Shenzhen Inovance’s Fourth-Quarter Non-Operating Numbers Pose “One-Off” Surprises; FVE Retained

We retain our fair value estimate on narrow-moat Shenzhen Inovance of CNY 48.5 per share after the company announced preliminary figures. The numbers largely meet our expectations, save for some noncore items. We intend to update our forecasts once Inovance announces full-year 2021 and first quarter of 2022 results at the end of April. While we think Inovance is on track to achieving above-industry growth in industrial automation, robotics and electric vehicle segments, the stock still appears overvalued after plunging 7% in Thursday morning trade, as the market seems to overlook macroeconomic risks in China and execution risks in overseas expansion.