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Investing.com - HSBC has initiated coverage on UBTECH Robotics (HK:9880) with a Hold rating and a price target of HK$124.00, according to a research note released Wednesday.
The Hong Kong-based firm, which launched its first humanoid robot "Walker" in 2018, is projected to ship 750 humanoid robot units in 2025, including 500 industrial robots, 50 service robots, and 200 research robots, according to HSBC’s analysis.
HSBC forecasts UBTECH’s humanoid revenue to grow at a compound annual growth rate (CAGR) of 313% from 2024 to 2027, reaching RMB2.5 billion, which would represent 48% of the company’s fiscal 2027 sales.
The investment bank highlighted client concentration as a risk factor, noting that Miracle Automation, which holds 30% equity in UBTECH’s subsidiary Wuxi Uqi, was the company’s largest customer in 2021, 2023, and 2024, while the top five clients accounted for 34% of sales in 2024.
HSBC also expressed concerns about potential equity dilution, pointing out that UBTECH has conducted five equity placements since its IPO at discounts of 9-20%, diluting equity holders by over 10% combined, with more dilution possible due to continued R&D investments and projected operating cash outflows of RMB1.3-1.5 billion over fiscal years 2025-2027.
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