Huachuang Securities: Accelerate Going Global, Localization Supports the Development of the Humanoid Siasun Robot & Automation in the Industrial Control New Scene.

Huachuang Securities released a research report stating that the industrial automation industry is an important part of the manufacturing industry's upgrade towards automation and intelligence. After experiencing a period of adjustment for over two years, the manufacturing industry has shown signs of recovery entering 2025; domestic industrial control brands actively explore demand domestically to replace imports, while also accelerating their expansion into overseas markets to step towards globalization. Additionally, the humanoid Siasun Robot&Automation opens up incremental scenarios for the industrial control industry and may become a major driving force for the industry's growth in the next decade. Overall, the firm believes that industrial control is still an industry with growth attributes as the main focus and cyclical attributes as a secondary consideration, giving the industry a "recommended" rating. Huachuang Securities' main points are as follows: - China's automation market size has seen a small decline for two consecutive years, reaching 285.9 billion yuan in 2024. - The OEM market's year-on-year growth rate decline continues to narrow on a quarterly basis, with the OEM market expected to enter an upward trend in 2025 and drive demand in the industrial control market. - The project market experienced three consecutive years of positive growth from 2021 to 2023, with growth dropping to 0.1% in 2024. The project market demand is expected to face pressure in 2025 due to weak investments in industries such as metallurgy and petrochemicals in the process industry. - The blue ocean of overseas markets is becoming apparent, with great potential for domestic brands. - With downstream manufacturing capacity expanding overseas, domestic industrial control brands are accelerating their overseas expansion through methods such as "borrowing boats to go abroad" and "expanding product lines abroad. Industrial control companies are gradually expanding their reach from emerging to mature markets. Tailoring strategies to specific regions is the best way to enter overseas markets, as HNC has deepened its presence in the Indian textile market for over a decade and has the capacity to respond to orders of tens of thousands; Weichuang has entered the Southeast Asian and Middle Eastern markets through its solar-powered pump solutions. - The potential for domestication varies in scale, with PLCs, variable frequency drives, and servos. - In 2024, the market share of the top five foreign PLC brands in the medium and large PLC, small PLC, medium-low voltage inverter, medium-high voltage inverter, and general servo markets ranged from 86.2% to 31.1%. PLCs, as the core of the control layer, have high technical barriers and strong process characteristics, with potential for import substitution and domestication necessity; domestic inverter market share still has room for improvement in the process industry; servos have room for breakthroughs in high-speed, high-precision, and high-response applications. - Humanoid Siasun Robot&Automation opens up new application scenarios for industrial control. - The joint modules and dexterous hands in Siasun Robot&Automation have significant value, with core components such as frameless motors, hollow cup/BLDC motors, drivers, position sensors, etc. being essential. Most industrial control companies have the relevant technology and products. According to estimates, the market space for drive control motor systems corresponding to 1 million units of output for Optimus is 33.2 billion yuan. Domestic industrial control companies are actively seizing the golden track of humanoid Siasun Robot&Automation, with many companies actively laying out their strategies. Key Companies Key recommendations are Shenzhen Inovance Technology, benefiting from the general automation recovery and entering the profit release period for its electric vehicle business; Wuxi Xinje Electric, with high barriers in PLCs, actively improving its solution capabilities and major customer strategies; Suzhou Veichi Electric, showing significant results in overseas expansion and actively laying out the track for humanoid Siasun Robot&Automation. It is recommended to keep an eye on China Leadshine Technology, Shenzhen Invt Electric, Zhejiang HeChuan Technology, Googol Technology, Shanghai Zhongchen Electronic Technology, among others. Risk Warning: Overseas market expansion may not meet expectations; import substitution speed may not meet expectations; progress in the humanoid Siasun Robot&Automation industry may not meet expectations; domestic manufacturing industry recovery may not meet expectations.