Delivery robots have rapidly spread in family restaurants in Japan. In labor-hungry Japan, if robot performance and costs strike the right balance, the Japanese could transform dramatically. Robot-related stocks are worth keeping an eye on.

The humanoid robot market is projected to grow exponentially, reaching $40 billion by 2035 from $984 million estimated for 2024. Companies like Figure (a U.S.-based robotics company specializing in the development of AI-powered humanoid robots) and 1X (a Norwegian robotics startup, supported by OpenA1) are actively testing humanoid robots in homes while simultaneously raising significant funds (e.g., Figure’s $1.5 billion round with a $40 billion valuation).

Below is the list of the Japanese stocks which can possibly benefit from humanoid revolution (by Toyo Keizai). Among these, I believe Kawada may be a good candidate for a further look, given its discounted valuation despite a decent around 9% ROE.

Harmonic Drive Systems (6324) develops, manufactures, and sells precision gear reducers. It also handles mechatronic products combining various drive mechanisms. HDSI is the market leader in high-end harmonic drives, which are essential in high-spec robots. Each high-spec two-armed humanoid unit needs as many as 44 harmonic drives.

Market cap: Y280.5 Bn
PE 73.74x (current OP weakness due to order decline from Nissan)
PB 3.54x
E ROE: 4.9%

SEC (3741/Systems Engineering Consultants) benefits from rising robot demand through its specialized expertise in robotics system development and real-time control technologies.

SEC’s involvement in AI-powered robotics, including humanoid warehouse operations, aligns with global trends toward automation and reduced manufacturing costs through mass production.

The company secured a contract for the International Space Station’s “Kibo” automated experiment system, focusing on robotic arm control and remote operation technology, showcasing its high-reliability robotics expertise

Market cap: Y22 Bn
PE 17x
PB 2.42x
ROE: 13.8%

CIJ (4826) is a company strong in foundational technologies, system development, and research and development support. The AYUDA series of service robots developed by the company aims to foster coexistence and symbiosis between humans and robots.  40% of sales are from Hitachi and NTT.

Humanoid robots are increasingly taking on roles traditionally held by humans, including guiding visitors at public facilities, patrolling and reporting crimes, and managing hotel receptions with tasks like check-ins, check-outs, and payment processing.

Market cap: Y28.1 Bn
PE 21x
PB 1.67x
ROE: 6.6%

Nabtesco (6268) occupies 60% of the global market share in precision gear reducers for industrial robots. Its RV series precision gear reducers excel in high precision, high rigidity, and more.

The products improve robot mobility and design flexibility, while their compact yet torque-generating technology shows great promise in the humanoid domain.

Market cap: Y248.4Bn
PE 19x
PB 0.91x
ROE: 3.8%

Kawada Technologies (3443) is a major player in steel structures and bridges, as well as comprehensive operations in civil engineering and system construction. It is also focused on advanced fields like robotics. Its subsidiary, Kawada Robotics, has pioneered the commercialization of humanoid robots capable of performing tasks and expanding business operations. Its NEXTAGE robot, developed by Kawada Robotics, is a collaborative humanoid robot designed to work alongside humans in industrial settings. It features dual arms and an integrated vision system, enabling it to perform tasks like assembly, inspection, and packaging

Market cap: Y49 Bn
PE 4.6x
PB 0.55x
ROE: 9.6%

YUSHIN (6482) develops, manufactures, and sells industrial robots and factory automation systems. The company is the world leader in robots for retrieving plastic injection molding products.

Previously, it was a human’s job to retrieve plastic molded products from molds. Due to the dangerous nature of the work, there is now a demand for retrieval robots like those provided by this company.

Market cap: Y21Bn
PE 12x
PB 0.58x
ROE: 5.1%