UOB Kay Hian Private Limited
Date of Report: Tuesday, 2 September 2025

Estun Automation 2Q25 Results: Recovery in Sight as Profitability Set to Improve in Second Half

Executive Summary: Estun Automation Sees Light Ahead Despite Short-Term Headwinds

Estun Automation Co Ltd (002747 CH), a leading manufacturer in the industrial robotics and automation sector, reported its 2Q25 financial results, showing a return to net loss but strong revenue growth and improving demand trends. UOB Kay Hian upgrades its rating to HOLD, raising the target price to Rmb24.00, as management’s focus on high-margin products and robust end-demand signal a brighter outlook for the second half of 2025.

Company Overview

Estun Automation specializes in mechanical equipment, with a focus on metal forming and electro-hydraulic robotic machines. The company’s core business segments include automation parts and industrial robots, serving industries such as automotive, Li-ion batteries, and consumer electronics. Estun is also advancing its presence in Europe and exploring humanoid robotics.

Stock Snapshot

• Share Price: Rmb23.63
• Target Price: Rmb24.00 (Up from Rmb14.50)
• Upside: +1.6%
• Market Cap: Rmb20.5bn (~US\$3.0bn)
• 52-week range: Rmb28.00 – Rmb11.42
• Major Shareholders: NJ Paileisite Tech Co (29.4%), Wu Bo (12.8%)

Q2 2025 Financial Performance Review

• Revenue rose by 12% year-on-year in 2Q25, landing at the upper end of guidance.
• Core net profit swung to a loss of Rmb22m, mainly due to adverse product mix effects.
• Operating expenses ratio dropped 5.6ppt year-on-year and 0.5ppt quarter-on-quarter, showing progress in cost-cutting.
• Gross margin remains weak at 27.0%, just 0.5ppt above the historical low of 2Q24.

Segment Analysis: Automation Parts vs. Industrial Robots

• Core Automation Parts: Sales declined by 11.5% YoY and 0.9% HoH to Rmb456m, underperforming expectations due to reduced capex in the metallurgy sector. Segment margin fell 2.6ppt YoY but improved 0.9ppt HoH to 30.6%.
• Industrial Robots: Delivered a robust 26.5% YoY and 51.7% HoH sales growth, reaching Rmb2,092m—driven by share gains among top-tier clients. However, margins declined 1.1ppt YoY and 2.9ppt HoH to 27.0%, impacted by a larger China mix with inherently lower margins.

Key Financial Metrics and Forecasts

2025-2026 Outlook and Strategic Guidance

• 2025 guidance remains unchanged, forecasting shipment of 35,000 Estun robots (16,420 units shipped in 1H25), revenue of Rmb5.2bn, blended margins above 30%, and net profit exceeding Rmb60m.
• Core automation parts are now expected to be flat for 2025, while Cloos robots, especially Cloos China, are projected to recover strongly in 2H25. Average selling prices (ASPs) are expected to gradually recover through 2025.
• For 2026, management targets revenue of Rmb6.3bn and a net margin of 5% (implying net profit of Rmb315m). UOBKH’s estimates for 2026 remain cautious and below management guidance.

Growth Engines: Industry and Geographic Drivers

• Automotive: Growth driven by import substitution among major clients like Zeekr and BYD.
• Li-ion Batteries: Strong capex from leaders such as BYD and CATL continues to support demand.
• Consumer Electronics: Apple and NVIDIA supply chains provide steady demand momentum.
• Overseas Expansion: European industrial capex recovery is aiding Cloos, and Estun-brand robots have achieved breakthroughs with Tier 1 clients such as Bosch and Schaeffler. Around 1,000 Estun robots are expected to be delivered in Europe in 1H26 for test runs.

Innovation: Humanoid and Wheel-Based Robotics

• Estun continues to develop industrial-grade humanoid robots. Second-generation humanoid models are already deployed for manufacturing tasks, with plans to expand to loading/unloading by end-2025.
• A wheel-based robot with dual dexterous hands was recently launched, targeting earlier mass commercial adoption compared to humanoid models. Development is still at an early stage with no shipment or profit targets set yet.

Earnings Revisions and Valuation

• UOBKH slashed its 2025 net profit estimate by 55.6% to Rmb28m, but slightly raised 2026 and 2027 forecasts to Rmb199m and Rmb209m, respectively.
• Upward revisions reflect higher ASPs and increased shipments from Cloos China, offset by weaker core automation part growth and lower margins.
• Target price is raised to Rmb24.00, based on a 2026F P/E of 104.9x—1 standard deviation above the five-year forward mean. The upgrade to HOLD is underpinned by improving demand and a strategic focus on profitable projects.

Balance Sheet and Cash Flow Highlights

• Net debt to equity remains elevated but is forecast to improve from 178.4% in 2025F to 149.6% by 2027F.
• Operating cash flow is expected to rebound to Rmb377m in 2025F after a negative Rmb74m in 2024.
• Capex will remain heavy, averaging Rmb250m per year through 2027.

Key Takeaways for Investors

• Estun Automation is showing signs of operational recovery, with demand trends and profitability set to improve in 2H25 and beyond.
• Strategic focus on high-margin projects and cost controls are expected to provide earnings leverage as market conditions normalize.
• Robust prospects in automotive, battery, and electronics end-markets, along with overseas expansion, position Estun for future growth.
• Investors should monitor margin trends and execution on profitability improvement, especially given elevated leverage metrics.

Disclaimer

This article is based solely on the research and analysis provided by UOB Kay Hian Private Limited. This is not an investment recommendation; investors should consult their own advisors before making any decisions.