Airtac April Sales Up 21%, Inovance Orders Surge – Strong Momentum in Automation Sector

Overview

This report from Nomura Securities provides high-frequency tracking of China’s factory automation industry, focusing on sector momentum in April 2026. The key conclusion is that demand continues to recover strongly, with leading players Airtac and Inovance delivering robust sales and order data. Airtac reported significant YoY sales growth in April and a record-high order backlog, while Inovance’s order growth far outpaced sales, indicating both delivery pressure and future upside. The firm maintains a positive outlook on both companies, citing ongoing policy support and industrial upgrading as key drivers for pneumatic components and automation products.

Core views

Strong sales growth and upgraded guidance at Airtac. Airtac (1590 TT), a Taiwan-based pneumatic component manufacturer with ~90% of its revenue from China, reported April 2026 RMB-denominated sales up 21% YoY and 4% MoM. Nomura estimates that, assuming 22.5 working days, its daily sales rose 26% YoY and 11% MoM. Management noted that both April orders and shipments exceeded guidance, and the order backlog at month-end reached an all-time high, supporting expectations for another strong month in May. Reflecting this momentum, the company raised its full-year 2026 sales growth guidance from 'above 10%' to 15–19%, and expects sequential improvement in Q2 sales and operating margins. Inovance sees explosive order growth and emergency capacity expansion. Inovance (300124 CH) reported that in Q1 2026, sales in its general industrial automation segment grew 14% YoY, but orders surged ~40% YoY. Management indicated April order momentum remained strong, prompting plans to increase production capacity by at least 30% in May to begin clearing the order backlog within the quarter. End-market performance is divergent, with batteries and electronics leading. Breaking down Airtac’s customer segments reveals broad but uneven growth: battery sector sales jumped 63% YoY (20% sales weight), electronics grew 21% (9% weight), textile machinery rose 51%, and machine tools increased 26%. In contrast, solar-related lighting and energy segments declined 8% YoY. This highlights that current automation capex is concentrated in new energy batteries, consumer electronics, and general manufacturing upgrades, while investment in the solar supply chain has cooled.

Analysis framework

Nomura employs a ‘high-frequency monthly tracking + micro-validation from industry leaders’ framework. First, it tracks monthly sales data from Airtac—the bellwether for China’s factory automation sector due to its China-centric revenue—and cross-validates with macro indicators like JMTBA’s China machine tool orders and Komatsu’s (Komtrax) operating hours to gauge overall manufacturing capex sentiment. Second, it dissects Airtac’s end-market sales breakdown to identify structural shifts in downstream demand (e.g., batteries vs. solar). Finally, it incorporates Inovance’s order trends and capacity plans to assess supply-side responsiveness and sustainability of sector momentum. This combined top-down (macro) and bottom-up (company-level) approach enables earlier detection of inflection points.

Methodology notes

• Industry/Sector Analysis FrameworkUpstream-Midstream-Downstream Transmission

  Using order and sales data from upstream core component suppliers (e.g., Airtac’s pneumatic parts, Inovance’s servo/PLC systems) to infer health across midstream equipment makers and downstream end markets.

  Pneumatic components and industrial control products are the 'nuts and bolts' of factory automation; their demand typically leads or coincides with full equipment shipments. By monitoring order backlogs at these upstream leaders, the report anticipates output cycles across the entire automation value chain over the coming quarters.

• Industry/Sector Analysis FrameworkVolume-price decomposition

  Distinguishing whether sales growth is driven by volume or pricing, and quantifying contributions from different end markets.

  Beyond headline sales figures, the report breaks down Airtac’s growth by end market (e.g., batteries, electronics, solar)—including growth rates and sales weights—to help investors identify true growth engines (e.g., surging battery demand) versus drags (e.g., solar decline), avoiding misinterpretation due to aggregate data masking structural risks.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Airtac (1590 TT)

  Key beneficiary—as China’s leading pneumatic component supplier in factory automation, directly benefits from rising manufacturing capex.

  Strengths

  April sales beat expectations; record-high order backlog; upgraded full-year guidance; strong cost control.

  Weaknesses

  Inventory turnover exceeds 100 days; management considers this low and plans to build inventory, potentially straining cash flow.

  Comparison

  Compared to Inovance, Airtac focuses more narrowly on pneumatic components, making it less vulnerable to swings in single sectors (e.g., solar) but with a narrower product portfolio.

  Risks

  Raw material cost volatility due to geopolitical factors.

• Inovance (300124 CH)

  Key beneficiary—China’s general automation leader; surging orders reflect strong positioning in servo, PLC, and other domains.

  Strengths

  Order growth (~40%) far outpaces sales growth, signaling strong competitiveness and demand pipeline; plans rapid 30% capacity ramp in May to address deliveries.

  Weaknesses

  Q1 EPS declined YoY due to one-off factors (per prior report), pressuring near-term profitability.

  Comparison

  Broader product portfolio than Airtac (e.g., drives, controls), offering higher elasticity but facing fiercer domestic competition.

  Risks

  Depreciation pressure from capacity expansion and profit distortion from one-off items.

Key data

• Airtac April Sales YoY Growth21%RMB-denominated, up 4% MoM
• Estimated Airtac Daily Sales YoY Growth in April26%Nomura estimate, assuming 22.5 working days
• Airtac Full-Year 2026 Sales Growth Guidance15–19%Upgraded from previous 'above 10%'
• Inovance General Automation Orders YoY Growth (Jan–Mar)Approx. 40%Significantly higher than 14% sales growth in same period
• Airtac Battery Sector Sales YoY Growth63%20% sales weight—the strongest segment
• Airtac Solar Energy Sector Sales YoY Growth-8%3% sales weight, showing decline

Impact & implications

The report argues that China’s factory automation sector remains in an upcycle in 2026, supported by government policy promoting smart manufacturing and industrial upgrading under the upcoming '15th Five-Year Plan.' Strong data from Airtac and Inovance indicate that downstream demand—particularly from battery and electronics sectors—is sufficient to offset risks like geopolitical-driven raw material cost volatility, supporting both growth and pricing power. For investors, this implies high earnings visibility for automation leaders and their ability to gain market share through capacity expansion. Weakness in solar suggests caution on dedicated equipment exposure, while recovery in batteries and electronics benefits suppliers of general-purpose automation components.

Risks

• Geopolitical risks causing raw material cost fluctuations beyond company control.
• Sustained investment declines in specific downstream sectors like solar, dragging overall automation demand.
• Capacity expansion lagging behind order growth, leading to delivery delays or customer attrition.

What to watch

• Whether Airtac’s May sales sustain April’s strong momentum.
• Inovance’s actual delivery performance and order digestion progress after its planned 30% capacity increase in May.
• Implementation details of China’s '15th Five-Year Plan' policies specifically supporting smart manufacturing.
• Actual impact of raw material price volatility on gross margins at Airtac and Inovance.