Chinese drone maker EHang targets US listing

The company reportedly sought to go public earlier this year but delayed the process due to a weak response from the market. The size and pricing of the offering have yet to be decided.

Founded in 2014, EHang positions itself as a supplier of autonomous aerial vehicles (AAVs) and related supporting systems and infrastructure for use in aerial photography, smart city management, logistics, and passenger transportation. In 2016, it unveiled the world’s first passenger-grade single-seat AAV. Last year, a dual-seat model – which can carry payloads of 220 kilograms up to 35 kilometers – was delivered for testing and demonstration.

The company claims to be different from mass-market drones – or unmanned aerial vehicles – because its devices can fly and operate autonomously. They comprise an autopilot and flight control mechanism, as well as communication, battery management, and safety management systems. On-the-ground command-and-control systems allow simultaneous control over 1,000 non-passenger-grade AAVs.

EHang, which has a 125-member R&D team, is working on commercial urban air mobility solutions with the likes of DHL-Sinotrans, Vodafone, and aerospace giant FACC. It has delivered 38 passenger-grade AAVs for testing, training and demonstration and developed two command-and-control centers for smart city management. There are 28 unfilled purchase orders for passenger-grade AAVs.

The IPO prospectus identifies three models of non-passenger-grade AAVs currently in production but provides no details as to how many have been sold. However, they are currently responsible for almost all its revenue. The company is best known for the Ghost Drone, or GD 2.0X, which is designed for surveillance and last-mile delivery functions.

EHang posted RMB66.5 million in revenue last year, up from RMB31.7 million in 2017. Smart city management solutions and aerial media solutions accounted for RMB30.5 million and RMB31.3 million, respectively. Air mobility solutions – which covers the sale of passenger-grade AAVs and the provision of logistics services – contributed RMB3.1 million.

Smart city management involves developing command-and-control systems and producing non-passenger-grade AAVs for use in public safety surveillance, traffic management, and other municipal functions. The company’s aerial media business is chiefly deploying fleets of drones in formation for display-based branding or advertising. To date, the company has completed over 70 performances.

EHang’s net loss narrowed from RMB86.6 million in 2017 to RMB80.5 million in 2018.

GGV has a 10.8% stake in the company, while ZhenFund holds 7.6%. GGV led a $10 million Series A round in 2015, with support from several angel investors, including ZhenFund founder Xiaoping Xu. A $42 million Series B came the following year, led by GP Capital. GGV and ZhenFund also took part.

According to Frost & Sullivan, the global commercial unmanned aerial vehicle market was worth $3.7 billion in 2018 and is expected to reach $103.7 billion by 2023. The AAV market is more nascent, with revenues of $300,000 last year. It is projected to hit $3 billion in 2023, as the global addressable market for AAV commercial solutions grows from $3.7 billion to $103.7 billion.

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• Topics
• Greater China
• Technology
• IPO
• China
• GGV Capital
• ZhenFund