Silicon Electric (301629.SZ) recently announced a pre-disclosure of shareholder reduction plans, with six pre-IPO shareholders planning to collectively sell up to 4.71% of the company's shares. Notably, these shareholders had previously committed not to reduce their holdings within 12 months of listing. The reduction notice was issued on the evening of March 25, just one day after the first anniversary of the company's IPO on March 24, 2025, highlighting the urgency of their exit.
This development follows Silicon Electric's late February release of its 2025 performance forecast, which projected a 39.04% to 49.93% year-on-year decline in net profit attributable to shareholders. The company attributed this primarily to "phased slowdowns in capital expenditures from certain downstream clients."
During its March 2025 IPO, Silicon Electric was sponsored by China Merchants Securities Co.,Ltd. (600999.SH), with Hu Yangyang and Bao Xiaolei serving as sponsoring representatives. Even before going public, the company demonstrated significant earnings volatility. While 2020 and 2021 saw robust growth, performance moderated pre-IPO: 2023 net profit fell 22.87% year-on-year, followed by a slight 2.97% increase in 2024 despite a minor revenue decline that year.
Silicon Electric faced scrutiny before listing, particularly regarding the entry of a major client's chairman as shareholder. In September 2020, Lin Zhiqiang, Chairman of Sanan Optoelectronics Co.,Ltd. (600703.SH), acquired a stake in Silicon Electric, holding 2.40% directly before the IPO. The relationship proved significant: from 2020 to 2022, Sanan Optoelectronics remained Silicon Electric's largest client, accounting for over 50% of sales in 2022.
The 2020-2021 period marked Silicon Electric's strongest growth, with revenue jumping from RMB93 million to RMB199 million in 2020, and further to RMB399 million in 2021. Sanan Optoelectronics played a crucial role, increasing purchases from RMB7.26 million in 2019 to RMB57.02 million in 2020—accounting for half of Silicon Electric's sales growth that year.
In 2022, Sanan Optoelectronics' procurement surged to RMB229.19 million, representing 51.85% of Silicon Electric's total sales. This RMB130 million increase from 2021's sub-RMB100 million level occurred as Silicon Electric's overall sales growth slowed to 10.73% (RMB442 million from RMB399 million). Without Sanan Optoelectronics' expanded orders, Silicon Electric would have faced substantial revenue decline.
The timing of Chairman Lin's investment preceding Sanan Optoelectronics' procurement surge raises questions about potential coordination, though no definitive link can be established. Silicon Electric's recent profit warning suggests diminished support from Sanan Optoelectronics, compounded by the latter's March 23 disclosure that its actual controller Lin Xiucheng is under investigation—triggering a stock plunge.
Given Sanan Optoelectronics' current challenges—including the unexplained investigation and a RMB500 million 2025 loss—the company appears unlikely to maintain prior levels of support for Silicon Electric.
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