Company Coverage
Inovance Technology (300124 CH): 2Q26: Results In Line, Recovery To Sustain Through 2027
BUY (Maintained)
Current price:
Target price:
Upside:
Previous TP :
Rmb61.87
Rmb95.00
+53.5%
Rmb80.50
Analyst
Analyst
Highlights
2Q26 net profit rose 9% yoy to Rmb1.8b, which is largely in line with consensus as mix improvements was offset by non-op items.
2H26’s general automation will continue to recover, although growth may slow down sequentially on a high base. The NEV business expected to remain weak, while the ESS business’ growth will accelerate thanks to breakthroughs overseas.
Maintain BUY. Raise target price to Rmb95.00.
Analysis
2Q26 results largely in line. Inovance Technology's (Inovance) 2Q26 revenue rose 26.0% yoy and 43.3% qoq to Rmb14.5b, 4.5% ahead of consensus driven by a solid beat in general automation segment. Given that the general automation business’s margins are much higher at close to 40%, product mix improved and blended gross margin expanded 0.6ppt yoy and 1.1ppt qoq, which is 1.3ppt above street’s 28.9%. Opex was well controlled, with opex ratio declining 1.2ppt yoy and 2.7ppt qoq to 14.9%, although this was partially offset by impairments which doubled yoy to Rmb413m. As a result, net profit grew 9.2% yoy and 77.3% qoq to Rmb1.8b, which is in line with consensus estimates.
Highlights
2Q26 net profit rose 9% yoy to Rmb1.8b, which is largely in line with consensus as mix improvements was offset by non-op items.
2H26’s general automation will continue to recover, although growth may slow down sequentially on a high base. The NEV business expected to remain weak, while the ESS business’ growth will accelerate thanks to breakthroughs overseas.
Maintain BUY. Raise target price to Rmb95.00.
Analysis
2Q26 results largely in line. Inovance Technology's (Inovance) 2Q26 revenue rose 26.0% yoy and 43.3% qoq to Rmb14.5b, 4.5% ahead of consensus driven by a solid beat in general automation segment. Given that the general automation business’s margins are much higher at close to 40%, product mix improved and blended gross margin expanded 0.6ppt yoy and 1.1ppt qoq, which is 1.3ppt above street’s 28.9%. Opex was well controlled, with opex ratio declining 1.2ppt yoy and 2.7ppt qoq to 14.9%, although this was partially offset by impairments which doubled yoy to Rmb413m. As a result, net profit grew 9.2% yoy and 77.3% qoq to Rmb1.8b, which is in line with consensus estimates.
BUY (Maintained)
Current price:
Target price:
Upside:
Previous TP :
Rmb61.87
Rmb95.00
+53.5%
Rmb80.50
Analyst
Analyst
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