China’s second biggest industrial drone maker Jouav files for $60m IPO

A 'Phantom 2' drone by DJI company flies during the 4th Intergalactic Meeting of Phantom's Pilots (MIPP) in an open secure area in the Bois de Boulogne, Paris, in this March 16, 2014 file photo. REUTERS/Charles Platiau/Files

China’s second biggest industrial drone maker is set to go public on Shanghai’s Nasdaq-like high-tech STAR Market, but dominance of the industry by SZ DJI Technology Co. Ltd.and escalating Sino-U.S. tensions may dampen investor enthusiasm.

Chengdu-based Jouav Automation Tech Co. Ltd.has received the green light for an IPO in which it will seek to raise 451 million yuan ($66.6 million), the bourse revealed Thursday.

Jouav’s main products are fixed-wing drones that can take off, hover and land vertically like a helicopter — a type of drone which accounts for one-tenth of China’s drone market and which has not been developed by DJI, according to the company’s prospectus. Its products are mostly used for mapping, inspection and surveillance.

Three-quarters of the funds raised will go to a new Chengdu factory — which is expected to produce 3,700 drones each year — and the rest will go to research and replenishing its operating capital.

Drones brought in nearly three-quarters of Jouav’s 210 million yuan revenue last year, and related services contributed about 13%. The drone-maker’s preliminary financial data showed revenue from January to September jumped at least 20% year-on-year to 150 million yuan, with profit increasing over 9% to 20 million yuan, thanks to increased marketing.

However, with drone giant DJI controlling over half the domestic industrial drone market, Jouav has a market share of just 5.4%.

Governments have been a stable source of sales, as Jouav has ties with bodies including the China Earthquake Administration and the Ministry of National Resources, as well as state-owned enterprises such as the country’s power transmission monopoly State Grid Corp. of China.

Its biggest clients are private mapping companies South Surveying and Mapping Technology Co. Ltd. and Shanghai Huace Navigation Technology Ltd., which contributed 23.61% and 3.15% of its 2019 revenue, respectively.

But this source of income is threatened by an emerging trend of mapping companies building their own drones. This trend has seen Huace’s contribution to Jouav’s revenue slump from 16.98% in 2017 to its single-digit level last year.

Another factor that could darken the drone-maker’s outlook is its reliance on imported components amid the tech decoupling of China and the U.S. All its drones’ laser scanners and inertial navigation systems come from abroad, and half of its camera lenses and one-third of its chips are imported.

New export restrictions China recently imposed could worsen Jouav’s overseas business, as the rules require government approval for exports of items such as personal information push services based on data analysis and voice-recognition technologies, which are commonly used in smartphones, robots and drones.

The article was first published on Caixinglobal.com 

 

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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.