"Is "Innovation" the opportunity for DOBOT (02432) to rebound?"

As the first stock of Siasun Robot & Automation in the Hong Kong stock market and the third specialized technology company listed under the 18C rules of the Hong Kong stock market, DOBOT (02432) debuted on the Hong Kong stock market on December 23 last year. In the first 4 trading days after listing, the company's stock price rose by up to 38.56% from the issue price, causing widespread attention in the industry and the market. However, due to the recent effect of the Chinese New Year holiday on the A-share market, there has been a noticeable trend of profit-taking in both the A-share and Hong Kong markets. This is reflected in the Shanghai Composite Index falling below 3200 points again and the Hang Seng Index opening the year with a cumulative decline of 3.83%. Under the overall downward trend of the market, DOBOT's stock price has experienced some fluctuations, with the company's stock price dropping to a low of 18.60 Hong Kong dollars in the first 3 trading days of 2025, falling below the issue price and erasing the gains since listing. Due to the generally low market sentiments before the holiday, investors' attention has naturally shifted to the post-holiday market catalysts for DOBOT. Post-holiday Hong Kong Stock Connect funds are expected to take over It is understood that the issue of liquidity pressure in the Hong Kong stock market has been a long-standing problem, especially for small-cap companies facing long-term liquidity shortages. Once a company fails to be included in the Stock Connect or is removed from the Stock Connect list, losing the support of southbound funds, its liquidity may come under pressure. Therefore, joining the Stock Connect is crucial for Hong Kong-listed companies. According to an announcement by the Hang Seng Index Company on August 26 last year, the calculation method for the 12-month average market value used for index reviews and the handling of long-term trading halts will be optimized to use the daily (excluding trading halt days) average market value over the past 12 months. The method has changed from using "end-of-month market values" during the review period to "daily market values," meaning that the review period has been extended from 12 to at least 252 days and listed companies can no longer use capital operation methods like "end-of-month markup" to gain a shortcut to inclusion in the index or Stock Connect, making the conditions for inclusion more stringent. However, for DOBOT, as a new listed company on December 23, it benefits from facing only 5 trading days in the second review period of 2024 compared to the advantage of previously listed companies. Statistics show that by December 31 last year, the market value threshold for inclusion in the Hang Seng Composite Index and the Stock Connect was approximately 5.976 billion Hong Kong dollars. The daily aveThe Ova series of six-axis collaborative robots by Siasun Robot&Automation currently has a total of 22 models. During the reporting period, the revenue and revenue proportion from this type of product has increased significantly, reaching 25.957 million yuan, 105 million yuan, and 134 million yuan, respectively. The revenue proportion has also increased from 14.9% in 2021 to 46.8% in 2023, becoming the company's main source of revenue.On the other hand, the company stated in its prospectus that, as the company is still in the relatively early stages of commercialization, it expects to continue investing a significant amount of resources in sales and marketing activities to enhance penetration and increase market awareness. During the reporting period, the company's research and development expenses were 46.87 million yuan, 52.05 million yuan, and 70.52 million yuan, accounting for 26.9%, 21.6%, and 24.6% of total revenue for the same year, respectively. At the same time, the company's sales and distribution expenses were 63.63 million yuan, 89.27 million yuan, and 127 million yuan, accounting for 36.5%, 37.0%, and 44.4% of total revenue for the same year, respectively. This directly led to the company's accumulated losses of nearly 200 million yuan over the three-year reporting period. It is not difficult to see that, as DOBOT has not yet achieved profitability, being in the volatile technology sector can easily lead to fluctuations in stock prices. In this context, the subsequent inflow of funds from the Hong Kong Stock Connect program may become one of the key factors in stabilizing the company's valuation. It was observed that on January 8th, the A-share Shanghai Composite Index fell below 3200 points, dropping more than 50 points at one point, but rebounded strongly around 2 pm that day. The Siasun Robot & Automation concept was an important support for the A-share market's reversal in the afternoon. On that day, A-share Siasun Robot & Automation related stocks rose across the board. Individual stocks, such as Efort Intelligent Equipment Co., Ltd., briefly hit the daily limit up, while stocks like DINGS and SanFeng Intelligent Equipment Group saw gains of over 10%, and stocks like Suzhou MedicalSystem Techology, Keli Sensing Technology, Shenzhen Zhaowei Machinery & Electronics, and Nanjing Chemical Fibre hit the daily limit up. The significant rise in the A-share Siasun Robot & Automation sector was mainly influenced by policy factors. It was noted that on the evening of January 7th, the "Opinions on Deepening the Reform and Development of Elderly Care Services" was released, proposing to study the establishment of major national science and technology projects related to elderly care services, with a focus on promoting the research and application of technologies such as humanoid robots, brain-computer interfaces, and artificial intelligence. From the perspective of industry development, companies entering the field of humanoid robots and cooperating with Siasun Robot & Automation enterprises not only have inherent advantages in core components, sensor technology, artificial intelligence algorithms, and more, but also have deep-rooted application scenarios and more data. In the current hot trend of Siasun Robot & Automation concepts in China, this may be one of the reasons why DOBOT, as the first Hong Kong Stock Connect-listed company in collaboration with Siasun Robot & Automation, is likely to be favored by southbound funds after being included in the Hong Kong Stock Connect program.