[Special Stock] Aelux Laying the Foundation for Humanoids... Undervalued Compared to Competitor PSR by 10 Times

Shinhan Investment: "Robot and Drone Stocks with Strong Fundamentals"

Aelux is showing strong performance. As interest in humanoid robots grows, attention to Aelux's robotics division is also increasing. It appears that securities firms' analysis reports predicting growth in the robotics and drone businesses are influencing this trend.

At 9:38 AM on the 10th, Aelux was trading at 13,790 KRW, up 2.53% from the previous trading day.

Seunghwan Choi, a researcher at Shinhan Investment Corp., explained, "The existing cash cows, domestic robotics and education businesses, have solid competitiveness," adding, "They have established a process to complete market research, planning, and production within one year, allowing them to launch products 60% faster than competitors who take 30 months." He continued, "The demand base is structurally increasing," noting, "As of last year, there were 3,000 after-school education demand sites for elementary schools, a sharp increase from 200 in 2019."

He also emphasized, "The overall market penetration rate is about 50%," and "With the mandatory coding education starting this year, both the number of customers and average spending per customer are increasing." He forecasted, "The domestic robotics and education market size is expected to grow by 10% annually," and "Aelux will continue to achieve growth exceeding the market."

The drone sector is also expected to grow rapidly. Researcher Choi stated, "After Donald Trump was elected President of the United States, U.S. drone stocks experienced explosive growth," analyzing, "The stock price increases over the past year were 181% for UMAC and 1189% for RCAT, with the surge occurring since November last year."

He explained, "There are two main reasons behind the rise in drone stocks," adding, "In November last year, the U.S. House of Representatives proposed legislation to counter Chinese Communist Party drones."

He explained that the sale of new drone products from DJI, which holds 60% of the global market, was banned. This is because relying on Chinese drones, which are war weapons, could lead to uncontrollable situations during war and concerns about national security leaks through backdoors. He added, "After Elon Musk was appointed head of the Department of Government Efficiency (DOGE), he criticized the use of expensive manned fighter jets like the F-35 and stated they should be replaced with inexpensive unmanned drones," and "The rise in drone stocks accelerated as Donald Trump Jr., the son of President Trump, joined Unusual Machines as an advisor."

Aelux has a track record of supplying training drones to the U.S. Air Force in 2023. This year, it aims to launch drones for U.S. home security companies. It produces about 20 new products annually and exports to more than 10 countries. The annual drone production capacity is planned to increase more than threefold from 150,000 units last year to 500,000 units this year. Researcher Choi emphasized, "The operating profit margin of drones is around 20%, higher than that of robotics and education," and "Profitability improvement will accompany this growth."

He estimated that this year’s sales will reach 80.5 billion KRW and operating profit 9.2 billion KRW, increases of 29.2% and 36.5% respectively compared to last year. Researcher Choi highlighted, "Both domestic and U.S. peer companies are loss-making," and "Considering the price-to-sales ratio (PSR) is also above 10 times, this indicates highly scarce fundamentals." He added, "The overhang burden is relatively low," and "Most of the shares available for release since November 1 last year are believed to have been resolved."