We maintain the investment rating at "Buy" and decrease TP to HK$123.80. Our TP represents 32.0x/ 22.2x/ 15.6x 2024-2026 PS ratio, with a 38.9% upside. Technological developments in humanoid robotics technology have been faster than expected. Therefore, we increase our UBTech Robotics (the “Company”) 2024-2026 shareholders' revenue forecasts to be RMB1,616 mn (+9.5%) / RMB2,331 mn (+10.3%) / RMB3,223 mn (+3.9%), respectively.
　　In 1H2024, the Company achieved significant advancements in both Robotics Technologies and Software AI Technologies. In robotics, it improved the efficiency and precision of robot movements with an updated linear servo actuator, released ROSA v2 middleware for enhanced communication and coordination, introduced specialized vision systems, and refined its gait algorithm. UBTech also integrated visual SLAM AI into its driverless logistics vehicles, achieving L4 technology with safe and stable operation in complex environments. Additionally, the Company advanced machine vision for enhanced object recognition and developed higher-order motion control AI using transformer-based learning, culminating in a general-purpose humanoid robot solution for industrial scenarios.
　　UBTech has begun commercializing the Walker S Series humanoid robot through partnerships with leading NEV manufacturers and companies in the automotive and 3C sectors. UBTech announced collaborations with companies such as Dongfeng Liuzhou Motor, Geely Auto, and Foxconn to develop a humanoid robot application ecosystem and pilot new use cases. The industrial version of Walker S has already been introduced into final assembly training lines of domestic NEV manufacturers, signaling that the physical and mechanical development of the robot is nearly complete. Given that Walker S is currently being trained in real factories, a mass-producible version is expected by mid to late 2025, contingent on the successful development of use cases.
　　Catalyst: Release of a fully functional industrial humanoid robot.
　　Risk factors: Limited development of industrial use cases, regulatory policy risk.