Company Reports

Invoance's second-quarter revenue grew 26% year on year. Net profit increased 9%, lagging revenue growth due to foreign exchange headwinds and asset impairments.

Inovance's general automation orders grew about 40% year on year in the second quarter and by more than 30% in July.

Inovance’s revenue grew 15% year on year in the fourth quarter of 2025 and rose 13% in the first quarter of 2026, but recurring net profit diverged: up 18% in the fourth quarter and down 15% in the first quarter.

In over 20 years, Inovance has grown into China’s largest domestic supplier of industrial automation solutions, with products spanning information, control, drive, execution, and sensing layers. It has leading market shares in general-purpose servo systems, variable-frequency drives, small programmable logic controllers, and industry robots. Inovance adopts a technology-driven and sector-focused strategy, offering customized industry solutions. This strategy helped the company establish a strong position in industries like solar photovoltaics, injection molding machines, and lithium-ion batteries.

Inovance guided for preliminary 2025 revenue between CNY 43.0 billion and CNY 46.7 billion and net profit attributable to shareholders in the range of CNY 5.0 billion to CNY 5.4 billion, implying year-on-year growth of 16%-26%.

Inovance's third-quarter revenue increased by 21% year on year, but net profit rose by just 4%.

Inovance's first-half revenue grew 27% year on year, but gross margin contracted by 92 basis points to 30.2%.

In over 20 years, Inovance has grown into China’s largest domestic supplier of industrial automation solutions, with products spanning information, control, drive, execution, and sensing layers. It has leading market shares in general-purpose servo systems, variable-frequency drives, small programmable logic controllers, and industry robots. Inovance adopts a technology-driven and sector-focused strategy, offering customized industry solutions. This strategy helped the company establish a strong position in industries like solar photovoltaics, injection molding machines, and lithium-ion batteries.

We transfer coverage of Inovance, China's leading industrial automation and new energy supplier.

In over 20 years, Inovance has grown into China’s largest domestic supplier of industrial automation solutions, with products spanning information, control, drive, execution, and sensing layers. It has leading market shares in general-purpose servo systems, variable-frequency drives, small programmable logic controllers, and industry robots. Inovance adopts a technology-driven and sector-focused strategy, offering customized industry solutions. This strategy helped the company establish a strong position in industries like solar photovoltaics, injection molding machines, and lithium-ion batteries.

Shenzhen Inovance reported full-year 2024 and first-quarter 2025 results. Revenue for the six months ended March 2025 was CNY 20.6 billion, up 23%, and gross margin was 26.8%, down 445 basis points from the same period last year, as new energy vehicles became the largest segment.

We think Shenzhen Inovance has a narrow moat driven by intangible assets and switching costs. Inovance established a reputation of being a reliable supplier by offering maintenance parts and comprehensive solutions over the lives of elevators. Elevator customers are sticky due to safety requirements, and programs behind elevator systems are tightly integrated with hardware. Inovance now offers a suite of cable, car, cord, and human machine interface products, fortifying its lead over local peers. Inovance has set up a factory in Hungary, which helps it strengthen its relationships with global elevator brands.

We think Shenzhen Inovance has a narrow moat driven by intangible assets and switching costs. Inovance established a reputation of being a reliable supplier by offering maintenance parts and comprehensive solutions over the lives of elevators. Elevator customers are sticky due to safety requirements and programs behind elevator systems are tightly integrated with hardware. Inovance now offers a suite of cable, car, cord and human machine interface products, fortifying its lead over local peers. Inovance is setting up a factory in Hungary, which helps it strengthen its relationships with global elevator brands.

We retain our fair value estimate for Shenzhen Inovance of CNY 56 per share after minor model changes. Inovance's shares appear fairly valued as a result of the recent rebound in expectations of fiscal stimulus, but we are concerned that share prices could overshoot if a CNY 10 trillion (USD 1.4 trillion) fiscal package mentioned in the recent Reuters article materializes. We do not see the fiscal package as a long-term solution to boost Inovance’s profitability in both general automation and electric vehicle components.

We lower our fair value estimate on narrow-moat Shenzhen Inovance to CNY 56 from CNY 60 per share after management hinted at worse full-year 2024 net profit outlook stemming from lower gross margins at general automation and a higher proportion of revenue from electric vehicles, or EVs, which have lower profitability. Thus, we have trimmed our gross margin assumptions, along with nonoperating items. We view Inovance’s shares as undervalued as intensifying competition is priced in, but the market is still too bearish on economic recovery and Inovance’s ability to capture market share in customers of heavy industries.

We think Shenzhen Inovance has a narrow moat driven by intangible assets and switching costs. Inovance established a reputation of being a reliable supplier by offering maintenance parts and comprehensive solutions over the lives of elevators. Elevator customers are sticky due to safety requirements and programs behind elevator systems are tightly integrated with hardware. Inovance now offers a suite of cable, car, cord and human machine interface products, fortifying its lead over local peers. Inovance is setting up a factory in Hungary, which helps it strengthen its relationships with global elevator brands.

We lower our fair value estimate for narrow-moat Shenzhen Inovance to CNY 60 per share from CNY 64 to reflect management’s more conservative 2024 outlook and a worse-than-expected product mix due to a higher proportion of revenue from electric vehicles, which have lower profitability. We have trimmed our gross margin assumptions. We think Inovance is fairly valued as intensifying pricing pressures in the general automation and EV segments could be offset by a budding macroeconomic recovery in China.

We think Shenzhen Inovance has a narrow moat driven by intangible assets and switching costs. Inovance established a reputation of being a reliable supplier by offering maintenance parts and comprehensive solutions over the lives of elevators. Elevator customers are sticky due to safety requirements and programs behind elevator systems are tightly integrated with hardware. Inovance now offers a suite of cable, car, cord and human machine interface products, fortifying its lead over local peers. Inovance is setting up a factory in Hungary, which helps it strengthen its relationships with global elevator brands.

We maintain our CNY 20 fair value estimate for no-moat Han’s Laser and CNY 64 fair value estimate for narrow-moat Shenzhen Inovance, ahead of both firms reporting 2023 results in April. We believe both companies are fairly valued. While Han’s Laser and Inovance benefit from their customers ramping up exports of electric vehicles, lithium batteries, and photovoltaic products, we believe margin pressures in EVs and battery equipment, and an unimpressive outlook in other sectors limit upside to the stocks.

Our fair value estimate for narrow-moat Shenzhen Inovance remains at CNY 64 per share after the company reported third-quarter results that were largely on track with our full-year projections. Inovance is fairly valued in our view, but upside surprises are likely with government stimulus and as more news surfaces about the planned spinoff of the electric vehicle arm.