Large-scale Order Receipts
The authors are analysts of KB Securities. They can be reached at hyg0619@kbfg.com and hdsung@kbfg.com, respectively. -- Ed.
Initiating coverage with BUY and TP of KRW40,200
We initiate coverage of Yuil Robotics with a BUY rating and target price of KRW40,200. We have derived our target price by applying a target P/E multiple of 55x (average of global robotics companies) to 2023E-2024E average EPS.
Investment highlights
Yuil Robotics is capable of handling turnkey projects thanks to its full lineup of products ranging from industrial robots to automation systems. Because it can engage in multiple projects at once, the company is able to: (1) reduce costs via large-scale feedstock purchases; (2) boost profit margins; (3) manage feedstock inventories; and (4) minimize production time, boosting clients’ confidence in the company’s ability to meet delivery deadlines. Also, amid growing downstream automation demand, Yuil Robotics is in the midst of plans for building a third plant for fueling its foray into the market for larger-sized robots (weighing 100kg or more) and supplying collaborative robots with AI vision. The new plant should add around KRW40.0bn in capacity (total capacity of KRW82.0bn).
Large-scale order intakes to allow for sharp earnings growth in 2023
We see sharp top-line growth and profit margin improvements in 2023 on: (1) revenue from smart factory projects in the order backlog; and (2) large-scale order receipts (in tens of billions of KRW). We forecast 2023E consolidated revenue of KRW55.0bn (+37.5% YoY) and OP of KRW5.5bn (+4,942.7% YoY; 10.0% OPM). The company’s diverse product portfolio (robots, automation systems, software) should lead to receipt of turnkey project orders, allowing for significant earnings growth in 2023-2024.
Risks: Delays in downstream capex
Risks for the company include a decrease in order receipts upon delays in downstream capex and intensified competition due to new entrants.