Estun Aims for Profitability and Growth with Upcoming Hong Kong IPO After Overcoming Losses

Astounding Turnaround and Upcoming IPO: Estun Seeks New Grounds in the Industrial Robot Sector

On February 23, Estun, a leading domestic industrial robot manufacturer, officially passed the Hong Kong Stock Exchange hearing, bringing it one step closer to its “A+H” dual listing. In the lead-up to this event, the company announced its forecast to return to profitability by 2025, projecting a maximum profit of 50 million yuan, which aims to overshadow the 818 million yuan loss recorded in 2024. However, this announcement has also raised concerns: Estun’s net profit has experienced extreme fluctuations over the past three years, with a declining gross margin and increasing customer concentration.

In a time of heightened competition in the global supply chain, this homegrown leader is attempting to leverage the Hong Kong listing to secure additional funding, seeking to find a new balance between expansion and profit growth.

Profit and Customer Concentration Challenges

As a top player in the domestic industrial robot sector, Estun has consistently led in shipment volumes within the local market. According to Frost & Sullivan data, as of September 30, 2025, the company has shipped over 105,000 industrial robots in the past five years and nine months. Based on 2024 revenue, Estun ranks sixth in both the global and Chinese markets, holding market shares of 1.7% and 2.0%, respectively. The company’s revenue is heavily concentrated in mainland China, accounting for 70.6% in the first three quarters of 2025, while overseas markets like Germany and the United States contribute 12.3% and 4.7%, respectively.

Despite leading in shipment volume and revenue, Estun’s profitability has shown significant volatility. The prospectus reveals that the company’s operating revenues for 2022, 2023, 2024, and the first nine months of 2025 were 3.881 billion yuan, 4.652 billion yuan, 4.009 billion yuan, and 3.804 billion yuan, respectively. The corresponding net profits were 184 million yuan, 134 million yuan, -818 million yuan, and 30 million yuan. Its gross margins have also been declining, recorded at 32.9%, 31.3%, 28.3%, and 28.2% for the same periods. Estun attributes the 2024 loss to reduced revenue and gross margins, impairment losses on intangible assets and goodwill, and increased operating expenses.

The risks associated with Estun’s goodwill should not be underestimated. As of the end of September 2025, the company’s goodwill and intangible assets remained as high as 1.6 billion yuan, with the goodwill of its welding brand, Carl Cloos, reaching 857 million yuan, which had already seen significant impairment in 2024. Historically, Estun has accelerated its technological layout through acquisitions: in 2017, it acquired Trio, a globally recognized motion control brand; that same year, it bought M.A.i, which focuses on intelligent manufacturing systems, strengthening its position in the smart manufacturing field; and in 2020, it acquired Cloos, enhancing its technical capabilities in industrial welding, particularly for medium and thick plate welding processes. However, the effectiveness of these mergers and their subsequent impact on profitability still require time for evaluation.

On January 22, Estun announced its earnings forecast for 2025, predicting a net profit attributable to the shareholders of 35 million to 50 million yuan, representing a year-on-year increase of 104.32% to 106.17%. The company attributes its anticipated return to profitability to the sustained growth in industrial robot shipments, particularly in the automotive, electronics, and lithium battery sectors, alongside an increased market share and significant domestic revenue growth compared to the previous year. However, it is important to note that, alongside business expansion, the issue of customer structure imbalance has become more pronounced. From 2022 to the first three quarters of 2025, the revenue share from the top five customers surged from 16.4% to 37.2%, an increase of 126.8%. Notably, the revenue share from the largest customer soared from 5.5% to 18.0%, with two customers contributing over 10% of revenue, totaling a share of 31.4%.

Aiming for an “A+H” Dual Listing: Balancing Expansion and Profitability

Estun’s history dates back to March 1993, with its founder, Wu Bo, focusing on the research and development of electromechanical products since February 2002. The company produced its first industrial robot in 2010. After being listed on the Shenzhen Stock Exchange in March 2015 (stock code: 002747.SZ), the company is now taking another significant step, planning to launch its Hong Kong IPO in June 2025, establishing an “A+H” dual capital platform. In terms of equity, before the Hong Kong IPO, Wu Bo (holding 12.74%), Liu Fang and her husband, along with their son Wu Kan (holding 0.15%), and Nanjing Pailaisite (holding 29.26%) collectively hold approximately 42.15% of the company’s shares, making them the controlling shareholders.

Estun plans to use the proceeds from the IPO primarily for expanding global capacity, seeking strategic investments and acquisition opportunities throughout the supply chain, enhancing research and development, improving global service capabilities, developing digital management systems, repaying loans, and supplementing working capital. The company emphasizes that the expansion is based on considerations of globalization and capacity scaling, which will take at least two to three years from planning to completion.

Analysts at Guotai Junan Securities believe that listing in Hong Kong will enhance the company’s brand recognition, with proceeds earmarked for capacity expansion, investment, and research and development, which will solidify the foundation for corporate growth. On an industry level, the industrial robot sector is continuously heating up. The global market size has expanded from $14.7 billion in 2020 to an estimated $25.4 billion by 2024, with a compound annual growth rate of 14.6%, and is expected to reach $51.8 billion by 2029.

Similarly, the domestic market shows significant potential. According to data from the National Bureau of Statistics, the production of industrial robots in China is projected to reach 773,100 units by 2025, a year-on-year increase of 28.0%, while the annual output of service robots is expected to reach 18.58 million units, growing by 16.1%. In contrast, the demand for intelligent transformation in manufacturing is even stronger, accelerating the upgrade of industrial automation. The current Chinese industrial robot market has formed a competitive landscape characterized by foreign brands, domestic private brands, and state-owned brands. Each of these three camps exhibits different development trends and strategic orientations. Domestic private brands, with their agile mechanisms and rapid market responsiveness, are becoming the main drivers of the domestic substitution process, boasting an overall market share of 34.6%. Among them, Estun (8.5%) and Inovance Technology (6.54%) represent the leading tier; however, there remains a significant gap in both scale and profitability compared to international giants.

The industry as a whole is still in a phase of “trading volume for price,” with many companies facing losses. This phenomenon highlights multiple challenges, as intense price competition severely squeezes profit margins. As the rate of localization continues to improve, the Chinese industrial robot industry is transitioning from mere scale expansion to optimizing structure and enhancing quality, with market share increasingly concentrating on leading enterprises, and the focus of competition shifting from “market share” to “profit share.” In this transformative process, the ability to control supply chain costs becomes crucial, which is a core issue Estun faces on its path to expansion.