Fiscal stimulus eases short-term pressure on innovation in Shenzhen, but long-term risks remain

We believe Shenzhen Inovance has a narrow moat driven by intangible assets and switching costs. Inovance has earned a reputation as a reliable supplier, offering service parts and complete solutions throughout the life of the elevators. Elevator customers are unhappy with safety requirements, and the software behind elevator systems is tightly integrated with the equipment. Inovance now offers a suite of cable, automotive, cord and human machine interfaces, strengthening its leadership over local peers. Inovance is opening a plant in Hungary, which will help it strengthen its relationships with global elevator brands.