Morningstar

Shenzhen Inovance Technology Co Ltd Class A 300124

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Stock XSHE Rating as of
¥62.45 +8.15 (15.01%)
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As of Delayed Price Closed

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Shenzhen Inovance Earnings: Automation Holding Up While Electric Vehicles Margins Fall Short

Phelix Lee

We lower our fair value estimate on narrow-moat Shenzhen Inovance to CNY 56 from CNY 60 per share after management hinted at worse full-year 2024 net profit outlook stemming from lower gross margins at general automation and a higher proportion of revenue from electric vehicles, or EVs, which have lower profitability. Thus, we have trimmed our gross margin assumptions, along with nonoperating items. We view Inovance’s shares as undervalued as intensifying competition is priced in, but the market is still too bearish on economic recovery and Inovance’s ability to capture market share in customers of heavy industries.

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Price vs Fair Value

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300124 is trading at a 792% premium.
Price
¥54.30
Fair Value
¥98.00
Uncertainty
High
1-Star Price
¥52.70
5-Star Price
¥31.90
Economic Moat
Ybqzjp
Capital Allocation
Znnnlfkrj

Bulls Say, Bears Say

Bulls

Inovance can win market share by integrating BST’s products into comprehensive elevator systems.

Bears

Dominance of global brands would limit Inovance’s development in heavy industries.

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News

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Trading Information

Previous Close Price
¥54.30
Day Range
¥56.00–62.98
52-Week Range
¥39.17–69.00
Bid/Ask
¥62.45 / ¥62.46
Market Cap
¥167.25 Bil
Volume/Avg
51.1 Mil / 14.4 Mil

Key Statistics

Price/Earnings (Normalized)
32.75
Price/Sales
4.25
Dividend Yield (Trailing)
0.83%
Dividend Yield (Forward)
0.83%
Total Yield
0.83%

Company Profile

Founded in 2003 by a group of ex-engineers from Huawei and Emerson, Shenzhen Inovance Technology develops and manufactures components used in elevators, automation equipment, robots, new energy vehicles, and railways. A partial list of products includes variable frequency drives—also known as inverters—servo systems, sensors, interfaces and motor controllers. Inovance employs about 22,000 staff, including over 5,400 research and development engineers. Almost 95% of Inovance’s sales are made in China. Its headquarters are in Shenzhen with a large regional office in Suzhou; these major offices are supported by over 10 branches across China.
Sector
Industrials
Industry
Electrical Equipment & Parts
Stock Style Box
Large Growth
Total Number of Employees
23,685
Website
https://www.inovance.com

Competitors

Valuation

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Metric
300124
6954
6506
Price/Earnings (Normalized)
 32.7531.4227.26
Price/Book Value
 5.712.433.29
Price/Sales
 4.255.362.39
Price/Cash Flow
 25.1025.9721.64
Price/Earnings
300124
6954
6506

Financial Strength

Metric
300124
6954
6506
Quick Ratio
 1.134.431.08
Current Ratio
 1.546.862.31
Interest Coverage
 29.84—19.78
Quick Ratio
300124
6954
6506

Profitability

Metric
300124
6954
6506
Return on Assets (Normalized)
 9.14%9.61%7.03%
Return on Equity (Normalized)
 18.05%10.99%12.78%
Return on Invested Capital (Normalized)
 14.73%10.61%10.02%
Return on Assets
300124
6954
6506

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