$Shenzhen Inovance Technology (300124.SZ)$$Estun Automation ...

UOB KH has a buy call on Inovance and tp of RMB82.00, now pegged to 38.3x 2024F PE, on a par with its historical forward mean.

They believe Inovance as the leader among domestic automation player will benefit the most from the on-going import substitution trend. We also expect Inovance to benefit more from the recovery in broader economy, given their larger exposure to end-markets such as property, semi and consumer electronics.

UOB KH maintain buy on Estun and keep tp at RMB31.50, based on 86.1x 2024F PE, which is now based on 0.5SD below historical forward mean.

Despite a worse-than-expected pick-up in industrial robot sales, Estun's share gains have already surpassed their expectations at 9% in 2Q23 (vs their full-year estimates of 8%), primarily driven by its dominance in the solar robotics market. As such, they remain confident in Estun achieving its full-year sales target of >25,000 industrial robots for 2023. From 2024 onwards, growth will be supported by the development of new end-markets and applications, penetration into the automobile value chain, as well as the recovery in consumer electronics as demand growth from solar will likely slow from a high-base.