July order growth slowed slightly, but the market share gain logic remains unchanged; reiterate Buy

Overview

This report tracks Inovance Technology's industrial automation order performance in July 2026 and assesses the company's growth momentum by incorporating downstream industry structure, historical seasonality, and peer order trends. July orders grew by over 30% YoY, slower than the approximately 40% growth rate in 1H, but were roughly flat month-on-month and in line with seasonality. Demand from traditional manufacturing and some process industries was relatively weak, while advanced manufacturing continued to grow rapidly. Based on this, Goldman Sachs judges that the company's market share gain trend has not been impaired and reiterates its Buy rating.

Core views

In the short term, the slowdown in July order growth mainly came from weakening demand in industries such as oil and gas, mining, textiles, and injection molding, rather than a broad-based decline; orders from advanced manufacturing such as lithium batteries, semiconductors, smartphones, and automotive equipment remained strong. In the medium to long term, the company already has leading shares in inverters and servos, and can still achieve growth through overseas expansion, share gains in small and large programmable logic controllers, digital transformation, and the ramp-up of new energy vehicle components. High R&D efficiency, a complete product portfolio, and broad end-market coverage form competitive barriers and increase customer switching costs.

Analysis framework

The report estimates monthly industrial automation order trends based on the company's description of YoY and MoM changes in orders, combined with historical financial data; it also references Haitian International's July orders and six-month rolling order performance to observe demand related to injection molding equipment. For valuation, it applies the 2027E P/E methodology, using a 35x P/E multiple to determine the 12-month target price.

Methodology notes

• Operating Trend AnalysisMonthly Order Trend Estimation

  Estimate industrial automation order trends using the YoY and MoM changes disclosed by the company and historical data.

  This method shows that July orders grew by over 30% YoY and were roughly flat MoM, with the latter broadly in line with historical seasonality.

• Peer ComparisonOrder Trend Cross-Validation

  Validate the strength or weakness of related downstream demand through order performance of industry-chain peers.

  Haitian International's July orders grew by low- to mid-single digits YoY, with domestic orders growing by low double digits YoY and overseas orders declining by mid-single digits YoY, indicating that injection molding-related demand was overall relatively moderate.

• Relative ValuationForward P/E Valuation Method

  Determine the target price by multiplying forecast annual earnings by the target P/E multiple.

  The 12-month target price of Rmb92.9 is based on 35x 2027E P/E.

• Multi-Factor AnalysisGoldman Sachs Factor Profile

  Compare a stock with the market and industry peers across growth, financial returns, valuation multiples, and composite metrics.

  Growth metrics reference forward sales, EBITDA, and EPS growth; financial returns reference ROE, return on capital, etc.; composite metrics take into account growth, returns, and valuation.

Asset mapping & comparison

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

• Inovance Technology (300124.SZ)

  Core research target

  Strengths

  A domestic leader in industrial automation, with leading market shares in inverters and servos; strong advanced manufacturing orders; high R&D efficiency, a complete product portfolio, broad end-market coverage, and growth potential in overseas markets, programmable logic controllers, digitalization, and new energy vehicle components.

  Weaknesses

  Demand from some process industries and traditional manufacturing downstream sectors has weakened, and overall July order growth slowed versus 1H.

  Comparison

  Compared with injection molding equipment peers, Inovance Technology benefits from broader product and downstream coverage, with July industrial automation orders growing significantly faster YoY than Haitian International.

  Risks

  Market share gains slower than expected, margins weaker than expected, delays in the ramp-up of new energy vehicle components, and a slowdown in manufacturing capex and automation demand.

• Haitian International (1882.HK)

  Peer reference for order trends

  Strengths

  Domestic orders still achieved low double-digit YoY growth in July.

  Weaknesses

  Overseas orders declined by mid-single digits YoY, and overall orders recorded only low- to mid-single-digit growth.

  Comparison

  Its July order growth was lower than Inovance Technology's, and six-month rolling orders were up only approximately 1% YoY as of July 2026, reflecting relatively weak injection molding-related demand.

  Risks

  Weak overseas demand and a downturn in the injection molding industry cycle.

Key data

• July industrial automation order growthYoY growth of over 30%Slightly slower than the approximately 40% YoY growth rate in 1H 2026.
• July order MoM changeRoughly flatBroadly consistent with historical seasonality.
• 12-month target priceRmb92.9The target price is maintained unchanged, based on 35x 2027E P/E.
• Reference share priceRmb64.06The price listed in the company-specific disclosure of the report.
• Implied upsideapproximately 45.0%Calculated based on the Rmb92.9 target price and Rmb64.06 reference share price, excluding dividends.
• Inverter market share in China25%Ranked No. 1 in the China market as of 2025.
• Servo product market share in China33%Ranked No. 1 in the China market as of 2025.
• Haitian International July ordersLow- to mid-single-digit YoY growthDomestic orders grew by low double digits YoY, while overseas orders declined by mid-single digits YoY.

Impact & implications

The July order data indicates a clear structural divergence in industrial automation demand: process industries and some traditional manufacturing sectors are under pressure, while advanced manufacturing remains resilient. For Inovance Technology, overall orders maintained growth of over 30% and MoM performance was in line with seasonality, supporting the view that it continues to gain market share. If demand from advanced manufacturing continues, expansion in programmable logic controllers and overseas markets proceeds smoothly, and the ramp-up of new energy vehicle components is added, the company's long-term growth and return performance are expected to support the current Buy thesis; conversely, a further slowdown in traditional manufacturing capex may weigh on orders and margins.

Risks

• Industrial automation market share gains are slower than expected.
• Margin trends are weaker than expected.
• The ramp-up of the new energy vehicle components business is slower than expected.
• General manufacturing capex or automation demand slows further.
• Downstream industries such as oil and gas, mining, textiles, and injection molding continue to weaken.
• Advanced manufacturing order growth slows more than expected.

What to watch

• Whether industrial automation order growth can remain above 30% YoY in the coming months.
• Whether orders in the oil and gas, mining, textiles, and injection molding industries can return to positive growth.
• Whether demand for lithium batteries, semiconductors, smartphones, and automotive equipment continues to maintain high growth.
• Progress in market share gains for small and large programmable logic controllers.
• Overseas market expansion and the ramp-up of the new energy vehicle components business.
• The transmission of changes in order structure to revenue growth and margins.
• Whether orders from peers such as Haitian International can validate an improvement in traditional manufacturing demand.