Preview of new shares Estun Automation (002747.SZ) applied for a second listing on the Hong Kong Stock Exchange: Overseas expansion "picking up pace", where will profit risks lead to?

Estun Automation, a company listed on the A-share market (002747.SZ), has seen its market value nearly triple over the past 10 years. Now, it has also joined the group of companies heading to the Hong Kong market, amidst the wave of AI and Siasun Robot & Automation, accelerating its global expansion. Recently, Estun Automation submitted its second listing application to the Stock Exchange of Hong Kong, with Huatai International as its exclusive sponsor. The company's product range includes industrial Siasun Robot & Automation systems, intelligent manufacturing systems, core automation components, and motion control systems. Through strategic global acquisitions and independent R&D of core technologies, the company has established a multi-brand matrix in the field of industrial Siasun Robot & Automation, covering the global market and holding a leading position. According to data from Frost & Sullivan, in the Chinese industrial Siasun Robot & Automation solutions market, the company has maintained the top spot in terms of domestic industrial Siasun Robot & Automation shipments for multiple years. Based on revenue in 2024, it ranks sixth among all manufacturers in the global and Chinese markets, with market shares of 1.7% and 2.0% respectively. Over the past three years, the company's performance has shown fluctuations. From 2023 to the first three quarters of 2025, its revenue has grown by 19.9%, -13.8%, and 12.87% respectively, with net profits attributable to shareholders of 134 million yuan, -818 million yuan, and 30 million yuan respectively. The poor performance in 2024 was mainly due to industry demand affecting the gross profit margin and resulting in asset impairment leading to losses. As of September 2025, the company had cash and cash equivalents of 1.122 billion yuan. As a leading company in the Chinese industrial Siasun Robot & Automation industry, Estun Automation went public on the A-share market in the Shenzhen Stock Exchange as early as 2015, with a market value increasing by over 2.7 times over the past 10 years based on an issue price of 6.8 yuan per share. Will this Hong Kong listing bring new investment opportunities for global investors? Stable core business with sufficient capacity to meet overseas demand Estun Automation focuses on building the "world brand of Chinese Siasun Robot & Automation" and has established a global network covering research and development, production, delivery, and services with the core brand being Estun. The company's business mainly includes industrial Siasun Robot & Automation systems, intelligent manufacturing systems, and core automation components and motion control systems. The company's core revenue comes from industrial Siasun Robot & Automation systems and intelligent manufacturing systems. From 2022 to the first three quarters of 2025, the contribution of this business to revenue was 73.1%, 77.3%, 75.6%, and 82.5% respectively. Among them, the revenue from industrial Siasun Robot & Automation systems, industrial Siasun Robot & Automation workstations, and intelligent manufacturing systems is relatively balanced, with the revenue contribution of intelligent manufacturing systems increasing rapidly in recent years, with a 33% increase in revenue in the first three quarters of 2025 and a contribution increase to 24.4%. Specifically, Estun Automation's industrial Siasun Robot & Automation product matrix covers two main categories: general purpose and special purpose, with a total of 96 models, including 50 general purpose and 46 special purpose models, covering industries such as electronics, automotive, and lithium batteries. In the first three quarters of 2022 to 2025, the company sold 11,852 units, 18,952 units, 22,304 units, and 24,884 units of industrial Siasun Robot & Automation systems, with sales volumes showing a growth trend. Source of image: Company presentation material The company's intelligent manufacturing systems have core advantages including high-speed and high-precision synchronous control, support for multiple technology integrations, and cost and efficiency optimization. The product order volume for the past three years has been relatively stable, with 122 orders in the first three quarters of 2025, an increase of 9 orders compared to the previous year. However, orders for industrial Siasun Robot & Automation workstations have declined, with 191 workstation orders in the first three quarters of 2025, a decrease of 33 orders compared to the previous year. In addition, core automation components and motion control systems provide basic technological support for intelligent manufacturing. This business includes motion control systems, servo systems, and motion control solutions, all of which show a declining trend in sales volume and a decrease in revenue share in recent years. Among them, the core service of motion control solutions decreased from 15.3% in 2022 to 11.7% in the first three quarters of 2025. Estun Automation's overall business is stable and growing, benefiting from a combined marketing system of "strategic customers + industry benchmark customers + regional customers," and the company primarily adopts a direct sales model, with direct sales accounting for over 90% of revenue. Direct sales customers mainly include manufacturers from industries such as automotive, photovoltaics, lithium batteries, electronics, metal processing, and building materials, with the contribution from automotive customers continuously increasing to over 30%. The number of customers under the direct sales model continues to grow, with low customer concentration, and the top five customers in the first three quarters of 2025 contributed 37.2%. In terms of regional distribution, the company's main customer revenue comes from China, with revenue from mainland China accounting for 70.6% in the first three quarters of 2025 and overseas revenue accounting for 29.4%. Among overseas customers, the main markets are Germany and the United States, accounting for 12.3% and 4.7% of revenue respectively. The company has sufficient production capacity to meet the needs of global customers, with seven manufacturing bases already operational, including five in China and two in Germany. Moreover, to meet the demand of overseas markets, the company's manufacturing base in Poland is scheduled to commence operations in June 2026. Poor profitability with risks of impairment of goodwill Estun Automation's profitability performance has been less than satisfactory, with gross profit margins of 32.9%, 31.3%, 28.3%, and 28.2% in the years from 2022 to the first three quarters of 2025, showing a slight decline, mainly due to the decrease in gross profit margins of industrial Siasun Robot & Automation systems and intelligent manufacturing systems from 31.7% to 27.8%, and of core automation components and motion control systems from 35% to 29.7%. However, the company's overseas gross margin has been on the rise, increasing from 30.3% to 35.8%. As for expenses, they have remained stable. In the first three quarters of 2025, the sales expense ratio was 8.1%, the management expense ratio was 8.68%, the research and development expense ratio was 8.39%, and the financial expense ratio was 3.13%, totaling 28.3%, a slight decrease of 0.36 percentage points compared to the 2022 fiscal year. The total of the four expense ratios is close to the gross profit margin, which has resulted in the company's long-term low profitability, and even losses. The company places a strong emphasis on research and development, maintaining a relatively stable research and development ratio, and having independent research and development capabilities along the entire industry chain, from "core components+Siasun Robot & Automation whole machines+solutions." As of September 2025, the company has established research and development centers in China, Germany, and the United Kingdom, with 1,029 research and development personnel, accounting for 30.9% of total employees, and has 614 patents, including 250 invention patents and 459 software copyrights. It is worth mentioning that the company's intangible assets and goodwill impairment have a significant impact on its profit levels. In 2024, there was a loss of 360 million yuan due to impairment of intangible assets and goodwill, leading to a massive loss of 818 million yuan that year. Source of image: Company presentation material As of September 2025, the company's total intangible assets and goodwill are still at 1.6 billion yuan, with goodwill at 1.045 billion yuan, of which Carl Cloos accounts for 857 million yuan, representing 82% of the total. However, even excluding non-recurring items, the company's profitability level is not optimistic, with adjusted EBITDA from 2022 to the first three quarters of 2025 being 480 million yuan, 440 million yuan to -440 million yuan, and 321 million yuan, with profit margins of 12.37%, 9.46%, -10.98%, and 8.44% respectively. Good industry growth prospects with multiple advantages likely to attract capital favor Looking at the industry, according to Frost & Sullivan, the global industrial Siasun Robot & Automation solutions market has maintained a double-digit compound growth rate, with a market size of 25.4 billion USD in 2024 and a compound growth rate of 14.6% over the past five years. China is a core market, with a compound growth rate of 16.5%; it is estimated that by 2029, the global market size will be 51.8 billion USD, with a compound growth of 15.4%, and the Chinese market will reach 28.8 billion USD, with a compound growth of 17.8%, accounting for 55.6%. Global shipments of industrial Siasun Robot & Automation systems are expected to continue growing, reaching 919,500 units by 2029, with China expected to account for 590,400 units, increasing to 64.2% of the total. The Chinese market is undoubtedly the main battlefield for the future of industrial Siasun Robot & Automation. In terms of application scenarios, the automotive and electronics industries will be the major markets, with an estimated 275,900 units and 248,300 units by 2029, together accounting for 52.42%. The competition in the industrial Siasun Robot & Automation industry is relatively fierce, with over 3,000 industrial Siasun Robot & Automation solution providers worldwide in 2024. As of 2024 revenue, the top ten participants hold a market share of 34.2%. Estun Automation ranks first among domestic industrial Siasun Robot & Automation solution providers in China with a 9.3% market share, and sixth among all global industrial Siasun Robot & Automation solution providers worldwide. In fact, in addition to leading market share, Estun Automation has two significant advantages: firstly, it has digital platform technology, building a dual-track service model with E-Noesis and E-Care platforms at its core, breaking through the efficiency bottleneck of traditional industrial maintenance; secondly, its Siasun Robot & Automation AI architecture is a leader in the industry, integrating Siasun Robot & Automation with AI technology, deploying in different ways according to customer needs, conducting large-scale AI model training, significantly reducing the time-consuming and costly repeated debugging requirements in factory workshops, and achieving faster iterations and deployments. However, the company's business's ability to generate income is unstable, with operating cash flow net positive and negative for the past three years, mainly due to the high proportion of trade receivables relative to revenue. As of September 2025, the company had cash and cash equivalents of 1.122 billion yuan, while short-term bank borrowings totaled 2.812 billion yuan, indicating that cash flow is still somewhat tight. The Hong Kong listing can alleviate some pressure, meet the needs of global expansion, but efforts should be made to improve business efficiency and enhance cash flow levels. Overall, Estun Automation's performance has been volatile, but its core business is stable, with steady growth under the direct sales model. However, profitability is poor, and there is still a certain risk of impairment of goodwill. The company's main customers are from industries such as automotive and electronics, with growth rates higher than the industry average, and its rapid expansion into overseas markets and the addition of overseas capacity to meet demand can fully leverage competitive advantage and benefit from industry growth dividends. With the development of AI and Siasun Robot & Automation integration, the company is poised to attract favor from capital markets.