The market has overly high expectations for the robotics business! Goldman Sachs downgraded the rating of "Sanhua Intelligent Controls."
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Due to excessively high market expectations for the humanoid robot business, leading component manufacturer Sanhua Intelligent Controls’ A-share rating has been downgraded by Goldman Sachs. The investment bank believes that although the company’s long-term potential still exists, the recent surge in its stock price has already overly reflected optimism that is unlikely to be realized in the short term.
According to Zhuifeng Trading Desk, Goldman Sachs, in its latest report released on November 2, downgraded Sanhua Intelligent Controls’ rating from “Buy” to “Neutral.” Goldman analysts pointed out that, despite market enthusiasm for the humanoid robot business, Tesla further delayed the release and mass production timeline for the Optimus Gen 3 robot during its most recent earnings call, bringing great uncertainty to short-term revenue contribution.
Previously, boosted by Tesla’s release of “Masterplan Part 4” and market rumors such as “Tesla placed a 5 billion RMB humanoid robot order with Sanhua Intelligent Controls,” Sanhua’s A-shares have soared 51% since September 2.
Goldman Sachs believes that the current stock price has already priced in overly aggressive robot shipment assumptions, which are unlikely to be achieved in the next 12 months. The investment bank’s 12-month target price for Sanhua A-shares is 40.9 RMB, implying an 18.1% downside from the stock price at the time of the report. At the same time, Goldman maintains a “Buy” rating on Sanhua’s H-shares.
Valuations have overdrawn the future; robot shipment expectations are unrealistic
Goldman’s core argument is that the market’s valuation of Sanhua in the humanoid robot sector is “too high, too early.” According to Goldman analyst Jacqueline Du, the implied valuation of Sanhua’s current A-share market cap is equivalent to the company having to ship 900,000 to 2,000,000 humanoid robots in the future (assuming Sanhua holds a 30% to 70% market share in actuator assemblies).
This expectation appears especially aggressive. Goldman believes it is premature to assess Sanhua’s real opportunities before seeing clear product performance and order evidence for Optimus Gen 3.
Goldman highlights in its report that Tesla had previously set a goal of 1 million Optimus robots shipped by 2030. Additionally, Tesla’s latest updates have also cooled market optimism. According to Tesla analyst Mark Delaney’s report, the launch of the Optimus Gen 3 robot, originally scheduled for before the end of 2025, has been postponed to Q1 2026 (February to March), and mass production has been pushed from early 2026 to the end of 2026.
Main business growth slowing, short-term pressure
While the outlook for the robotics business remains unclear, Sanhua’s traditional main businesses may also face pressure from slowing growth in the next two to three quarters.
Goldman, citing its China consumer products analyst Nicolas Yi, notes that due to high base effects and the government’s pace control of “old-for-new” home appliance subsidies, Sanhua’s HVAC (heating, ventilation, air conditioning) components will face continued growth pressure in Q4 2025. At the same time, China automotive analyst Tina Hou expects the production growth rate for new energy vehicles (EVs) in China to slow from 37% in 2025 to 19% in 2026 and 2% in 2027. This will impact Sanhua’s EV thermal management business, and Goldman forecasts year-on-year growth in this business to hold at a moderate 12%-15% in coming quarters.
Though Goldman maintains a cautious view, the enthusiasm for upstream home appliance companies like Sanhua entering the humanoid robot sector is not baseless. According to China Appliance Network, Sanhua has already listed “bionic robot electromechanical actuators” as a strategic emerging business in its annual report and has begun layout at its Hangzhou and Mexico bases.
Re-evaluation: raising earnings forecast, but lowering rating
Notably, while downgrading the rating, Goldman actually raised its 2025-2030 earnings per share (EPS) forecast for Sanhua by 4%-8%. This move is mainly due to the company’s outstanding cost control shown in its Q3 2025 financial report, which Goldman sees as a sustainable factor.
Based on a sum-of-the-parts (SOTP) valuation cross-check of the core business and humanoid robot business, Goldman raised Sanhua’s target P/E ratio from 21x to 25x. In this model, the core business is valued at 20x P/E, while the promising humanoid robot business receives a 40x P/E.
Despite improvements in long-term profitability and the valuation model, the stock price has risen too rapidly in the short term, far surpassing the target price based on fundamental analysis, which ultimately led Goldman to rate Sanhua A-shares as “Neutral.” This reflects that, for investors, it’s crucial to distinguish long-term narratives from short-term realities.
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