Asia and Global Semiconductor and Tech Research

Andrew Lu

Equity Capital Markets

Shenzhen Goodix Technology / Equity Capital Markets

<ul><li>A leading capacitive touch panel IC and fingerprint sensor vendor in China,  Shenzhen Huiding Technology (also known as Goodix) is expected to be listed on Shanghai Stock Exchange as A-share listing on Oct 17, 2016. The company will issue 45mn new shares at IPO price of RMB$19.42, implying IPO size of US$131mn and IPO listing market cap of US$1.3bn or becoming the largest listed market cap fabless in China.</li><li>Unless Goodix is using the proceeds of US$131mn for acquiring NFC and touch pen IC technologies, we would expect the company can develop these through in-house R&amp;D and high free cash flow.</li><li>By lowering price to US$2.0-2.5 per fingerprint sensor against US competitors' US$4-5 and bundle with <a href="https://www.smartkarma.com/entities/772" target="_blank" data-smartkarma-citation="entities:772:1">Mediatek Inc (2454 TT)'s</a> smartphone SoC solution, Goodix sees strong design win and its fingerprint sensor  first time exceeded touch panel controller sales starting 1Q16 and reached over 3x higher in 2Q16.</li><li>Driven by 950% y/y and 67% y/y fingerprint sensor shipment growth in 2016E and 2017E, respectively, we estimate EPS growth of 54% y/y for 2016E to RMB$1.46 and 16% y/y for 2017E to RMB$1.70 or at P/E of 13x and 11x (pls see Table 2, China semi sector P/E average of over 30x), respectively, at IPO price.</li></ul>

A leading capacitive touch panel IC and fingerprint sensor vendor in China,  Shenzhen Huiding Technology (also known as Goodix) is expected to be listed on Shanghai Stock Exchange as A-share listing on Oct 17, 2016. The company will issue 45mn new shares at IPO price of RMB$19.42, implying IPO size of US$131mn and IPO listing market cap of US$1.3bn or becoming the largest listed market cap fabless in China.Unless Goodix is using the proceeds of US$131mn for acquiring NFC and touch pen IC technologies, we would expect the company can develop these through in-house R&amp;D and high free cash flow.By lowering price to US$2.0-2.5 per fingerprint sensor against US competitors' US$4-5 and bundle with Mediatek Inc (2454 TT)'s smartphone SoC solution, Goodix sees strong design win and its fingerprint sensor  first time exceeded touch panel controller sales starting 1Q16 and reached over 3x higher in 2Q16.Driven by 950% y/y and 67% y/y fingerprint sensor shipment growth in 2016E and 2017E, respectively, we estimate EPS growth of 54% y/y for 2016E to RMB$1.46 and 16% y/y for 2017E to RMB$1.70 or at P/E of 13x and 11x (pls see Table 2, China semi sector P/E average of over 30x), respectively, at IPO price.

Shenzhen Huiding Tech IPO - Riding on China Fingerprint Sensor Demand; IPO Valuation at 1/3 of Peers

Equity Bottom-Up

<h2>Executive summary</h2><ul>
<li>Xiaomi introduced its flagship smartphone 5S using Qualcomm ultrasonic fingerprint sense ID the first time, and more smartphone vendors are in design-in phase.</li>
<li>Qualcomm Sense ID biometrics technology has advantages of detecting a live finger, dealing contaminants, providing better precision, and having flexibility in design.</li>
<li>Capacitive sensor has some drawbacks like sensitive to electrostatic discharge (shock), valleys have a lower capacitance to measure, and less flexible on…</li>
</ul>

Executive summary
Xiaomi introduced its flagship smartphone 5S using Qualcomm ultrasonic fingerprint sense ID the first time, and more smartphone vendors are in design-in phase.
Qualcomm Sense ID biometrics technology has advantages of detecting a live finger, dealing contaminants, providing better precision, and having flexibility in design.
Capacitive sensor has some drawbacks like sensitive to electrostatic discharge (shock), valleys have a lower capacitance to measure, and less flexible on…


Disruptive Ultrasonic Fingerprint IC from Qualcomm Likely Will Kill Capacitive Sensor

Taiwan

FocalTech Systems Co., Ltd. provides machine interface solutions and manufactures touch panel controller ICs and LCD driver ICs for mobile devices. The Company offers its products around the world.

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Focaltech Systems (3545 TT)

Shenzhen Huiding Tech IPO - Riding on China Fingerprint Sensor Demand; IPO Valuation at 1/3 of Peers

A leading capacitive touch panel IC and fingerprint sensor vendor in China, Shenzhen Huiding Technology (also known as Goodix) is expected to be...

Andrew Lu

Disruptive Ultrasonic Fingerprint IC from Qualcomm Likely Will Kill Capacitive Sensor

Executive summary Xiaomi introduced its flagship smartphone 5S using Qualcomm ultrasonic fingerprint sense ID the first time, and more smartphone...

Andrew Lu

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)