Orient: Emerging technologies are changing the cyclical characteristics of machine tools, bringing increased prosperity resilience and opportunities for structural upgrading.

Orient released a research report stating that from January to July 2026, the revenue of China's machine tool industry increased by 7.1% year-on-year, of which the metal cutting machine tool sub-industry increased by 17.4% year-on-year, and the industry continues to prosper. Driven by emerging technologies such as AI and humanoid Siasun Robot&Automation, the cyclical characteristics of the machine tool industry are changing. On the one hand, the sustainability of the industry's prosperity is expected to strengthen; on the other hand, leading companies with high-end precision production capacity are expected to benefit structurally. Orient's main views are as follows: The prosperity of the machine tool industry continues to rise, and demand from the technology industry is changing cyclical characteristics In the past, machine tool demand was anchored to the capital expenditure of traditional manufacturing industries such as automobiles and general molds, and the industry's prosperity had strong cyclical characteristics. However, the bank believes that the underlying foundation of recent industry demand has changed. Driven by the technology industry, the prosperity of the machine tool industry no longer relies solely on the renewal of existing equipment and the recovery of traditional manufacturing. The resilience of the industry's prosperity has clearly improved, and the characteristics of weakened cyclicality and strengthened growth are gradually emerging, with fundamentals continuing to improve. The bank observed that from January to July 2026, the revenue of China's machine tool industry increased by 7.1% year-on-year, of which the metal cutting machine tool sub-industry increased by 17.4% year-on-year, and the industry continues to prosper. The expansion of emerging technology industries will continue to drive growth in the machine tool industry The bank believes that the core DRIVE behind the current high growth of the machine tool industry comes from demand growth in emerging technology industries such as AI computing power construction and mass production of humanoid Siasun Robot&Automation. Unlike the phased inventory restocking and equipment renewal of traditional manufacturing, capital expenditure on AI liquid cooling structural parts, humanoid Siasun Robot&Automation joints, reducers, and precision housing components will bring new demand for machine tools. The bank expects that as the mass production pace of complete humanoid machines advances and the global AI computing infrastructure expands, the demand for production capacity construction of downstream precision components will continue to be released, and machine tool orders in emerging tracks are expected to continue to increase significantly. Emerging technology industries impose new processing requirements, bringing structural opportunities and benefiting leading companies AI and humanoid Siasun Robot&Automation components differ from traditional manufacturing in processing accuracy, equipment stability, material lightweighting, and complex curved surface processing capabilities. Traditional low- and mid-end general-purpose machine tools are relatively difficult to adapt to the processing requirements of emerging scenarios, and demand for high-end five-axis machine tools, precision grinders, and high-precision drilling and milling machining centers is expected to increase. The industry demand structure continues to migrate toward high-end precision, and the bank believes that the market share of leading companies that can match the processing requirements of emerging tracks and possess high-end precision production capacity is expected to increase. Risk warnings Macroeconomic fluctuations leading to investment falling short of expectations, AI demand falling short of expectations, the development of liquid cooling systems falling short of expectations, and rising raw material prices dragging down corporate profitability.