In recent days, the China Securities Regulatory Commission has been working on creating a special pathway for "new economy enterprises" in key sectors such as cloud computing, biotechnology, artificial intelligence, and high-end manufacturing. This initiative has opened up an IPO fast-track, sparking excitement in the market.
The New Third Board is one of the most prominent platforms for China's new economy, hosting numerous companies in fields like cloud computing, 3D printing, and robotics. Particularly, the robotics sector within the New Third Board has drawn significant attention, with nearly 2.3 billion yuan in financing plans announced this year alone.
Last year, over 32 robotic companies listed on the New Third Board raised approximately 2.3 billion yuan in total. Among them, Zhi Zhi Smart (834869) stood out with its high-price fundraising at 124.93 yuan per share.
On October 10, 2017, Zhi Zhi Smart announced plans to issue no more than 3.61 million shares at 124.93 yuan each, aiming to raise up to 450 million yuan. The company focuses on intelligent service robots, providing robotic customer service solutions to telecom operators, banks, e-commerce firms, and government agencies.
Zhi Zhi Smart currently serves major telecom operators, financial institutions like China Construction Bank and Bank of Communications, as well as industry giants such as Jingdong, Suning, and Wanda. With over 10,000 clients, it holds the largest knowledge base and semantic library in the industry.
However, despite growing revenue, the company has been operating at a loss for more than five years. In 2016, Zhi Zhi Smart reported revenue of 85.82 million yuan, a 90% increase from the previous year, but also recorded a loss of over 73 million yuan, a 127.9% rise.
By the first half of 2017, the losses had narrowed, though full-year results remained unclear. On January 5, 2018, after several delays, Zhi Zhi Smart successfully raised 263 million yuan through its 450 million yuan fundraising plan, with Silicon Valley Paradise being the main investor.
As part of the deal, the company’s shareholders, including the actual controller, pledged to submit an IPO application by June 30, 2020. If not met, Silicon Valley Paradise could demand that the shareholders sell more than 51% of their equity in the company.
Interestingly, just as investors were starting to feel hopeful, news emerged that the CSRC was considering relaxing IPO rules for new economy enterprises, adding another layer of anticipation.
Currently, there are six New Third Board robot companies with a market value exceeding 1 billion yuan, and ten others surpassing 5 billion yuan. Zhi Zhi Smart, with a valuation of around 2.5 billion yuan, leads the pack, followed closely by Tianzhi Hang (834360), which has a market cap of 2.37 billion yuan.
Tianzhi Hang is a pioneer in medical robotics, being the first domestic company to commercialize medical robots. It launched the country’s first orthopedic robot in 2010, securing the first medical robot registration license.
Despite its achievements, medical robotics face long development cycles and high capital requirements. Industry experts note that the journey from technology to product in this field typically takes over a decade.
In August 2017, Tianzhi Hang, which had been losing money for years, had only 37 million yuan in its account. It then conducted its first additional share issuance at 13.28 yuan per share, raising about 400 million yuan.
In December 2017, the Advanced Manufacturing Industry Investment Fund (Limited Partnership) subscribed almost entirely to the offering. Behind this fund are provincial industry guidance funds from Zhejiang, Jiangsu, and Liaoning, as well as support from the Ministry of Finance, indicating strong backing.
While the overall market value of New Third Board robot companies remains modest, the sector still holds promise. Some private equity funds have joked that the valuation growth during funding rounds often outpaces the market value of listed companies.
Whether there are bubbles or undervalued opportunities, only time will tell. But for now, the future of these new economy enterprises looks promising.
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