Summary of Shenzhen Inovance Technology 3Q25 Earnings Call Company Overview - **Company**: Shenzhen Inovance Technology (300124.SZ) - **Industry**: China Industrials - **Stock Rating**: Overweight - **Price Target**: Rmb95.00 - **Current Price (as of October 23, 2025)**: Rmb79.25 - **Market Capitalization**: Rmb212,129 million Key Financial Highlights - **3Q25 Revenue**: Increased by 21% year-on-year (y-y) to Rmb11.1 billion, aligning with estimates and consensus, driven by: - **Automation Segment**: +27% y-y - **NEV Powertrain Segment**: +15% y-y - Specific revenue growth in automation products: - AC Drives: +13% y-y - General Servo: +26% y-y - PLC: +26% y-y - Industrial Robots: +23% y-y [2][4] - **Gross Profit Margin (GPM)**: Decreased by 1.2 percentage points y-y and 2.1 percentage points quarter-on-quarter (q-q) to 27.5%, below the estimated 30.0%. The decline was primarily due to: - NEV Powertrain GPM fell by 2.9 percentage points y-y to 14.4% [3] - **Net Profit**: Increased by 4% y-y to Rmb1.3 billion, which was 5% below estimates and 9% below consensus. The decline in asset disposal gains (Rmb167 million in 3Q24 vs. nil in 3Q25) impacted results. Recurring net profit grew by 14% y-y to Rmb1.2 billion, in line with estimates [4] Market Outlook and Strategic Focus - **Key Areas to Watch**: - Growth outlook for 2026 by segment - Demand momentum from downstream markets - Price competition and margin outlook - Business updates in humanoids, digitalization, globalization, and new products [8] Valuation Methodology - Price target derived from: - Applying a 35x 2026 estimated P/E for core business, based on historical valuation levels - Applying a 5x 2030 estimated P/S ratio for the humanoids business, consistent with peers [11] Risks - **Upside Risks**: - Stronger-than-expected macroeconomic conditions boosting demand for automation products - Higher-than-expected sales of ePVs equipped with Inovance's EV control system in 2025 [12] - **Downside Risks**: - Inability to develop high-end automation products, leading to declining average selling prices (ASP) for low-end products due to competition - Greater-than-expected GPM decline due to raw material price increases [13] Conclusion Shenzhen Inovance Technology's 3Q25 results reflect solid revenue growth driven by automation and NEV segments, although GPM pressures and net profit performance indicate challenges ahead. The company remains focused on strategic growth areas and faces both upside and downside risks in the evolving market landscape.

Summary of the Conference Call on China Industrials - 3Q25 Preview Industry Overview - The focus is on the **China Industrials** sector, specifically in **Automation, Robotics, and General Industrials** [1][4] - The overall industry view is **In-Line**, indicating expectations for performance to align with market consensus [4][6] Key Insights - **3Q25 Results Expectations**: Most companies are anticipated to report results that are largely in line with expectations, with a positive outlook for the domestic automation market recovery in **4Q25 and 2026** [1][6] - **Growth Drivers**: The growth is attributed to: - Replacement cycles - New capital expenditures in AI - Solid domestic and overseas demand from multiple downstream sectors such as **NEV (New Energy Vehicles)**, **battery**, and **PCB (Printed Circuit Board)** [1][6] - **Future Demand Outlook**: Continued demand momentum is expected into **4Q25**, with most companies likely to meet their annual targets [6] Company-Specific Highlights 1. **Shenzhen Inovance Technology (300124.SZ)**: - Expected **14% year-on-year revenue growth** in 3Q25, up from **9%** in 2Q25 - NEV powertrain business projected to grow **35% year-on-year** [8] - Estimated net profit growth of **11% year-on-year** to approximately **Rmb1.4 billion** [8] 2. **Zhejiang Shuanghuan Driveline Co. Ltd. (002472.SZ)**: - Anticipated NEV gear sales growth to decelerate to the mid-teens from **30%** in 1H25 due to overall NEV sales growth slowing to **8-12%** [8] - Expected net profit of **Rmb320 million**, a **21% year-on-year increase** [8] 3. **Han's Laser (002008.SZ)**: - Projected **20% year-on-year revenue growth**, primarily driven by a **60%** increase in PCB segment revenue [8] - Estimated net profit growth of **35% year-on-year** to around **Rmb270 million** [8] 4. **Hongfa Technology Co Ltd (600885.SS)**: - Forecasted **13% year-on-year growth** in relay products sales, supported by demand in new energy and NEV sectors [8] - Expected net profit of **Rmb509 million**, a **20% year-on-year increase** [8] 5. **Leader Harmonious Drive Systems (688017.SS)**: - Anticipated **35% year-on-year revenue growth** due to increased humanoid orders [8] - Expected net profit of **Rmb25 million**, a **12% year-on-year increase** [8] 6. **Estun Automation Co Ltd (002747.SZ)**: - Projected **12% year-on-year growth** in industrial robot segment sales [9] - Estimated net profit of approximately **Rmb13 million** in 3Q25 [9] 7. **Centre Testing International Group (300012.SZ)**: - Expected **10% year-on-year revenue growth**, driven by demand recovery and a low base effect [13] Market Sentiment and Catalysts - The sentiment around humanoid theme stocks is expected to improve due to several catalysts in **4Q25**, including: - Tesla's Annual General Meeting (AGM) - Unitree IPO progress - New orders in the humanoid sector [6] Conclusion - The **China Industrials** sector is poised for continued growth, driven by strong demand across various segments, particularly in automation and robotics. Companies are expected to meet or exceed their targets, with a positive outlook for the remainder of 2025 and into 2026 [1][6][8]