A-share subscription | Longtu Optical Mask (688721.SH) opens subscription for the domestically scarce independent third-party semiconductor mask manufacturer.

On July 26, Longtu Guangzhao (688721.SH) started its IPO with an issue price of 18.50 yuan per share and a maximum subscription limit of 80,000 shares. The price-to-earnings ratio is 30.20 times, and it is listed on the Shanghai Stock Exchange, with Haitong acting as the sponsor and lead underwriter. The prospectus shows that Longtu Guangzhao's main business is the research, production, and sales of semiconductor photomasks, making it a rare independent third-party semiconductor photomask manufacturer in China. The company closely follows the development path of domestic specialty process semiconductors, continuously tackling technical challenges and iterating on products. The semiconductor photomask technology has evolved from 1m to 130nm, with applications in power semiconductors, MEMS sensors, IC packaging, analog ICs, and other specialty semiconductor fields, covering industries like new energy, photovoltaic power generation, automotive electronics, industrial control, wireless communications, the Internet of Things, and consumer electronics. As the requirements for semiconductor photomask in technical research and production processes are high, China started relatively late in this field. For a long time, the domestic semiconductor photomask market has been dominated by international giants like Photronics from the US, Toppan from Japan, and DNP from Japan. Longtu Guangzhao, as a leading domestic semiconductor photomask company, aims to tap into the domestic semiconductor market by catering to the production needs of domestic semiconductor manufacturers. The company continuously improves its photomask technology and customization services, becoming a qualified supplier for several major specialty process wafer manufacturers in China and gaining market share from overseas semiconductor photomask manufacturers in some process nodes. In the power semiconductor photomask field, the company's technology nodes meet the demand of mainstream power semiconductor processes globally. Longtu Guangzhao's main products are highly customized, mainly sold through direct sales. After years of development, the company has established long-term stable cooperation with many well-known customers, forming a high-quality customer structure, including companies like SMIC, Hangzhou Silan Microelectronics, JIATA Semiconductor, HUA HONG SEMI, Newray Technology, BYD Company Limited Semiconductor, Hangzhou Lion Microelectronics, Beijing YanDong MicroElectronic, GigaDevice Semiconductor, Advanced Photonics, Yangzhou Yangjie Electronic Technology, Shenzhen Injoinic Technology, Wuxi Chipown Micro-electronics, StarPower Semiconductor, Tsinghua University, Shanghai Jiao Tong University, among others. The main raw materials for Longtu Guangzhao are quartz substrates or soda substrates, optical films, with major suppliers including Global International Technology Co., Ltd. (with Japan's HOYA as the end-user), Hunan Puzhao Information Materials Co., Ltd., and Shanghai Qujiu Technology Development Co., Ltd. (with Microphase Technology Co., Ltd. as the end-user). Financially, in 2020, 2021, 2022, and the first half of 2023, Longtu Guangzhao's operating income was approximately RMB 52.69 million, RMB 1.14 billion, RMB 1.62 billion, and RMB 1.03 billion, with net profits of RMB 14.48 million, RMB 41.16 million, RMB 64.48 million, and RMB 40.20 million respectively. It is worth noting that Longtu Guangzhao mentioned in the prospectus that it faces risks related to the reliance on imported raw materials and equipment with concentrated suppliers. The company's main raw materials include quartz substrates, soda substrates, and optical films. The technology for quartz substrates and optical films is difficult, with suppliers concentrated mainly in Japan, Taiwan, and other regions, leading to a certain dependence on imports of raw materials for the company. During the reporting period, purchases from the top five suppliers accounted for 82.73%, 84.62%, 88.08%, and 85.50% of the total raw materials purchased, respectively. The company's main production equipment, such as photolithography machines, is primarily purchased from overseas suppliers. The company's reliance on imported and concentrated raw materials and photolithography machines poses risks. While current semiconductor trade restrictions mainly focus on advanced process-related products, there is a possibility of broader restrictions from countries like the US, Japan, the Netherlands, impacting the company's production operations. Additionally, if suppliers face significant adverse changes in their operations or delivery capabilities, it could also negatively impact the company's production operations.