Initiate with "Buy" and a TP of HK$171.20. We forecast the Company's revenue in 2024-2026 to be RMB1,476 mn, RMB2,113 mn, RMB3,102 mn, respectively. Our TP represents a 45.0x, 31.5x, 21.4x 2024-2026 PSR.
　　The humanoid robotics industry is emerging as a highly promising sector, comparable to the early days of the electric vehicle (EV) industry. It addresses critical labor shortages caused by an aging workforce and declining birth rates, creating substantial demand across various industries. In China, the government has launched supportive policies to accelerate industry growth, highlighted by the “14th Five-Year Plan for Development of Chinese Robotics Industry”. Key technologies that enable this industry are rapidly advancing towards commercial viability.
　　Given the high and rigid demand along with advancing technology, this sector is poised to be one of the fastest-growing industries.
　　UBTech leads the emerging humanoid robot sector, distinguished by comprehensive commercial and technical capabilities. It possesses a full spectrum of core technologies, essential for developing advanced robotic models, and has effectively marketed its products to a wide audience, partly through ties with major firms such as BYD. The Company stands out as a key player in an industry recognized by the government as part of the “New Quality Productive Forces,” ensuring access to significant government support. Such positioning enhances UBTech's prospects for growth and influence within the robotics market.
　　UBTech also leverages its technologies in consumer markets to sustain revenue while its primary industry matures. It has developed various products, including assistance solutions for retirement homes, educational and logistics robots, and smart appliances for pets. The Company’s ability to meet high consumer standards indicates both its immediate financial potential and its long-term viability in the robotics industry. This reflects the strength and adaptability of UBTech’s research and development capabilities, essential for its continued success.
　　Catalysts: 1) Release of new humanoid robotics products demonstrating commercial viability. 2) Improvements in core technologies for the industry.
　　Risks: 1) Intensified competition within the Chinese market as the industry matures. 2) Policy risk preventing technologies developed abroad from disseminating into the Chinese Market.