Chinese robots are on a roll. Morgan Stanley shares its favorite plays

Morgan Stanley identifies China as a growing global robotics leader, driven by record industrial robot installations and domestic suppliers now outselling foreign counterparts, projecting 10% annual growth in Chinese manufacturing robotics through 2028. The firm favors Inovance and Geekplus, with analysts at Daiwa initiating coverage on Geekplus, an automated warehouse robot system provider, with a buy rating, expecting profitability this year and over 30% annual growth through 2029, noting its resilience to U.S. tariffs. Concurrently, HSBC upgraded Inovance, a factory automation leader, to buy, forecasting 22% annual earnings growth through 2027 as China's industrial automation market is set to recover.

Analysis

China is solidifying its global robotics leadership, installing a record 295,000 industrial robots in 2024, with domestic suppliers outselling foreign ones. Morgan Stanley projects 10% annual growth in Chinese manufacturing robotics through 2028, contributing to global installations exceeding 700,000 by 2025, with AI broadening applications.

Morgan Stanley favors Inovance and Geekplus. Geekplus, an automated warehouse robot system provider, received a "buy" from Daiwa, anticipating profitability this year and over 30% annual growth through 2029. It exhibits strong global diversification, with over 70% of 2024 revenue from outside mainland China and a client base including 65+ Forbes Global 500 companies.

Geekplus is also well-positioned against U.S. tariffs, leveraging a 30% cost advantage and potential assembly shifts to Japan, despite acknowledged execution uncertainty. Inovance, a leading industrial automation supplier, was upgraded to "buy" by HSBC, forecasting 22% annual earnings growth through 2027.

HSBC expects China's industrial automation market to recover in 2026-27. Analysts are closely monitoring Inovance's EV control systems for better-than-expected sales, potentially supporting stock performance and projected earnings growth.

Key Decisions for Investors

• Consider increasing exposure to the Chinese robotics and industrial automation sector given strong growth forecasts and domestic leadership.
• Evaluate Geekplus for its high growth potential, global diversification, and tariff resilience, particularly following its recent listing and positive analyst initiation.
• Assess Inovance for its established market leadership in factory automation and projected earnings recovery, monitoring its EV control systems performance for upside potential.