Thinkon Semiconductor
Corporate Value and Return Enhancement Action Plan 2024
Thinkon Semiconductor Jinzhou Corp. (hereinafter referred to as "Thinkon
Semiconductor" or "the Company") considers it a fundamental duty of listed
companies to enhance their quality, increase investor returns, and improve the
sense of gain for investors.
To practice the listed company development philosophy of "investor-oriented"
and to safeguard the interests of all shareholders, based on confidence in the
company's future development prospects and recognition of its value, and to
earnestly fulfill social responsibility, the company has formulated the Corporate
Value and Return Enhancement Action Plan 2024 to further enhance the
company's operational efficiency, strengthen market competitiveness, protect
investor rights, stabilize stock prices, and establish a positive image in the
capital market. The main measures are as follows:
1. Focus on strengthening the main business and improving core
competitiveness
Since its establishment, Thinkon Semiconductor has been dedicated to the
production, research and development, and sales of large-diameter silicon
materials and their application products. With years of accumulation and layout,
the company has maintained a leading position in the field of large-diameter
silicon materials, mastering all technical processes for crystals up to 22 inches
and below. It is one of the very few integrated manufacturers in China with the
complete manufacturing capability. The company can provide large-diameter
silicon material products to downstream manufacturers globally on a large scale,
with high quality, high reliability, and wide coverage, ranking in the first tier in
the global niche market.
In 2024, the company will further focus on its main business and enhance its
core competitiveness:
a. Seizing the development opportunities at the bottom of the
semiconductor cycle, strengthening market marketing efforts
Data from the World Semiconductor Trade Statistics Association shows that the
global semiconductor market size declined by 9.4% to about $520 billion in
2023. Entering 2024, leading global IC manufacturers and semiconductor
manufacturing equipment manufacturers have begun to predict that this year's
global semiconductor market will recover. The company's large-diameter silicon
materials, have downstream demand closely related to the utilization rate of
capacity and the addition of capacity by terminal user IC manufacturers.
Currently, it is a development opportunity period at the bottom of the global
semiconductor industry cycle.
The company will actively respond to the rapidly growing diversified domestic
market demands, establish local presence to be close to the actual production
of customers, improve feedback speed, deploy market resources proactively,
integrate and improve technology, quality, and logistics services, and further
enhance customer satisfaction; in the overseas market, it will layout
strategically, actively track the latest technological development demands, and
develop in tandem with overseas partners based on its own advantages, further
enhancing the company's international market position.
b. Optimize operational management and improve business quality
and efficiency
In 2024, the company will further improve order collection and payment
management, actively control the scale of accounts receivable, increase
collection efforts, continuously monitor the collection of overdue accounts
receivable, and reduce or stop sales to specific customers based on credit risk
assessment.
In terms of inventory turnover, the company's new business of large-size silicon
wafer products had a long evaluation and certification cycle in 2023, resulting
in limited average capacity utilization and slow inventory digestion. In 2024, the
company will prudently expand silicon wafer capacity, optimize production
scheduling, strictly manage inventory, and achieve the optimal balance
between R&D validation and economic benefits.
Additionally, due to the rapid and continuous increase in the prices of raw
polycrystalline silicon materials and high-purity quartz crucibles in the past two
years, the company has relatively increased the amount of stockpiling to control
costs. With the easing of supply chain tensions and the decline in prices, the
company will gradually digest the existing raw materials. The company will
establish a more effective inventory control system, set more reasonable
inventory warning lines, and accelerate inventory turnover.
c. Strengthen the management of fundraising projects and achieve
the on-schedule commissioning of new production capacity
In 2023, the company issued shares to specific objects through a simplified
procedure, raising a net amount of about 296.06 million yuan, with 210 million
yuan planned to be invested in the "Silicon Material Capacity Expansion Project
for Integrated Circuit Etching Equipment", 90 million yuan for supplementary
working capital, and the insufficient part will be resolved by the company with
self-raised funds.
This project is a capacity expansion measure carried out against the backdrop
of the increasing demand for etching silicon materials driven by the large-size
trend of silicon wafers and the shrinking of processing technology. The overall
capacity utilization rate of the company's large-diameter silicon material
products will be basically saturated under high industry prosperity conditions,
and there is a project construction window period before the next upswing cycle
of the semiconductor industry. The project will continuously optimize the
product structure based on downstream market demand, further increase the
proportion of high-margin 16-inch and above large-diameter products, and
actively expand the business of etching polycrystalline silicon material products
to further improve profitability. After the project is implemented, it will form an
additional annual production capacity of 393,136 kg of etching silicon materials.
The company will accelerate the implementation of fundraising investment
projects and strive to put them into production and achieve expected benefits
as soon as possible.
2. Share development results and improve the investor return
mechanism
The company believes that a good investor return is the cornerstone of a
company's long-term development in the capital market. Since its listing on the
Shanghai Stock Exchange's STAR Market in 2020, the company has paid cash
dividends every year to reward all shareholders: in 2020, a cash dividend of
0.10 yuan per share (including tax) was paid, totaling 16,000,000 yuan,
accounting for 15.74% of the net profit attributable to the shareholders of the
listed company in 2020; in 2021, a cash dividend of 0.41 yuan per share
(including tax) was paid, totaling 65,600,000.00 yuan, accounting for 29.68% of
the net profit attributable to the shareholders of the listed company in 2021; in
2022, a cash dividend of 0.10 yuan per share (including tax) was paid, totaling
16,000,000.00 yuan, accounting for 10.12% of the net profit attributable to the
shareholders of the listed company in 2022.
On April 24, 2023, the company formulated and disclosed the "Thinkon
Semiconductor Jinzhou Corp. Shareholder Dividend Return Plan for the Next
Three Years (2023-2025)". The company will distribute according to the
principle of "same shares, same rights, and same shares, same benefits" based
on the proportion of the company's shares held by each shareholder. The
company implements a continuous, stable, and active profit distribution policy,
values reasonable investment returns for shareholders, and under the premise
of meeting the cash dividend distribution conditions stipulated by relevant laws,
regulations, normative documents, and the "Company Charter", the company
will prioritize the cash dividend distribution method. In the absence of major
investment plans or major cash expenditure plans, without affecting the normal
business development needs of the company, the company's net profit for the
year is positive, the accumulated undistributed profit at the end of the year is
positive, the capital reserve is positive, and other cash dividend distribution
conditions stipulated by relevant laws, regulations, normative documents, and
the "Company Charter" are met, the company should distribute no less than 10%
of the distributable profit for the year in cash.
Based on confidence in the company's future sustainable development and
recognition of the company's value, to enhance investor confidence in the
company and promote the stable and healthy development of the company,
effectively closely linking shareholder interests, company interests, and
employee interests, after approval by the company's board of directors and
shareholders' meeting, the company began to implement A-share repurchase
in November 2023. As of February 29, 2024, the company has repurchased a
total of 900,516 A-shares, accounting for 0.5288% of the company's total share
capital, with a total transaction amount of approximately 27,812,656.90 yuan
(excluding transaction fees and taxes).
In 2024, the company will continue to balance the dynamic relationship
between company development, performance growth, and shareholder returns,
actively explore ways and methods, and under the premise of complying with
relevant laws, regulations, and the "Company Charter" profit distribution policy,
take into account the immediate and long-term interests of shareholders,
achieve a "continuous, stable, and scientific" shareholder return mechanism,
and enhance the sense of gain for the majority of investors.
3. Accelerate the development of new quality productive forces and
innovate the allocation of production factors
The company will cultivate and use new quality productive forces to promote
high-quality development of the company and lead industrial transformation
and upgrading. It will strengthen industry-academia-research cooperation and
actively improve the company's operational efficiency through technological
breakthroughs and innovative allocation of production factors.
A strong talent supply is the source of momentum for technology-intensive
enterprises. The company, guided by job value and capability, driven by
performance results, establishes a "fair internally and competitive externally"
compensation system, improves the efficiency of compensation resource use,
motivates outstanding employees, encourages employees to actively
contribute ideas for the company's performance development, technological
innovation, and management optimization, thereby attracting outstanding
talents.
In 2024, the company will continue to strengthen its talent development strategy,
optimize talent incentive mechanisms, maintain the stability of the research
team, use restricted stock incentive plans as a normalized incentive mechanism,
continue to recruit compound experts and technicians with rich production and
management experience, expand into the existing team of middle and senior
management personnel, strengthen the construction of a high-level talent
echelon, and continuously enhance the competitive advantage of talent;
continuously optimize and iterate the existing performance assessment
mechanism, improve the company, department, and individual three-level
performance assessment goals and content, and constantly strengthen the
performance assessment and benefit distribution system centered on
"responsibility, rights, and interests", stimulating the enthusiasm of talents at
work, achieving a win-win for the company and employees.
The company continues to strengthen R&D investment, with the company's
R&D investment aimed fundamentally at profitability, and R&D activities are
carried out based on the specific and clear assessment and certification
requirements of downstream clients. Since its listing, the company's R&D
investment as a proportion of its annual operating income from 2020 to 2023
was 9.08%, 10.59%, 7.30%, and 19.18% respectively. The company has
cumulatively obtained 10 invention patents, 75 utility model patents, and
achieved 31 core technologies.
In 2024, the company will stimulate the synergistic effect of R&D with the
market, supply chain, and customer service, meet the safety needs of the local
market industrial chain while keeping pace with the world's advanced
semiconductor manufacturing process requirements, continuously strengthen
technical reserves, and build core competitiveness. Focus on resource
investment in high-barrier, high-profit-margin products, carry out R&D related
to large-size polycrystalline silicon materials, large-size special-shaped silicon
materials and ultra-flat silicon wafers, and improve the output efficiency of R&D
investment; strengthen the R&D system, actively consolidate and enhance the
domestic Chinese technical talent echelon, and complete no less than 3 key
core technology R&D projects within the year.
In the industrial situation where "global division of labor, free trade, efficiency
first" coexists with "localization of IC manufacturing", the company considers
innovating the allocation of production factors through investment or
cooperative development while growing internally, and growing together with
domestic and foreign high-end semiconductor material and component
manufacturers, enabling the company to cover more product categories and
capture more niche markets, laying the foundation for the company's long-term
sustainable growth.
4. Improve the quality of information disclosure and strengthen
investor communication
The company's securities office is the dedicated department for communication
between the company and investors. Since its listing, the company has actively
answered investor hotlines, promptly replied to investor emails and the
"Shanghai Stock Exchange E-Interaction" platform, and held investor
communication meetings on platforms such as "Shanghai Roadshow Center"
and "Jinmen Finance" after the disclosure of quarterly, semi-annual, and annual
reports, explaining the company's operating performance and interpreting
regular reports.
In 2024, the company will strictly follow laws, regulations, and regulatory
requirements, implement the company's information disclosure management
system, and fulfill its information disclosure obligations truly, accurately,
completely, timely, and fairly. Specific aspects include:
a. Investor online communication activities
In the future, the company will continue to maintain active online
communication with investors, enrich investor communication methods,
expand communication channels, and enhance transparency. The company
will hold no less than 4 investor online communication meetings each year
through platforms such as "Shanghai Roadshow Center" and "Jinmen Finance",
ensuring that the communication meetings are held within one week after the
release of regular reports, with the company's chairman, general manager, and
other key personnel actively participating in relevant activities.
b. Improve the investor opinion solicitation and feedback mechanism
The company will continue to improve the investor opinion solicitation and
feedback mechanism, enhance the transparency of information disclosure,
actively, timely, and in-depth understand investor demands and make targeted
responses. This will allow investors to fully and timely understand the
company's operating conditions and development strategies, strengthen
communication with investors, and enhance investor trust in the company.
5. Deepen corporate governance and ensure standardized operations
The company attaches great importance to the soundness of its corporate
governance structure and the effectiveness of its internal control system, and
will continue to improve the legal person governance and internal control
systems, improve the standardization of company operations and the scientific
nature of decision-making, and fully protect shareholder rights. The specific
plan is as follows:
a. Accelerate the implementation of independent director system
reform
The company will accelerate the implementation of independent director
system reform, optimize the selection of audit institutions and internal audit
management, further strengthen the supervision of branches and subsidiaries,
and ensure the company's compliant operations.
b. Improve internal control construction
Combining the actual situation of the company, comprehensively sort out the
original management systems, and establish a suitable internal control
management system for the company under the premise of meeting internal
control requirements, clarify the responsibilities and authority of relevant
department personnel, and implement comprehensive management. The
company will complete the update of its management system within the year.
c. Management self-discipline and compliance
The company's directors and senior management personnel will faithfully and
diligently perform their duties, restrain occupational consumption behavior, not
transfer benefits to other units or individuals, and effectively protect the legal
rights and interests of the listed company and all shareholders. In major matters
such as production and operation, investment and mergers and acquisitions,
protect the legal rights and interests of investors, especially small and medium-
sized investors, enhance investor participation and sense of identification.
d. Board and supervisory board and senior management training
The company's board and supervisory board members and senior
management actively participate in various training organized by regulatory
agencies such as the China Securities Regulatory Commission (CSRC) and
the Shanghai Stock Exchange, strengthen the study of securities market-
related laws and regulations, continuously improve self-discipline and
compliance awareness, and promote the company's continuous standardized
operation. The company will fully encourage and assist the board and
supervisory board members and senior management to actively participate in
relevant training in the future.
6. Strengthen the binding of management and shareholders' shared
interests and the responsibility of the "key minority"
Since its listing, the company has maintained close communication with the
actual controller, controlling shareholders, shareholders holding more than 5%
of the shares, and other "key minorities" of the company, organized relevant
parties to participate in training on the standardized operation of listed
companies, case analysis of risk prevention, and training related to "honesty
obligations of major shareholders and board and supervisory board members",
promptly informed the latest regulatory information and regulatory cases,
standardized the rights and obligations of the company and shareholders,
prevented the abuse of shareholder rights and the advantageous position of
management to damage the rights and interests of small and medium-sized
investors; tracked the fulfillment of promises by relevant parties on a quarterly
basis and conducted pre-communication to ensure that relevant parties fulfill
their promises.
In 2024, the company will continue to strengthen communication with the "key
minorities", guide shareholders to invest long-term, track the fulfillment of
promises by the aforementioned relevant parties, continuously strengthen the
sense of responsibility and fulfillment of promises of the relevant parties. At the
same time, the company will continue to organize the aforementioned relevant
parties to participate in various training organized by regulatory agencies such
as the Shanghai Stock Exchange and the CSRC, promptly convey regulatory
updates and regulatory dynamics, strengthen the "key minorities" learning of
capital market-related laws and regulations, professional knowledge, and
continuously improve their self-discipline awareness, jointly promote the
company's standardized operation. Efforts will be made to guide the "key
minorities" to convey confidence in the company's development prospects
through commitments not to reduce holdings, increase holdings in the
company's shares, and other methods.
7. Other matters
The company will continue to assess the implementation of the "Quality
Improvement, Efficiency Enhancement, and Focus on Returns" action plan and
timely fulfill its information disclosure obligations. The company will continue to
focus on its main business, enhance the company's core competitiveness,
profitability, and risk management capabilities. Through good business
management, standardized corporate governance, and active investor returns,
the company will effectively protect investor interests, fulfill the responsibilities
and obligations of listed companies, reward investor trust, maintain the
company's good market image, and promote the stable and healthy
development of the capital market.
The company's plans, development strategies, etc., mentioned in this report
are forward-looking statements that have not yet become facts and do not
constitute a substantive commitment from the company to investors. Investors
are advised to pay attention to the relevant risks.
Thinkon Semiconductor Jinzhou Corp.
Board of Directors
March 30, 2024
