Shenzhen Inovance Technology Co Ltd Class A

300124: XSHE (CHN)

Morningstar Rating for Stocks	Fair Value	Economic Moat	Capital Allocation
	¥46.00	Rlfcjd	Jszvwkgvb

Inovance Becomes Attractive as Automation and EV Prospects Outshine Valuation. FVE up to CNY 60.

Phelix Lee

Apr 27, 2022

We lift our fair value estimate on narrow-moat Shenzhen Inovance to CNY 60 per share after incorporating more upbeat revenue forecasts but more conservative gross margin assumptions, especially for 2022. Despite a sell-off in China tech names due to concerns on the economic toll from lockdowns, we view Inovance’s valuation and fundamentals have improved to justify a buy. The stock is trading at 36 times 2022 adjusted P/E and 27 times 2023 adjusted P/E. We regard Inovance as a high-quality ticker which would be among the first to rebound when sentiment bottoms out.

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