23 September 2025 | 6:21PM HKT Equity Research Shenzhen Inovance Technology Co. (300124.SZ): 2025 CIIF takeaways: Positioning as standardized component platform for humanoid robots We met with Head of Inovance's Humanoid Robotics Business on Sep 23, as part of the group meeting hosted by Inovance at the 2025 China International Industry Fair (CIIF). The event showcased Inovance's emphasis on its humanoid robot component business, positioning itself as a core component and a more standardized module supplier ...

abc 18 September 2025 Global Research Jiangsu Hengli Hydraulic We raise 2025-27E EPS by 8-11% to reflect higher excavator cylinder/pump&valve growth assumption. Hengli's share price is up 30% since June — mainly due to market expectations for an accelerating core business and progress on its screw business. However, we believe continued share gains in the cylinder and pump&valve markets, as well as potential breakthroughs in the ball screw and roller screw businesses are not fully priced in. We maintain Buy ...

Summary of Conference Call on Zhejiang Sanhua Intelligent Controls Company Overview - **Company**: Zhejiang Sanhua Intelligent Controls - **Ticker**: 2050 HK (H-shares), 002050 CH (A-shares) - **Market Capitalization**: Approximately $18.2 billion for A-shares and $17.3 billion for H-shares as of September 11, 2025 [6][49] Core Industry Insights - **Industry**: Robotics, Refrigeration, and Automotive Parts - **Key Growth Drivers**: - Expansion in humanoid robotics - Leadership in refrigeration and EV thermal management - Data center liquid cooling solutions Key Financial Metrics - **Price Target**: - H-shares: HK$41 (implying ~30% upside) [2][8] - A-shares: Rmb43 [2][8] - **Earnings Growth**: Projected 15% EPS CAGR over FY26-27E [2][8] - **Revenue Growth**: - Refrigeration: 20-30% Y/Y - Auto Parts: 20% Y/Y [20][52] Strategic Developments - **Humanoid Robot Business**: - Dedicated robotics unit established in Thailand, with initial orders from global OEMs like Tesla [5][52] - Targeting Rmb500 million in robot revenue by FY27 as a validation of growth potential [5][52] - **Data Center Liquid Cooling**: - Generating approximately Rmb1 billion in revenue in FY24, with significant growth potential [21][52] Operational Highlights - **Manufacturing Capacity**: - Approximately 30% of manufacturing capacity located overseas, aiding in cost management and pricing negotiations [20][22] - **Customer Diversification**: - Largest customer contribution decreased from 35% to 29% Y/Y, indicating improved customer mix and reduced volatility [20][52] Risks and Challenges - **Market Risks**: - Potential slowdown in domestic home appliance and EV sales in 2H25 due to reduced government subsidies and market saturation [23][24] - **Tesla Dependency**: - Revenue exposure to Tesla has decreased, with management downplaying its significance compared to historical levels [24][52] - **Lock-up Period**: - First lock-up period for H-shares expires on December 23, 2025, which may lead to share price volatility [26] Investment Thesis - **Positive Drivers**: - Benefits from China's policy stimulus for large-scale equipment renewal in home appliances and autos [55][60] - Diversified customer portfolio supporting auto parts business growth [55][60] - Strategic positioning in the humanoid robot market [55][60] - **Valuation Methodology**: - Discounted cash flow (DCF) model with a WACC of 8.1% and terminal growth rate of 3.5% [9][61] Conclusion - **Outlook**: - The company is positioned for above-industry growth driven by its humanoid robot business and strong performance in refrigeration and auto parts. Monitoring key operational metrics will be crucial for assessing the investment thesis moving forward [10][52]

Summary of UBTech (9880 HK) Conference Call Company Overview - **Company**: UBTech - **Industry**: Humanoid Robotics - **Market Position**: Largest humanoid robot maker in China with 2,790 patents, and the only listed humanoid robot manufacturer in the country [3][43] Key Insights Advantages - **Scarcity**: UBTech is the only listed humanoid robot maker in China [3][43] - **Client Relationships**: Established connections with major auto OEMs, which are expected to be significant clients for future sales [3][44] - **Product Diversity**: Other products, including smart cat litter boxes, education, and logistics robots, accounted for 97% of FY24 sales, providing cash flow before humanoid mass production [3][46] Humanoid Robot Production - **Launch Timeline**: The first humanoid robot, "Walker," was launched in 2018 [4] - **Projected Shipments**: Estimated humanoid robot shipments of 750 units in 2025, including 500 industrial robots, 50 service robots, and 200 research robots [4][39] - **Revenue Growth**: Humanoid revenue is projected to grow at a CAGR of 313% from 2024 to 2027, reaching RMB2.5 billion by FY27, contributing 48% of total sales [4][32] Client Concentration Risks - **Customer Dependency**: Miracle Automation was UBTech's largest customer, accounting for 30% of equity in a subsidiary and significant sales in 2021-2024. The top five clients represented 71%, 53%, and 34% of sales in 2022, 2023, and 2024, respectively [5][55] - **Order Delays**: Potential delays in orders from EasyHome for 500 "Una" robots due to a sluggish renovation market [5] Financial Performance - **Equity Dilution**: Five equity placements since IPO have diluted equity holders by over 10% [5][50] - **Operating Cash Flow**: Forecasted cash outflow of RMB1.3-1.5 billion over FY25-27, with RMB3 billion cash as of 2025 [5][50] - **Target Price**: Initiated at Hold with a target price of HKD124, reflecting a valuation premium due to its unique market position [6] Financial Projections - **Revenue Forecast**: Expected revenue growth from RMB1.3 billion in 2024 to RMB5.2 billion in 2027, with a CAGR of 58% [37][38] - **Earnings Estimates**: Projected EPS to improve from -2.67 in 2024 to -0.77 in 2027 [9][14] Risks and Concerns - **Slower Humanoid Production**: Earnings could fall below estimates if mass production of humanoid robots is delayed [48] - **Competition in Non-Humanoid Sector**: Strong competition in consumer and logistics robots could impact revenue [49] - **Further Equity Dilution**: Anticipated additional equity placements could dilute existing shareholders further [50] Conclusion - **Investment Outlook**: While UBTech is well-positioned to capture future humanoid opportunities, the pace of commercialization remains uncertain due to limited customer base and potential delays in orders. The company’s diversified product range and established relationships with auto OEMs provide a buffer before humanoid robots can significantly contribute to revenue [6][37][46]

Summary of UBTech Robotics 1H25 Financial Results and Outlook Company Overview - **Company**: UBTech Robotics - **Industry**: Humanoid Robotics - **Stock Code**: 9880.HK - **Current Price**: HK$95.70 (as of August 29, 2025) - **Price Target**: HK$135.00 (by December 2026) [10][11] Key Financial Highlights - **1H25 Revenue**: Rmb621 million, a 28% year-over-year increase from Rmb487 million in 1H24 [7] - **Net Loss**: Reduced by 20% year-over-year to Rmb414 million, achieving 39% of FY25 estimates [4][7] - **Gross Profit Margin (GPM)**: Decreased by 3 percentage points to 35.0% [7] - **Operating Expenses**: Decreased by 17% year-over-year to Rmb632 million [7] - **Net Profit Margin**: Improved by 39 percentage points year-over-year to -66.6% [7] Operational Insights - **Total Shipments in 1H25**: Estimated at over 50 units, with a full-year target raised to over 500 units from an initial target of 300-500 units [4][5] - **Segment Performance**: - **Education Smart Robotics**: Revenue increased by 49% year-over-year to Rmb240 million [8] - **Consumer Robotics and Hardware**: Revenue also increased by 49% year-over-year to Rmb260 million [8] - **Intelligent Service Robotics**: Experienced a decline of 30% year-over-year [8] Strategic Outlook - **Future Shipment Capacity**: UBTech plans to ramp up humanoid robot production capacity to 300 units per month, aiming for a total of over 1,000 units for the remainder of the year [5] - **Long-term Goals**: Management aims to achieve breakeven and positive operating cash flow by FY26/27E [6] - **Market Expansion**: UBTech is broadening its applications beyond automotive OEMs to sectors such as aerospace, semiconductor foundry, and traditional manufacturing [6] Investment Thesis - **Market Position**: UBTech is positioned as a leading player in the humanoid robotics market in China, with strong relationships with major clients like BYD and Foxconn [10] - **Growth Potential**: The company is seen as a strategic early mover in the humanoid robot industry, with significant growth opportunities anticipated from new commercialization avenues [10] Risks and Considerations - **Downside Risks**: Include lower-than-expected trial run progress with auto OEMs, slower industry development, and intensifying market competition [12] Conclusion - **Recommendation**: Maintain an Overweight rating on UBTech, considering it a top pick within the humanoid robot space due to its strong performance and growth potential [10]

Core Viewpoint - Tesla is shifting focus from electric vehicles to autonomous vehicles and the Optimus humanoid robot, which CEO Elon Musk believes will significantly contribute to the company's future growth and valuation [2][3]. Group 1: Optimus and Future Valuation - Musk stated that "80% of Tesla's value will be Optimus," suggesting a potential valuation of around $20 trillion for the robot segment [3]. - The company is targeting to have three prototypes of Optimus available by the end of 2025, with scaled production expected in 2026, aiming for an annual production goal of one million units as quickly as possible [4]. - Musk envisions that Optimus could help Tesla achieve a market capitalization of $25 trillion through advancements in autonomous transport and robotics [5]. Group 2: Market Potential and Analyst Insights - Nvidia CEO Jensen Huang believes that Optimus could be the first humanoid robot to achieve high production volume, indicating a potential multi-trillion-dollar industry [6]. - RBC Capital analyst Tom Narayan has highlighted the future value of Tesla stemming from robotaxis, full self-driving (FSD), and humanoid robots, with a price target of $325 for Tesla stock [7]. - Narayan estimates a base value of $36.6 billion for humanoid robots in the short term, suggesting that the potential upside could be significantly greater if used in home or retail applications [8]. Group 3: Stock Performance - Tesla's stock is currently down 1.4% to $329.30, with a year-to-date decline of 13.2% in 2025, reflecting market volatility [10].

Summary of Zhejiang Sanhua Intelligent Controls Earnings Call Company Overview - **Company**: Zhejiang Sanhua Intelligent Controls - **Industry**: China Autos & Shared Mobility - **Ticker**: 002050.SZ - **Market Cap**: Rmb118,198 million as of August 28, 2025 - **Stock Rating**: Overweight - **Price Target**: Rmb30.00, with a current price of Rmb31.68 Key Financial Results - **2Q25 Earnings**: Grew 39% YoY and 34% QoQ to Rmb1,207 million, in line with preliminary results [1][2] - **2Q Revenue**: Increased 19% YoY to Rmb8.6 billion, driven by China's trade-in stimulus for autos and home appliances, and export rush orders before tariff hikes [2][3] - **Gross Margin**: Rose by 1.4 percentage points YoY and 2.4 percentage points QoQ to 29.3%, attributed to scale benefits [2][3] - **Operating Profit**: Increased by 49% YoY to Rmb1,509 million [3] - **Net Profit**: Increased by 39% YoY to Rmb1,207 million [3] - **Recurring Net Profit**: Increased by 35% YoY to Rmb1,157 million [3] - **EPS**: Increased by 43% YoY to Rmb0.33 [3] Future Outlook - **Key Areas of Focus for 2H25 and 2026**: 1. Sustainability of growth into the second half of 2025 and 2026 2. Progress in the humanoid business 3. Strategies to address US tariff hikes [2] Risks and Opportunities - **Upside Risks**: - Stronger-than-expected sales from Tesla, particularly in China - Higher-than-expected growth in air conditioner sales - New order wins from electric vehicle (EV) customers - Success in the robotic business [9] - **Downside Risks**: - Sales slump in China's property market affecting residential HVAC - Global slowdown in EV demand - Increased competition in the new energy vehicle (NEV) sector - Foreign exchange and export risks amid macroeconomic uncertainty [9] Valuation Methodology - **Valuation Method**: Derived from DCF (Discounted Cash Flow) valuation - **Key Assumptions**: - WACC (Weighted Average Cost of Capital): 12% - Terminal Growth Rate: 3% [7] Additional Insights - **Market Performance**: The company’s stock has a 52-week range of Rmb36.96 to Rmb15.66, indicating volatility [5] - **Analyst Ratings**: The stock is rated as Overweight, suggesting expected performance above the average total return of the industry [5][24] This summary encapsulates the essential financial metrics, future outlook, risks, and valuation methodology for Zhejiang Sanhua Intelligent Controls, providing a comprehensive overview for potential investors.

Emerging Technology - The industry anticipates humanoid robots performing daily tasks [1] - The industry expresses excitement about the future of humanoid robots based on demo videos [1]

Group 1 - The article highlights the importance of weekly announcements from Sunday to Thursday, which include significant stock market updates such as suspensions, increases or decreases in holdings, investment wins, acquisitions, earnings reports, unlocks, and high transfers [1] - Key sectors mentioned include rare earth permanent magnets, humanoid robots, low-altitude economy, and new energy vehicles, with a company already supplying small batches to downstream humanoid robot clients and receiving new export licenses for rare earth-related items [1] - The article also discusses the integration of water conservancy, humanoid robots, and artificial intelligence, noting that a company has successfully sold multiple intelligent operation and maintenance robots for rail transit to clients [1] Group 2 - The company is set to mass-produce 800G optical module products and has won a 1.5 billion yuan contract for a marine energy project, indicating strong growth potential in the optical and marine sectors [1]

Investment Rating - The report maintains a "Buy" rating for Hengli Hydraulic, anticipating a sequential business recovery driven by improving excavator component demand and potential growth in the humanoid robot sector [3][25]. Core Views - The report highlights that Hengli's earnings growth is expected to accelerate to 17% year-over-year (YoY) in 2Q25, up from only 3% YoY in 1Q25, primarily due to stronger demand for excavator components from Chinese OEMs and foreign customers [1][19]. - Revenue growth for Hengli is forecasted at 13% YoY in 2Q25, driven by the excavator component business, which is outpacing the overall growth of China's excavator industry [2][19]. - The report emphasizes that the market has not fully accounted for Hengli's potential to outgrow the Chinese excavator industry due to increased exports and restocking by foreign OEMs [2][19]. Financial Summary - Hengli's estimated net profit for 2Q25 is projected to be Rmb800 million, reflecting a 17% YoY increase and a 30% quarter-over-quarter (QoQ) increase [2][8]. - The target price for Hengli is set at Rmb85.0, based on a price-to-earnings (P/E) ratio of 40x for 2025E, which aligns with its historical average [26][7]. - The expected total return for Hengli's shares is 22.1%, comprising a 21.1% price return and a 1.0% dividend yield [4][7]. Market Position and Strategy - Hengli Hydraulic is recognized as China's leading hydraulic parts supplier, focusing on the research, development, and manufacturing of hydraulic components [24]. - The company is preparing to produce up to 100,000 planetary roller screws for humanoid robot clients by 2026, despite uncertainties in demand from clients [25]. - The report notes that losses from Hengli's Mexico and ball screw & linear guide plants are expected to decrease as production ramps up [25].