汇川技术 (300124): Inovance: An oversold earnings compounder

Unlike other factory automation stocks, Inovance's share price declined 37% in the last twelve months despite the accelerating automation upcycle, mainly due to weakness in the Chinese EV industry. The stock is trading near historical lows, with both forward P/E and EV/EBITDA 1 s.d. below average and PEG at 1.2x. Despite moderately decelerating FA demand, with a stabilizing EV business, we expect 20%+ OP growth in 2027, driving a potential re-rating. The automation business delivered 29% revenue growth in 26H1, driven by the cycle and renewed market share gains across most products, with margins resilient despite rising raw material costs; core automation gross margin is ~45%, higher than foreign competitors. The EV segment grew only 4% in 1H26, with gross margin declining to 12.8% due to sharp increases in copper, aluminum, and Pr-Nd oxide prices;