Joulwatt Technology Co.,Ltd. (688141), which has been listed on China's STAR Market for less than three years, is now planning to go public in Hong Kong. According to the prospectus, Joulwatt Technology intends to raise funds for product research and development, improving overseas sales networks, strategic investments and acquisitions, among other purposes. While these stated purposes appear straightforward, analysis of multiple data sources reveals that the core reason behind Joulwatt Technology's Hong Kong financing initiative lies in its persistent business losses and continuously deteriorating financial condition. Additionally, under the virtual IDM model, the company's R&D investment and output are disproportionate, creating an urgent need for financing to sustain operations.
**Persistent Losses and Deteriorating Financial Condition**
From 2022 to 2023, China's analog chip market experienced cyclical downturn, with insufficient demand leading to intensified market competition and widespread performance declines across industry players. According to the prospectus, in 2023, Joulwatt Technology's operating revenue decreased from 1.448 billion yuan in the previous year to 1.297 billion yuan, while net profit dropped from 136 million yuan to -533 million yuan, shifting from profit to loss and ending two consecutive years of profitability.
Entering 2024, as downstream inventory levels declined and demand increased from computing, storage, and automotive electronics sectors, the domestic analog chip market began to recover. However, Joulwatt Technology failed to achieve turnaround and losses further expanded. In 2024, its operating revenue increased to 1.679 billion yuan, but losses widened to -611 million yuan.
Alongside persistent business losses, Joulwatt Technology's financial condition has been gradually deteriorating. According to the prospectus, from 2022 to 2024, the company's net cash flows from operating activities were -823 million yuan, -291 million yuan, and -360 million yuan respectively; net cash flows from investing activities were -137 million yuan, -300 million yuan, and -500 million yuan respectively.
This continuous "hemorrhaging" has forced the company to rely on bank loans to meet operational funding needs. According to the prospectus, at the end of 2022, Joulwatt Technology had total bank loans of 526 million yuan on its books, which increased to 997 million yuan by the end of the first quarter of 2025. During the same period, the company's cash and cash equivalents amounted to 994 million yuan, roughly equivalent to its bank loan amount.
More seriously, operational issues have emerged at Joulwatt Technology. At the end of 2024, its inventory value was 855 million yuan, down 2.19% year-over-year. Among this, outsourced processing materials amounted to 631 million yuan, down 0.62% year-over-year; finished goods were valued at 512 million yuan, up 36.88% year-over-year.
Logically, inventory increases would be normal for Joulwatt Technology given the domestic analog chip market recovery. However, the significant increase in finished goods and the temporal structure of inventory suggest inventory accumulation and slow destocking progress. According to the prospectus, from 2022 to 2024, Joulwatt Technology's inventory aged within one year was 718 million yuan, 743 million yuan, and 729 million yuan respectively; inventory aged 1-2 years was 86.1 million yuan, 288 million yuan, and 258 million yuan respectively; inventory aged over two years was 14.49 million yuan, 75.84 million yuan, and 263 million yuan respectively.
Furthermore, due to disappointing sales performance, from 2022 to 2024, Joulwatt Technology's inventory impairment provisions were 35.69 million yuan, 232 million yuan, and 395 million yuan respectively, showing a year-over-year increase.
**High-Investment Low-Output Dilemma**
According to the prospectus, Joulwatt Technology's main revenue comes from power management chips. From 2022 to 2024, the company's power management chip revenue was 1.381 billion yuan, 1.278 billion yuan, and 1.646 billion yuan respectively, accounting for 95.5%, 98.5%, and 98% of total operating revenue during the respective periods.
Notably, from 2022 to 2024, Joulwatt Technology's R&D expenses were 305 million yuan, 499 million yuan, and 619 million yuan respectively, representing 21.1%, 38.5%, and 36.9% of total operating revenue during the respective periods.
During the same period, 3PEAK (300661) had R&D expenses of 626 million yuan, 737 million yuan, and 871 million yuan, with R&D investment representing 19.63%, 28.18%, and 26.02% of operating revenue respectively; Novosense (688052) had R&D expenses of 404 million yuan, 522 million yuan, and 540 million yuan, with R&D investment representing 24.17%, 39.79%, and 27.55% of operating revenue respectively. Joulwatt Technology's R&D investment intensity ranks among industry leaders, but judging from performance results, its substantial investment has not translated into profits.
Additionally, 3PEAK and Novosense adopt the industry-standard Fabless model, where wafer manufacturing, chip packaging, and chip testing are all outsourced to external manufacturers. Joulwatt Technology, however, adopts the virtual IDM model, where the company not only focuses on integrated circuit design but can also conduct process development and optimization based on foundry production line resources, subsequently requiring foundries to cooperate in wafer manufacturing according to its proprietary processes.
Theoretically, the virtual IDM model creates a third pathway in the semiconductor industry chain through design-process collaboration, particularly suitable for analog chips that are process-sensitive products. However, from a gross margin perspective, Joulwatt Technology's R&D conversion efficiency appears relatively low.
From 2022 to 2024, the company's power management chip gross margins were 37.3%, 13.5%, and 16.9% respectively; during the same period, 3PEAK's power management chip gross margins were 55.41%, 46.10%, and 47.81% respectively, while Novosense's power management chip gross margins were 42.93%, 29.55%, and 22.42% respectively.
Through comparison, Joulwatt Technology's R&D expense ratio exceeds that of 3PEAK and Novosense, yet its core product power management chip gross margins are significantly lower than industry peers.
More importantly, under the virtual IDM model, the company must continuously upgrade and iterate its proprietary process platforms, with relatively short upgrade cycles. According to the prospectus, Joulwatt Technology's 5-55V medium-low voltage BCD process platform has been upgraded to its fourth generation, with the first generation developed from 2014 to 2016, second generation from 2018 to 2022, third generation from 2020 to 2021, and fourth generation from 2022 to 2024.
The 10-200V high-voltage BCD process platform has been upgraded to its second generation, with the first generation developed from 2017 to 2018, second generation from 2020 to 2022, and the third generation starting from 2023 and still under development; the 10-700V ultra-high voltage BCD process platform has been upgraded to its third generation, with the fourth generation beginning investment in 2024 and currently still in development.
From the development cycles, Joulwatt Technology upgrades and iterates its proprietary process platforms approximately every two years. To maintain the iteration speed of process platforms, the company's R&D personnel numbers have continuously expanded. According to financial data, from 2022 to 2024, the company's R&D personnel numbered 407, 544, and 776 respectively, representing year-over-year growth of 44.84%, 33.66%, and 42.64% respectively.
The increase in R&D personnel has driven significant growth in personnel compensation. During the same period, the company's R&D personnel compensation was 190 million yuan, 319 million yuan, and 429 million yuan respectively, representing year-over-year growth of 58.58%, 67.67%, and 34.45% respectively.
Under conditions of low conversion rates, sustained high R&D investment has further intensified the difficulty for Joulwatt Technology to achieve profitability turnaround.
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