With annual revenue exceeding 2 billion, another Shenzhen big seller is quietly making a fortune!

As a major cross-border auto parts brand, Daotong Technology has not only made great strides in the auto parts field, with gratifying revenue and profits; the development of its subsidiary's drone business, which is comparable to DJI, has also attracted much attention from industry insiders.

2 million units sold in one year , TPMS series products are so popular

As an auto parts seller founded in 2004 and listed in 2020, Shenzhen Daotong Technology Co., Ltd. (hereinafter referred to as "Daotong Technology") focuses on the research and development, production, sales and services of automotive electronic components, automotive intelligent diagnosis and detection and analysis systems. It has four major product lines : automotive diagnostic series, TPMS (tire pressure monitoring) series, ADAS (intelligent monitoring and calibration) series products and related software cloud services. The products are mainly sold to more than 70 countries including the United States, Europe and Japan through platforms such as Amazon and eBay and offline distribution .

According to the performance forecast released in 2021, its operating income in 2021 is expected to be 2.254 billion yuan, an increase of 42.84% compared with the same period last year; the net profit attributable to the parent company's owners is 440 million yuan, an increase of 1.69% over the same period last year.

In terms of products, Autel 's comprehensive automotive diagnostic products, including simple diagnostic instruments - code reading cards, smart comprehensive diagnostic computers, etc. , are hot-selling on Amazon, and many products are on the Amazon auto parts category Best Sellers list, also capturing a large number of overseas fans.

The automotive comprehensive diagnostics product, which contributes the most revenue and gross profit to Daotong Technology, can be called Daotong Technology's most profitable "weapon". In 2020, the revenue and gross profit of this product were 931 million yuan and 571 million yuan respectively, accounting for more than 50% of the company's revenue and overall gross profit.

As the United States, the European Union, China and other countries have successively introduced regulations requiring new cars to install TPMS , the business of its products has also shown rapid growth, and its future development potential is highly anticipated. According to sales data from January to September 2021, the TPMS series products ( TPMS system diagnostic matching tools, tire pressure sensors) have the highest sales , with sales reaching 2.74 million units, exceeding the 2.64 million units in 2020.

Although the company's other product category ADAS has not been launched for a long time, its development momentum is also very strong . According to the data in 2020, its sales volume was 1,841 sets, an increase of 85.16% compared with the same period last year, and its sales revenue exceeded 112 million yuan. Relevant data show that by 2025, the penetration rate of new car ADAS in the United States, Europe and China is expected to reach 95%, 100% and 70% respectively.

In addition, Daotong Technology also has a wholly-owned subsidiary, Shenzhen Daotong Intelligent Aviation Technology Co., Ltd., which is specifically responsible for expanding its drone business . It is already on par with DJI overseas, and this part will be mentioned in the second part.

In terms of sales regions, North America is the most important source of operating income for Daotong Technology, and the European market is developing rapidly. In the first three quarters of 2021 alone , Daotong Technology achieved revenue of 809 million yuan in the North American market, accounting for nearly 50% of its revenue; the European market was second, at 221 million yuan.

Cutting off loss-making businesses, Daotong Technology's performance grew rapidly

Compared with the development of the auto parts category of Daotong Technology, the divested drone business may be little known.

Relevant data shows that as early as 2016-2018, Daotong Technology's operating income was 585 million yuan, 722 million yuan and 900 million yuan respectively. In the corresponding period, the revenue of its drone products was 60.6227 million yuan, 19.6141 million yuan and 0 yuan respectively , accounting for 10.41%, 2.74% and 0% of the current operating income respectively .

The drone business has seriously affected the performance of Daotong Technology, and even indirectly caused the parent company's net profit to be negative 70 million. At this time, Daotong Technology has already started to prepare for listing. Faced with the drone business with large R&D investment and extremely uncertain development, Daotong Technology chose to divest its drone business.

After the divestiture of the drone business, its profits also showed a significant increase. The net profits attributable to the parent company in 2016-2018 were RMB 141.1857 million, RMB 207.2842 million and RMB 291.8097 million respectively.

Daotong Technology, which later focused on the auto parts category, also saw a significant increase in performance. From 2018 to 2020, its operating income was 900 million yuan, 1.196 billion yuan and 1.578 billion yuan, respectively, and its net profit attributable to shareholders of listed companies was 336 million yuan, 327 million yuan and 433 million yuan, respectively .

As for the main reasons for the company's growth, Daotong Technology gave that it maintained a high level of R&D investment in the direction of intelligence and digitalization. Its product competitiveness has been continuously strengthened, and its product recognition and brand image have continued to improve in the automotive aftermarket. The company is in a period of rapid growth and its demand for funds continues to increase.

Continue to invest heavily in R&D to build core competitive barriers

The reason why Daotong Technology has achieved such excellent results is inseparable from its continued high R&D investment, which has also built the core competitiveness of technology for Daotong Technology. According to the data from the first three quarters of 2021, the company's R&D investment has reached 363 million yuan, an increase of 92.06% compared with the same period last year, accounting for 22.21% of its total operating income. Its R&D personnel have reached 1,004 in the first half of 2021, accounting for 45.43% of the company's total number of employees.

Daotong Technology started out with comprehensive automotive diagnostic products. Its vehicle diagnostic information database and core algorithm library are the core competitive barriers of the company's comprehensive diagnostic products. With strong R&D investment and two core barriers, Daotong Technology's products have covered nearly 200 brands and nearly 10,000 vehicle models, including more than 1,000 new energy vehicle models.

High R&D capabilities have also driven Channel Technology's strong product replacement capabilities, and its flagship product, comprehensive automotive diagnostic products, has been updated to the third generation.

With the foundation of strong R&D capabilities, the company is also strengthening the protection of its patent rights to avoid infringement. According to the data in the first half of 2021, the company's accumulated domestic and foreign patents and software copyrights have reached 1,481, with the highest number of applications being 408 design patents.

The importance of R&D strength to big sellers is self-evident. Well-known cross-border sellers such as Anker have placed R&D at the center of their company's operations. Sellers who want to develop in the cross-border e-commerce industry in the long run also need to plan the company's blueprint further, and R&D strength cannot be ignored.

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