This article is intended to convey more market information and does not constitute any investment advice.
Jia Nan Zhizhi, who has repeatedly hit the wall in the capital market, once again launched an IPO sprint.
On October 28th, the United States local time, the world's second largest mining machine design and manufacturing company, Jia Nan Zhizhi officially submitted an initial public offering (IPO) prospectus to the US Securities and Exchange Commission (SEC), plans to use the stock code "CAN" in late November. "On the NASDAQ, tentative fundraising does not exceed $400 million. Credit Suisse, Citigroup, Huaxing Capital, CMB International, Galaxy Digital Advisors LLC, Huatai Securities and Tiger Securities International act as underwriters.
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Founded in 2013, Jianan Zhizhi mainly produces Avalon mining machines, and since then it has added AI chip business to smooth Bitcoin risk. In September 2018, Jia Nan Zhizhi released the first generation AI chip Kendrye K210, and began mass production in the fourth quarter of 2018. This is the world's first RISC-V commercial edge computing chip with machine vision and machine hearing, mainly used in smart home, smart retail, security, automatic driving assistance systems, smart industry, medical, education, and authentication. At present, Jianan Zhizhi is developing the second-generation 28nm AI chip "Kendryte K510", which will be developed for 5G scenes and will be used in new scenarios such as smart retail and smart driving. It is expected to start mass production in the first quarter of 2020.
According to data from the third-party agency Frost & Sullivan, the prospectus pointed out that as of the first half of 2019, Jianan Zhizhi was the world's second largest designer and manufacturer of bitcoin mining machines, and the market share of Bitcoin mining machines accounted for 21.9% of the world. More than 99% of the company's revenue comes from Bitcoin mining machines and related sales.
If all goes well, Jia Nan Zhi Zhi will become China's first successful IPO mining machine company, "CAN" will also become the first real blockchain stock.
10 core views of the prospectus:
2. The main business model is to provide advanced semiconductor solutions for supercomputing hardware, and to engage in IC front-end, back-end design and bitcoin mining solutions (including mining machine design, manufacturing, sale and lease, and production and sales of parts) .
3. Future growth strategies will focus on six directions: strengthening leadership in supercomputing solutions, continuing to invest in high power efficiency IC design, launching new AI products, enhancing the AI platform business model (planning to create an AI SaaS platform), Strengthen supply chain management and continue to expand overseas business.
4. This time, choose "Canaan Inc." as the company name of this IPO.
5. Chinese users are major customers of mining machines.
6. Encrypted Capital Encrypted Assets Investment Bank Galaxy Digital's broker dealer, Galaxy Digital Advisors LLC, is one of seven securities underwriters.
7. The R&D team accounts for nearly half of the company's total number and has an average of 7 years of industry experience, including 61 members with a master's degree or higher.
8. The management's cumulative shareholding is as high as 50.8%.
9. In the first quarter of last year, the overseas reorganization was completed, and the share split was completed in June of the same year.
10. The company is positioned as a “semiconductor company” with the goal of becoming a “leading supercomputing solution provider” and commercialization of AI chip design.
Customer base: mainly from China
According to the data disclosed in the prospectus, the total revenue of Jianan Zhizhi increased from 1.381 billion yuan in 2017 to 2.705 billion yuan ($394.1 million) in 2018, an increase of 106.8%. During the same period, its net profit fell by 67.4%, from 375.8 million yuan to 122.4 million yuan (17.8 million US dollars).
In the six months ended June 30, 2018, Jianan Zhizhi's total revenue was 1.947 billion yuan, net income was 216.8 million yuan, and adjusted net income was 226 million yuan; but as of June 2019 In the six months of the 30th, Jianan Zhizhi’s total revenue was only 288.8 million yuan ($42.1 million), its net loss was 330.9 million yuan ($48.2 million), and the adjusted net loss was 109.9 million. Yuan ($16 million). According to the prospectus, bitcoin price volatility is the reason for the decrease in income.
In addition, the prospectus states that Chinese users are the main customers of mining machines. In 2017, 2018 and the six months ended June 30, 2019, revenue from Chinese customers accounted for 91.5%, 76.1% and 87.9% of Jianan's total revenue, respectively. “Most of our revenue comes from sales to Chinese customers. Any adverse developments in China's regulatory environment can have a negative impact on our business.”
Growth: The future will balance mining and AI chip business
According to the prospectus, Jianan Zhizhi is currently the world's second largest designer and manufacturer of bitcoin mining machines. As of June 30, 2019, the company's bitcoin mining machine sales accounted for 21.9% of the world's total. In September 2018, Jianan Zhizhi became the first commercial edge computing AI chip company based on the Risc-V architecture, with the ability to provide customers with overall AI solutions, including AI chips, algorithm development and optimization, hardware. Modules, end products and software services.
In the prospectus, Jianan Yunzhi positioned itself as a “leading supercomputing solution provider” and said that the company's future growth strategy will focus on six major areas: strengthening its leadership in supercomputing solutions and continuing investment. Design of high power efficiency ICs, launch of new AI products, enhancement of AI platform business model (planning to create AI SaaS platform), strengthening supply chain management, and continued expansion of overseas business.
Jia Nanzhi said that the company's AI business is currently small. In 2018 and the first half of 2019, as of June 30, AI products contributed a net sales income of 742,900 yuan, or about $108,200, which only accounted for the company's revenue. small portion. In the future, the company plans to balance the mining business and AI chip business to achieve a more balanced combination. Currently, he focuses on edge computing and explores applications in smart retail and smart driving.
For the planned AI SaaS platform, Jia Nan said that this will be a source of stable income streams in the future. The platform will implement an overall AI service that includes hardware, algorithms and software, as well as tailored to the needs of different IoT scenarios, creating a complete and open ecosystem for end customers.
Fundraising: no more than $400 million planned
Jianan Zhizhi plans to list on the NASDAQ under the ticker symbol CAN and set aside $400 million in funding. It is not yet possible to determine the final fundraising amount, valuation and price per share.
According to the prospectus, underwriters include Credit Suisse, Citigroup, Huaxing Capital, CMB International, Galaxy Digital Advisors LLC, Huatai Securities and Tiger Securities International. Among them, Galaxy Digital Advisors LLC is a broker dealer of Galaxy Digital, a crypto asset investment bank.
△ list of underwriters; image source: Jia Nan Zhizhi went public in the US public offering
Positioning: "Semiconductor Company", AI chip R&D design has been commercialized
The prospectus shows that the company currently provides advanced semiconductor solutions for supercomputing hardware, and is engaged in IC front-end, back-end design and bitcoin mining solutions (including mining machine design, manufacturing, sale and lease, and production and sales of parts). .
It is particularly noteworthy that the prospectus shows that Jianan Zhizhi already has the AI chip design capability, which is part of the Jianan Zhizhi business model. In September 2018, Jia Nan Zhizhi released the first generation AI chip Kendrye K210, and began mass production in the fourth quarter of 2018. This is the world's first RISC-V commercial edge computing chip with machine vision and machine hearing, mainly used in smart home, smart retail, security, automatic driving assistance systems, smart industry, medical, education, and authentication.
According to the prospectus, Jianan Zhizhi will also position itself as a “leading supercomputing solution provider” and also hopes to build a world-class semiconductor company with the early and large-scale adoption of advanced process technology. As a result, the company will balance the mining business and the AI chip business in the future (currently the AI chip business is relatively small), and the semiconductor industry leader and new entrants are also considered potential competitors.
As of June 30, 2019, the company's research and development team consisted of 127 members, accounting for 44.4% of the total number of employees, with an average of 7 years of industry experience, including 61 members with a master's degree or higher. A total of 59 patents were registered in China, including two inventions, 46 utility model patents and 11 design patents. In addition, the company also registered 70 software copyrights and 30 IC layout design rights, and achieved a number of technological breakthroughs in ASIC.
Architecture: Overseas restructuring in the first quarter of last year, completion of share split in June of the same year
According to the prospectus, Jianan Zhizhi is a Cayman Islands holding company that conducts business in China through its subsidiaries. In 2013, the parent company officially launched the Bitcoin mining machine business through Beijing Jianan Zhizhi Innovation Information Technology Co., Ltd. The company was renamed as Hangzhou Jianan Zhizhi Innovation Information Technology Co., Ltd. in September 2015, or Hangzhou Jianan. Min Zhi.
Jia Nan Zhizhi further revealed in the prospectus that with the growth of the business and the convenience of international capital investment, the company reorganized overseas in the first quarter of last year. In February 2018, according to the laws of the Cayman Islands, Jia Nan was registered as an offshore holding company.
At the same time, Jianan Technology (Hong Kong) Co., Ltd. ("Canaan HK"), a wholly-owned subsidiary of Jianan Zhizhi, was also established in Hong Kong last February. In March of the same year, Canaan HK acquired 100% equity of Hangzhou Jianan.
In June 2018, Jianan Zhizhi completed the split of 2000 shares, and the total number of issued and circulating common shares reached 2 billion shares. Jianan Zhizhi has a registered capital of US$50,000 and is divided into 10 billion shares of common stock at US$0.00000005 per share.
According to the prospectus, the overseas subsidiaries of Jianan Zhizhi include Jianan Technology (Hong Kong) Co., Ltd., and the domestic subsidiaries are: Hangzhou Jianan Zhizhi Information Technology Co., Ltd., Hangzhou Jianan Blockchain Technology Co., Ltd., Zhejiang Wallonia Technology Co., Ltd., etc.
Equity: Management's cumulative shareholding is up to 50.8%
According to the prospectus, the company's management holdings totaled 50.8%. Li Jiaxuan, Zhang Nanxuan, Kong Jianping and Sun Qifeng held 16.2%, 16.0%, 12.1% and 5.8% respectively. Ouroboros Co., Ltd., Flueqel Co., Ltd., Urknall Co., Ltd., Liu Xiangfu, Hong Kong Jiaji Technology Co., Ltd., Wlyl Co., Ltd. and Li Enguang are the major shareholders of the company. The shareholdings are: 16.2%, 16.0%, 10.2%, 10.2%, 8.8%, 8.7%, 5.9%.
Among them, Ouroboros Co., Ltd. is indirectly wholly-owned by a trust company of Li Jiaxuan and his family as beneficiaries. Flueqel Co., Ltd. is indirectly wholly-owned by the trust company of Zhang Nanzhen and his family as beneficiaries. Urknall Co., Ltd. is wholly-owned by Liu Xiangfu. Wlyl Co., Ltd. is indirectly wholly-owned by a trust of Kong Jianping as a beneficiary, while Hong Kong Jiaji Technology Co., Ltd. is indirectly controlled by Yao Yongjie, the chairman of Hangzhou Minsheng Investment and the founder of Xiong'an Fund.
As of October 28, the prospectus was issued, and the total number of ordinary shares issued by Jianan Zhizhi was 222,222,222 shares, including 52,027,157 restricted shares. After the completion of the issuance, the authorized share capital of Jianan Zhizhi will be US$50,000, including 999,682,488,667 shares of Class A common stock and 356,624,444 shares of Class B common stock, with a par value of US$0.00000005 per share. Among them, Class A common shares have 1 vote for every 1 share, and Class B common shares have 15 votes for each share.
Source: Mars Finance APP (ID: hxcj24h)