China is not only introducing more robots, it is also manufacturing more robots. In a Sept. 30 report shared with the media last week, investment analysts said this theory supports Morgan Stanley’s view that China will continue to grow as the world’s robotics leader, giving an advantage to two Chinese companies. The analysis follows the release of the International Federation of Robotics’ annual report in late September, which showed that not only will China install a record 295,000 industrial robots in 2024, but domestic suppliers will outsell foreign companies for the first time. “There is no sign that China’s demand for robots will slow down as Chinese robotics opens up new markets,” the report said. “China’s manufacturing industry still has a lot of potential to grow by an average of 10% every year until 2028.” The number of robots installed worldwide is expected to grow by 6% this year to 575,000 and reach more than 700,000 by 2025. With the latest advances in generative artificial intelligence, robots could soon be used more widely in new scenarios such as collaboration with humans and service roles, Morgan Stanley analysts said. “We prefer Inovance and Geekplus,” they said. While Shenzhen-listed Innovance has garnered widespread attention as a supplier of industrial automation products, Geek+ has largely flown under the radar, only listing in Hong Kong this summer. Geekplus sells automated robotic systems primarily for moving products within warehouses. By 2024, more than 70% of the company’s revenue will come from outside mainland China, and Geekplus claims its customers include more than 65 Forbes Global 500 companies. According to an Oct. 3 report that initiated Geek+ coverage with a buy rating, analysts at Daiwa Capital Markets said those clients include Unilever, Walmart, and Adidas. The four companies did not respond to requests for comment. Daiwa analysts expect Geek+ to reach profitability this year and benefit from industry growth of more than 30% annually through 2029. Chinese companies are also “well prepared for U.S. tariffs,” the report said. Even though about a quarter of Geekplus’s sales come from the United States, the company noted that its rates are 30% lower than its competitors, giving it room to increase prices while potentially moving assembly to Japan. Morgan Stanley’s preference for Geek+ is based on comparisons with the humanoid robot and autonomous driving sectors, but it should be noted that the potential warehouse market is small and execution uncertainty remains. But analysts predict that Geek+ could benefit from the opportunity to gain market share faster than the overall industry growth. As for Innovation, Morgan Stanley analysts said if the economy grows faster than expected, demand for automation products will increase. Analysts are particularly focused on whether Innovance’s EV control systems will generate better-than-expected sales this year, supporting the stock. HSBC analysts upgraded Innovance to buy-from-hold in mid-September “due to its market leadership in factory automation.” “We expect China’s industrial automation market to resume growth in 2026-27 after two years of weakness,” HSBC said. As a result, Innovance expects to see revenue growth of 22% annually through 2027. —CNBC’s Michael Bloom contributed to this report.
