The document summarizes recent developments in the global robotics industry, including mergers and acquisitions and new product announcements. Some key points: - China offered $5 billion to acquire Kuka, a leading German industrial robotics company that is expanding into service robotics. - Toyota is in talks to acquire Boston Dynamics and Schaft, leaders in bipedal and quadruped robots, and took a stake in Uber which has autonomous vehicle programs. - Consumer electronics companies like Asus and Acer announced new home robotics products, but they are not as capable as products from Amazon or SoftBank. - SK Telecom's social robot Vyo shows potential by breaking the mold of

1. Robotics OVERWEIGHT
Robotics
Robert Cheek
+822-3787-2138
r.cheek@hmcib.com
The global robot revolution is here, and growing
Robotics Monthly
June 17, 2016
Race to dominate the global robotics space
The past month has seen a spate of robotics M&Aactivity around the world. China tipped its hand to its RIoT ambitions
with a USD5bn offer for Germany’s Kuka, one of the world’s leading robotics companies. Kuka has traditionally been a
strong player in the industrial robot space but recently has been aggressively moving into the service robotics domain
due to the expected massive growth of the segment.
Toyota is also reported to be in talks with Google to acquire Boston Dynamics and Schaft—the world’s premier bipedal
and quadruped robotics builders. The Japanese automaker also recently took a sizable stake in Uber, the ridesharing
platform developer from San Francisco. Uber has its own autonomous car and RIoT program so it should be interesting
to see how this alliance plays out. Earlier in the year Toyota scooped up what could best be called a ‘Dream Team’of
some the world’s top names in robotics and artificial intelligence to run its robotics/AI/autonomous vehicle innovation
centers in SiliconValley, Boston, and Detroit.
On the consumer robotics front, several consumer electronics companies have announced robotics initiatives. At
Computex, Taiwanese PC maker Acer unveiled its USD599 Zenbo home robot, which appears to be the company’s
attempt to make a mobile version of Amazon’s Echo. Attached to the top of the body via a metal arm is the robot's face,
a screen with a built-in display that can display information. It also includes a camera, which can take photos and
videos, detect faces and remotely monitor the home through an app. Zenbo wins in the area of mobility but is not even
a close match forAmazon’s Echo in terms of practicality and‘intelligence’.
Asus believes Zenbot’s monitoring capabilities will be useful for senior citizens. The robot also comes with a selection of
children's books and games. Some features, such as controlling connected devices, require developer support. In
addition to mobility, Zenbo listens and responds to verbal commands, works with social media, and has stereo
speakers.
Zenbo is also reminiscent of Softbank's Pepper, a mobile humanoid that can detect their owners' emotions based on
expressions and voice tones. But thosecost USD1,700 and still are not widely available almost two years after they were
announced.
China’s Cowa Robot unveiled a line of smart luggage that uses auto-follow technology to follow the owner. To activate
it, all a traveler has to do is press a button in the handle and walk. The Cowa will then follow the owner by using the
intelligent sensors in the case and a tracker bracelet worn by the passenger.
The robo-luggage utilizes the latest technology to avoid anything in its path and looks for its owner if it gets
separated. It can follow a specific path, and it has a handle so it can be dragged in busy spaces.
It weighs 10lbs and has USB ports and a built in charger for smartphones and tablets.

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기아자동차 (000270)
삼영전자(005680)INDUSTRY NOTE
SK Telecom (017670.KS, BUY) has been making notableadvances in its robotics endeavors as seenin the 5G rescue
robot program and the educational robot Albert. Far more interesting, however, is the Vyo social robot project,
which appears far more promising than other social robots currently on the market and in development. What gives
Vyo more potential, and leads us to believe SKT has a better view of RIoT and robotics, in general, is that it breaks
the ‘traditional’social home robot mold in which a tablet computer is added to a nonthreatening robot body with a
limited amount of freedom. And then the companies do their utmost to ensure that the speech recognition and
conversation algorithms to entertain the general public. The problem with this approach is that it is nothing more
than an overpriced and pointless extension of a smart device.
The major difference with Vyo, however, is that the robot is “a personal assistant serving as a centralized interface
for smart home devices.”Though the idea is not new, what is key is the execution of the idea. And what makes Vyo
different is its approach to HRI (human-robot interaction). The robot is a mix of non-anthropomorphic design and
anthropomorphic expressiveness with a tactile object-based control system. And in our view, Vyo is compelling
evidence that SKTis developing technologies that may help define the future ofhome robotics.
In medical robotics, Korea’s Koh Young Technology (098460.KQ, Not Rated) is slated to file for KFDAapproval for its
‘Brain Surgery Robot System’and has plans to file with the US FDA later in the year. We visited the company and
learned that it recently hired a well-known AI expert from the US to help it with its algorithm endeavors. From what
we gather about the robot, we believe the company has a tremendous opportunity to become a major player in the
neurosurgery spacewith thistechnology.
In the US, the FDA just approved the first medical robot from Auris, a secretive startup from the co-founder of
Intuitive Surgical, the maker of the popular da Vinci robot. Industry observers believe the company may be
preparing a supervised autonomous system soon. We will closely monitor developments and provide our views in
our upcoming in-depth report on medical robotics.
For aerial robotics/drones, we visited Hankuk Carbon (017960.KS, Not Rated) to learn more about its partnership
with IsraelAerospace Industries (IAI), one of the world’s premier military drone makers.
We found that the venture is developing as planned and that Hankuk now has a team in Israel working with IAI.
We believe this partnership with IAI could propel Hankuk into the position of being Korea’s leading military drone
maker in the future.

3. 3
Robotics Robert Cheek +882-3787-2138 / r.cheek@hmcib.com
Korean robotics companies on the move
In the Korean robotics space we think the following names are the most promising investment opportunities:
1) Hankuk Carbon, as the company is making good progress in the venture with IAI in the development of a next-
generation VTOLdrone. The company also dominates some of the other business segments in which it operates and
has ample cash. IR also indicated that management is considering raising the dividend payout ratio.
We believe the partnership with IAI, if successful, will provide Hankuk with a decided technological edge over
Korean Air Lines (003490.KS, Marketperform) and other domestic drone makers in the unmanned aerial vehicle
market.
Japan’s Mitsui, a supplier of materials to Sony, recently entered the drone as a service (DAAS) business recently
acquired a 10% stake in Hankuk. The company will begin supplying carbon fiber to produce lightweight vehicles. At
present the partnership with Mitsui is exclusively for automobiles but the LNG division could benefit if Mitsui wins
shipbuilding orders.
Hankuk has been benefitting from increasing LNG demand since the 2011 Japan earthquake. Korean shipbuilders
now accounts for 80% of the company’s orders. LNG is relatively unaffected by the slumping shipbuilding sector,
however new orders saw a moderate decline. Overall, 2016 will see higher revenues from 2015 and this year’s order
backlog is north of KRW300bn. The company has KRW120bn in net cash and maintains a zero-debt policy and has
interest income. Operating profit and net profit are at similar levels. Glass paper is the company’s second-largest
cash cowafter LNG.Glass paper is mostly used inPVC flooring materials and key clients are LG Hausys, Hana LNC.
2) Hanwha Techwin (012450.KS, Not Rated) for its overall view of the RIoT ecosystem. The company is positioned
to take advantage of being a supplier of military robotics. As a Korean player it has a strategic advantagein thesales
space compared toChinese rivals thanks to security concerns.
3) Yujin Robot (056080.KQ, Not Rated) for the success of GoCart V2 in recent tests at a hospital in Korea. There is
very strong demand for GoCart as silver care facilities and hospitals in the US and EU are pressed to maintain quality
and hold the line on costs while demand for care rises with the aging of the population. The company is now
finalizing safety tests with the robot and plans to commercially launch in 4Q16 in the EU and 1Q17 in the US. GoCart
has tremendous opportunity because of the interest in the silver care space in the US and EU along with the lack of
competition in the markets. There are other companies developing autonomous logistics systems but are lacking in
the areas of sales network and technology.We believeYujin Robot has at least a two-year lead in this business.
4) We think SKT is very interesting due to the strategic partnerships that the company has with robotics
developers around the world. We believe the recent developments with Vyo and the 5G robot program indicate that
the company has a view of the evolving RIoT ecosystem and is poised to become a leader in the service robotics
space.

4. 4
기아자동차 (000270)
삼영전자(005680)INDUSTRY NOTE
<Fig. 1> Two Kuka LWR cobots
Source: Kuka, HMC Investment Securities
<Fig. 2> Kuka KMR Riiwa service robot
Source: Kuka, HMC Investment Securities
<Fig. 3> Kuka industrial robots palletizing milk
Source: Kuka, HMC Investment Securities

5. 5
Robotics Robert Cheek +882-3787-2138 / r.cheek@hmcib.com
<Fig. 4> Cowa Robot robotic luggage
Source: Cowa Robot, HMC Investment Securities
<Fig. 5>Asus Zenbo
Source:Asus, HMC Investment Securities
<Fig. 6>Albert educational robot at an SKT coding class
Source: SKT, HMC Investment Securities

6. 6
기아자동차 (000270)
삼영전자(005680)INDUSTRY NOTE
<Fig. 7> Vyo social robot prototype
SourceVyo, HMC Investment Securities
<Fig. 8> Uber test vehicle
Source: Uber, HMC Investment Securities
<Fig. 9> Schaft’snew bipedal robot
Source: IEEE Spectrum, HMC Investment Securities

7. 7
Robotics Robert Cheek +882-3787-2138 / r.cheek@hmcib.com
<Fig. 10> Next generation of Boston Dynamics robots
Source: Companydata, HMCInvestment Securities
<Fig. 11> Yujin Robot GoCartsV1 andV2
Source:Yujin Robot, HMC Investment Securities
<Fig. 12> Yujin Robot Coca Cola GoCart
Source: Coca Cola, HMC Investment Securities
<Fig. 13>Auris surgical robot
Source:Auris Surgical Robotics, HMC Investment Securities

8. 8
기아자동차 (000270)
삼영전자(005680)INDUSTRY NOTE
<Fig. 14> Service robots for personal/domestic use sales forecast
Source: IFR, HMC Investment & Securities
<Fig. 15> Medical robotics systems market
Source: Global Medical Robotics, HMC Investment & Securities
<Fig. 16>Agricultural robot shipment and revenue forecast
Source:Tractica, HMC Investment &Securities

9. 9
Robotics Robert Cheek +882-3787-2138 / r.cheek@hmcib.com
Compliance note
•The author(s) of this report does(do) not have any interests in the company(ies) covered herein.
• HMC Investment Securities has not disclosed the material contained in this report to any institutional investor or third party prior to its publication.
• HMC Investment Securities has no special interest in the subject company as of the date of recommendation.
•This report accurately reflects the author(s)’s professional views and was written without any undue external influence or interference.
Investment rating
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• OVERWEIGHT: Sector-wide fundamentals and share prices are expected to turn up.
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the date of rating declaration.
• BUY: Excess return of +15%p or more
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Stock ratings distribution (April 1, 2015- March 31, 2016)
Rating Count % of rating category
BUY
MARKETPERFORM
SELL
131
26
1
82.9
16.5
0.6
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