We use P/B for our valuation methodology as P/E is no longer applicable due to Estun's fluctuating earnings. Our TP of Rmb13.8 is based on 6.4x 2025E P/B, similar to its avg. to reflect Estun’s recovery but low ROE and profitibility.

Key upside risks that could cause Estun shares to trade above our target price include: 1) stronger-than-expected industrial robot shipments or market share gain; 2) better-than-expected GPM due to lower raw material costs or alleviated price competition; and 3) favorable FX.