Recently, Guangzhou XAG Technology Co., Ltd. (hereinafter referred to as "XAG Technology") and its sponsors took the initiative to apply to withdraw the listing application documents.
In November 2021, XAG Technology submitted application documents for an initial public offering of shares to the Shanghai Stock Exchange and listing on the Science and Technology Innovation Board. After half a year, XAG Technology gave up on the eve of its listing.
XAG Technology caught up with the larger Wujiang UAV in the industry, which was previously launched, but in the end it still failed to win the title of "the number one agricultural drone stock".
01
Peng Bin’s relationship with drones
In 2007, Peng Bin established XAG Technology in Guangzhou as a XAG, a well-known domestic agricultural technology company, takes "improving global agricultural production efficiency" as its mission and is committed to using robots, artificial intelligence and new energy technologies to empower agricultural production.
The main business of XAG Technology includes the research and development, manufacturing and sales of agricultural drones, agricultural unmanned vehicles, agricultural machinery autopilots, etc., intelligent agricultural equipment and intelligent agricultural management systems, and the provision of related technologies Serve.
XAG Technology mainly provides agricultural workers with accurate, efficient and flexible unmanned production solutions by building a complete product digital matrix, thereby improving agricultural productivity and solving labor shortages and problems in agricultural production. Problems such as extensive management.
So how did Peng Bin get involved with drones?
Peng Bin graduated from Xi'an University of Electronic Science and Technology in Computer Science and Technology. After graduation, he worked at Microsoft (China) for two years, making like-minded friends in the process.
Everyone has a fanatical interest in computers and network technology, and is willing to invest a lot of time in research, and eventually formed XAG together.
When he first started his business, Peng Bin had no direction. After a period of investigation, Peng Bin saw the niche field of drones and started to build the first-generation quad-rotor model aircraft.
With orders from the international fan community, XAG’s revenue reached several million. By 2011, XAG’s annual operating revenue reached 20 million.
When the sales of agricultural plant protection drones were first promoted, the market was difficult to open, and ordinary people could not accept drones priced at more than 100,000 yuan.
Therefore, XAG changed its business model and recruited hundreds of plant protection drone operators to use XAG drones to spray pesticides on cotton fields, charging only a service fee of more than ten yuan per mu of land.
As the market opens and people’s acceptance of agricultural plant protection drones increases, XAG’s plant protection drones begin to be favored by the market.
Subsequently, XAG continued to explore in the agricultural field. In addition to releasing agricultural drone products, XAG also launched agricultural unmanned vehicles, agricultural remote sensing drones, automatic tractor driving and other products.
02
Not yet profitable
From the above, XAG’s product revenue is good, but looking at the financial information, we can find that , XAG Technology has not yet made a profit.
The prospectus shows that from 2018 to the first half of 2021, XAG’s revenue was 322 million yuan, 357 million yuan, 530 million yuan, and 469 million yuan respectively; the corresponding net profits were -6.7174 million yuan respectively. yuan, -39.7032 million yuan, -60.8455 million yuan, -85.1229 million yuan.
It can be seen that the net profit of XAG Technology is still losing money, which makes people wonder why the more it sells, the more it loses.
Moreover, XAG’s continued losses may not meet the listing standards of Article 2.1.2, Item 4 of the "Shanghai Stock Exchange Science and Technology Innovation Board Stock Listing Rules": "The expected market value is not less than RMB 30 billion, and the operating income in the most recent year is not less than RMB 300 million."
This may be one of the reasons why XAG Technology withdrew its listing application.
As of June 2021, XAG Technology has accumulated losses of more than 200 million. Regarding this situation, the company explained that the industry the company is in is still in a period of rapid growth. At this stage, R&D investment is relatively high and new products are still in the market promotion stage.
Let’s take a look at XAG’s R&D investment. From 2018 to the first half of 2021, XAG’s R&D investment was 48.8482 million yuan, 69.4743 million yuan, 97.3584 million yuan and 81.3071 million yuan respectively. million, accounting for 15.18%, 19.49%, 18.36% and 17.35% of operating income respectively.
Currently, XAG Technology has a total of 527 R&D personnel, accounting for 38.47% of the company’s total employees.
As of July 23, 2021, XAG Technology has 1,305 authorized patents, including 230 invention patents, 693 utility model patents, and 382 design patents.
Although XAG has been increasing investment in R&D and focusing on product innovation and upgrades, it will also face problems with technology investment and achievement transformation.
If XAG fails to make correct judgments on the direction of research and development in the future, fails to make breakthroughs in key technologies during the research and development process, or fails to develop products that are recognized by the market, it will face early investment in research and development. Risks that are difficult to recover and the expected benefits are difficult to realize may have an adverse impact on the company's market competitiveness.
03
Subject to chip shortage
The prospectus shows that XAG Technology is also facing the problem of declining gross profit margin. In 2018 By 2020, the comprehensive gross profit margins were 32.54, 32.74, and 35.60 respectively, showing a stable upward trend; but from January to June 2021, the comprehensive gross profit margin was 22.11.
The company’s comprehensive gross profit margins were 32.54, 32.74, and 35.60 respectively, showing a stable upward trend; from January to June 2021, the comprehensive gross profit margin was 22.11.
The reason for the decrease in gross profit margin is In order to lower the price of agricultural equipment products for end customers, the company expects to reduce product costs through economies of scale and achieve democratization of technology while ensuring reasonable gross profits.
However, due to the chip shortage exceeding industry expectations, the company's peak season production and delivery capacity failed to fully match the actual market order demand. Some sales orders were lost due to the inability to supply in time, and the expected scale effect and cost reduction were not achieved. Effect.
In addition, the sharp increase in global commodity prices in the first half of 2021 has also increased the cost of the company's important components such as motors.
Originally, XAG appropriately lowered the sales prices of some new products when setting the prices for 2021 products at the new product launch conference. This ushered in an embarrassing situation, which ultimately led to the company's 2021 January- Comprehensive gross profit margin fell in June.
In addition, XAG also has a strong rival, DJI Drone. In four years from 2013 to 2017, revenue climbed from 820 million to 17.57 billion, and in 2020 Achieved revenue of 26 billion.
According to the Frost & Sullivan report, in 2020, DJI and XAG’s share of China’s agricultural drone market were 54.82 and 37.59 respectively. Although XAG ranked second, and DJI Innovations still has a big gap.
Moreover, DJI drones are involved in a wide range of industries, including sports cameras, agricultural plant protection machines, educational robots, etc., and are even making new attempts in fields such as automobiles.
DJI’s technical strength is also relatively leading in the industry. As mentioned earlier, XAG has 230 invention patents. However, DJI already has 2,609 invention patents, which is ten times more than XAG.
04
Conclusion
XAG faces a fiercely competitive track and strong competitors, so it has postponed its listing this time. matter, it might be a wise move.
XAG Technology can hide its capabilities and bide its time, solve its own supply chain, improve the upper and lower industrial chains, continue to make efforts in the promotion of new products, improve sales channels, and optimize product upgrades.
I believe that in the future, XAG will have greater confidence to win the “first share of agricultural drones”.