Engaging in a price war with DJI, the "second-largest" in the agricultural drone industry eyes the Hong Kong stock market | IPO Observation
Author | Zhang Ziyi
Editor | Yuan Silai
"A courier on horseback gallops through the dust, making the imperial concubine smile." Now, the phrase "delivering lychees by drone" has become a popular internet meme during this year's lychee harvest season.
In fact, the agricultural drone industry is quite mature in China. In 2024, the sales volume of agricultural drones in China reached nearly 3 billion yuan, making it the largest single market for agricultural drones worldwide. Taking plant protection drones as an example, by the end of last year, the number of plant protection drones in the country reached 251,000, and the area of pest control operations reached 2.67 billion mu, both increasing by nearly 25% compared with the previous year, ranking first in the world.
"Among China's agricultural technologies that can be showcased on the international stage, plant protection drones are definitely one of them," said Yuan Huizhu, a researcher at the Institute of Plant Protection of the Chinese Academy of Agricultural Sciences.
The landscape of the agricultural plant protection drone industry has been clear for many years. This industry is basically dominated by DJI and XAG.
XAG entered the agricultural drone industry earlier than DJI. Founded in 2012, XAG spent its early years exploring various application scenarios for drones, including aerial photography drones, logistics drones, and power line inspection drones. It even participated in the Antarctic scientific expedition, but its business didn't make much progress.
It wasn't until the founder, Peng Bin, noticed that customers in Xinjiang were buying XAG's drone flight control systems rather than the drones themselves that they decided to focus on plant protection drones.
DJI officially launched its agricultural plant protection drones in 2015 and quickly gained a strong foothold. According to the national agricultural machinery purchase subsidy system, in 2023, a total of 35,631 plant protection drones were subsidized across the country, with DJI accounting for 80.54% and XAG accounting for 15.8%.
Even so, XAG has reached a critical juncture: it is just one step away from an IPO.
At the end of September this year, XAG submitted its prospectus for listing on the Hong Kong Stock Exchange. This is XAG's second attempt to go public. Different from its loss - making state when it aimed for the A - share market three years ago, XAG has achieved profitability in the past two years. In 2024, its net profit reached 70.4 million yuan, and as of June 30, 2025, the net profit was 130 million yuan.
The hollowing - out of rural areas is an established fact. XAG's unmanned solutions clearly have far - reaching significance. However, in China's scattered and complex rural areas, XAG is destined to face a difficult journey.
01 The Pressure to Go Public After Capital Investment
To some extent, investing in agriculture is also investing in the future. When China's agricultural mechanization is still in its early stage, XAG decided to fully commit to the agricultural sector. This was bound to come at a considerable cost.
In 2021, XAG submitted a prospectus to list on the Science and Technology Innovation Board, planning to raise 1.5 billion yuan. Subsequently, affected by the pandemic, it was unable to complete due diligence, respond to regulatory inquiries, and other tasks within the specified time limit, so it applied to suspend the review.
XAG's performance at that time was also unclear. From 2018 to 2020, XAG earned about 1.2 billion yuan but incurred a loss of 220 million yuan, and the total R & D investment was also 210 million yuan.
However, in the primary market, XAG has always attracted much attention. It has completed a total of seven rounds of financing, with investors including well - known funds such as Baidu Capital, SoftBank, and Sinovation Ventures.
After the plan to list on the Science and Technology Innovation Board was put on hold, XAG completed a new round of financing in October 2023. The investors included China Unicom Guangxin Fund, and the old shareholder, Sinovation Ventures, also increased its investment.
The prospectus shows that in the C++ round of financing completed by XAG in October 2023, Lianchuang Guangxin No. 1 subscribed for 1,398,387 yuan of the company's registered capital at a consideration of 25.5 million yuan. Based on this calculation, XAG's valuation is approximately 6.22 billion yuan.
Peng Bin, the founder of XAG, has publicly stated that he still hopes to go public as soon as possible, but the company needs to meet the listing requirements in terms of profitability, operational finesse, and management ability.
XAG has also taken measures to improve its profitability.
Currently, XAG's revenue mainly comes from the sales of agricultural robots, including agricultural drones, agricultural unmanned vehicles, agricultural machinery autopilots, intelligent farm IoT products, and accessories.
The core of XAG's revenue is still agricultural drones, and their proportion in the total revenue has been continuously increasing. In 2022, 2023, 2024, and the first half of 2025, the revenue from agricultural drones was 475 million yuan, 499 million yuan, 935 million yuan, and 663 million yuan respectively, accounting for 78.6%, 81.2%, 87.8%, and 89.0% of the total revenue in the same period.
The sales volume of XAG's agricultural drones has also changed significantly. In 2024, the sales volume of XAG's agricultural drones increased by 107.81% year - on - year, but in the first half of 2025, the growth rate of this business was only 13.67%.
XAG's prospectus (Source/Company)
The average selling price of XAG's agricultural drones has also been decreasing. The prospectus shows that the average selling price of the company's agricultural drones reached 46,000 yuan in 2022, but in the first half of 2025, it was only 37,500 yuan.
Peng Bin explained at a media conference that even with this pricing strategy, XAG can still achieve high gross margins. The main reason is the overall reduction in the cost of automotive - grade chips and the energy storage industry chain. XAG has benefited from the new energy vehicle industry chain.
However, it cannot be denied that competition is also one of the factors contributing to the price reduction. The selling price of DJI's agricultural drones also remains at around 40,000 yuan. Taking the DJI T70 as an example, during the Spring Festival promotion in 2025, the standard package of the T70 was priced at 36,999 yuan, and the most expensive flagship package was 45,999 yuan.
The prices of XAG's other agricultural products have also been reduced. The prospectus shows that in the first half of 2025, the average selling prices of the company's agricultural unmanned vehicles, agricultural machinery autopilots, and intelligent farm IoT products were 49,447 yuan, 3,024 yuan, and 501 yuan respectively, representing cumulative decreases of 6.7%, 58.09%, and 84.27% compared with their average selling prices in 2022.
With the overall cost reduction, the strategy of trading price for volume has indeed brought about revenue growth for XAG. In 2024, the company's revenue reached 1.065 billion yuan, a year - on - year increase of 73.4%, and the net profit was 70.41 million yuan, marking the first time the company turned a profit.
02 An Unbalanced Battle
The agricultural plant protection industry has never been calm.
Since 2016, DJI and XAG have been engaged in an "arms race", continuously improving the payload and endurance of their drones.
In 2017, the main products of DJI and XAG were 5 - kg drones, which were upgraded to 15 - kg drones in 2018. Since then, the payload has basically increased by 10 kg per year. By 2024, the payload of both companies' drones exceeded 85 kg, and the price dropped from the initial 200,000 yuan to 50,000 yuan.
In the agricultural drone industry, XAG still has the strength to compete with DJI.
One of the important reasons is the high barriers in the B - to - B market. XAG stated in its prospectus that the agricultural robot industry is technology - and capital - intensive, and the development cycle from the laboratory prototype to on - site deployment of products is 3 - 5 years. There is a huge gap between the testing of prototype drones and their large - scale mass production and application.
XAG's past losses are closely related to its continuous investment in R & D. However, this has also enabled XAG to gain a certain degree of loyalty among agricultural customers.
More importantly, the overseas market is the new growth area targeted by both companies. The global arable land area is more than 10 times that of China, indicating strong potential. In 2017, the United States alone had more than 9,000 agricultural aircraft, accounting for 28% of the global total. These aircraft were responsible for 65% of chemical treatment operations, and plant protection equipment completed nearly 60% of pesticide spraying operations.
The overseas market has also become a focus for XAG. The prospectus shows that from 2022 to 2024, XAG's overseas business revenue increased from 146 million yuan to 371 million yuan.
XAG stated in its prospectus that in future product design and R & D, it will fully consider the actual situations of different countries overseas and further launch agricultural robot products that meet local needs. For example, it will launch more cost - effective versions in Southeast Asia and products with larger payloads, longer endurance, and more prominent technical indicators in the Americas to fully tap the potential of the overseas market.
However, the space left by DJI for XAG in the overseas market is limited. According to 36Kr, DJI Agriculture has a market share of over 70% in Japan, South Korea, Southeast Asia, and other regions.
DJI's more than 70% global market share in the consumer - grade drone market has invisibly enhanced its brand reputation in the agricultural sector, which is an advantage that XAG does not have.
This is not a war of equal strength, but in the vast global agricultural market, companies like XAG will surely reap their rewards.