Over RMB 1 billion in fundraising, RMB 250 million Acquisition: New developments for Foshan Lighting and BPS

On the evening of March 15, Foshan Lighting announced a private placement plan, intending to issue 409 million shares to no more than 35 specific investors, including major shareholders, domestic individual investors, and institutional investors, with the aim of raising up to approximately RMB 1.095 billion.

Among them, RMB 365 million is allocated to Foshan Lighting's automation retrofitting and digital transformation project, RMB 253 million to the Phase I project of Foshan Lighting's Hainan Industrial Park, RMB 240 million to the automotive lighting module production project, RMB 145 million to the R&D center construction project, and the remaining RMB 91.7952 million to the smart streetlight construction project.

Among them, Foshan Lighting Automation Transformation and Digital Transformation Project: The total investment of the project is 364 million yuan, with 364 million yuan planned to be raised from fundraising. LED lighting has become a necessity in lighting applications. To meet market demand for LED products, address the company's current production capacity bottlenecks, and accommodate future business expansion needs , this project plans to carry out technological upgrades to the LED product production line, update equipment, purchase advanced automated production equipment and supporting hardware, and enhance the level of workshop automation. At the same time, the company will deeply integrate IoT technology with industrial manufacturing to build a highly automated and informatized intelligent manufacturing system, undergoing digital transformation .

Foshan Lighting Hainan Industrial Park Phase I: The total project investment is RMB 334 million, with RMB 253 million planned to be raised from fundraising. To align with national policy development and follow the trend of domestic production of marine lighting fixtures, while delving deeper into the LED lighting niche, Foshan Lighting's Hainan Industrial Park Phase I project plans to construct production workshops, production lines, and supporting facilities for marine lighting fixtures and related products. This project will combine downstream product demand in the marine lighting industry, add new marine lighting product lines , focusing on advancing the production of fish attracting lights, coastal lighting, aquaculture lighting, and deep-sea lighting products, to further enrich the company's LED product types and provide strong support for the company's sustained rapid development, thereby helping the domestic lighting industry break through the technical barriers of foreign enterprises in deep-sea lighting and promoting the domestic substitution of high-end marine equipment in China.

Smart Streetlight Construction Project: The total project investment is RMB 92 million, with RMB 92 million planned to be raised through fundraising. The project is located in Gaoming District, Foshan. The project plans to introduce production lines for multi-functional smart poles and high-efficacy intelligent outdoor lights, and complete the construction of related supporting facilities and equipment. Aligning with the development trends of the smart lighting industry, the project adds product lines for multi-functional smart poles and high-efficacy intelligent outdoor lights to further enrich the company's product types.

Automotive Lighting Module Production and Construction Project: The total investment of the project is RMB 240 million, with RMB 240 million planned to be raised through fundraising. To cope with the rapid growth of the automotive lighting module business, the project intends to invest in automotive lighting module production lines, supported by automated equipment and personnel, to expand the existing production capacity of automotive lighting module products. Upon completion, the project will further deepen industrial synergy with the subsidiary Nanning Liaowang and promote the development of FSL's automotive lighting product series.

R&D Center Construction Project: The total investment of the project is 145 million yuan, with 145 million yuan planned to be raised from funds. This project will upgrade the existing LED lighting products of Foshan Lighting. The project will focus on five major directions: "Healthy lighting", "Smart lighting", "Agricultural lighting", "Marine lighting", and "Automotive lighting", developing a series of LED lighting products to continuously enrich the product system in these fields.

Foshan Lighting stated that the use of the funds raised is closely related to the company's future development strategy and its existing core business. The construction of production projects will help the company increase production capacity, expand its scale, enhance its competitive advantage and profitability, improve its risk resistance, and thereby maximize both corporate and social benefits; the construction of the R&D center project will help strengthen the company's R&D capabilities, increase product added value, and enhance the company's competitiveness.

According to the announcement, prior to this issuance, Guangsheng Group directly holds 6.1% of Foshan Lighting's shares. Guangsheng Group and its concerted parties, Electronics Group, Hong Kong Guangsheng Investment, and Hong Kong Huasheng, collectively hold 30.82% of the company's shares. Guangsheng Group and its concerted parties are the controlling shareholders of the company, with Guangsheng Group being the actual controller.

Guangsheng Group intends to subscribe for 25% of the total funds raised from this issuance of shares to specific objects. Based on the upper limit of 409 million shares for this issuance, after the completion of the issuance, Guangsheng Group and its parties acting in concert are expected to hold no less than 29.48% of the company's shares in aggregate, and there will be no change in the company's control.

On March 15, BPSemi released the "Announcement on Using Own Funds to Acquire Partial Equity of a Participating Company" (hereinafter referred to as the "Announcement"), proposing to acquire a 38.87% equity stake in Nanjing Lingou Chuangxin Electronics Co., Ltd. (hereinafter referred to as "Lingou Chuangxin") for RMB 250 million.

The announcement states that, based on the company's strategic development plan, in order to further strengthen synergies between both parties, improve the efficiency of the company's operational decision-making, and enhance profitability, BPS Semiconductor plans to use its own cash to acquire a 38.87% equity stake in Lingou Chuangxin held by its shareholders, GF Xinde Investment Management Co., Ltd. and Zhoushan Hezhongxin Enterprise Management Consulting Partnership (Limited Partnership), for a transfer price of approximately RMB 250 million. Upon completion of the Acquisition, the company will hold a 61.61% equity stake in Lingou Chuangxin , and Lingou Chuangxin will be included in the company's consolidated financial statements.

Business registration records show that as early as April 2020, BPS acquired a 5% stake in LinkOChip, with the target valued at RMB 150 million at the time, and the two parties primarily engaged in business cooperation. In October 2021, BPS announced that it would acquire a 95.75% equity interest in Nanjing LinkO for a consideration of RMB 613 million. Upon completion of the transaction, LinkOChip would become a wholly-owned subsidiary of BPS. However, due to subsequent market changes, on March 8, 2022, BPS announced its decision to terminate the restructuring and withdraw the application documents.

According to disclosures, as of December 31, 2022, BPS held a 22.74% stake in Lingou Chuangxin, making it the second-largest shareholder.

As a leading domestic enterprise in LED lighting driver chips, BPS's main business is power management chip products, with existing products including LED lighting driver chips, motor driver chips, AC/DC power chips, DC/DC power chips, etc.Lingou Chuangxin's core products are MCU chips, and its terminal markets are mainly electric vehicles, power tools, home appliances, industrial control, etc.

It is understood that BPS's power management chips and motor control driver chips can form a complete motor drive solution with LKsemi's motor control MCU. The announcement also indicates that this transaction will facilitate business synergy between the company and LKsemi in areas such as products, technology, and R&D.

The 2022 preliminary earnings announcement released by BPSemi shows that, affected by shrinking end-consumer demand and product price reductions, the company's 2022 performance showed a significant loss, with total operating revenue of RMB 1.077 billion, a Year-on-year (YoY) decrease of 53.21%. In terms of Net profit, the company achieved a Net profit of RMB 677 million in 2021, while in 2022, the company's Net profit was approximately -RMB 207 million, turning from profit to loss.

In comparison, the operating performance of the target assets is relatively stable. The announcement shows that Lingou Chuangxin achieved Revenue of RMB 91.5578 million and RMB 123.8651 million in 2021 and 2022 respectively, with Net profit of RMB 21.4156 million and RMB 42.2237 million.

Against this backdrop, BPSemi has chosen to acquire a 38.87% equity stake in Lingou Chuangxin using its own funds, indicating strong confidence in the future growth potential of the acquisition target.

Regarding this transaction, BPS Semiconductor hopes to further expand and improve its product line and accelerate its layout in downstream application markets. According to reports, Wang Xingchen, Board Secretary of BPS Semiconductor, told reporters that the Acquisition of a portion of LKsemi's equity aims to combine the latter's motor control MCU chips with BPS Semiconductor's power management chip products, jointly expanding terminal application scenarios such as home appliances and electric vehicles.