Rokae (Shandong) Robotics Group Co., Ltd. (Rokae Robotics) has submitted a new application to list on the main board of the Hong Kong Stock Exchange under the Chapter 18C framework, attracting significant market attention.
The IPO is notable due to several distinctive attributes of the company. It is reportedly the only domestic Chinese enterprise capable of mass-producing both industrial and collaborative robots simultaneously. Its order book spans over 40 countries and includes major manufacturing clients such as Xiaomi, Valeo, and Zhiyuan Robotics. The company also has backing from the National Manufacturing Transformation and Upgrading Fund.
These factors present a compelling case for investment in this high-profile robotics firm. However, as a company preparing to list via the special通道 for 18C Technology Companies—entities in cutting-edge tech sectors that have not yet achieved large-scale profitability or significant revenue—Rokae Robotics also presents reasons for investor caution. The market's willingness to value such companies depends heavily on the potential premium assigned to their future technology commercialization prospects. Investors focus not just on past sales but also on technological barriers, potential for gross margin improvement, and the viability of a "second growth curve."
Rokae Robotics faces investor hesitation on several of these key dimensions.
The first concern involves research and development expenditure. R&D investment is critical for 18C companies to demonstrate technological strength, and the Hong Kong market has specific requirements for it. However, Rokae's R&D spending has been declining. In 2022, R&D expenses accounted for 44% of revenue, but by 2025, this figure had dropped to 12.6%, falling below the 15% minimum requirement for commercialized companies under the 18C rules. Furthermore, since 2024, the company's marketing expenses have surpassed its R&D spending, indicating a structure that prioritizes sales over development—a potential red flag for a technology-focused firm.
The second reason for hesitation is a gross margin that remains substantially lower than industry peers. While Rokae's gross margin showed positive improvement, rising from 7% in 2022 to 21.9% in 2024, it stagnated at 21.9% in 2025. This level is not considered competitive within the robotics sector. For comparison, DOBOT, often called the "first collaborative robotics stock" in Hong Kong, maintains gross margins consistently above 46%. Estun Automation, a leader in industrial robotics, typically sees gross margins around 30%. Other comparable companies like Huayan Robotics and YouiBot also report gross margins near 35%. This discrepancy suggests lower profitability for similar products, which could limit valuation premiums.
The third area of concern is the performance of its "second growth curve," embodied AI robotics. While Rokae holds a significant global market share with its industrial and collaborative robots, market attention is focused on the prospects of its newer embodied AI business. In the first half of 2025, revenue from this segment was only RMB 400,000, a decline of over 70% year-on-year. Concurrently, the prospectus mentioned orders for over 10,000 embodied AI units, leading to market skepticism regarding production capacity and order fulfillment. For an 18C company, the "second growth curve" is a core source of market premium. Investors are willing to buy into the story of embodied AI, but only if supported by convincing data. Although full-year 2025 revenue for this segment grew to over RMB 47 million, it still constituted just 9% of total revenue. In contrast, listed peers like Ubtech are seeing rapid development in embodied AI, with it even becoming a pillar business. The lack of new updates on the 10,000-unit order has further dampened market confidence in Rokae's future narrative.
Rokae Robotics possesses strengths, but in each key area, competitors appear to hold advantages. Whether Rokae can convince Hong Kong investors will likely depend on when its promising attributes translate into a clear inflection point for profitability on its income statement.