We maintain "Buy", and adjust TP to HK$87.00. UBTECH ROBOTICS’s (the “Company”) recent earnings release has indicated that its product development is on track, with the Walker S robot being upgraded with increased functionality for manufacturing use cases. Therefore, we adjust the Company’s 2025-2027 revenue forecasts for our base case to RMB2,348 mn/ RMB4,585 mn/ RMB11,870 mn, respectively. Our TP represents 16.0x/ 8.2x/ 3.2x 2025-2027 PS ratio and 30.2x 2025 PB ratio.
　　The Company’s humanoid robotics segment has made progress in three key areas: 1) improvements in linear joint technologies; 2) third generation dexterous hands with integrated pressure sensing; and 3) release of ROSA v2, enabling communication capabilities for the algorithm module within the ROS middleware. Currently, in industrial applications, the Walker S1 model can perform highly repetitive tasks, including cargo transport, quality inspection, process material handling, parts assembly and SPS sorting. The Company plans on iterating on top of its existing models for future models. Based on customer feedback, the Walker S2 model is expected to have increased precision and stability, as well as additional functions such as self-replacements of batteries.
　　Additionally, the Company’s other segments made steady progress, with strong performance in the consumer-level robots. In 2024, revenue from education smart robotic products increased to RMB363.4 mn, representing an increase of 4.6% YoY. Revenue from logistics smart robotic products and services increased to RMB321.7 mn, representing a decrease of 17.5% YoY.
　　Revenue from other sector tailored smart robotic products and solutions increased to RMB140.7 mn, representing an increase of 126% YoY. Revenue from consumer level robots increased to RMB477.0 mn, representing an increase of 88.1% YoY.
　　Risk factors: 1) enhanced competition from other domestic competitors; and 2) inability to meet the precision and stability requirements of the downstream customers.