On October 9, the Shanghai Stock Exchange disclosed that BIWIN Storage (688525) had been accepted for non-public issuance of shares to specific targets. BIWIN Storage is a company mainly engaged in the research and development, packaging and testing, production and sales of semiconductor memory storage media applications, and its main products and services include embedded storage, consumer-grade storage, industrial-grade storage and advanced packaging and testing services.

According to the "Financial China Society", BIWIN Storage was listed on the Science and Technology Innovation Board of the Shanghai Stock Exchange at the end of 2022, and its stock price soared after listing, but it changed face with performance. The issue price is 13.99 yuan / share, affected by ChatGPT and other concepts, the market's optimistic expectation of the recovery of the global storage industry, BIWIN Storage's share price once soared to become a 100 yuan stock. In 2023, the company will achieve operating income of 3.59 billion yuan, a year-on-year increase of 20.3%, but the net profit attributable to shareholders of listed companies will be -620 million yuan, a year-on-year decrease of 976.7%, and the increase in income will not increase profits. The company said the decline was due to a shrinking market and a sharp decline in memory shipments and prices.

In the first half of 2024, BIWIN's total operating income was 3.44 billion yuan, a year-on-year increase of 199.6%; The net profit attributable to the parent company was 280 million yuan, a year-on-year increase of 195.6%, and the net profit attributable to the parent company was 480 million yuan, a year-on-year increase of 264.1% after excluding share-based payment expenses. At the same time, the company's operating cash flow has also turned from negative to positive, has the company's crisis been resolved?

The amount to be raised has shrunk significantly

In this issuance, BIWIN Storage intends to raise a total of no more than 1.9 billion yuan, which will be mainly used for the expansion construction project of Huizhou BIWIN's advanced packaging and testing and memory manufacturing base and wafer-level advanced packaging and testing manufacturing project. Among them, the total investment of the Huizhou project is 890 million yuan, and the total investment of the wafer-level project is 1.29 billion yuan, and the proposed raised funds are 1.02 billion yuan.

It is worth noting that the issuance plan was first proposed in July 2023, and it was originally planned to raise 4.5 billion yuan, and the plan was revised in April 2024, reducing the amount to be raised by 2.6 billion yuan. Among them, the R&D center upgrade and construction project and the replenishment of working capital were reduced, and the amount of funds to be raised for the Huizhou project and the wafer-level project was adjusted. As for the reason for the reduction in the amount of funds raised, the company did not make a clear statement.

The proportion of inventory is high, and it is doubtful whether the provision for price decline is sufficient

From 2021 to January to June 2024, BIWIN's operating income was 2.61 billion yuan, 2.99 billion yuan, 3.59 billion yuan and 3.44 billion yuan respectively, and in the same period, the company's inventory and price decline provisions are shown in the figure below, with inventory price decline provisions of 130 million yuan, 130 million yuan, 250 million yuan and 230 million yuan respectively, and inventory book value of 1.6 billion yuan, 1.95 billion yuan and 1.95 billion yuan respectively. 3.55 billion yuan and 3.57 billion yuan, the scale has caught up with the company's revenue and accounted for 56.8%, 44.3%, 56.1% and 51.9% of the company's total assets, respectively.

The inventory stored by BIWIN is mainly composed of raw materials and inventory commodities, and the inventory at the end of each period is relatively large, accounting for a relatively high proportion of total assets at the end of the period. The expansion of inventory scale will put greater pressure on the company's working capital, resulting in certain operational risks. The company explained that the reason for the large inventory size is mainly due to the adoption of different stocking strategies, as well as changes in the structure and demand of downstream customers. However, the large inventory backlog has also affected the company's capital utilization efficiency and operational flexibility.

As we all know, excessive inventory not only occupies a large amount of working capital, but also increases the operating risk faced by the company. If the market declines sharply in the future, BIWIN Storage may face the double blow of inventory backlog and inventory price decline, and then needs to make further provision for price decline. This process will directly affect the company's profit performance and have a large negative impact on the company's future performance.

In addition, BIWIN's short-term debt repayment pressure cannot be ignored. As of the end of June 2024, the company's monetary funds on the books were 720 million yuan, while the total long-term and short-term debt was as high as 3.63 billion yuan. Among them, short-term debt accounted for a very high proportion, reaching 3.13 billion yuan. This means that the company is facing greater debt repayment pressure in the short term, and the funds available on hand are relatively insufficient, which may have a certain impact on the company's capital chain. In the short term, if the company cannot solve the problem of tight liquidity in an effective way, it may face greater financial risks, which will affect the company's overall operation and the implementation of the development strategy.