The maker of Smart Home-Use Robots has applied for an IPO in Hong Kong, with an important elder of the high-tech gadget world of China as a large shareholder and non-executive director
Main takeaway restaurants:
- Switchbot applied for an IPO in Hong Kong and reported that the loss was limited last year, because it placed a second consecutive year of positively adapted EBITDA
- The creator of Smart Home-Use Robots regards Japan as the largest market and delivers almost 60% of his turnover
Robot -like shares have recently been in tear, eliminated by recent events such as a dancing robot performance on China’s widespread annual Spring Festival Gala TV program and repeated hype van Jensen Huang, CEO of Nvidia, saying that the robot era is coming close. Smart home-oriented is in that buzz is Switchbot (Shenzhen) Co. Ltd.He hopes to tap enthusiastic investors for cash with his plan for a list of Hong Kong.
The company was released in 2015 as the brainchild of two college classmates of the Harbin Institute of Industry, Li Zhichen and Pan Yang, according to his List document submitted earlier this month to the Hong Kong Stock Exchange. It launched the world’s first finger robots in 2017 and marked the official debut of the Switchbot brand. It was restructured in a joint stock company and the road for his IPO in April this year. Li Zhichen is the largest shareholder in the company with 21.82% of his shares.
The market for smart home-use embodimented AI robots is rapidly expanding as AI technologies continue to improve, so that the road is opened for hardware with increased intelligence and flexibility. According to research by third parties cited in the list document of Switchbot, the market for such products from 213.3 billion Yuan ($ 29.71 billion) grew to 257.7 billion Yuan in 2024 in 2024, on average annual growth of almost 10%.
The growing demand is fed by demographic trends such as an ever -aging world population, more people who choose to live alone and young people looking for the latest trendy smart products to beautify their homes. Such a question is expected to hum the market with a comparable growth of 10.7% annually in the next five years and reached 428.3 billion Yuan in 2029, according to the list document.
Market leader
Switchbot is the world’s largest provider of home embodied AI robot systems, which use a central platform to enable robots to learn themselves, after which they can acquire human-like capacities and perform complex tasks in the house. Last year the company was the world leader in AI Home embodied robotics with 11.9% of the market, 2.1 percentage points higher than the best company in China.
Most products are exported, especially to Japan, which generated 57.7% of Switchbot’s turnover last year. Japan is always beaten by such high-tech gadgets and has special use for such home base assistants because of the rapidly aging society of the country. Europe was the second largest market, good for 21.4% of sales, followed by North America at 15.9%.
Of the wide range of products, the lockrobots of the company are the largest breadwinners, who contribute 18.5% of sales last year. Such robots work by making existing slut systems afterwards and using face recognition, NFC or speech assignments to unlock doors. Last year the company sold such robots for an average of 388 yuan each, an increase of 19.4% on an annual basis, with a turnover of 113 million Yuan, an increase of 44.4% on an annual basis.
Strong growth
As the demand for robots has grown, the income of Switchbot is too. Last year the figure rose 33.4% to 609 million Yuan, while gross profit rose by 36.9% to 316 million Yuan. The loss of the company limited to 3.07 million Yuan for the year of 16.38 million Yuan in 2023, because distribution and R&D costs continued to drag on the bottom line. But Switchbot has been profitable in the last two years on an adapted EBITDA basis, because that figure increased from 5.81 million Yuan in 2023 to 26.08 million Yuan last year.
The unique business and strong growth have attracted a number of heavyweight investors, including Professor Li Zexiang from the University of Science and Technology of Hong Kong, whose help in the early days of the leading drone maker Dji has delivered him the “Godfather of Dji”. Li owns 12.98% of the shares of Switchbot through different companies and serves as one of the non-executive directors of the company.
Other investors are Brizan Ventures, founded by Dr. Ko Ping Keung, a former dean of the Engineering School at the Hong Kong University of Science and Technology, which owns 9.72% of the shares of Switchbot. Ko was also an early investor in DJI and currently acts as a different non-executive director on the Switchbot board. Shanghai Chenjun, whose executive managing partner is private equity Giant Hillhouse, is also a shareholder with 4.38% of the shares of Switchbot.
We must note that the company is highly dependent on selling its products via e-commerce Gigant Amazon, which in 2022 delivered more than 80% of its turnover, although that number fell to 64.2% last year. His dependence on Amazon, as well as related promotions such as Amazon Prime Day and Black Friday, means that the company has the tendency to report its strongest results in the second half of the year. The Christmas gift season season makes the fourth quarter one of the strongest, usually good for between 26% and 32% of the annual income from the company.
Forex exposure
Another point to note is the exposure of the company to Forex winnings and losses because of the dependence on export, especially to Japan. A weak Chinese Yuan is not a problem, but a weak Japanese yen in particular could undermine the profit of Switchbot.
Under Hong Kong-Genter Robot Supplements, UBtech Robotics (9880.hk) and Drum (2432.HK) Last year continued to lose money on an adapted EBITDA basis, in contrast to Switchbot that has been profitable on the basis of two consecutive years. That could give Switchbot a leg on his rivals in attracting robot -oriented investors. UBTech is currently being traded at a price sale (p/s) ratio of 12.55 times, while Dobot is even 37.1 times higher, as a result of high expectations of large growth at companies. That could well predict for Switchbot, whose Bottom Line not only looks stronger than the two, but also has a strong group of pre-ipo backers.
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