 359 million yuan, - 802 million yuan, - 1073 million yuan and - 961 million yuan respectively, and the corresponding net profit after deduction of non-profit is about - 359 million yuan, - 786 million yuan, - 986 million yuan and - 744 million yuan respectively.

In the same period (from 2017 to 2019), the cash flow from operating activities of Ruoyu technology was - 358 million yuan, - 612 million yuan and - 810 million yuan respectively; from 2017 to the first half of 2020, the book value of accounts receivable of the company was 29 million yuan, 41 million yuan, 88 million yuan and 98 million yuan, accounting for 45.11%, 38.05%, 38.59% and 84.09% of the current operating income, respectively.

Rouyu technology said that the main reason for the company's continuous loss is that the products are still in the market development stage, the sales scale is small, and the research and development of new products requires a lot of investment.

From 2017 to June 30, 2020, R & D investment was 160 million yuan, 489 million yuan, 586 million yuan and 583 million yuan respectively, and the proportion of R & D investment in business revenue in the last three years was 308.17%.

In order to raise funds, Ruoyu technology has used its sole land use right mortgage, the equity pledge of its subsidiary company Ruoyu display, some equipment mortgage and some patent pledge to apply for loans from the bank. These pledged assets are important production and operation assets of Ruoyu technology.

As a matter of fact, as early as 2019, Ruoyu technology has been listed in the United States, and for this reason, it has set up a vie structure, established Cayman Rouyu and issued shares. By June 2020, in order to return to the domestic capital market, the company has dismantled the vie structure with the support of shareholders.