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Focus on surgical robot-related events in 2H25

2Q25 review: Both revenue and OP miss consensus

For 2Q25, Koh Young Technology (Koh Young) reported below-consensus results, with revenue of W52.1bn (-1% YoY) and operating profit of W2.5bn (-21% YoY; OP margin of 4.8%).

By region, revenue: 1) declined 3% YoY to W8.6bn in Korea (sluggish demand related to automotive electronics and smartphones); 2) fell 28% YoY to W11.4bn in the US (order delays due to tariffs); 3) declined 29% YoY to W5.3bn in Europe (continued investment slowdown); 4) grew 21% YoY to W13.3bn in China (solid demand related to automotive electronics); 5) surged 162% YoY to W1.8bn in Japan; and 6) grew 37% YoY to W11.7bn elsewhere in Asia (increased investments in India).

By customer segment, revenue: 1) fell 25% YoY to W14.6bn for auto (weaker investments in the Americas/Europe); 2) grew 4% YoY to W7.7bn for smart products (expanded investments in India); 3) grew 32% YoY to W13.1bn for servers (higher sales in Southeast Asia); 4) rose 5% YoY to W15.2bn for IoT (increased demand for 3D AOI); and 5) grew 5% YoY to W1.4bn for other segments.

By product, revenue: 1) fell 6% YoY to W19.3bn for SPI (weaker investments in the Americas/Europe); 2) grew 11% YoY to W26.3bn for AOI (demand growth in China and India); and 3) fell 23% YoY to W6.5bn for other products (-55% YoY for MOI).

Maintain Buy and TP of W20,800

We attribute the weaker-than-expected results to sluggish automotive electronics-related demand amid tariff uncertainty. However, we believe demand was merely deferred (with a recovery likely in 3Q25). For 2025, we look for revenue of W224.8bn (+11% YoY) and adjusted EBITDA of W36.8bn (+57% YoY; adjusted EBITDA margin of 16.4%). The stock is trading at a 12-month forward EV/EBITDA of 21x, a discount to global peers (22x) and its three-year average (26x).

Much of the optimism surrounding the firm’s stereotactic brain surgery robot (as well as the scalability of its sensing and robotics technologies) appears to have been priced in. To date, the robot has been used in around 700 surgeries in Korea. An additional unit was installed at Severance Hospital in July, and adoption by other domestic hospitals has been confirmed for 3Q25, which will bring the total number of installed units to 12.

Overseas, Koh Young shipped its first surgical robot to the US in July (with the aim of selling 100 units in the US over the next three years) and expects to secure Japan PMDA approval in October. It also plans to apply for regulatory approval in key Southeast Asian markets in 3Q25 and in China by year-end. With competition in the stereotactic surgical robot market just beginning to heat up, we believe a long-term view is warranted.