Initiating Estun With No Moat but Positive Moat Trend Rating; Shares Expensive vs. Our CNY 15.70 FVE

As of end-June 2022, Estun Automation is the largest and only domestic industrial robot manufacturer in the top five in China, a market that is dominated by foreign companies. As a late mover, Estun focuses on emerging industries with big growth potential such as the photovoltaic and lithium-ion battery industries. It is one of the largest industrial robot suppliers to the photovoltaic industry, with a leading market share in photovoltaic typesetting. In addition, its robots have landed in the factories of top lithium-ion battery companies such as BYD and CATL. The photovoltaic industry plays an important role in the world’s carbon neutrality pledge, and the lithium-ion battery industry underpins the global transition to electrical vehicles. We think Estun is well positioned to capture the growth opportunity in these megatrends.