Summary of the Expert Call on China's Automation Market Industry Overview - **Industry**: Automation in China - **Date of Call**: November 17, 2025 - **Expert**: Mr. Wang Baomin, Senior Partner at MIR (Marketing Intelligence Resource) Key Points Market Outlook - The automation market in China is expected to be stable in 2026, with a forecasted sales decline of -0.3% year-on-year (y-y) in 2025, reaching Rmb285 billion, followed by another -0.3% y-y in 2026 and a growth of +2.0% y-y in 2027 [3][9] - The OEM market is projected to outperform the project market, with growth of +1% y-y in 2026 compared to a decline of -1% y-y for the project market [3] Demand by Downstream Industries - Anticipated strong demand for automation from sectors such as: - New energy - Electronics (smartphones, optical modules, PCB, etc.) - Logistics - Robotics - Precision machinery (liquid cooling parts, humanoid screws, etc.) - Non-ferrous metal mining - Stable demand expected from packaging and plastics, while construction-related industries (building materials, elevators) are expected to remain sluggish [4][9] Price Outlook - With channel inventory normalizing, stable prices are expected in 2026 with reduced downside risk [5][9] Growth Projections for Specific Products - **PLC (Programmable Logic Controllers)**: - Small PLCs: +7.0% y-y in 2025 and +5.8% y-y in 2026 - Midsized/large PLCs: +6.3% y-y in 2025 and +5.2% y-y in 2026 - **Servos**: +7.4% y-y in 2025 and +8.0% y-y in 2026 - **Low-voltage AC drives**: +1.3% y-y in 2025 and +3.0% y-y in 2026 - **Industrial robots**: +11.9% y-y in 2025 and +12.8% y-y in 2026 - **CNC (Computer Numerical Control)**: +3.1% y-y in 2025 and +2.1% y-y in 2026 [11] Competitive Landscape - Domestic brands are gaining market share against foreign competitors, particularly in high-value segments [9][11] - Companies like Inovance, Geekplus, and Han's Laser are preferred within the automation segment [9] Strategic Opportunities - Two key opportunities identified: - Technology security - Energy security - Positive outlook for AI-driven downstream markets [11] Risks - **Upside Risks**: - Stronger-than-expected macroeconomic conditions boosting demand for automation products - Increased sales of ePVs equipped with Inovance's EV control system - Improved profitability in China's manufacturing sector leading to higher capital spending [15][16] - **Downside Risks**: - Failure to develop high-end automation products - Significant gross margin decline due to raw material price hikes - Intensifying competition and potential loss of key clients [19][16] Conclusion The expert call highlighted a stable outlook for China's automation market in 2026, with specific growth opportunities in various sectors and products. However, the market faces challenges from competition and potential economic fluctuations.

Summary of the Conference Call on China Industrials Industry Overview - The report focuses on the automation operations within the Chinese industrial sector, highlighting the strong momentum of domestic players compared to foreign competitors [1][5]. Key Points Sales Performance - In September 2025, four global players (Yaskawa, Panasonic, Delta Electronics, and ABB) experienced a decline in sales of servos and low-voltage AC drives in China, with sales down by -5% and -3% respectively, contrasting with positive growth of +4% and -2% year-on-year in the first eight months of 2025 [2][7]. Domestic Players' Orders - Inovance (300124.SZ) reported a significant increase in automation orders, up over 30% year-on-year in September, compared to 20-30% in August. Key markets driving this growth include batteries, logistics, semiconductors, wind power, construction machinery, and machine tools [3][10]. - Wuxi Xinjie (603416.SS) also saw orders grow by over 20% year-on-year in September, maintaining the same growth rate as August [3]. - Tsugami China (1651.HK) reported a solid order volume growth of 33% year-on-year in September, down from 42% in August [3]. General Equipment Orders - Haitian International (1882.HK) experienced a recovery in orders, with low teens year-on-year growth in September, compared to a low single-digit decline in August. Domestic orders showed strong growth while overseas orders increased by high single digits [4]. - Guomao (603915.SS) also reported similar trends with teens growth in orders [4]. Market Demand Insights - The overall demand in the automation sector remains robust, particularly in logistics, battery production, machine tools, electronics, and semiconductors. The PMI index increased to 49.8 in September from 49.4 in August, indicating a slight improvement in manufacturing activity [10]. Investment Recommendations - The report favors Inovance as a leading automation player due to its market share gains and strong drivers in the electric vehicle (EV) powertrain sector, as well as potential in humanoid robotics [10]. Valuation and Risks - The price target for Inovance is set at RMB 95, based on a 35x P/E ratio for its core business and a 5x P/S ratio for its humanoid business [11]. - Upside risks include stronger-than-expected macroeconomic conditions boosting demand for automation products and higher sales of ePVs equipped with Inovance's EV control systems [12]. - Downside risks involve failure to develop high-end automation products and potential gross margin declines due to rising raw material costs [13]. Conclusion - The Chinese industrial automation sector is showing strong domestic growth, particularly among local players, while foreign competitors are facing challenges. The outlook remains positive, with specific recommendations for investment in leading companies like Inovance.

September 3, 2025 03:22 PM GMT China Industrials | Asia Pacific Automation Operations Tracker – Strong Momentum Sustained Key Takeaways In August, four global players – Yaskawa (6506.T), Panasonic (6752.T), Delta Electronics (2308.TW) and ABB (ABBN.S) – had combined China sales of servos and low-voltage AC drives of +19% and -10%, respectively, according to Market Intelligence Resource (MIR), vs. +3% and -1% y-y in 7M25. Inovance's (300124.SZ) Aug automation orders were up 20-30% y-y vs. +20% y-y in July. V ...