Good News on Listing | Frost & Sullivan Congratulates Chengdu Henglong Automation Technology Co., Ltd. on Successful Listing on the Sci-tech Innovation Board (688070)

Chengdu Henglong Automation Technology Co., Ltd. (hereinafter referred to as 'Henglong Shares') successfully listed on February 10, 2021, with an issue of 21.9 million shares at an issue price of 23.16 yuan per share.

Since its establishment, Vertical Flight Co., Ltd. has been focusing on the research and development, production, sales, and service of industrial drones related products. It is committed to providing customers with intelligent, standardized, and tool-based industrial drone systems. It is one of the leading and most competitive industrial drone enterprises in the field of vertical takeoff and landing fixed-wing drones in China. The company takes vertical takeoff and landing fixed-wing drone systems as its core product and currently owns seven major series of such systems: Dapeng CW-007, CW-10, CW-15, CW-20, CW-25, CW-30, and CW-100. The maximum takeoff weight ranges from 6.8 to 105 kilograms, and the flight time covers from 1 to 8 hours. The products are widely used in surveying and geographic information, inspection, security monitoring, emergency response, and other fields.

Frost & Sullivan actively explores and promotes the application of industrial drones mainly consisting of vertical takeoff and landing fixed-wing drones. Through years of technology research and development accumulation as well as industrial application, the company has formed core technical advantages in areas such as aircraft platform design and manufacturing, flight control and avionics, integrated design and integration, and possesses engineering and industrialization capabilities. The company's overall technical level is at a leading domestic level, with some products and technologies reaching international advanced standards. Frost & Sullivan has long been paying attention to the global and Chinese intelligent industry sectors, publishing a large number of research reports that have been widely cited in the prospectuses of leading science and technology innovation board listed companies in the industry, helping customers accelerate their growth.

A drone is an aircraft managed by a control station (including remote control or autonomous flight), also known as a remotely piloted aircraft. A drone system refers to a system composed of a drone aircraft platform, flight control and navigation subsystems, ground command subsystems, mission payload subsystems, etc. As an efficient and safe aircraft, drones can replace humans to better complete tasks such as data collection, aerial photography, geological remote sensing, and remote monitoring.

According to their purpose, drones can generally be divided into military drones and civilian drones; civilian drones can be further categorized into consumer-grade drones and industrial drones. Military drones have high requirements for endurance, cruising speed, flight altitude, range of action, mission payload, etc.; consumer-grade drones are mainly used for aerial photography and entertainment, focusing on shooting functions and operability; industrial drones prioritize economic benefits, seeking a balance between performance such as cruising speed and endurance, and have high requirements for specialized applications of drones. Industrial drones achieve diverse functions by carrying different mission payloads and are mainly used in fields such as surveying and geographic information, inspection, security monitoring, emergency response, etc.

The global consumer-grade drone market and the large-scale military drone market are developing increasingly maturely. The rapid growth in industrial application scenarios for drones and the expansion of the small-scale military surveillance drone market are driving the continuous expansion of the global drone industry scale. From 2015 to 2019, the global drone market size had an average annual compound growth rate of 19.40%. In 2019, the global military and civilian drone market sizes were 70.33 billion yuan and 65.74 billion yuan respectively, accounting for 51.69% and 48.31% of the total. It is estimated that by 2024, the global drone market size will exceed 500 billion yuan.

The global market size for civilian drones increased from 21.45 billion yuan in 2015 to 65.74 billion yuan in 2019, with an average annual compound growth rate of 32.3% over five years. In the past few years, consumer drones have occupied a significant market share in the civilian drone market, but the consumer drone market is becoming increasingly saturated. With the expansion of drone applications in industrial scenarios, the gap between the consumer drone and industrial drone market sizes is gradually narrowing, and industrial drones are poised to catch up, with the market size expected to surpass that of consumer drones by 2020. Frost & Sullivan predicts that as drones continue to be popularized in industrial application fields, the global market size for civilian drones will grow from 99.34 billion yuan in 2020 to 415.73 billion yuan in 2024, with an annual compound growth rate of 43.0%.

From 2015 to 2019, the market scale of civil drones in China accounted for more than 65% of the global drone market scale; in 2019, the market scales of consumer-grade and industrial drones in China were 28.33 billion yuan and 15.18 billion yuan (including complete drones and drone services), respectively, accounting for 74.3% and 55.0% of the global corresponding market scales. China has become one of the most important sectors in the global drone industry landscape.

The civil drone market in our country has enormous development potential. Drone companies represented by DJI Innovation are leading the development of consumer-grade drones globally. Industrial drones are increasingly being applied in fields such as agriculture and forestry pest control, inspection, surveying and geographic information, security monitoring, logistics transportation, etc., achieving cost reduction and efficiency improvement by replacing manual labor. It is expected that the civil drone market in China will continue to grow rapidly in the future, reaching a market size of 207.559 billion yuan by 2024.

With the continuous development of drone technology and the maturation of commercial applications, the application fields of industrial drones are expanding continuously. The application of drones in the industrial sector will have greater commercial value, and the market scale of industrial drones in China is currently in a stage of rapid growth. From 2015 to 2019, the market scale of industrial drones in China increased from 3 billion yuan to 15.18 billion yuan, with an average annual compound growth rate of 49.9%. It is estimated that by 2024, the market scale of industrial drones in China will exceed 150 billion yuan. Currently, industrial drones in China are mainly applied in fields such as surveying and mapping with geographic information, inspection, security monitoring, and agricultural and forestry plant protection.

Industrial drones can be classified into multi-rotor drones, fixed-wing drones, unmanned helicopters, vertical takeoff and landing fixed-wing drones, etc., based on their aerodynamic layout. Industrial drones with different aerodynamic layouts have certain differences in specific application scenarios due to their respective usage characteristics. In 2019, the hardware market scale of industrial drones in China (statistical by order and by model) was 5.06 billion yuan. Among them, multi-rotor drones and vertical takeoff and landing fixed-wing drones are the types of industrial drones with a relatively high proportion, accounting for 80.5% and 10.1% of the drone hardware market scale respectively. Vertical takeoff and landing fixed-wing drones adopt a composite layout combining fixed wings and multi-rotors, combining the advantages of fixed-wing drones such as high energy efficiency and long flight time, as well as the vertical takeoff and landing capabilities of multi-rotor drones and the ability to hover. Their application in the industrial drone industry is becoming increasingly widespread. It is estimated that by 2024, the market scale of vertical takeoff and landing fixed-wing drones will reach 12.43 billion yuan, and the proportion of the industrial drone hardware market scale will increase from 10.1% in 2019 to 30.6%.

Frost & Sullivan has rich research experience in the industrial, automotive, and energy sectors, assisting many well-known companies in successfully listing on capital markets. Recent successful listings include Ehang Intelligent (EH.NASDAQ), Aodima (8418.HK), CIMC Vehicle (1839.HK), Xunlong (1930.HK), CSSC Leasing (3877.HK), Chengdu Expressway (1785.HK), Tianrui Automotive Interior (6162.HK), Baren Holdings (2885.HK), Huazhi International (2258.HK), PULIN Chengshan (1809.HK), NIO Automotive (NIO.NYSE), Wanli Da (8482.HK), Qilu Expressway (1576.HK), Yingheng Technology (1760.HK), Asia Industry (1737.HK), Xinghua Port (1990.HK), Ruifeng Power (2025.HK), Gaomeng Technology (8065.HK), and others.