Initiating Estun With No Moat but Positive Moat Trend Rating; Shares Expensive vs. Our CNY 15.70 FVE

We initiate coverage of Estun Automation, a leading Chinese industrial automation and industrial robot company, with a fair value estimate of CNY 15.70. We assign a no-moat rating as we are not fully convinced of a moat at this stage, given its small installed base. But we assign a positive moat trend as we think both switching costs and intangible assets moat sources are strengthening. The shares closed 45% above our fair value estimate as of Dec. 13. We see more downside risk than upside potential at this price level. To support its current share price level, we think Estun will have to grow revenue at 31% CAGR, well above the 19.3% 2021-26 CAGR we project.