Unitree Robotics (688836) Equity Research Report - Humanoid Shipment Leadership Is Real, but 103x Adjusted Earnings Has Priced In the Growth

Disclaimer: This report is compiled and analyzed from publicly available information and is intended solely for informational and research purposes. It does not constitute investment advice, a securities recommendation, a trading instruction, or any guarantee of returns. The company's operations, valuation, market price, and consensus expectations discussed herein may change over time. Readers should independently verify the data and make their own decisions.

1. Core Conclusion: The Startup That Sells Robots Best Meets the Least Forgiving IPO Valuation

1. The company is high quality, and the evidence of leadership comes from deliveries, profit, and cash rather than stage demonstrations. In 2025, Unitree shipped 5,511 humanoid robots and recognized sales of 5,215 units, while quadruped robot sales reached 23,037 units. Humanoid revenue was ￥ 868 million, or 51.78% of core-business revenue. The company's 60.44% consolidated gross margin, ￥ 591 million adjusted net profit, and ￥ 670 million operating cash flow were all materially better than the still-loss-making UBTECH, DOBOT, and Leju Robotics. The top five customers accounted for only 12.08% of revenue, indicating low dependence on any large customer and demonstrating standardized, global sales capabilities.
2. The essence of growth is “lower prices x higher volume x a broader product portfolio,” with volume contributing far more than price. In 2025, humanoid robot sales volume increased 1,165.78% year over year, while the average selling price fell from ￥ 260,400 to ￥ 166,400; revenue still grew 708.81%. Quadruped robot sales increased 222.83%, while average selling price declined 6.27% and revenue rose 202.60%. The transmission chain is clear and reproducible: mid-sized products such as G1 lowered the entry barrier -> humanoid sales increased by 4,803 units -> humanoid revenue increased by ￥ 761 million -> humanoid gross profit contribution rose to ￥ 548 million, or 54.40% of core-business gross profit -> group adjusted net margin rose to 34.77%. The low-price strategy expands the ecosystem and market share, but it also means future profit will increasingly depend on scale-driven cost reduction rather than high prices for scarce products.
3. Profit and cash flow were both strong in 2025, but the profit trajectory weakened ahead of revenue in 2026. Based on operating cash flow minus cash paid to acquire long-term assets, simplified free cash flow was approximately ￥ 620 million in 2025, or about 104.9% of adjusted net profit. Cash, financial assets held for trading, and debt investments totaled ￥ 2.584 billion at year-end 2025, with almost no interest-bearing borrowings. The contrary evidence is equally clear: in 1Q26, revenue increased 68.49% year over year, but adjusted net profit fell 52.55% and operating cash flow declined 85.65%. The company estimates that 1H26 revenue will grow 35.62%-45.41%, while adjusted net profit will still fall 6.43%-21.97%. Revenue growth no longer translates automatically into higher profit, which is the most dangerous fundamental change for the current valuation.
4. The offer price pays too much of the industry-leader premium up front. The ￥ 60.993 billion IPO valuation is 4.80x the ￥ 12.7 billion post-money financing valuation from June 2025. It corresponds to 103.25x adjusted net profit, 219.23x attributable net profit, and 35.89x sales based on 2025 figures. The sales multiple is 81.8% above the 19.74x average for UBTECH and DOBOT. Even mechanically annualizing the 1H26 revenue and adjusted profit ranges results in a price-to-sales ratio of approximately 27.0x-29.0x and an adjusted P/E of approximately 107.8x-129.2x. The online subscription's effective oversubscription multiple of approximately 8,288.82x on August 10 and final allocation rate of 0.01809759% prove scarcity and investor enthusiasm, not that future cash flow can support this price.
5. The threshold for reversing the negative-leaning view is high but quantifiable. If full-year 2026 revenue exceeds ￥ 3.0 billion, adjusted net profit exceeds ￥ 800 million, consolidated gross margin remains above 58%, and at least one manufacturing or service application produces a disclosed, repeat bulk order, faster growth could absorb the 103x baseline earnings multiple. If humanoid average selling prices fall by more than another 20%, consolidated gross margin drops below 55%, full-year adjusted net profit fails to grow, or the embodied foundation model remains limited to pilots and demonstrations, the current IPO valuation will move from “an expensive industry leader” to “using mature earnings to pay for a long-dated technology option.”
    

2. Company Overview, Business Mix, and Core Operating Metrics: Quadrupeds Provide the Manufacturing Base, While Humanoids Have Taken Over the Profit Pool

Core Operating Metrics and Changes

3. Fundamental Quality: Cash Flow Leads Peers, but Front-Loaded Spending Is Ending Exceptional Margins

4. Industry and Competitive Landscape: Unitree Wins in the Body and Cerebellum, While the Brain and Real Labor Remain Scarce

5. Key Risks

1. Demand shifts from enthusiasm to real use. If research procurement, entertainment performances, and short-term rentals cool while manufacturing, logistics, inspection, and service customers have yet to generate repeat bulk orders, humanoid sales growth will decline ahead of the industry narrative. Fixed R&D and selling investments would then raise expense ratios, causing slower revenue to flow rapidly into adjusted profit.
2. Price competition outpaces scale-driven cost reduction. Humanoid robot average selling prices already fell 36.10% in 2025, and gross margin declined 6.08 percentage points. If like-for-like prices fall by more than another 20% in 2026 without commensurate declines in materials, chips, and outsourced processing costs, consolidated gross margin could drop below 55%, weakening the high margins on which the IPO valuation depends.
3. Investment in the “brain” fails to create a product. Unitree's proprietary general-purpose embodied foundation model has not yet been used at scale. The R&D expense ratio fell from 31.39% in 2023 to 8.53% in 2025, below the 24.70% average for peers in 2025. If IPO investment only raises spending on compute, personnel, and data collection without improving task success, generalization, and customer repeat purchases, profit will fall first while the platform premium remains unrealized.
4. Cash-flow normalization could exceed the decline in profit. Operating cash flow in 2025 benefited from share-based payment, higher payables, and contract liabilities, then fell 85.65% year over year in 1Q26. If inventory continues rising, supplier payment terms shorten, or customer prepayments decline, simplified free cash flow could fall materially below adjusted profit, further reducing the approximately 1.02% free-cash-flow yield at the IPO valuation.
5. Cross-industry competitors rewrite the cost curve. Tesla, domestic automakers, and consumer-electronics companies have greater capital resources, supply-chain capabilities, and internal factory applications. Once their humanoid robots achieve stable low-volume production and become available to external customers, Unitree could face simultaneous competition for talent, components, pricing, and customer validation, pressuring both market share and gross margin.
6. Intellectual-property, export, and supply-chain constraints. As of January 31, 2026, Unitree held 262 registered patents in China and overseas, including 20 domestic invention patents. The relatively small number of invention patents may make core technology more difficult to protect. The latest U.S. FCC policy does not currently affect certified core models, but if new models cannot obtain certification or exemptions, the 43.65% overseas revenue base would face regional market-access pressure. Price increases for memory and other chips would also raise costs.
7. Governance risk combines with a high valuation. Before the offering, Xingxing Wang directly held 23.82% of shares and, through the special voting-rights structure and employee platforms, controlled a combined 68.78% of voting rights. External shareholders have limited ability to constrain major decisions. The IPO price-to-sales ratio is 81.8% above the listed-peer average. If enthusiasm fades after listing or restricted shares are gradually released, multiple compression could dominate shareholder returns even if the company continues growing.
    

6. Monitoring Checklist

• Official 1H26 results: Revenue should fall within the ￥ 1.052-1.128 billion range, and adjusted net profit should at least approach the ￥ 260 million midpoint. Results below the low end of guidance would directly reinforce the negative-leaning view.
• Humanoid volume and price: Full-year 2026 recognized sales should exceed 8,000 units, while the decline in average selling price should remain within 20%. Insufficient volume growth or faster price declines would indicate weakening price elasticity.
• Gross margin and expense ratios: A consolidated gross margin of at least 58%, an R&D expense ratio rising to approximately 15%, and adjusted net margin of at least 20% would show that Unitree can preserve economics while investing in the “brain.” Gross margin below 55% would weaken the view.
• Cash conversion: Trailing-12-month operating cash flow divided by adjusted net profit should remain above 80%, with simplified free cash flow staying positive. If the ratio remains below 50% for two consecutive reporting periods, the sustainability of 2025 cash flow should be reassessed.
• Industrial repeat purchases and task metrics: Unitree should disclose at least one deployment of 100 or more units in manufacturing, logistics, inspection, or services, along with a repeat order and task-success or productive-work-hours data. Performances and prototype orders alone would not change the valuation conclusion.
• Model commercialization: Movement of the UnifoLM series from open source and pilots into paid deployments, together with disclosure of model-driven feature revenue, customer counts, or repeat-usage data, would weaken the “brain as an option only” view. Continued absence of quantified KPIs would reinforce the negative-leaning conclusion.
• Competitor progress: Monitor whether UBTECH can exceed 2,000 full-size humanoid sales, Deep Robotics' quadruped revenue and net margin, and Tesla Optimus external sales and actual factory deployment. If any competitor closes the loop between cost and applications, Unitree's leadership premium will narrow.
• Growing into the valuation: Without relying on a share-price target, continue comparing market capitalization with trailing revenue, adjusted profit, and free cash flow. If fundamental improvement lowers adjusted P/E below 80x and industrial repeat purchases are established, the negative-leaning view could move to neutral. Otherwise, the high multiple will continue magnifying execution risk.
   

7. Research Sources

• Unitree Robotics Preliminary Prospectus for Its Initial Public Offering and Listing on the STAR Market (2026-07-31) (https://static.cninfo.com.cn/finalpage/2026-07-31/1225449783.PDF)
• Shanghai Stock Exchange: Unitree Robotics STAR Market IPO Project Details (https://www.sse.com.cn/listing/renewal/ipo/index_listing_detail.shtml?auditId=2178)
• Unitree Robotics Special Investment Risk Announcement for Its Initial Public Offering and STAR Market Listing (2026-08-07) (https://static.cninfo.com.cn/finalpage/2026-08-07/1225462415.PDF)
• Shanghai Securities News: Unitree Robotics Online Offering Subscription and Allocation Rate Announcement (2026-08-11) (https://paper.cnstock.com/html/2026-08/11/content_2253738.htm)
• Unitree Robotics Official Website (https://www.unitree.com/cn)
• Unitree Robotics Official GitHub Organization (https://github.com/unitreerobotics)
• Shanghai Stock Exchange: Deep Robotics STAR Market IPO Prospectus Filing Draft (2026-05-18) (https://static.sse.com.cn/stock/disclosure/announcement/c/202605/002190_20260518_G44F.pdf)