Shenzhen Inovance Automation Doing Well, but Electric Vehicles Margins Fell Short

We think Shenzhen Inovance has a narrow moat driven by intangible assets and switching costs. Inovance established a reputation of being a reliable supplier by offering maintenance parts and comprehensive solutions over the lives of elevators. Elevator customers are sticky due to safety requirements and programs behind elevator systems are tightly integrated with hardware. Inovance now offers a suite of cable, car, cord and human machine interface products, fortifying its lead over local peers. Inovance is setting up a factory in Hungary, which helps it strengthen its relationships with global elevator brands.