Domestic robot pioneer company, product application scenarios continue to be rich

We have been deeply involved in the robot industry for more than ten years, with deep technology accumulation and leading market position. The company was founded in 2012 and is dedicated to R&D, design, production and sales of intelligent service robots and solutions. The company holds more than 1,800 registered patents for full-stack technology, covering the fields of robotics and artificial intelligence. As of 2022, the company's revenue scale ranked in the top three in China's intelligent service robots and solutions industry, and ranked first in the education sector.

Product application scenarios continue to be rich, and revenue scale is growing steadily. The company has successively commercialized multiple application scenarios: consumption (2016) /education (2017) /logistics (2020) /health (2022). Currently, the education business is the main source of revenue, and education/logistics/consumer business accounted for 51%/26.1%/13.1% of revenue in 2022, respectively. With the abundance of product application scenarios, the company's revenue scale continued to expand: in 2020-2022, the revenue scale was 7.4/8.2 billion yuan, respectively, and +10.4%/23.4% year-on-year in 2021-2022.

Humanoid robots are the culmination of technology in the Industry 4.0 era. Triple catalytic factors brought an inflection point to the development of the industry. As the technical culmination of the Industry 4.0 era, humanoid robots are important carriers for various new technology applications such as electrification, artificial intelligence, and intelligent manufacturing. Because of their similar structure to humans, humanoid robots can theoretically adapt to all human social scenarios. Along with physical intelligence, they gradually become the main theme of the era of strong AI, which is expected to drive the booming development of the humanoid robot industry.

Currently, humanoid robots are still in the early stages of growth. Under the catalysts of major model technology breakthroughs, policy increases, and Tesla's strong entry into the market, they have quickly broken through R&D difficulties and gradually entered the stage of industrialization and implementation. Furthermore, humanoid robots have many similarities with electric vehicles in terms of hardware, software, and architecture, and future development is expected to fully target the development path of the electric vehicle industry.

Driven by R&D, it is expected to gradually open up downstream application scenarios. The best choice is the domestic humanoid robot leader, which insists on driving growth through R&D. In 2020-2022, the company's R&D expenses rate was 57.92%/63.27%/42.48%, respectively. It developed many core technologies such as servo drives, motion control, artificial intelligence, etc., and built a rich product matrix including Goku and Walker series.

Preferential Choice established a joint venture with Tianqi Co., Ltd. and further signed a “Strategic Cooperation Framework Agreement” to actively promote the implementation of humanoid robots in multiple industrial scenarios. In the future, the preferred humanoid robot is expected to take the lead in opening up industrial scenarios in the automotive industry, and further expand to downstream scenarios such as commercial use and home use as demand expands.

Give the company an “increase in holdings” rating

We expect the company to achieve revenue of 15/23/3.7 billion yuan in 2023-2025, +46%/+55%/+64% year-on-year; achieve net profit of -6/4/0.2 billion yuan respectively. As a leading domestic robot company, the company is still in the early stages of growth, so we adopted the PS valuation method. The corresponding PS for 2023-2025 is 23/15/9X, respectively.

Humanoid robots are important carriers for new technology applications such as artificial intelligence, so we selected AI targets such as Shangtang and Cambrian as comparable companies. Their average PS values for 2023-2025 were 32/18/12X, respectively. The company's valuation was slightly lower than the average of comparable companies, and for the first time, we covered it and gave it an “gain” rating.

Risk warning: humanoid robots fall short of expectations, risk of increased market competition, risk of untimely data updates, risk of profit forecasting assumptions falling short of expectations, etc.