AXT, Inc. Announces Next Filin

FREMONT, Calif., July 05 12, 2022 (GLOBE NEWSWIRE) — AXT, Inc. (NasdaqGS: AXTI), a leading manufacturer of compound semiconductor wafer substrates, today announced that its China-based wafer manufacturing subsidiary, Beijing Tongmei Xtal Technology Co., Ltd. (“Tongmei”), submitted to the Shanghai Stock Exchange, and the Shanghai Stock Exchange has accepted for consideration, additional documents as the next step in the process of listing Tongmei shares in an initial public offering (the “IPO”) on the Sci-Tech Innovation Board of the Shanghai Stock Exchange (the “STAR Market”). This is the fourth round of submissions and follows the normal processes and steps towards a STAR Market listing.

Qualitative comments from management

“We believe we are making good progress on the IPO,” said Morris Young, chief executive. “The initial filing was officially accepted for review by the Shanghai Stock Exchange on January 10, 2022. Since then, we have answered two sets of questions. The recent submission is our fourth filing and updates previously submitted material and provides new information, including additional financial information presented under Accounting Standards for Business Enterprises under China Generally Accepted Accounting Principles (“Chinese GAAP “). It is important for our investors to understand that the results of Tongmei do not match the results of AXT, Inc. and that Chinese GAAP may differ materially from US GAAP. AXT is not updating the guidance we provided on April 28, 2022 for Q2 2022. As we continue to work through the IPO process, we are encouraged by the progress of our application. I am proud of our team for their diligence and appreciate the support and guidance of our investment bank and our law firm in China.

STAR Market List Update

In conjunction with the IPO process, the Shanghai Stock Exchange has published on its website certain consolidated financial results of Tongmei for the three months ended March 31, 2022, together with Tongmei’s preliminary expectations regarding these financial results for the six months ended March 31, 2022. June 30, 2022. the financial results were determined in accordance with Chinese GAAP and consisted of the following:

  • Tongmei’s revenue under Chinese GAAP for the quarter ended March 31, 2022 was RMB252.6 million, compared to RMB193.2 million for the quarter ended March 31, 2021.
  • Net profit attributable to Tongmei shareholders under Chinese GAAP for the quarter ended March 31, 2022 was RMB 20.4 million, compared to RMB 13.9 million for the quarter ended March 31, 2021.
  • Tongmei’s revenue under Chinese GAAP for the six months ended June 30, 2022 is provisionally estimated at RMB 456.2 million to 557.6 million, compared to RMB 393.6 million for the six months ended June 30, 2021.
  • Net profit attributable to Tongmei shareholders under Chinese GAAP for the six months ended June 30, 2022 is provisionally estimated at RMB 44.3 million to RMB 54.2 million, compared to RMB 40.2 million for the six months ended June 30, 2021.

The preliminary revenue and net profit estimates presented above for the six-month period ended June 30, 2022 reflect the consolidated and standalone results of Tongmei in RMB, as prepared in accordance with Chinese GAAP, and these results will differ , potentially materially, of AXT, Inc.’s consolidated revenue and net income for the period, which will reflect additional financial and operating items and will be prepared in US dollars in accordance with US generally accepted accounting principles (“US GAAP”).

The process of going public on the STAR market includes several review periods and, therefore, is a long process. Tongmei expects to achieve this goal in the second half of 2022. AXT has posted a brief summary of the plan and process on its website at http://www.axt.com.

About AXT, Inc.

AXT is a materials science company that develops and manufactures high-performance compound and single-element semiconductor substrate wafers comprising indium phosphide (InP), gallium arsenide (GaAs), and germanium ( Ge). The company’s substrate wafers are used when a typical silicon substrate wafer cannot meet the performance requirements of a semiconductor or optoelectronic device. End markets include 5G infrastructure, data center connectivity (silicon photonics), passive optical networks, LED lighting, lasers, sensors, power amplifiers for wireless devices and solar cells satellites. AXT’s global headquarters are in Fremont, California, and include sales, administrative, and customer service functions. AXT has its Asia headquarters in Beijing, China, and manufacturing facilities in three separate locations in China. In addition, as part of its supply chain strategy, the Company has partial ownership in ten companies in China producing raw materials for its manufacturing process. For more information, see the AXT website at http://www.axt.com.

Forward-looking statements

The preceding paragraphs contain forward-looking statements within the meaning of federal securities laws, including, for example, statements regarding Tongmei’s preliminary revenue and net profit estimates for the six-month period ended June 30, 2022 and progress, timing and estimated completion of the proposed listing of Tongmei shares on the STAR market. These forward-looking statements are based on assumptions that are subject to uncertainties and factors relating to the company’s operations and business environment, which could cause actual results to differ materially from those expressed or implied by the forward-looking statements contained in the previous discussion. These uncertainties and factors include, but are not limited to: requests for redemption by private equity funds in China of investments in Tongmei, administrative challenges in meeting the requirements of various government agencies in China regarding the listing of shares of Tongmei on the STAR Market, continued open access for companies to stock listing on the STAR Market, investor enthusiasm for new stock listings on the STAR Market, and geopolitical tensions between China and the United States. Additional factors and uncertainties include, but are not limited to: timing and receipt of large orders; cancellation of orders and return of product; emerging applications using chips or devices fabricated on our substrates; end-user acceptance of products containing chips or devices fabricated on our substrates; our ability to market new products; product announcements by our competitors; the ability to control costs and improve efficiency; the ability to use our manufacturing capacity; product yields and their impact on gross margins; the relocation of manufacturing lines and the ramp-up of production; possible plant closures due to air pollution in China or COVID-19; COVID-19 or other outbreaks of a contagious disease; tariffs and other trade war issues; the financial performance of our partially owned supply chain companies; policies and regulations in China; and other factors as set forth in the company’s annual report on Form 10-K, quarterly reports on Form 10-Q and other filings with the Securities and Exchange Commission. Each of these factors is difficult to predict and many of them are beyond the company’s control. The Company undertakes no obligation to update any forward-looking statements, as a result of new information, future events or otherwise.

contacts:
Gary Fisher
Financial director
(510) 438-4700
Leslie Green
Green Communication Consulting, LLC
(650) 312-9060

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