
Can SICC Stave Off Decline with Hong Kong IPO Amid Tumultuous Times?
2025-06-16
Author: Ling
SICC’s Rocky Road to Hong Kong IPO
Silicon carbide (SiC) substrate manufacturer SICC Co. Ltd. has received the green light from China’s securities watchdog to launch its IPO in Hong Kong, despite facing serious revenue declines in recent months.
A Rapid Shift in Fortune
Just four months ago, when SICC filed its IPO application, the company was riding high with impressive double-digit revenue growth and was gearing up for its first annual profit. But now, anticipation has turned to uncertainty as the company navigates a challenging market landscape. SICC plans to issue approximately 87.2 million shares in what could be one of Hong Kong’s hottest IPO seasons.
Major Players Backing the IPO
With backing from leading investment banks such as CICC and Citic Securities, the IPO seems poised primarily for Asian investors. This focus comes amid escalating trade restrictions by Western nations, particularly the U.S., aiming to limit investments in cutting-edge Chinese technology firms.
Overcapacity and Contracting Revenue
SICC’s optimistic prospects have been overshadowed by significant market challenges. After an exhilarating two years of growth driven by the NEV and solar sectors, the company now grapples with a downturn that is symptomatic of overcapacity within the industry. SICC’s core business—the production of SiC substrates—represents over 80% of its revenue, and it is being affected by price declines triggered by excess supply in crucial markets.
Sector Struggles Amplify SICC's Challenges
The NEV market, which previously saw explosive growth, is now exhibiting signs of saturation. Trade barriers overseas compound the problem, forcing manufacturers into price wars that have slashed profit margins. Meanwhile, solar panel producers are facing similar financial distress, resulting in increased pressure on suppliers like SICC to reduce costs.
Recent Financial Disappointments
SICC’s initial IPO narrative now appears outdated as its revenue funnel narrows. After achieving a staggering revenue tripling in 2023, growth contracted significantly with an unfavorable forecast for 2024. Its recent financial report reveals a worrying trend: a 4.25% drop in revenue in Q1 2025, following lackluster results in prior quarters.
R&D Spending vs. Profitability
Despite recovering from previous losses and posting a profit for part of last year, SICC’s latest quarterly figures reflect an 82% plunge in profits, raising alarms about the sustainability of its growth trajectory. Increased investment in research and development, which doubled to 11% of revenue in Q1 2025, implicates a commitment to innovation amid economic challenges.
Investor Sentiment Wrong-footed by Performance
Since its IPO in Shanghai, SICC's stock has suffered a decline of about 30%, following a hurried sell-off after disappointing first-quarter results. As the company vies for investor interest in Hong Kong, it faces stiff competition from other semiconductor firms also targeting the lucrative market.
Can the IPO Change the Game?
As SICC prepares for its Hong Kong debut, the question remains—can it reclaim its market position and emerge from this downturn? With a volatile landscape ahead and investor skepticism mounting, SICC’s IPO could be a pivotal moment for the company. Whether it can successfully navigate these challenges will be closely watched by the market and analysts alike.