A pioneer enterprise of intelligent service robots and humanoid robots in China. The company was founded in 2012 and is an intelligent service robot and solution supplier in China. It has been deeply involved in full-stack humanoid robot technology for more than 10 years. Its main products cover enterprise-level (education, logistics, other industry customization) and consumer-grade intelligent robots and solutions, and has successively launched products such as the small robot Alpha, the humanoid robot Walker, Walker X, and Walker S (industrial humanoid robot). The company is in the middle of the humanoid robot industry chain. It is one of the few humanoid robot body manufacturing and system integration enterprises in China. The product applications cover a wide range of downstream new energy, 3C electronics, batteries, tires, health care, education and other industries. According to the company's prospectus, as of 2022, the company's revenue scale ranked third in the intelligent service robot and solution industry, and ranked first in the education segment application field, accounting for 2.8% and 22.5% of the market share, respectively.

The scale of revenue has increased steadily, and emphasis is placed on R&D investment. 1) In 2020-2023, the company's revenue increased from 0.74 billion yuan to 1.056 billion yuan, with a CAGR of 12.55%; while net profit increased from -0.707 billion yuan to -1.234 billion yuan, mainly due to the company's various expenses maintaining a high level; in 2020-2023, the company's gross margin decreased from 44.68% to 31.53%.

2024H1 achieved total revenue of 0.523 billion yuan, +100.18% year over year; gross margin was 38.01%, which was a significant improvement over last year; losses narrowed sharply, and net profit - 0.516 billion yuan, a slight decrease over the previous year. 2) In recent years, the company's R&D expenses rate has remained around 50%. As of June 30, 2024, the number of authorized patents has reached 2,450, an increase of more than 12% compared to the end of 2023. In terms of robotics technology, the company iterated on a new generation of industrial humanoid robots and designed a third-generation dexterous hand with pressure monitoring functions; in terms of artificial intelligence technology, the company built a large model containing multiple types of character scenes to fine-tune its own data set, and used a “big model+small model” architecture scheme, which has surpassed the performance of some general large models in the field of humanoid robot industrial scene application and interaction; in terms of fusion technology, the company built a scene understanding map (3D SenceGraph) to achieve this A visual semantic navigation function based on object information or text information, and an imitation learning framework based on the Transformer architecture and diffusion strategy has been developed to achieve generalized dexterous operation.

Humanoid robots have broad prospects, and AI is empowering the development of the industry. The Ministry of Industry and Information Technology issued the “Guiding Opinions on the Innovation and Development of Humanoid Robots”, stating that humanoid robots integrate advanced technologies such as artificial intelligence, high-end manufacturing, and new materials, and are expected to become disruptive products after computers, smartphones, and new energy vehicles; the introduction of large model technology is beneficial to the multi-modal perception and decision-making of humanoid robots, further improving the level of intelligence. Policy support and the development of artificial intelligence technology will empower the humanoid robot industry, accelerate the development and application implementation of all links in the industrial chain, and set off a new wave of future industries. In 2022, domestic and foreign companies such as Tesla, Xiaomi, Yuki, and Fourier launched humanoid robots one after another to stimulate the vitality of the industry; in 2024, Figure released robot demonstrations supported by Open AI to open up a new field of large models+humanoid robots. The company has already reached a cooperation with Baidu Wenxin, which is conducive to leapfrogging the company's humanoid robot intelligence; in addition, based on breakthroughs in key core technologies, the company is the first in the world to reach cooperation with automobile companies such as Dongfeng Liuqi, Geely Automobile, FAW-Hongqi, FAW-Volkswagen Qingdao Branch, Audi FAW FAW, etc., to build a humanoid robot application ecosystem and jointly build a humanoid robot demonstration application to accelerate the cultivation of new types of productivity.

Profit forecasting and valuation. We expect the company's revenue for 2024/2025/2026 to be 1.812/2.468/3.188 billion yuan, and net profit to mother of -0.653/-0.499/-0.2 billion yuan. Considering the company's scarcity and growth potential for the first time, we gave the company an 18-20 times PS in 2024, with a reasonable value range of HK$85.34-94.83 per share, corresponding to a reasonable market value of HK$35.8-39.8 billion (HK$1 = RMB 0.9107; the exchange rate reference date is September 17, 2024), which is an “superior to the market” rating.

Risk warning: The industrialization of humanoid robots fell short of expectations, the company's revenue growth fell short of expectations, the company's expenses fell short of expectations, the company's gross margin fluctuated greatly, and industrial competition intensified.