Estun Automation Co., Ltd. (ESTUN) recently announced that its wholly-owned subsidiary will acquire a 100% stake in Nanjing Estun Co., Ltd. (referred to as "Estun Cool Tech") for a total cash consideration of 487 million yuan. The company's controlling shareholder, Nanjing Pairest Technology Co., Ltd., holds a 39.07% stake in Estun Cool Tech, making this acquisition a related-party transaction.
Since its inception, Estun Cool Tech has recorded consecutive losses, with the deficit amounts nearly matching or exceeding its revenue during the same periods. The acquisition premium for this transaction exceeds 900%. Meanwhile, Estun Automation Co.,Ltd. has seen a continuous rise in its interest-bearing debt and debt ratio, indicating constrained financial resources. In March of this year, the company completed a HK$1.2 billion fundraising through its Hong Kong IPO, only to funnel a portion of the proceeds back to its major shareholder via this acquisition a few months later.
In 2024, Estun Automation Co.,Ltd. had already recorded a significant goodwill impairment due to "post-merger integration issues," a trend that has persisted. In recent years, the company's high-margin overseas markets have shown no growth, while its domestic market strategy has relied on price cuts to capture market share, leading to a steady decline in gross margins and near-zero profitability in its core business. The high-premium purchase of a loss-making asset from the controlling shareholder raises questions about whether it will achieve the expected outcomes.
Target Company's Consecutive Losses, Acquisition Premium Over 900%, and Rising Debt, With HK$1.2 Billion IPO Just Completed
On August 5, Estun Automation Co.,Ltd. announced plans to acquire the entire equity of Estun Cool Tech, in which the controlling shareholder holds approximately 39%, for a total cash payment of 487 million yuan. Estun Cool Tech is primarily engaged in the R&D and sales of collaborative robots, embodied intelligent robots, and their core components. The company has completed the development of two generations of humanoid robots, 17 high-end collaborative robots, and four types of composite mobile robots. Estun Automation Co.,Ltd. stated that the acquisition aims to rapidly establish a full-scenario product line spanning "heavy-duty industrial robots, lightweight collaborative robots, and embodied intelligent robots."
According to the announcement, Estun Cool Tech was established in 2022. Its revenue for 2024, 2025, and the first four months of 2026 was 10.99 million yuan, 50.17 million yuan, and 14.87 million yuan, respectively, while net losses were 36.10 million yuan, 53.00 million yuan, and 12.66 million yuan. The company is not only in a persistent loss-making state, but its losses also nearly match or exceed its revenue in the same periods. Despite these consecutive losses, the total valuation of the target company for this transaction is set at 487 million yuan, representing an astonishing premium rate of 901.20%.
As the acquirer, the listed company has been facing significant debt pressure. In recent years, Estun Automation Co.,Ltd. has seen a general upward trend in both its interest-bearing debt and debt ratio, with its own cash position being far from ample. On March 9 of this year, Estun Automation Co.,Ltd. was listed on the Main Board of the Hong Kong Stock Exchange, raising approximately HK$1.2 billion through its IPO. The funds were intended for expanding global production capacity, pursuing strategic alliances, investments, and acquisition opportunities, R&D projects and digital management systems, as well as repaying existing loans, working capital, and general corporate purposes. However, this HK$1.2 billion, originally earmarked for the company's global expansion, technology overseas deployment, and easing short-term debt repayment pressures, was used just a few months later to acquire a loss-making asset in which the major shareholder holds a stake, effectively channeling a portion of the funds back to the major shareholder.
High-Premium Acquisition Previously Led to Significant Goodwill Impairment, While Domestic Market Pursues Volume Over Price and Overseas Market Growth Stalls
Estun Automation Co.,Ltd. has a prior record of goodwill impairment. In 2024, the company suffered a massive net loss of 810 million yuan, with asset impairment provisions totaling 400 million yuan. This included 345 million yuan in goodwill impairment, 41 million yuan in inventory write-downs, and 16 million yuan in intangible asset impairment. Due to overall market changes in the industry, the company recognized a total goodwill impairment provision of 345 million yuan for four subsidiaries, including its German subsidiary Cloos. As of the end of 2024, the end of 2025, and the end of the first quarter of 2026, Estun Automation Co.,Ltd.'s goodwill stood at 1.104 billion yuan, 1.030 billion yuan, and 994 million yuan, respectively, indicating that goodwill impairment is ongoing.
As a leading domestic robot manufacturer with high shipment volumes for several consecutive years, Estun Automation Co.,Ltd. has seen no growth in its high-margin overseas markets. In the domestic market, the company has relied on "price involution" to trade volume for market share, resulting in downward pressure on product unit prices and a continuous decline in gross margins. After a significant loss in 2024, its non-GAAP net profit in 2025 was only 7 million yuan, placing its core business in a near-break-even state.
Under the performance-based earn-out clause set for this acquisition, Estun Cool Tech's revenue targets for the period from May to December 2026, the full year of 2027, the full year of 2028, and the full year of 2029 are no less than 70 million yuan, 120 million yuan, 180 million yuan, and 250 million yuan, respectively, with a cumulative total of no less than 620 million yuan. However, considering that the target company's total revenue for the full year of 2025 was only 50.17 million yuan, the leap from tens of millions to hundreds of millions in revenue within a short period represents a significant challenge. Furthermore, the performance commitment in the transaction does not specify a net profit requirement. If the company fails to achieve a rapid turnaround, the substantial goodwill impairment resulting from the high-premium acquisition will directly impact Estun Automation Co.,Ltd.'s profit and loss statement. Against the backdrop of its own dual pressures on performance and cash flow, Estun Automation Co.,Ltd., having just completed its Hong Kong IPO, is now spending substantial funds to acquire a consistently loss-making related-party asset at a nine-fold premium. Whether this is a strategic move to lay out a second growth curve or a disguised method of injecting capital into the major shareholder is a question that warrants close attention.
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