Harmonic reducer maker Reach Top files for Shenzhen IPO, to raise nearly US$50m

The fast ascent of a number of homegrown players like Reach Top has somewhat shaken up the domination of overseas core parts suppliers like Harmonic Drive.

Reach Top (瑞迪智驱), a company making precision transmission gear like harmonic reducer, submitted on January 22 its application to go public on the Growth Enterprise Market of China’s Shenzhen Stock Exchange, one of the country’s three bourses.

The company has updated the status of its initial public offering bid 10 days after the exchange’s listing committee scrutinized its qualifications.

Reach Top, headquartered in southwestern China’s Chengdu, capital of Sichuan Province, planned to issue up to 13.78 million Class-A shares to raise 357 million yuan (US$49.80 million).

The company plans to invest the proceeds to expand the production of its signature electromagnetic brake and clutch as well as build an R&D center.

Electromagnetic brake and clutch are widely used in industrial automation equipment.

The company said in its prospectus it will set aside 272 million yuan for construction of the R&D facility and another 35 million yuan to supplement its working capital.

The facility, due to be completed over 24 months, will add 3.59 million electromagnetic brakes to the annual output when it becomes operational.

Fast ascent of local players

Reach Top, while relatively obscure among foreign buyers or suppliers of automation equipment, has earned its reputation as a key supplier to clients in the Chinese industrial automation and robotics industry.

A manufacturer of transmission gear, electromagnetic brake and harmonic drive, Reach Top mainly sells to sectors including digital machine tool, robotics and elevator.

The fast ascent of a number of homegrown players like Reach Top has somewhat shaken up the domination of overseas core parts suppliers like Harmonic Drive.

During its reporting period, it counted among its clients well-known firms such as automation titan Inovance (汇川科技), industrial robot heavyweight Estun (埃斯顿) and elevator behemoths Hitachi, Otis and Toshiba.

Some of Reach Top’s customers are from the realm of robotics, ranging in category from welding robot to six-axis robot, and from cobot to automated guided vehicle.

Together they snapped up 7,878 units of its harmonic reducer products in the first half of 2023, for which data was last available in its financial statements.

Reach Top booked revenue of 393.38 million yuan, 544.48 million yuan, 564.06 million yuan and 285.63 million yuan in 2020, 2021, 2022 and the first six months of 2023.

The corresponding net profit to shareholders after deducting non-recurring gain and loss stood at 33.11 million yuan, 61.14 million yuan, 68.48 million yuan and 46.51 million yuan.

Market analysts believe the steady rise in earnings suggests the firm’s sustained market appeal.

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Ni Tao

Ni Tao is the founder and editor-in-chief of cnrobopedia. Prior to cnrobopedia, he had a full decade of experience with a major state-run English-language newspaper as a tech reporter and opinion writer. He is also a communications specialist, having provided consultancy services to established firms like Siemens, Philips, ABinBev, Diageo, Trip.com Group (Nasdaq: TCOM, HK: 9961), Jianpu Technology (NYSE: JT) and a handful of domestic startups. A graduate of Fudan University, he writes widely about China's business and tech scenes and other topics for global publications including South China Morning Post, SupChina, The Diplomat, CGTN, Banking Technology, among others, and tries to impart his experience to students at Fudan University Journalism School, where he is a part-time lecturer. When he's not writing about robotics, you can expect him to be on his beloved Yanagisawa saxophones, trying to play some jazz riffs, often in vain and occasionally against the protests of an angry neighbor. Get in touch with him by dropping a line at nitao0927@gmail.com.

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