We initiate coverage of RoboSense Technology ("RoboSense" or the "Company”) with a "Buy" investment rating and a TP of HK$53.54. We adopt relative valuation using EV/Salse multiples valuing the ADAS and robotics segments separately. We assign an EV/Sales multiple of 3.0x for the ADAS segment in comparison to other LiDAR companies, and an EV/Sales multiple of 15.0x for the robotics segment as is common for the robotics supply chain.
　　We forecast that the Company's revenue in 2024-2026 will be RMB1,519 mn/ RMB3,264 mn/ RMB5,259 mn, respectively, with YoY growth rate of 36%/ 115%/ 61%. We forecast ADAS revenue in 2024-2026 to be RMB1,224 mn/ RMB2,408 mn/ RMB3,130 mn, respectively, with YoY growth rate of 57.5%/ 96.8%/ 30.0%. We forecast robotics revenue in 2024-2026 to be RMB195 mn/ RMB747 mn/ RMB2,016 mn, respectively, with YoY growth rate of 4.6%/ 283%/ 170%. Adjusted net profit in 2024-2026 will be RMB367 mn/ RMB259 mn/ RMB310 mn, respectively, with YoY growth rate of -19.9%/ -28.3%/ 4.3%.
　　We expect revenue for the Company’s robotics segment to triple in 2025, bringing the robotics revenue to roughly 30% of total revenue, therefore convincing the market to adopt a higher robotics segment valuation. Therefore, we expect that valuation will change to the higher valuation of 10x-15x EV/Sales that is currently being placed on Chinese robotics component manufacturers listed on the Hong Kong and A-Share markets. Currently, we estimate that roughly 20,000 humanoid robots will be delivered in China over the course of 2025. Tesla is very likely to incorporate LiDAR applications in its humanoid robot designs. Existing designs for humanoid robots are expected to have between 4-8 LiDAR sensors at slightly lower ASPs. RoboSense currently makes LiDAR sensors for leading robotics company Unitree and has an established reputation among robotics companies, making it very likely that it would be among the first to secure contracts among humanoid robotics manufactures in China.
　　Catalysts: Earnings guidance for 2025 that reflects the fast growth pace of the robotics revenue expected for 2025/2026 along with design updates of humanoid robots incorporating LiDAR into their designs.
　　Risks: 1) Designs for humanoid robotics incorporating fewer LiDAR sensors than expected; 2) ASP of robotics products declining faster than expected.