Lianhe Sowell: A Pioneer in Machine Vision, the Nine-Axis Robot Unlocks New Growth Opportunities

Lianhe Sowell International Group Ltd (NASDAQ: LHSW), a company providing machine vision solutions, officially went public on the Nasdaq stock exchange on April 3, 2025, and publicly issued 2 million shares at a price of $4 per share, raising total gross proceeds of $8 million, becoming the "first Nasdaq-listed stock in the United States" in the field of intelligent industrial robots. The IPO marks a significant step forward in the company’s technological innovation and global expansion strategy. Its core product, the nine-axis robot, is widely regarded as the key to opening the 100 billion-level automation market, heralding a new era of growth with vast potential. $Lianhe Sowell International Group Ltd(LHSW)$

Technology Driving Diversified Application Scenarios

Lianhe Sowell International Group Ltd primarily focuses on the research and application of machine vision technology, with its business spanning industrial manufacturing, artificial intelligence, intelligent transportation, and electronic customs clearance. Its strong R&D capabilities and extensive experience in color vision algorithms enabled the company to start developing nine-axis robots as early as 2021. Targeting the automation market for automotive after-sales repair and maintenance, the company has achieved multiple iterations and updates, demonstrating robust innovation and market insight.

Adopting a modular product development strategy of "technology reuse and scenario expansion", the company has built a product system covering nine core technologies, including image processing, video analysis, facial recognition algorithms, and visual inspection. As of March 2024, the company owned 15 invention patents, 17 utility model patents, four design patents, and 53 software copyrights. Its independently developed dynamic facial recognition algorithm, combining infrared and RGB cameras for "liveness detection", achieves 99% accuracy with a dynamic response time of just 0.5 seconds. Its industrial visual inspection technology has a precision of 0.1mm and can inspect a single product in as little as 0.5 seconds, meeting international first-class technical standards.

The company's machine vision products are categorized into four types based on application scenarios: industrial machine vision, artificial intelligence (facial recognition and AI behavior analysis), intelligent low-voltage systems (building intelligence and intelligent transportation), and electronic customs clearance. Industrial machine vision products can accurately detect various surface defects of workpieces in dense manufacturing or hazardous working environments and are widely used in industries such as 3C electronics, QR codes, and barcodes. In the AI field, facial recognition systems and AI behavior analysis systems utilize advanced algorithms to precisely identify personnel and smartly warn of abnormal behaviors. Intelligent low-voltage products significantly enhance system intelligence in building intelligence and intelligent transportation. Electronic customs clearance products improve clearance efficiency through automatic container number recognition. Derived from industrial machine vision, the nine-axis intelligent spray-painting robot is designed for automotive repair and maintenance. It possesses advantages such as 360-degree coverage, 24/7 operation, and precise paint usage control, making it one of China's most advanced robotic systems in the automotive repair industry. It has gained purchase intentions from many global leading enterprises and is expected to start contributing to revenue in 2025.

Strong Revenue and Profit Growth, Robots Unlock New Growth Opportunities

Based on the financial data, Lianhe Sowell International Group Ltd has shown impressive growth. In the 2022 fiscal year (12 months ending March 31), 2023 fiscal year, and 2024 fiscal year, the company's revenue was $949,300, $13,070,600, and $36,598,700 respectively. This represents a significant increase, with revenue surging by 180% in the 2024 fiscal year. Net profits for the same periods were -$391,100, $1.61 million, and $2.8178 million, showing sustained growth after turning a profit, with a year-on-year increase of 75% in the 2024 fiscal year.

In terms of revenue structure, industrial machine vision and software solutions make up the bulk of the company's income. In the first half of the 2024 fiscal year, industrial machine vision products accounted for 78% of revenue, while software solutions accounted for 22%. However, it is worth noting that although the nine-axis robot has not yet been delivered on a large scale, its technical advantages have already been recognized by the market. It has three core patents: "multi-axis and multi-directional linkage control + dynamic path setting and obstacle avoidance planning + real-time visual detection" (with 23 related patents). The "spray trajectory optimization algorithm based on deep learning" won the "China Patent Excellence Award" from the National Intellectual Property Administration, making it the only spray robot in China to achieve full-process automation of "real-time recognition-planning-monitoring". According to production plans, it will begin contributing to revenue in 2025, with an annual production capacity of 4,000-8,000 units by 2028, a mid-term target of 10,000 units, and a corresponding revenue potential of 4 billion yuan (based on 400,000 yuan per unit), which is 14 times the total revenue of the 2024 fiscal year.

Building a Three-Dimensional Moat of Technology, Customers, and Ecosystem

Lianhe Sowell International Group Ltd emphasizes independent innovation, it applies its machine vision technologies across multiple fields by using the "core technology reuse + cross-scenario expansion" strategy. The company keeps increasing its R&D investment to boost technological levels and stay ahead in the competitive market. For example, its ongoing innovation in image processing enables products to perform more accurately and efficiently in defect detection.

Centered around industry leaders, the company has built a stable customer base with long-term partnerships with many well-known enterprises. These stable customer demands provide a solid safeguard for the company's business development.

In ecosystem building, Lianhe Sowell has established a joint R&D center with Zhejiang University and labs with universities like the University of Science and Technology of China and Harbin Institute of Technology. By leveraging these universities' research strengths, the company continuously introduces cutting-edge technologies to drive its innovation. Compared with peers such as Hikrobot and Jutze, Lianhe Sowell focuses more on industrial robots, creating differentiated competition advantage. It also expands the market through complementary cooperation.

Growth Potential: Nine-Axis Robots Targeting a Billion-Dollar Market

The nine-axis robot is a key product for Lianhe Sowell International Group Ltd following its IPO, currently targeting the automotive after-market and collaborating with numerous leading international and domestic automakers. As China's first industrial robot to achieve "vision-guided inspection + dynamic path planning with obstacle avoidance + precision spraying," it offers significant technological advantages. Equipped with proprietary image recognition algorithms, it enables on-site modeling, uses AI for path planning and obstacle avoidance, and conducts real-time spray quality monitoring. It can make fine adjustments to its movements and air output, supports spray precision at the millimeter level for a master-class finish, and uploads data to the cloud post-spraying for AI-powered optimization of future performance. The robot operates 24/7, tripling productivity while cutting spray material usage by 30%. Its real-time learning and pure open architecture technology adapts to various fields, including automotive, low-altitude aircraft, shipping, home appliances, and furniture.

In terms of market size, China's automotive after-market is valued at over one trillion yuan. In 2023, the country had 34,000 car dealerships, each with multiple spray paint booths. Assuming 30% of dealerships have a need for such robots, China's spray robot market is expected to reach 20,000 units in 2026. The global market features over 450,000 automotive after-market spray paint rooms, representing a potential automation-upgrade market worth 18 billion yuan. Leveraging its Nasdaq listing, Lianhe Sowell plans to enter the European and American automotive repair markets in 2026 to address the shortages of skilled spray technicians and high labor costs.

Moreover, the company aims to expand its spraying solutions to other industrial scenarios like home decor, home appliances, low-altitude aircraft, shipping, and construction machinery, addressing product spraying-related issues and labor-related injuries. This expansion is expected to unlock a market worth hundreds of billions of yuan.

On the production front, the company is set to establish a smart manufacturing base in China. Phase one aims for an annual output of 4,000 units, with a long-term target of 10,000 units. Overseas production bases are planned for 2026 to meet growing domestic and international demand.

Conclusion: High-Growth Target with over 10x Potential and Significant Rarity

Equipped with strong product advantages and expanding production capacity, Lianhe Sowell International Group Ltd demonstrates huge growth potential. If nine-axis robots reach annual sales of 10,000 units at 400,000 yuan each, mid-term revenue could hit 4-billion-yuan, up 14x from the 2024 fiscal year’s 260 million, excluding the natural growth of existing business. If the net profit margin of spray-painting robots is 10%, the long-term annual net profit would reach 400 million yuan. Valued at a price-earnings ratio of 20x, this would add 8 billion yuan to the market value. Against the current 1.3 billion yuan, there’s a 5x growth potential.

In summary, amid global intelligent manufacturing transformation, as the first NASDAQ-listed company in its niche, Lianhe Sowell boasts significant rarity and over 10x growth potential. Long-term attention should be paid to its technology implementation and production capacity release.

# 💰 Stocks to watch today?(20 Aug)

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

Report

Comment2

  • Top
  • Latest
  • keke006
    ·05-14
    Sounds like an exciting investment opportunity
    Reply
    Report
  • Sloth16
    ·05-14

    Great article, would you like to share it?

    Reply
    Report