CICC: The industrial control cycle and structural market trends are expected to continue to evolve in 2025, or accelerate the pace of going global.

CICC released a research report stating that the industrial control sector is a typical pro-cyclical direction, but in recent years, due to relatively weak demand and lack of prosperity downstream, the sector has not yet seen beta-level market trends. The market trends are more dispersed in a structural alpha direction. It is expected that by 2025, the transmission of demand will become smoother, with new productive forces represented by humanoid Siasun Robot & Automation and low-altitude flight gradually completing the leap from 0 to 1. Looking ahead to 2025, both pro-cyclical and structural market trends are expected to continue to evolve, with opportunities for development in server power and RF power; with multiple strategies such as local manufacturers going international, localization, and distribution going international, 2025 is expected to be the year of accelerated internationalization for the industrial control sector. CICC's main points are as follows: Pro-cyclical: Currently at a point where the endogenous cycle is approaching improvement, while we also see that exogenous policy variables continue to show more positive changes. With the continuous decline in macro inventories of downstream industrial enterprises and micro inventories of distributors, the transmission of automation demand is expected to become smoother. With the improved sustainability of demand, the whip tail effect may further thicken the elasticity of original factory orders. We still view favorably related companies with large pro-cyclical exposures. Industrial power supply: AI and semiconductor open up growth space for high-end industrial power supplies, and prospects for development opportunities in server power and RF power are good. The tide of the times represented by AI has brought both high demand growth and many incremental components and new opportunities; in the semiconductor market, with changes in the external environment, the urgency of domestic substitution has increased, and domestic RF power supply manufacturers have gradually ushered in a strategic window of domestic substitution. Positive outlook on development opportunities for high-end power supplies in 2025. Industrial control going international: Industrial control going international brings high growth and high profits, and 2025 is expected to be a year of accelerated internationalization for industrial control. The overseas market space is vast, with the bank estimating the overseas market to be 3~4 times the size of the Chinese market, and the average gross profit margin in overseas markets is 10-20% higher than in domestic markets. Therefore, the bank sees that industrial control companies actively participating in overseas markets have seen significant improvements in both revenue growth and profit margins. In addition, learning from history and understanding the present, Yaskawa Electric has been exploring the Chinese market for thirty years, and its in-depth localization strategy is also key to its success. Overall, with multiple strategies such as local manufacturers going international, localization, and distribution going international, industrial control going international will become an important growth point for industrial control companies. New productive forces (humanoid & low-altitude): Optimistic about the broad prospects and commercial potential of new productive forces. Since 2024, humanoid Siasun Robot & Automation represented by Optimus has continued to evolve, with not only improved movement capabilities but also upgraded dexterity. In addition, technological giants such as Nvidia and Huawei have entered the market, promising future development potential for humanoid Siasun Robot & Automation. Furthermore, low-altitude flight has also seen policy support since 2024, with eVTOL companies advancing in certification, opening up a new development cycle for low-altitude flight. Risk factors: Macroeconomic fluctuations, intensified industry competition, and industry development pace falling short of expectations.