If I want to invest in the robotics industry, which company in the A-share market is the best choice with a higher success rate? Ideally, it should be a company that will not go bankrupt even if others in the robotics sector do.
This is a question that strikes at the essence of investment: how to ensure the safety of the principal while pursuing high returns?
The robotics industry is a new field filled with opportunities and risks. Finding a company that remains standing while others fall requires penetrating the surface to understand the core competitiveness and risk resistance of the enterprise.
We should look for a “water seller” in the robotics industry rather than a “gold digger.” The robotics sector may seem glamorous, but it actually hides risks: rapid technological iteration, difficulties in commercialization, and fierce competition, with many companies still struggling in the quagmire of losses.
If we want to invest in a “resilient” company, we cannot just look at the popularity of the robotics concept. We might consider the following aspects:
1. Leading position: Having an absolute advantage in a key link of the robotics industry chain.
2. Diversified business: The robotics business is an important growth point but not the entirety. Even if the robotics industry faces a short-term downturn, the company’s other businesses can provide stable cash flow and profits to ensure survival.
3. Core technological barriers: Possessing strong R&D capabilities and a patent moat that is hard to replace.
4. Financial health: Ample cash flow, low debt ratio, and stable profitability.
Based on these criteria, the first company is: Inovance Technology (300124), an invisible leader in the robotics industry. In the A-share robotics sector, Inovance Technology meets the requirements of “high success rate and strong risk resistance” the best.
Why?
First, its leading position: As the heart of industrial automation, Inovance Technology is the absolute leader in the domestic industrial automation control field.
Its core products include inverters, servo systems, and PLCs (Programmable Logic Controllers), which are the “brain” and “nerves” of industrial equipment.
Whether it is robots, CNC machine tools, or photovoltaic and lithium battery production lines, these core components are indispensable. Inovance Technology continues to lead the market share in these areas, and its technological strength is on par with international giants.
Second, diversified business; robotics is just one of its “growth poles.” Unlike many pure robotics companies, Inovance’s robotics business is just one part of its diversified landscape. The company’s main revenue and profits come from stable core industrial automation businesses (such as elevator electrics, general automation, etc.).
This means that even if the robotics industry faces a short-term downturn, Inovance still has a strong “cash cow” to support it, sufficient to withstand the winter.
Third, technological barriers, mastering the core lifeline. The three core components of robotics are controllers, servo systems, and reducers.
Inovance Technology can produce the first two itself. This vertical integration capability not only reduces costs but also builds a very high technological moat. In the context of national strategy focusing on technological self-sufficiency, Inovance’s advantages become even more pronounced.
Fourth, financial stability, the confidence to weather cycles. Inovance Technology’s financial health is exemplary, with ample cash flow, low debt ratio, and stable profitability.
This financial strength allows it to support high R&D investments (over 10% annually) and to expand against the trend during industry downturns, acquiring quality assets.
The logic of investing in Inovance: betting on the future of Chinese manufacturing is essentially investing in the “infrastructure” of the upgrade of Chinese manufacturing.
No matter how the robotics industry fluctuates, as long as the trend of Chinese manufacturing towards high-end and intelligent transformation remains unchanged, Inovance’s core components will always have a market. This “infrastructure attribute” gives it a very high certainty of survival and long-term growth potential.
The risk is that its business covers multiple fields, including industrial automation and new energy vehicles, with the robotics business accounting for less than 40%, making it significantly affected by fluctuations in other businesses.
Based on these criteria, the second company is: Harmonic Drive (688017), currently the most resilient core stock in the A-share market, capable of continuous growth even amid industry reshuffling due to its high technological barriers, core component position, and binding with top customers.
First, the irreplaceable technological barrier: Harmonic Drive is the absolute leader in the localization of harmonic reducers, with a domestic market share exceeding 60%, and only Japan’s Harmonic Drive can compete with it globally.
The third-generation product has a lifespan of 200 million cycles, exceeding international standards by one time, and its size has been reduced by 40%. It has passed the sample testing for Tesla’s Optimus, with technical indicators far exceeding the industry average.
By 2025, production capacity is expected to double to 590,000 units, with the export ratio expected to increase to 40%, forming a complete closed loop from R&D to mass production to overseas expansion.
Second, the positioning advantage of core components: reducers account for the largest cost (over 35%) and have the highest technological barriers in robotics. Each humanoid robot requires 6-8 harmonic reducers.
Compared to complete machine manufacturers and system integrators, core component companies are less affected by downstream fluctuations. Even if a complete machine manufacturer goes bankrupt, the leading component manufacturer can still turn to other customers.
Third, financial stability and cyclical resistance: net profit growth is expected to exceed 150% in 2024, with a gross profit margin maintained above 50%, significantly higher than the industry average of about 30%.
The risk lies in industry and technological changes. If the mass production of humanoid robots is significantly delayed or if there are changes in the technological route, Harmonic Drive’s short-term valuation may come under pressure.
There are other investment targets:
Estun (002747), a leading domestic industrial robot manufacturer, with a market share of 10.3% by Q1 2025. The risk is intense competition in the complete machine manufacturing sector, with a projected net profit loss exceeding 800 million yuan in 2024 and high customer dependency.
Shenghua Intelligent Control (002050), a core supplier of actuators for Tesla’s Optimus, with a projected 120% growth in robotics business revenue in the first half of 2025. The risk is excessive binding with Tesla; if Optimus’s mass production does not meet expectations, performance will fluctuate significantly.
Mingzhi Electric (603728), a leading supplier of hollow cup motors, is the exclusive supplier of joint motors for Yushu robots, with a single vehicle value of 4,000 yuan. The risk is high customer concentration, with only 260 million yuan in robotics motor revenue projected for 2024, far smaller than Harmonic Drive.
iFlytek (002230): leading in AI technology, focusing on service robots. The risk is that the robotics business does not account for a high proportion, and competition in the AI sector is fierce, with commercialization still needing breakthroughs.
Other investment targets can be explored further.
Suggestions:
Consider a combination of Inovance and Harmonic Drive, along with other high-potential targets like Estun, to diversify risks.
Adopt a long-term perspective, holding with the mindset of investing in manufacturing infrastructure, ignoring short-term fluctuations. Pay attention to valuation fluctuations, and position when market sentiment is low and valuations are reasonable to increase safety margins.
In summary, seek certainty amid uncertainty. The future of the robotics industry is full of imagination, but investment requires rationality. Inovance Technology, Harmonic Drive, and Estun may not be the most glamorous robotics companies, but they are likely the ones that can survive the longest.
I hope this analysis helps you make more informed decisions. When the tide goes out, those who truly possess core capabilities and risk resistance will eventually stand out.
Remember: in investing, “staying alive” is more important than “running fast.”
Once again, please note that the above content is based on publicly available information and personal opinions, and does not constitute any investment advice. Investment carries risks, and caution is required when entering the market. Please conduct independent research and judgment before making investment decisions.
Previous articles:
Li Bei shouted “once in a decade,” but Lin Yuan said “worthless”! Who should we listen to about the future of real estate?
Breaking news, stock god Buffett suddenly takes action!
Lin Yuan’s book launch for “30 Years of Investment Turbulence”: In the future, invest in these two tracks.
The wealth password for the next five years, industries benefiting from the “14th Five-Year Plan”.
The difference between “long-term investment” and “long-term holding”.