Unitree Starts Shanghai Trading With a Bang. Can Investor Euphoria Last?

Unitree Robotics, the world's largest maker of humanoid robots and the first to list on a Chinese mainland stock exchange, didn't disappoint investors expecting a big pop in its share price on the first day of trading on Wednesday.

The stock soared to a 460 percent close above its offer price on Shanghai's tech-focused STAR Market. That came despite bearish trading in the broader market, with the Shanghai Composite Index losing 2.4 percent and the STAR Market 50 Index tumbling 6.9 percent.

But is Unitree's stellar performance sustainable?

"The exceptionally good performance of Unitree indicated strong investor interest, but at the same time, tech shares, including robotic-related ones, suffered sharp falls today, casting shadows upon the upcoming performance of Unitree" said Zhou Peng, an analyst with China International Capital Corp.

The debut of Unitree came after a heavily oversubscribed IPO that raised 6.1 billion yuan (US$905 million). The 1-in-5525 lottery chance of securing retail shares during the subscription process left huge unmet demand waiting for the start of trading, despite an aggressive price-to-earnings of ratio of 219 times on expectations for future growth.

Founded in 2016, Unitree reported first-half profit of 274 million yuan, turning from a 32-million-yuan loss a year earlier. However, profit excluding one-time items fell 19 percent to 244 million yuan on higher costs of research, development and marketing. Revenue surged 49 percent to 1.2 billion yuan.

Its institutional investor roster includes the National Council for Social Security Fund, DeepSeek, Tencent-linked capital, PetroChina's Kunlun Capital, China Southern Power Grid, China Telecom and Citic Securities-related capital.

Its market debut presents an unusual combination of narratives. On one hand, it is a rare profitable humanoid manufacturer entering an industry that barely exists at commercial scale. On the other hand, the company's future is clouded by headwinds from the US, which has banned the import of some advanced robots to protect its domestic industry. About 13 percent of Unitree's revenue last year came from the US.

But such considerations didn't dent investor enthusiasm on opening day. Unitree's shares surged as high as 629 percent at the open. Retail investors who managed to get one lot of initial shares saw a paper profit of as much as 470,000 yuan. Founder and Chairman Wang Xingxing, 36, who owns roughly 30 percent of the stock, became the richest Chinese person born in the 1990s. By the close, the company was valued 341.7 billion yuan.

Unitree's glow didn't spread to other tech shares. Shares in recent IPO star Changxin Memory Technologies (CXMT), the world's fourth-largest maker of dynamic random-access memory and the largest listed chipmaker in China, shed 2.8 percent. And Zhongji Innolight, the world's largest producer of optical transceivers used in AI data centers, plunged 9.4 percent.