Korea’s Leading Robotics Company
The author is an analyst of NH Investment & Securities. He can be reached at kyeongkeun.kang@nhqv.com. -- Ed.
Rainbow Robotics stands as the first in Korea to develop a biped humanoid robot. Having internalized robotics technologies for the manufacturing of core parts in the development process, the firm now appears ready to expand into a range of business arenas. Earnings growth should pick up in earnest from 2023 thanks to capacity expansion and advance into overseas markets.
Korea’s leading robotics company
Spun off from Hubo Lab (a research center of KAIST) in 2011, Rainbow Robotics is the developer of Hubo, Korea’s first biped humanoid robot. Hubo is recognized as one of the world’s top three biped robots, along with Japan’s Asimo and the US’s Atlas. Rainbow Robotics came in first at the DARPA Robotics Challenge (DRC), the first global robotics competition held by the Defense Advanced Research Project Agency (DARPA).
Core technology internalization to broaden business areas and strengthen price competitiveness
Having internalized core robotics technologies through the development of a biped humanoid robot, Rainbow Robotics looks well-positioned to enter a diverse range of businesses and enjoy strong price competitiveness. Starting as a manufacturer of high-precision mount systems used for astronomical observation, the company has now completed the launch of a new collaborative robot series. Going forward, it plans to expand its lineups to include automotive mobile robots, medical robots, and four-legged robots.
At Rainbow Robotics, GPM exceeds 50% thanks to a low COGS-to-sales ratio, which has been made possible by the firm’s in-house development of key parts and software programs for robots. In addition, as the owner of key robot technologies, which account for over 60% of the costs for a collaborative robot, the company can supply its robots at a price 30~50% lower than that for domestic and overseas competitors.
In 1H22, Rainbow Robotics successfully turned to profit, with sales of W6.99bn (+148.2% y-y) and OP of W810mn (TTP y-y; OPM of 11.6%). We expect the firm to enter into a full-fledged earnings growth trajectory moving ahead, as it plans to beef up its collaborative robot production capacity (1,000 units → 3,000 units) next year and enter overseas markets. Of note, entry into overseas markets was previously delayed due to Covid-19. Viewing it as one of the top domestic robot-related stocks, we believe the firm deserves mid/long-term attention.