The Shanghai Stock Exchange recently disclosed that Zhejiang Fine Motion Robot Joint Technology Corporation has advanced its IPO application for the Shenzhen Stock Exchange’s STAR Market to the inquiry phase.
Fine Motion aims to raise RMB 1.408 billion (USD 197.1 million) through the IPO, with funds earmarked for the following initiatives:
- Construction of a precision reducer intelligent manufacturing base: RMB 1.1 billion (USD 154 million)
- Establishment of a precision transmission R&D center: RMB 157 million (USD 22 million)
- Working capital and loan repayment: RMB 150 million (USD 21 million)
Founded in 2020 as a subsidiary of Shenzhen-listed Shuanghuan Driveline, Fine Motion specializes in high-precision reducers for robotic joints. Its core products include rotate vector (RV) reducers, precision components, and harmonic reducers, widely used in robotics, industrial automation, and advanced manufacturing. Following a shareholding reform in August 2023, Fine Motion began its IPO process.
According to Tianyancha, Fine Motion has completed two financing rounds, attracting investments from notable backers such as Hillhouse, ZJU Joint Innovation Investment, the National Manufacturing Transformation and Upgrading Fund, CS Capital, and Temasek. Its most recent valuation places the company at RMB 3 billion (USD 420 million).
Fine Motion has demonstrated robust growth during the reporting period from 2021 to June 2024. According to its prospectus, the company’s revenue and net profit figures were as follows:
- 2021: RMB 91.41 million (USD 12.8 million); RMB 20.21 million (USD 2.8 million).
- 2022: RMB 169 million (USD 23.7 million); RMB 50.18 million (USD 7 million).
- 2023: RMB 309 million (USD 43.3 million); RMB 76.26 million (USD 10.7 million).
- 2024 (H1): RMB 134 million (USD 18.8 million); RMB 25.54 million (USD 3.6 million).
Fine Motion’s growth is fueled by rising demand for its flagship RV reducers, critical components in industrial robotics, positioning devices, machine tools, and medical equipment. RV reducers, known for their precision and high gear ratios, enhance industrial automation and improve safety and accuracy in medical devices. According to Business Research Insight, the global RV reducer market is projected to reach USD 15.339 billion by 2031.
Domestically, Chinese manufacturers are closing gaps in core technologies due to industrial upgrades and government support. Companies like Shuanghuan, Sima Transmission Machinery, Zhongda Leader Intelligent Transmission, Nantong Zhenkang, and Qinchuan Machine Tool are strengthening their foothold in the market.
However, technological barriers remain steep for RV reducers, involving precision manufacturing and material science. Fine Motion claims a competitive edge, with 15 trademarks and 84 patents, mostly in RV reducer technology. As of 2023, it held an 18.89% share of the domestic RV reducer market.
Despite its advantages, Fine Motion faces challenges. In the first half of 2024, the company reported an 11.96% year-on-year decline in main business revenue and slower net profit growth, attributed to reduced procurement from downstream sectors like robotics, 3C electronics, photovoltaics, and automotive. Additionally, profit declines at its top two clients during the first three quarters of 2024 exerted additional pressure. With nearly 80% of revenue coming from its top five customers, Fine Motion is significantly exposed to dependency risks.
To sustain growth, Fine Motion must address dependency risks while balancing customization demands with cost efficiency and delivery timelines. Its ability to innovate technologically and protect its patents will be critical as it navigates its IPO and seeks to strengthen its position in a competitive market.
KrASIA Connection features translated and adapted content that was originally published by 36Kr. This article was written by Chi Meng for 36Kr.