Shenzhen Inovance Technology Co. (300124.SZ) Pre announced 2Q26 results in line with GSe; key things for upcoming earning call

Equity Research 25 August 2026 | 12:16AM HKT

Shenzhen Inovance Technology Co. (300124.SZ): Pre-announced 2Q26 results in line with GSe; key things for upcoming earning call

Inovance pre-announced 1H26 results, with implied 2Q26 revenue/net profit of Jacqueline Du | Rmb14,532mn/Rmb1,796mn (+26%/+9% yoy), or +4%/-3% vs. GSe, and Goldman Sachs (Asia) L.L.C. improving from +13%/-23% yoy respectively in 1Q26. We regard the overall result as in line especially excluding non-operating items and likely came in better than feared heading into the print, particularly given concerns around margin pressure/earnings drag from Inovance Automotive subsidiary and the conversion of strong IA order momentum into reported revenue.

While the pre-announcement does not disclose segment-level performance, management specifically attributed the stronger revenue growth to recovering demand driven by AI-related investment, exports and increasing localization of core equipment, with industrial automation, intelligent robotics and digital energy all delivering strong growth. In contrast, the yoy decline in net profit was primarily attributed to profitability deterioration of the NEV powertrain business and lower fair value gains from overseas funds amid FX volatility.

Company will host the post-results conference call at 3pm Mon Aug 31 during which we will specifically look into key topics as below:

1) Sustainability of the current factory automation upcycle and dynamics among key AI/non-AI end-markets;

2) Any supply chain constraints or whether the company has better flexibility to accelerate market share gain amid some peer companies’ supply chain tightness;

3) Latest update on magnitude of cost inflation and accordingly the pricing negotiation with customers, for both Industrial Automation and Inovance Automotive segment;

4) Any sign/evidence that Inovance Automotive’s earnings performance may sequentially trend better;

5) Latest progress/thoughts for new business such as humanoid robotics and digital energy.

Investment thesis, valuation and risks Shenzhen Inovance is a domestic leader in industrial automation. We like the company’s growth outlook given: 1) although its two key products, i.e., inverter/servo already reached 25%/33% or No.1/No.1 in China as of 2025, the

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Goldman Sachs Shenzhen Inovance Technology Co. (300124.SZ)

company still has opportunities in overseas markets; 2) we expect the company to gain market share in small/large PLC, which will serve as a building block for it to extend into digitalization and transform into an IoT solution provider; 3) EV components continue to ramp up share on top of fast industry growth; and 4) digitalization business development with the potential to exceed our expectations. We view Inovance’s major competitive moats that will underpin its resilience through cycles as: 1) industry leading R&D effectiveness with high success rates for new product lines; and, 2) a comprehensive product portfolio and end-market coverage that reinforce customers’ switching costs. We view valuation as attractive given the shares are trading at around historical average multiples with a solid long-term growth and return profile; we are Buy rated.

Price Target Risks and Methodology - Shenzhen Inovance Technology Co. Valuation methodology: Our 12-month TP of Rmb92.90 is based on 35x 2027E P/E at 9.5% CoE.

Key downside risks: 1) Slower-than-expected industrial automation market share gains; 2) Weaker-than-expected margin trends; 3) EV component segment ramp-up coming slower than expected; 4) general manufacturing capex/automation demand slowing down.

300124.SZ 12m Price Target: Rmb92.90 Price: Rmb58.30 Upside: 59.3%

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