Sanhua Intelligent Controls 2Q26 operating trend is stable, with commercial HVAC and liquid cooling becoming key incremental drivers
AI summary card
Sanhua Intelligent Controls 2Q26 operating trend is stable, with commercial HVAC and liquid cooling becoming key incremental drivers
Goldman Sachs believes Sanhua Intelligent Controls' 2Q26 HVAC and automotive thermal management performance is broadly in line with expectations, and 2026E liquid cooling revenue is expected to grow more than 50% year-on-year, but the A-share target is below the current price while H-shares still have significant upside.
- Management indicated HVAC components 2Q26E is expected to turn positive, with overseas demand stronger than domestic demand, and commercial HVAC performing better than residential HVAC.
- Liquid cooling business continues to advance, and management expects 2026E liquid cooling revenue to grow more than 50% year-over-year, increasing from about Rmb2bn in 2025 to about Rmb3bn in 2026E.
- Automotive thermal management 2Q26E still maintains year-on-year growth, with Goldman Sachs estimating +13%, but it may be similar to or slightly weaker than 1Q26's 15% growth rate.
- Raw material pressure is broadly manageable, and pricing for HVAC components and North American automotive thermal management customers is linked to commodities such as copper and aluminum, with partial hedging on the Europe exposure.
- The 12-month target price is Rmb39.80 for A shares and HK$41.20 for H shares, implying 18.8% downside for A shares and 35.9% upside for H shares.
Report interpretation
Overview
This report updates Sanhua Intelligent Controls' 2Q26 operating trends, HVAC components, commercial HVAC, liquid cooling, automotive thermal management, raw material costs, and margin outlook based on an in-person exchange between Goldman Sachs and Sanhua board secretary Zhimi Lion on July 6, 2026. It believes the overall 2Q26 trend is roughly in line with expectations, with commercial HVAC and liquid cooling as the most important growth drivers, while automotive thermal management remains in growth; domestic demand and overseas policy uncertainty remain areas to watch.
Core views
Goldman Sachs is positive on Sanhua Intelligent Controls' status as a global leader in HVAC control and thermal management components, and expects 2025-30E revenue and net profit CAGR of 16% and 17%, respectively. Within HVAC components, commercial HVAC, cold-chain logistics and sensor products are expected to support the company in outperforming the residential HVAC industry; liquid cooling is expanding from primary-side microchannel products to secondary-side pumps, cold plates, valves, and sensors, with 2026E revenue expected to reach Rmb3bn. Automotive thermal management is supported by overseas shipments and higher per-vehicle value, but domestic NEV retail demand, overseas policy, and tariffs remain external risks. The company may have long-term opportunities in the humanoid robot actuator supply chain, but market expectations for Optimus mass-production timing may be too optimistic.
Analysis framework
The report combines company management communication, business-trend tracking by segment, Goldman Sachs estimates, segment growth forecasts, and target P/E discount valuation. Business analysis is broken down into HVAC components, commercial HVAC and liquid cooling, automotive thermal management, and humanoid robots, and incorporates raw material pass-through, FX impact, expense efficiency, and capacity constraints to assess margin and the quality of growth.
Methodology notes
Based on 2030E P/E discounted to 2026E
Goldman Sachs' 12-month target prices for Sanhua A/H are Rmb39.8/HK$41.2. The method applies a 2030E 25x P/E and discounts back to 2026E at a 9.5% cost of equity.
Growth, financial returns, valuation multiple, and composite factors
GS Factor Profile provides an investment context for the stock by comparing it with covered stocks and industry peers, using growth, financial returns, valuation multiples, and composite factors.
Grading of potential acquisition probability
Goldman Sachs uses an M&A Rank of 1 to 3 to measure the probability that a covered company becomes an acquisition target, with 1 representing high probability, 2 medium probability, and 3 low probability.
Asset mapping & comparison
Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).
- 002050.SZSanhua Intelligent Controls A shares
- Strengths
- Global leader in HVAC controls and thermal management components, with growth potential in commercial HVAC, liquid cooling, automotive thermal management, and humanoid robot actuators.
- Weaknesses
- A shares are currently priced above Goldman Sachs' target, and the market may have already priced in relatively optimistic humanoid robot expectations.
- Comparison
- Compared with H shares, A shares' target price implies an 18.8% downside.
- Risks
- Humanoid robot revenue contribution may come in slower or faster than expected, and home appliance sales may be weaker than expected.
- 2050.HKSanhua Intelligent Controls H shares
- Strengths
- Similarly benefits from commercial HVAC, liquid cooling, automotive thermal management, and long-term robot supply-chain opportunities, with upside potential versus current price relative to the target.
- Weaknesses
- Still exposed to the pace of robot mass production, EV demand, and home appliance demand.
- Comparison
- Compared with A shares, H shares' target price implies 35.9% upside.
- Risks
- Humanoid robot revenue contribution may be slower than expected, global EV sales may be weaker than expected, and home appliance sales may be weaker than expected.
- Data center liquid cooling supply chainSanhua Intelligent Controls is expanding as a supplier of data center liquid cooling components
- Strengths
- The company is expanding from primary-side microchannel products to higher-value secondary-side components such as pumps, cold plates, valves, and sensors, and has conducted certifications with cloud customers.
- Weaknesses
- The company does not plan to build full CDU systems; shipments mainly depend on server supply-chain vendors and the pace of project breakthroughs.
- Comparison
- The company supplies components to participants including Vertiv and Envicool, rather than building complete systems directly.
- Risks
- AI DC project breakthroughs may be slower than expected, and customer certification and supply-chain ramp-up may progress slower than expected.
Key data
- HVAC components 2Q26E growthGSe: +2% yoyManagement indicated 2Q26 performance may turn positive, and the 6% year-over-year decline versus 1Q26 has narrowed meaningfully.
- Automotive thermal management 2Q26E growthGSe: +13% yoyManagement believes growth may be close to or slightly weaker than 1Q26's 15%, with demand in May to June improving versus April.
- Liquid cooling revenue 2026E growth50%+ yoyManagement expects liquid cooling revenue to rise from about Rmb2bn in 2025 to about Rmb3bn in 2026E.
- 2025-30E revenue/net profit CAGR16% / 17%Goldman Sachs expects long-term growth to be driven by both core and emerging businesses.
- A-share target vs current priceRmb39.80 / Rmb48.99This implies a potential 18.8% downside over 12 months.
- H-share target vs current priceHK$41.20 / HK$30.32This implies a potential 35.9% upside over 12 months.
Impact & implications
For investors, Sanhua Intelligent Controls' short-term fundamentals are not solely dependent on residential HVAC; they are supported by commercial HVAC, cold-chain logistics, data center liquid cooling, and overseas automotive thermal management together. A/H share valuation implications are clearly diverging: A shares are priced above the target, indicating that relatively optimistic humanoid robot expectations may already be largely priced in; H shares still show significant upside versus current price. Future equity re-rating will depend on breakthroughs in liquid cooling projects, the pace of humanoid robot mass production, EV penetration, and whether raw material/FX pressure remains manageable.
Risks
- Humanoid robot revenue contribution coming in faster or slower than expected could create upside or downside risk to A shares, respectively.
- Global EV sales outperforming or underperforming expectations will affect automotive thermal management growth.
- Home appliance sales outperforming or underperforming expectations will affect HVAC component demand.
- Domestic NEV retail demand may decline, and domestic policy rollbacks may continue to pressure residential HVAC.
- There is uncertainty around overseas policy and export tariffs.
- 2Q26 may still see foreign exchange losses, although management expects the impact to be less than in 1Q26.
- Raw material price volatility remains potentially impactful to margins despite pass-through and hedging mechanisms.
What to watch
- Whether 2Q26 HVAC components perform as management guided and turn positive or come close to positive.
- Whether demand for commercial HVAC and cold-chain transport remains stronger than residential HVAC.
- Whether liquid cooling business revenue in 2026E can reach Rmb3bn and grow more than 50% year-on-year.
- Whether AI DC in-house ASIC server supply-chain projects achieve breakthroughs in 2H26.
- Whether 3Q26 production schedules and capacity tightness for new products such as fuel pumps and expansion valves continue.
- The intensity of overseas shipments for customers like Tesla, Leapmotor, Geely, and BYD.
- Progress in humanoid robot functionality, large customer mass-production timelines, and Sanhua's role in the actuator supply chain.