Middle Eastern Investments on the Rise!

As 2025 begins, investments from the Middle East continue to find their way into the Chinese market, signifying a growing interest in emerging technologies and industries within the regionRecent reports highlight notable investments made by Kuwait's government investment agency, which recently increased its stake in a publicly traded company on the A-share marketFurthermore, the venture capital arm of Saudi Aramco has also been active, participating in the E-round financing of a Shanghai-based firmIt’s crucial to underline that both companies share significant attributes, as they are key players within the same thriving industry sector.

The recent announcement from the listed company indicated that the Kuwaiti investment agency has upped its holdings in Sanhua Intelligent Controls, a prominent player in the HVAC control components sector

According to their disclosure on January 8, 2025, which detailed the major shareholders as of December 30, 2024, Kuwait Government Investment Authority purchased an additional 4,782,400 shares, bringing its total holdings to 23,520,800 sharesNotably, the National Social Security Fund’s 102 combination also entered the top ten shareholders list of Sanhua, acquiring shares that closely rival those of the Kuwaiti agency.

Sanhua Intelligent Controls has earned its reputation as the world's largest manufacturer of refrigeration control components, alongside being a leading supplier of automotive air conditioning and thermal management system controlsThe company operates three primary business segments: refrigeration and air conditioning electrical components, automotive parts, and strategic emerging businesses— the latter primarily focusing on electromechanical actuators in the field of bionic robots.

Kuwait’s increase in shares could be strategically linked to Sanhua Intelligent Controls’ expansion in humanoid robotics

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In recent years, funds from the Middle East have been notably active in A-share markets, with Abu Dhabi notably investing in companies like Inovance Technology, which is known for its humanoid robotics.

On the other hand, the venture capital fund under Saudi Aramco has made moves to invest in a company called Fourier Intelligent Technology Co., Ltd., which also specializes in humanoid robotics.

Founded in 2015, Fourier has made strides in humanoid robot development, undergoing multiple rounds of funding since its inceptionDuring its D-round financing in 2024, Fourier secured an investment of 400 million RMB from Prosperity7 Ventures, the venture capital arm of Saudi Aramco, alongside SoftBankMost recently, on January 7, 2025, Fourier announced that it raised approximately 800 million RMB in its E-round financing, with Prosperity7 Ventures continuing to play a significant role.

In terms of product development, Fourier introduced its first humanoid robot, GR-1, in 2023, followed by the GR-2 in September 2024. Both models have found applications in various fields, including guidance, consultation, academic research, and medical rehabilitation.

The interest in humanoid robots is not limited to just Sanhua and Inovance

Other firms, like Hongfa Technology, have also attracted investment from Middle Eastern funds and are similarly linked to the robotics segmentFor example, by the end of the third quarter of 2024, Abu Dhabi invested heavily in Hongfa’s subsidiaries, which received a high-tech enterprise certificate in November 2022.

The question arises: why are humanoid robots garnering increasing interest from Middle Eastern investors?

Humanoid robots, often referred to as bionic humans, are designed to replicate human appearance and behavior, specifically focusing on those with human-like bodiesFor years, the idea of humanoid robots mainly existed in the realm of science fiction.

Recently, however, progress in humanoid robots has been rapidBy December 2023, the term "humanoid robots" was listed among the top ten technological buzzwords of the year

On April 27, 2024, the Beijing Humanoid Robot Innovation Center unveiled the world's first full-sized humanoid robot capable of human-like running, powered entirely by electricityExperts predict that the humanoid robot industry could see explosive growth in the coming years, with China’s humanoid robot market expected to reach an approximate scale of 2.76 billion RMB by 2024, forecasted to balloon to 75 billion RMB by 2029, holding a 32.7% share of the global marketChinese Society of Electronics is even more optimistic, estimating that by 2030, China’s humanoid robot market could soar to 870 billion RMB, and when including all types of robots, the total market size is expected to exceed one trillion RMB.

Moreover, humanoid robots are receiving policy support—a principal focus areaFor instance, in 2024, the Ministry of Industry and Information Technology and six other departments announced policies to strengthen advanced equipment manufacturing, explicitly emphasizing breakthroughs in humanoid robotics, quantum computers, and other high-tech products.

According to Everbright Securities, the balance and mobility abilities of humanoid robots are currently at a relatively mature level

However, the critical factor hindering significant scaling of the industry remains in training, particularly the training necessary to generalize capabilities furtherThe challenge stems from the relative scarcity of high-quality motion data for robots, contrasting greatly with the vast resources available for text and imagesThey predict that 2025 will mark the year humanoid robots' capabilities reach a mature state, enabling extensive scene deployment that enriches training materials and enhances robot functionalities downstreamThroughout this time, close attention should be paid to the completion of scaled deployment, innovations in training methods, achievement of key results, and the ensuing industry catalysisThey maintain a strong outlook on the humanoid robot industry, focusing on hardware technology routes and advancements from various manufacturers involved.

Research institutions generally have high expectations for humanoid robot-related stocks

A recent survey of 24 selected stocks reflected that they possess considerable upside potential relative to current closing prices, indicating promising investment landscapes.

Among these, Eastsun’s stock saw the greatest potential for increaseThe company focuses on a comprehensive ecosystem in automation, successfully developing core businesses in industrial robots and intelligent manufacturing systemsHuatai Securities posited that with a rebound in robot market sentiment by the third quarter of 2024, the company's revenues would accelerate, and given its leading position in the industrial robot sector, expectations for revenue growth over the next two years appear robustConsequently, Huatai Securities maintains a 'Buy' rating for Eastsun, setting a target price of 31.6 RMB per share, marking a promising 78.94% potential increase from its latest closing price of 17.66 RMB.

Additionally, companies such as Dahua Technology, Invt, and Dunan Environment are among 16 stocks attributed with similarly high target prices representing over 20% upside potential based off their current market performance

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