Hello, I am MC Kim Ji-hoon. Today, we have a special guest. Recently, it’s unfortunate that people’s interest has decreased significantly. We can say that robots are representative of structural growth stocks, and I believe that in all manufacturing sectors, including secondary batteries and semiconductors, they are essential and will truly experience explosive growth in the future. I think we shouldn't lose interest in robots just because their stock prices are currently a bit sluggish. So today, we have Researcher Yang Seung-won with us to share various insights related to investments, not only in robotics but also in defense and aerospace. Welcome, Researcher. Could you please give us a brief self-introduction? Yes, hello. I am an analyst at Eugene Investment & Securities Research Center, responsible for machinery, transportation, and the robotics industry. Today, I will primarily focus on robotics.

The sectors we are looking at include robotics, defense, and transportation, among others. So, if you have any questions today, please feel free to ask, and I will do my best to provide thorough answers. The interest rate cuts began in September, and naturally, with a decrease in interest rates, there will be a reduction in financing costs. This suggests that growth stocks, particularly in robotics and other structural growth areas, are likely to be highlighted more than defensive stocks. I'm curious about your thoughts on this. Honestly, I have a lot of concerns as well. Theoretically, with interest rate cuts, the discount rate will decrease, and as you mentioned, financing costs will go down, which could lead to increased investment by companies. From this perspective, growth stocks may deserve more attention. This is quite a traditional viewpoint.

I think it's a theoretical discussion, and while I believe that to be true, I also think we are in a somewhat different phase now. Rather than simply categorizing stocks as growth stocks, I believe it's time to draw a bigger picture. There are various aspects we can consider, but currently, the main topic in the stock market is identifying the companies that will survive and continue to grow in the future. Many people are looking at this perspective. To find those companies, I think we should focus on three main areas: first, geopolitics; second, energy transition and environmental sustainability; and third, technological advancements like AI. We should look at these three key areas rather than just categorizing them as tech stocks or growth stocks.

I think that rather than looking at it in a segmented way, it would be more helpful to grasp the overall flow in a broader context for medium- to long-term investment returns. In the first half of the year, the KOSPI index significantly outperformed the KOSDAQ index. However, in the second half, although the issue of the capital gains tax still remains, if the capital gains tax is postponed or abolished, it seems that the KOSDAQ will see stronger performance in its leading sectors, such as pharmaceuticals and biotechnology, as well as secondary batteries, which are representative growth stocks. What is your outlook for the KOSDAQ's performance in the second half? To be honest, I don't look at the entire KOSDAQ, but as you mentioned, the sectors that hold a significant weight in the KOSDAQ include pharmaceuticals and biotechnology, secondary batteries, as well as entertainment, and robotics is also heavily represented.

However, all these sectors need to show some rebound for the index to ultimately rise. We think there are still many uncertainties in the second half of the year, so we are taking a conservative view. Robotics stocks are considered one of the representative structural growth stocks. I believe there are important points to consider regarding robotics stocks, and I'm curious about when we might see a strong trigger. This is because companies like Doosan Robotics and Rainbow Robotics are still experiencing a continuous flow of losses. It seems difficult to simply dismiss the investment as challenging due to poor earnings. What are your thoughts? The robotics sector, although not fully developed yet, is indeed a very challenging field for us analysts, especially since earnings estimates are...

There are indeed some difficult aspects, and there are many sectors where it's quite challenging to hastily assess corporate value. This makes it a bit cautious and difficult. However, if we look at past trends, we can see that the market has risen significantly based on momentum. For instance, last year, I often mentioned in various broadcasts or YouTube appearances that Samsung Electronics was investing somewhere, there were large-scale IPOs, or that humanoid AI technologies were advancing. Each time there were these substantial momentum shifts, the stock prices showed a strong upward trend. However, the market now understands that the robotics sector will continue to grow over the next 10 to 20 years. While we recognize the growth potential, there is still a need for tangible results to be demonstrated.

I think there is a growing need for these kinds of things. It seems that many people are looking for them. Although it is still a bit difficult for us to focus on performance, there are companies that are growing at a pace we hope for, even if they are not yet making profits, thanks to their sales growth. There are also companies that possess overwhelming technological capabilities that are unmatched by others, or those that have a unique edge. I believe these types of companies will continue to stand out in the future. However, I want to mention that since the beginning of this year, there has been a significant increase in interest in humanoid robots and AI in the market, but there are not many related investment options in Korea. Of course, there are some, like Rainbow Robotics and others in the robotics sector, but what is currently attracting attention in the market is...

Rainbird Robotics is certainly paying attention, but rather, there is more interest in American companies like Figure AI, as well as Nordic companies like Unx Technology, and American companies such as Tesla and Boston Dynamics. It seems that Korea is becoming somewhat isolated from this trend, but I believe that eventually, the perspective will definitely change. Currently, companies like Tesla and other major players are rapidly planning to commercialize their technologies within the next year or two, and they claim they will be implementing them in factories. However, from my perspective, it still seems far off. I believe we will need considerable additional time to reach the level of technology we desire. Therefore, next year might present more opportunities for Korean companies. In a way, Korea is not focusing on humanoids or AI, but rather...

In a way, industrial robots, collaborative robots, and logistics robots are now being regarded as legacy technologies, but I believe these areas might gain more attention next year. The reason is that we have been focusing on collaborative robots and logistics robots since the year before last, and while the penetration rate of this market has been slower than expected, there are various reasons for this. Interest rates have risen significantly, and companies need to utilize these robots; however, the high investment costs have prevented them from purchasing and using collaborative robots. As we mentioned earlier, interest rates are now falling, so gradually, we might see more adoption of collaborative robots and logistics robots.

I believe that the demand for B2B robots may continue to grow after next year. As a result, the performance of companies that focus on traditional robots could improve, leading to a significant expansion in the market. Rather than solely focusing on humanoids driven by mere expectations, there may be a renewed interest in robots that can be practically used in this market starting next year. While there is certainly interest in humanoid AI, I think there is a possibility of falling into a bit of a chasm. Therefore, I believe that next year could present various opportunities. The reason I mention this is that, at this moment when we are filming today, the hottest keyword is China.

China is now introducing additional economic stimulus measures. With these discussions emerging, it seems that cosmetics from Korea are gaining attention. However, if we look at the global market, robotics stocks are receiving significant attention. The reason is that just last week, leading Japanese robotics companies such as Fanuc and Yaskawa Electric saw their stock prices rise sharply, almost by 10% after the announcement of the economic stimulus measures. This is largely because Japan, and the industrial robotics market in general, heavily relies on the massive Chinese market. There is an expectation that this market will become more active and that performance will improve due to the economic stimulus measures. This anticipation has been reflected in the strong performance of these stocks. Ultimately, what we are seeing now is a focus on humanoid robots, which can sometimes seem unrealistic.

Although there are such appearances chasing after illusions, I think the market is rather focused on the practical increase in demand and how it can be reflected in reality. Therefore, I believe that next year we might see more interest in robots that we can truly use. When looking at industrial, logistics, or collaborative robots, it is natural that Doosan Robotics would attract the most attention. They are doing well, and as far as I know, just three to four months ago, the market share difference with Techman Robot from Taiwan, which was in third place, was only 0.78% excluding the Chinese market. Doosan Robotics is performing remarkably well on a global scale. Additionally, they are excelling in important areas related to robotics, such as heavy lifting.

I understand that you have been emphasizing the importance of Rainbow Robotics despite the current situation. I'm curious about the special reason behind this. It seems you are not just talking about the Samsung momentum. From the perspective of individual investors, the comparison between Doosan Robotics and Rainbow Robotics is particularly interesting, as both are leading stocks. Could you share your thoughts on the differences between the two and your perspective as a researcher? 

Currently, the biggest focus in the market seems to be on these two major stocks: Doosan Robotics and Rainbow Robotics. To put it simply, I think of Doosan Robotics as a company that possesses a significant edge, like a powerful sword. On the other hand, I view Rainbow Robotics as a company capable of doing a wide variety of things. Therefore, I believe both could perform well in the future.

I think we can have enough expectations about this. First of all, the reason we have a positive view on Rainbow Robotics is that there is a very impressive phrase on their website: We touch the Q. Ultimately, it indicates that they have the core technology. They have experience developing the first-generation humanoid robot called Hubo, where they internalized and developed everything from the software to the components and algorithms involved. Based on that experience, they continue to work on humanoid robots, but they also aimed to quickly commercialize something, so they first entered the collaborative robot market. However, they are not only focusing on collaborative robots.

Since then, you have continued to show us something new. At the beginning of this year, there was the RBY1, a dual-arm robot. These days, the humanoid market is quite hot, and I understand that it took only three months to develop that robot. Recently, through various press conferences and events, you unveiled a logistics robot. Last year, you introduced a serving robot, and you are naturally expanding the range of collaborative robots, increasing the length of the arms and diversifying your offerings. In a way, you have a remarkably diverse portfolio of robots. I have a positive outlook, thinking that by laying all this groundwork, there is a possibility that something will take off and succeed.

Of course, Samsung Electronics invested in this last year, and there is a growing sense of collaboration and expectation between the two companies, which I believe can be viewed positively. Doosan Robotics, as I mentioned, is a company that has an edge; it is performing very well in the collaborative robot market. This company has consistently ranked between third and fifth globally. In fact, before collaborative robots, there were traditional industrial robots developed by companies like Yaskawa and others in the chemical sector. You could see this as an evolution of those earlier robots. Looking back at the traditional industrial robot market, the companies that established themselves first are still doing quite well. Ultimately, we cannot ignore the advantages of being a first mover in the market.

In a way, Doosan Robotics has opened up the high payload area first and has been continuously developing and applying new applications in logistics, which has significantly built its recognition in the market. Based on this, we can expect additional market penetration. With the powerful weapon of collaborative robots, there is a sense of optimism for continued growth. On the other hand, when considering the overall technological capabilities related to robotics, Rainbow Robotics has a slight technological advantage over Doosan Robotics. This is evident in the development of Hubo, which is Korea's first humanoid robot, indicating that Rainbow Robotics possesses more advanced technology than Doosan Robotics.

Can we consider it to be somewhat superior? I say this cautiously, but I believe there is no other way. To put it simply, collaborative robots are like arms, right? They are arms, but Rainbow Robotics also incorporates legs, so we can conclude that we have at least additional technological capabilities. I think we can make that judgment. Earlier, you briefly mentioned humanoid robots, and various issues related to humanoid robots continue to arise. It seems that there are no specific beneficiaries in Korea, but I am curious if there are any domestic companies related to humanoid robots that you think are worth studying. Alternatively, you briefly mentioned Boston Dynamics and Tesla earlier; do you think it is more common to invest directly in these overseas companies?

Studying companies related to overseas markets can be challenging. So, how should we approach these companies? First, if we ask whether there are any domestic stocks available, the answer is yes, there are. For example, Rainbow Robotics is certainly involved in humanoid robotics, which is worth paying attention to. However, I would like to shift the perspective a bit and talk more about the components involved. Ultimately, there are various types of robots, including humanoids and collaborative robots, but the components that go into them are often common. These include motors, sensors, and semiconductors. One component we always emphasize is the reducer, as it is a mechanical part that is installed alongside the robotic drive components.

So, the motor is combined with the device, and while the speed at which the motor rotates is fast, the force it generates is relatively weak. Therefore, it is essential to include a device that can amplify this force. Of course, these days, there are developments in direct drive technology that can generate sufficient power with just the motor, without the need for a reducer. However, there are still some challenges, so we believe that the use of reducers will continue. In any case, since this is used in driving components, we should expect that the demand will increase as the number of driving components increases. For collaborative robots, we have six driving components, meaning there are six joints. However, a human weight can have a minimum of 20 joints and can go up to 50. So, when we consider the components that go into this robot, specifically those that go into human weight...

The number of reducers used in collaborative robots varies significantly. There is an enormous difference right now, so the market naturally has to grow. Therefore, we can first look at the components in that direction. There are certainly domestic companies that manufacture such reducers, and as I mentioned earlier, Rainbow Robotics is working on humanoids, so from the perspective of which companies supply those parts, we might consider companies like SPG and others. In fact, it's quite an interesting story that at the beginning of the year, SPG was not the number one in the reducer market. It’s true that a Japanese company is in first place; Harmonic Drive is the leader. When this company announced its annual guidance, they shared a very interesting story.

Now, I believe I mentioned that guidance is being provided for an annual revenue of around 40 billion yen, and it was noted that 10% of that will come from sales of reducers for humanoids. When converted to Korean won, that amounts to about 40 billion won. While this scale is not particularly large, considering that only a few humanoids are currently being produced, it's noteworthy that this already represents 10% of the company's revenue. If we think about the possibility that, for example, 1,000 humanoids might be sold this year, 10,000 next year, and 100,000 the year after, such a quantum leap would naturally allow significant contributions to the results from component manufacturers. Therefore, I think we can apply these investment stories to SPG as well.

I can think about it this way. In the case of overseas companies, most of those doing human labor, except for Tesla, are private companies, making it quite difficult to invest in them. So I have been considering this. Some might say that if that’s the case, we should just buy Tesla. I agree with that to some extent. Elon Musk has mentioned that Tesla will commercialize their robots next year and that robots will play a significant role in their future. It's still hard for us to estimate how much the Optimus robot will contribute to Tesla's valuation, but from a medium to long-term perspective, buying Tesla could be one way to approach it. Alternatively, if we consider the domestic perspective, we should also look at which company owns Boston Dynamics.

Since it's Hyundai Motor Group, I think it would be good to approach it from that perspective as well. Ultimately, Boston Dynamics will likely have to go public next year or the year after. This is due to certain conditions that are in place, so they will probably be listed on NASDAQ or somewhere similar. At that time, it might be worth paying attention to the valuation impacts on Hyundai Motor, starting from the second half of this year into next year. The interest in things like robot taxis is growing, and the next focus will likely be on robots, so it might be good to consider that. Rainbird Robotics and Doosan Robotics are currently in the red, but I'm interested in a global company called Intuitive Surgical, which is a tremendous firm. Nevertheless, there is also a domestic company called Curexo that makes medical robots.

This company is not in deficit; it is experiencing significant revenue growth. However, I wonder why you, as a researcher, are not covering this area or if you see no merit in medical robots. Do you believe that medical robots also have growth potential? It seems that there is too much focus on humanoid robots and collaborative robots from companies like Doosan. I think this is a very good idea because it operates in a niche market, which could actually provide more opportunities. In fact, Curexo is rapidly growing in revenue and profit, so this could be seen as an investment point. However, from Curexo's perspective, for the stock price to increase, it ultimately needs to expand into overseas markets. Of course, we have already entered markets like India, and we are also looking to expand into Japan and the United States.

We are now preparing, and ultimately, it is a medical device. Although it is a robot, we still need to obtain certifications related to medical devices. In that sense, it seems somewhat similar to the pharmaceutical and biotech industries. I believe we need to continuously follow up on these events. If we manage to penetrate new markets like Japan and the United States, I think the valuation will increase significantly. However, if we only focus on the domestic market, even though there are many hospitals, it doesn't amount to several million. There are clear limitations. Therefore, we have no choice but to go abroad, and to do that, we need to obtain the necessary certifications. The company has mentioned that they plan to apply for these certifications as early as the end of this year, with a timeline of about one to two years.

I am thinking that it might be good to approach it like that.

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