[Source: "New Industry" October issue]

Less than three months after the listing, domestic LED chip maker Huacan Optoelectronics (300323.SZ) launched a large-scale expansion in Suzhou, Jiangsu.

On September 11, Huacan Optoelectronics held a general meeting of shareholders to approve the “Proposal on Establishing a wholly-owned subsidiary and partially changing the fundraising project”. The proposal decided to invest 1.8 billion yuan to establish a production base in Suzhou.

However, a securities analyst pointed out that the main reason for Huacan Optoelectronics to invest in Suzhou should be the local policy advantages of Suzhou, especially the local financial subsidies. “For domestic LED manufacturers, the proportion of local financial subsidies has been Directly affect the performance of LED manufacturers in the past two years."

According to the motion announced by Huacan Optoelectronics, Huacan Optoelectronics will set up Huacan Optoelectronics Suzhou Co., Ltd. with a total of 300 million yuan in the raised funds. According to the “Feasibility Analysis on Establishing a wholly-owned subsidiary and partially changing the fundraising project”, Huacan Optoelectronics plans to invest 1.806 billion yuan to establish a production base. The main business of the subsidiary is the same as that of the listed company. The project investment direction and the listed company’s original IPO raised funds investment project "the third phase of LED epitaxial chip construction project" is consistent.

The project is planned to build a LED blue-green light epitaxy and chip production base with a construction area of ​​about 92,400 square meters in the Zhangjiagang Economic and Technological Development Zone of Jiangsu Province. It is planned to complete the infrastructure construction, equipment installation and officially put into operation within three years. After the project is put into production, Huacan Optoelectronics will add a total of 1.095 billion blue and green light chips per month.

However, "New Industry" noted that as of the first half of 2012, Huacan Optoelectronics had total assets of 1.885 billion yuan and net assets of 1.656 billion yuan. The total investment planned for the Suzhou project is as high as 1.806 billion yuan, which is already higher than the company's net assets.

In addition, Huacan Optoelectronics has been operating in Wuhan for 7 years. As of the first half of this year, Huacan Optoelectronics' fixed assets in Wuhan were only 660 million yuan. Counting the I PO fundraising project, the construction in progress is 290 million yuan. The total investment of the company's IPO fundraising project “The third phase of LED epitaxial chip construction project” is planned to be 1.398 billion yuan.

Why, Huacan Optoelectronics was listed on June 1 this year. It has just raised 923 million funds, and has rushed to invest heavily, and has spared no expense in drawing IPO projects.

In this regard, Zhou Fuyun, chairman of Huacan Optoelectronics, said that the company's current production capacity is equivalent to more than 70,000 chips/month of 2 inch LED epitaxial wafers, and the actual sales capacity has reached 200,000. Even if the IPO fundraising project reaches production, it will add new epitaxial wafers. With a production capacity of 104,400 pieces/month, there is still much room for improvement.


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