Guojin Securities: Traditional circuit demand in the telecommunications industry is steady and optimistic about new quality productivity and overseas travel brings profit and valuation flexibility

The Zhitong Finance App learned that Guojin Securities released a research report saying that since 2025, demand in the automation market has shown a moderate recovery, driven by policies such as equipment updates and digital transformation of enterprises. In recent years, the process of replacing front-line equipment with domestic production has accelerated markedly. Leading domestic manufacturers are actively cooperating with downstream core customers to jointly promote the verification and introduction of automation products. It is expected that related products will usher in a stage of growth in large-scale mass production. In 2026, the industry is expected to officially kick off the “robot IPO”.

Guojin Securities's main views are as follows:

The overall summary of the industry in 2025: the industry recovery trend is determined, and the pattern is focused on the head

Driven by policies such as equipment updates and digital transformation of enterprises, demand in the automation market has recovered moderately over the past 25 years. The OEM market size was +2% year-on-year in the first three quarters, reversing the downward trend of the industry for three consecutive years since 2022. Downstream prosperity in industrial robots, lithium batteries, packaging, logistics, etc. is high, and new quality productivity represented by low altitude and physical intelligence is leaping 0-1. At the micro level, the enterprise as a whole showed a trend of “revenue growth and profit differentiation”, and the leading “Matthew effect” intensified.

Looking ahead to 2026: Demand for traditional racetracks is steady, optimistic that new quality productivity & overseas travel will bring profit and valuation flexibility

(1) Domestic: Investment in equipment related to technology iteration is the core direction of structural opportunities: ① the growth of “AI+” related industries drives a continuous increase in demand for manufacturing equipment such as semiconductors and electronics; ② solid-state battery pilot lines and the expansion of lithium battery production bring a new round of equipment cycles. Furthermore, there is room for new productivity (low altitude, physical intelligence, etc.) to exceed expectations, and the domestic automation market is expected to recover further in '26; (2) Overseas: Automation companies are accelerating the shift in their strategic focus and are expected to contribute to increased performance in the medium to long term.

Advanced manufacturing: domestic alternatives enter deep-water zones, core categories enjoy structural dividends

Semiconductor and high-end electronics manufacturing have strict precision requirements. The localization rate of advanced equipment is less than 20%, and there is plenty of room for replacement. In recent years, domestic replacement of Qiandao equipment has begun to accelerate. Leading domestic manufacturers are cooperating with major downstream customers to introduce automated products, and related products are expected to gradually expand. Benefiting from the boom in the downstream high-end manufacturing industry (semiconductors, electronics, lithium batteries, etc.), the inverter+servo+PLC+ relay market is expected to grow from 87.4 billion yuan in 24 to 103.1 billion yuan in '27, a CAGR of 6%, which is higher than the growth rate of the automation industry.

Humanoid robots: the first year of mass production is approaching, and OEM targets resonate with new technology iterations

The industry is expected to officially kick off the “robot IPO” in '26. Driven by leading companies such as Tesla (Gen3 launched in the first quarter of '26, mass production of 26Q2, and the construction of an Optimus production line with an annual output of one million units at the end of '26), the industry is expected to usher in full-scale mass production, while focusing on iterations of new technologies such as motors (axial magnetic flux motors). Industrial control companies actively lay out products such as joint modules and core components (motors, drivers, encoders) based on power electronics technology, and have card position advantages.

Low altitude: 26 years is a critical year to obtain evidence of airworthiness, focusing on the volume of leading orders in the segment

The four core elements of policy support, deregulation, infrastructure construction and industrial chain development work together to accelerate the commercialization of eVTOL, and it is expected that 2026 will usher in the issuance of a new batch of model certificates. As a high-value (high power density, high safety) link, the electric drive system has extremely high certification barriers and strong customer stickiness. Wolong Electric Drive has reached cooperation with customers such as COMAC, Wofei, and Shanhe Star Airlines, and is expected to be the first to fulfill order performance in '26.

Going overseas: From “optional” to “required”, AIDC opens up a new blue ocean

The global industrial automation market has reached 240 billion US dollars (Statista data), and the overseas capacity is about 4-5 times that of the domestic market. Domestic-funded enterprises are penetrating from emerging markets to high-end markets in Europe and the US. Pay particular attention to the spillover effects brought about by the surge in AIDC capital expenditure. Demand for high-voltage DC relays, HVAC electric drive systems, etc. is booming, and it is expected to become a new growth pole for overseas trips.

Investment advice

The proposal is laid out around the following three main lines: (1) strategic card position and scale effect leader: focus on recommending the leader [Huichuan Technology], which has a stable position in the industry, cross-cycle risk resistance and long-term strategic value; (2) targets with high growth and flexibility: focus on growing enterprises that benefit deeply from the industry's overall growth dividends and acceleration of localization, and have clear overseas strategies, categories and downstream scenario expansion capabilities, [Xinjie Electric], [Raysai Intelligence], etc.; (3) Aim for invisible champions in emerging racetrack AI segments: Core components that have taken the lead in technology in booming fields and System suppliers, it is recommended to pay attention to [Ocean Motor], etc.

Risk Alerts

The slump in the manufacturing industry, increased market competition, uncertainty about the implementation of cutting-edge technology research and development, raw materials and supply chain cost risks, etc.