深圳汇川技术（300124.CH）：汇川技术盈利增长从负10%到正15%——拐点带来良好买入机会

Weibin Liang, Ph.D.+852 2123 2666weibin.liang@bernsteinsg.com RatingOutperform Dien Wang, Ph.D.+852 2123 2622dien.wang@bernsteinsg.com Price Target 300124.CH 87.00 CNY(77.00OLD) Inovance: From -10% to +15% -- inflection in earnings growthpresents a good buying opportunity After a difficult 2024, Inovance started 2025 with a strong first quarter with revenue andoperating profit increasing 38.3% and 72.5% YoY, respectively (Exhibit 1), resulting fromcontinued momentum in EV (+66% YoY) and sharp recovery in FA (+29% YoY vs. 1% in2024; Exhibit 4). The strong recovery in FA echos the cyclical indicators (see barometer) andother companies’ results in 1Q (AirTAC: + 12.4%, Estun +38.3%, FANUC +31% in China, andKeyence +17% YoY in Asia ex-Japan). In April, Inovance continued to see moderate growthof new orders in its FA segment despite some customers responding to tariff uncertainty bydelaying CAPEX. Similar to us, management expects the negative impact of tariff to last for1-2 quarters. Company’s full-year guidance baked in this impact and sees 10-30% growth inrevenue (FA growth ~20%) and 5-25% growth in EPS. Inovance has a clear growth strategy. In FA, the focus is to further expand in processautomation with large PLCs and digital solution. In EV, Inovance is pushing its China marketshare from 10% now to 20% in the long term, by expanding customer base and products. Inhumanoid robots, it is making steady but disciplined investment, focusing on motion-relatedcore components and solutions for factory applications. With profit growth recovering from the 2024 trough to ~20% CAGR in the next few years, weexpect valuation multiple to increase meaningfully (Exhibit 7 to Exhibit 9). The stock remainsour top pick in Asia-ex-Japan. Investment Implications Reiterate OP. We roll PT date to Dec-2025 and increase PT to CNY87 (was CNY77) bysetting 30.0x EV/EBITDA multiple (was 25.0x) against 2026 EBITDA est. of RMB7738mn(was RMB8573mn), to reflect the tariff impact. DETAILS Source: Bloomberg, Bernstein estimates and analysis Source: Bloomberg, Bernstein analysis EXHIBIT 11:Inovance revenue breakdown by segment EXHIBIT 15:Inovance GP margin trends by business group. Inovance company GP margin keeps declining as EV androbot contributing higher % of revenue EXHIBIT 18:Trends of demands from solar industry forindustrial automation in China. APPENDIX - FINANCIAL FORECASTS BERNSTEIN TICKER TABLE I. REQUIRED DISCLOSURES References to "Bernstein" or the “Firm” in these disclosures relate to the following entities: Bernstein Institutional Services LLC(April 1, 2024 onwards), Sanford C. Bernstein & Co., LLC (pre April 1, 2024), Bernstein Autonomous LLP, BSG France S.A. (April 1,2024 onwards), Sanford C. Bernstein (Hong Kong) Limited盛博香港有限公司,Sanford C. Bernstein (Canada) Limited, SanfordC. Bernstein (India) Private Limited (SEBI registration no. INH000006378), Sanford C. Bernstein (Singapore) Private Limited andSanford C. Bernstein Japan KK(サンフォード・C・バーンスタイン株式会社). On April 1, 2024, Société Générale (SG) and AllianceBernstein, L.P. (AB) completed a transaction that created a new joint venturein which their respective cash equities and research businesses operate in a new business combination. Although their respectiveownership percentages in the joint venture differ between North America and the rest of the world, the creation, production andpublication of research is handled collaboratively on a global basis across the two research brands, “Bernstein” and “Autonomous”.Unless specifically noted otherwise, for purposes of these disclosures, references to Bernstein’s “affiliates” relate to both SG andAB and their respective affiliates. Shenzhen Inovance Technolo-A We use EV/EBITDA multiple as the primary valuation method. We set a RMB 87.0 target price using an EV/EBITDA multiple of30.0x against our 2026 EBITDA estimate of RMB 7,738mn. We set the multiple referencing previous cycles but adjust for secularor competitive trends that we believe are moving multiples higher or lower across multiple cycles. We use DCF as reference forthe company's long-term intrinsic value. As we move along the different stages of a cycle, the time-dependent target price maydeviate from the DCF-implied value. RISKS Shenzhen Inovance Technolo-A The risks to our view on Inovance are mainly associated with macro economy, including industrial capex cycles, trade frictions, andcurrency. The downside risks to our view on Inovance include 1) weaker than expected automation demands in China, 2) weakeror slower than expected share gain in China in segments besides servo motor and VFD, 3) weaker than expected EV demands. RATINGS DEFINITIONS, BENCHMARKS AND DISTRIBUTION Bernstein brand The Bernstein brand rates stocks based on forecasts of relative performance for the next 12 months versus the S&P 500 forstocks listed on the U.S. and Canadian exchanges, versus the Bloomberg Europe Developed Markets Large and Mid Cap PriceReturn Index (EDM) for sto