We initiate with a "Buy" rating and a TP of HK$27.09, corresponding to a 2026 EV/Sales ratio of 13.5x. We mainly adopt relative valuation as the primary valuation method, with reference to a peer group consisting of cobot supply chain companies. According to Bloomberg, the peer group of cobot supply chain companies had an EV/Sales ratio of 19.0x for 2026, and a simple average EV/Sales of 17.6x for 2026. We adopt a relatively conservative valuation for DOBOT (the “Company”) to account for the risk of tariffs and sanctions limiting the Company’s exposure to the US market.
　　We forecast the Company's revenue in 2024-2026 to be RMB364 mn/ RMB492 mn/ RMB701 mn, respectively, with YoY growth of 26.9%/ 35.1%/ 42.5%. Domestic revenue in 2024-2026 is forecast to be RMB152 mn/ RMB221 mn/ RMB354 mn, respectively, with YoY growth rate of 30.0%/ 45.1%/ 60.1%. Overseas revenue in 2024-2026 is forecast to be RMB212 mn/ RMB270 mn/ RMB347 mn, respectively, with YoY growth rate of 24.8%/ 27.8%/ 28.2%.
　　Previously the greatest technical barrier to creating a viable collaborative robot product in China was AI software, of which is limited by access to compute. The release of Deepseek decreased our estimates of compute needed by 90%, greatly accelerating the timeline in which we believe the Company would be able to mass market their products. Therefore, the certainty in which the cobot market can grow at the projected rate of 40-50% per year has considerably increased, decreasing the risk of investment and thereby increasing the valuation for the Company.
　　Catalyst for investment: Release of embodied intelligence software updates that can considerably increase the commercial viability of the Company’s products.
Risks: 1) Similar development across other robotics products that are substitutes for the Company’s products. 2) Tariffs on the Company’s products that significantly reduce addressable market.