Estun Earnings: Top Line Beats Expectation but Shares Still Expensive

Estun 002747 recorded a strong fourth-quarter 2022 revenue growth of 86.3% year on year and 50.9% quarter on quarter, beating our expectation, but we note that first-quarter 2023 revenue growth has eased to 22.5% year on year. Nonetheless, the strong latter 2022 performance leads to us raise our 2023 revenue forecast to CNY 5 billion from CNY 4.4 billion, up 29.7% from 2022. We also increase our 2023 operating margin estimate to 8.6% from 6.4%. As a result, we increase our net income estimate to CNY 287 million from CNY 233 million, up 72.9% from 2022. We raise our fair value estimate to CNY 17 from CNY 15.70. The shares closed 34% above our new fair value estimate on April 28. We think the current share price has incorporated aggressive growth and earnings assumptions.

Estun’s domestic industrial robot shipment grew by more than 60% in 2022, far exceeding the 10% industrywide growth. This was underpinned by its exposure to new energy industries such as lithium-ion batteries and photovoltaic manufacturers. We expect the favorable exposure to continue driving Estun’s industrial robot shipment in 2023. We now forecast CNY 3.9 billion revenue for the industrial robot and intelligent manufacturing segment in 2023, up from our prior forecast of CNY 3 billion. Despite projecting strong growth, we are keeping an eye on its rising accounts receivables. The amount jumped by 70% year on year and receivable days rose to 137 in 2022 from 104 in 2021.