BDStar Navigation is selling stakes of SinsTek to Beijing Shengshunpuhui Photoelectric Technology Co., Ltd. and Beijing Jindiruike Technology Co., Ltd. The two companies will pay 71.64 million yuan (10.66 million U.S. dollars) for 51.43% of SinsTek's share.

BDStar said in an announcement that the deal will be conductive to recover funds and revitalize its assets. The current business of the company won't be significantly affected. 

SinsTek has been at a loss for 2 years. According to BDStar's figures released on August 5th, SinsTek's net profit in 2015 was -2.32 million yuan (-345,094 U.S. dollars) and -19.59 million yuan (-2.91 million U.S. dollars) in 2016.

"It is mainly due to the delay of orders caused by the adjustment of special industry institutions and the split and incorporation of its agent product business into other business units," BDStar explained in a reply to Shenzhen Stock Exchange's inquiry letter about the company's 2015 annual report. SinsTek generated 26.10 million yuan (3.88 million U.S. dollars) in revenue in 2015, down 53.37% from a year earlier. SinsTek only accounts for 2.36% of BDStar's total income, and it doesn't have much effect on the BDStar's overall business.

SinsTek made its first appearance in the announcement of BDStar in March 2011. Back then, BDStar announced that it would use 60.9 million yuan (9.06 million U.S. dollars) raised through its affordable SoC chipset project to acquire 51.34% of SinsTek's stake. It expected the investment to enhance their anti-risk capabilities in the defense sector by leveraging both parties' expertise.

Integration of the satellite navigation technology and inertial navigation technology is still an unchanged trend. However, SinsTek hasn't achieved good performance under such trend. According to BDStar's announcement released on August 5th, SinsTek generated a total net profit of 3.09 million yuan (459,213 U.S. dollars) from 2011 to 2016, with the contribution of a net profit of 1.59 million yuan (235,765 U.S. dollars) for BDStar.

At the beginning of the acquisition, SinsTek and its original shareholders voiced strong confidence to reach performance targets from 2011 to 2013. But SinsTek failed to achieve expected earnings in 2011 due to factory relocation and market reasons. In 2013, the company also failed because of the reduced defense customer purchase.

Email: zhanglingxiao@nbd.com.cn