Nomura sees uneven China advanced-manufacturing prospects: humanoid demand remains unproven, inverter compliance costs are rising, and Techtronic has favorable power-tool catalysts.

Overview

The report summarizes investor discussions in Kuala Lumpur and Singapore across three advanced-manufacturing themes. Nomura argues that humanoid robotics is still supply-led rather than demand-led, sees policy compliance as a structural issue for inverter and ESS suppliers, and remains positive on Techtronic's power-tool outlook.

Core views

Humanoid robots were the most discussed theme. Nomura's unchanged view is that current China-sector shipments validate the ability to manufacture humanoids, but do not yet prove durable demand. Its 2026F survey allocation is approximately 30% entertainment/performance, 30% consumer, 20% government procurement and 15% education, leaving only about 5% for industrial and commercial uses. For industrial and logistics applications, buyers focus on ROI, mean time between failures and takt time; at current humanoid average selling prices relative to industrial arms and labor costs, Nomura believes payback periods at most workstations remain below adoption thresholds. Grippers already meet needs at structured stations. Humanoid rental day-rates of CNY4,000-20,000 are down 50-60% year on year and have stabilized only because OEM selling prices have already declined. Nomura therefore characterizes the current cycle as a supply-side rather than demand-side inflection. It identifies the first repeat order from a non-related industrial customer, funded from an operating rather than pilot budget, as the key evidence that this assessment has changed. On the humanoid “brain,” Nomura views high-quality real-world physical-interaction data as the binding constraint. Its industry survey indicates 2026F demand for around 10mn hours of such data, while each deliverable skill requires 2,000-5,000 hours. Leading robotics firms estimate an embodied-AI “ChatGPT moment” could arrive in around two years, with scaled adoption later. For inverters and ESS, investor discussion was driven more by policy than demand. Nomura is negative on the long-term structural trend of US policy: at the low end, policy may allow continued cheap imports while raising low-cost suppliers' compliance costs and reducing supply-chain dependence; at the advanced end, it aims to prevent China from rapidly closing the technology gap. For Sungrow, Nomura considers compliance cost and re-certification timing—not outright loss of US access—the central constraint. It estimates that the PowerTitan 3.0 AI data-center variant is fully exposed because it requires fresh radio-frequency certification. The cost burden spans component re-sourcing, software and data localization, hardware/software bill-of-material disclosures and conditional-approval dossiers. Europe adds a separate localization cost. Under the Net-Zero Industry Act, China-produced inverters lose access to EU public funding worth 10-15% of project investment. Local-content thresholds are 40% in 2026, 60% in 2027 and 70% in 2028, effective from 1 May 2026 and including storage PCS. Nomura estimates Sungrow's Poland output has a 12-18% cost premium versus China supply, narrowing to 4-5% when customers access low-interest financing. The larger structural risk, in its view, is customer behavior: compliance uncertainty could lead US buyers to qualify second sources and erode long-term share even if no final rule is implemented. Nomura is positive on Techtronic's fundamentals for 2H26F and 2027F. First, it sees the market entering a replacement window: the prior sales-growth peak was in 2020-21 and the normal replacement cycle is estimated at five to seven years. Second, it expects restocking: Home Depot's June 2026 inventory was similar to or lower than a year earlier, while Nomura's industry survey points to more than 14% year-on-year Milwaukee growth in 4Q26F, supported by Black Friday and gift-center promotions plus product launches; this underpins its expectation for additional distributor restocking in 3Q26F. Third, mix is improving. In 1H26, group revenue rose 5.9% year on year to USD8.29bn; Milwaukee grew 10.5% in local currency and Ryobi rose 1.7% to USD1.9bn, together up 8.2%, while non-core brands fell 19.4% and represented 6.6% of group sales after the 2025 HART exit. Gross margin expanded 258bp year on year to a record 42.9%, and EPS rose 17.8% to USD0.405. Management retained guidance for mid- to high-single-digit 2026E revenue growth, an EBIT margin of at least 10% by 2027E with further upside in 2028E, and lifted 2026E free-cash-flow guidance to more than USD1.3bn from more than USD1.0bn.

Analysis framework

Nomura combines industry-survey evidence, adoption-economics analysis and policy transmission analysis for humanoids and energy storage. For Techtronic, it assesses replacement-cycle timing, channel inventories, promotional and product-launch drivers, business mix, margins, earnings and management guidance.

Methodology notes

• Industry AnalysisSupply-demand framework

  Humanoid demand composition and industrial-adoption economics

  Nomura separates shipment supply from end-demand durability, then tests industrial adoption through buyer ROI, reliability and throughput requirements.

• Industry AnalysisUpstream-Midstream-Downstream Transmission

  Policy and compliance-cost transmission in inverters and ESS

  The report traces US and EU rules through certification, sourcing, localization and customer supplier-qualification decisions.

• Valuation methodsP/E and PEG Valuation

  Price-to-earnings valuation

  Nomura values Sungrow at 14x 2027F P/E for a CNY120 target price and Techtronic at 24x 2027F EPS for a HKD173 target price.

Asset mapping & comparison

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

• Sungrow Power Supply (300274 CH)

  Inverter and ESS supplier exposed to US certification requirements and EU localization rules.

  Weaknesses

  Compliance costs, re-certification timing and potential customer second-sourcing.

  Comparison

  Poland output carries a 12-18% cost premium to China supply, narrowing to 4-5% with low-interest financing.

  Risks

  Policy headwinds for ESS and softening utility-scale project demand; upside risks include faster ESS development in data-center clients and stronger margins from stable battery prices.

• Techtronic Industries (669 HK)

  Power-tool manufacturer expected to benefit from replacement demand, channel restocking and a favorable Milwaukee mix.

  Strengths

  Milwaukee growth, record 42.9% gross margin, improving mix and raised free-cash-flow outlook.

  Weaknesses

  Non-core brands declined 19.4% year on year after the HART exit.

  Comparison

  Milwaukee grew 10.5% in local currency in 1H26, versus Ryobi's 1.7% growth.

  Risks

  Weaker-than-expected US housing, slower AI data-center project growth, less-than-expected gross-margin expansion, and rising raw-material costs or supply-chain disruption.

Key data

• Humanoid industrial and commercial demand sharec.5% of 2026F demandNomura's survey allocates the remainder mainly to entertainment/performance, consumer, government procurement and education.
• Humanoid rental day-ratesCNY4,000-20,000Down 50-60% year on year.
• High-quality humanoid-interaction data demandc.10mn hours in 2026FNomura estimates 2,000-5,000 hours are needed per deliverable skill.
• EU local-content thresholds40% in 2026, 60% in 2027, 70% in 2028Applied from 1 May 2026 and covering storage PCS.
• Sungrow Poland cost premium12-18%, narrowing to 4-5%Versus China supply; the lower range assumes customers claim low-interest financing.
• Techtronic 1H26 revenueUSD8.29bnUp 5.9% year on year.
• Techtronic gross margin42.9%A record level, up 258bp year on year.
• Techtronic 2026E free-cash-flow outlookOver USD1.3bnRaised from over USD1.0bn.

Impact & implications

Nomura's analysis implies that humanoid manufacturing progress alone is insufficient to establish a broad commercial-adoption cycle, while inverter suppliers face compliance and localization burdens that can influence customer sourcing. In contrast, Techtronic's replacement cycle, channel restocking and Milwaukee-led mix are expected to support growth into 2027F.

Risks

• For Sungrow, ESS policy headwinds and softer utility-scale project demand could impede the target-price outcome.
• For Techtronic, weaker US housing, slower AI data-center projects, slower margin expansion, and raw-material or supply-chain pressures are stated downside risks.

What to watch

• Whether a non-related industrial customer places a repeat humanoid order funded from an operating budget rather than a pilot budget.
• US certification and compliance developments affecting Sungrow's PowerTitan 3.0 AI data-center variant.
• EU localization requirements, financing access and the resulting cost competitiveness of Poland production.
• Distributor restocking, Milwaukee's 4Q26F growth, and Techtronic's progress toward its margin and free-cash-flow guidance.