CICC: Power Equipment Sector Maintains Steady Growth in Q3, Optimistic About Sustained Grid Investment at Home and Abroad

Stock News2025-11-12

The power equipment sector reported an 11.9% year-on-year revenue growth in Q3 2025, maintaining steady performance. Segment-wise, secondary equipment (+16.2%) outperformed primary equipment (+13.8%), followed by grid digitalization (+9.8%), while smart power distribution and consumption (-5.4%) lagged.

From January to September 2025, China's grid construction investment reached RMB 437.8 billion, up 9.9% year-on-year. Grid investment is expected to sustain high single-digit annual growth in the coming years. Overseas demand remains robust, supporting Chinese power equipment companies in expanding globally.

**Primary Equipment**: Demand showed slight divergence, with strong ultra-high voltage equipment tendering in main grids and notable export growth for transformers and switches. However, weak Q3 new energy installations outside the grid slightly pressured deliveries. The sector remains optimistic about accelerated ultra-high voltage projects by year-end and positive contributions from overseas demand.

**Secondary Equipment**: Performance remained stable, driven by steady demand for main grid protection and companies diversifying into grid-independent markets like energy storage and computing centers, alongside overseas expansion.

**Smart Power Distribution & Consumption**: The segment faced temporary pressure due to sluggish domestic meter deliveries. However, new meter tenders are expected to drive volume and price growth. Overseas diversification efforts continue, with companies entering new markets and accelerating exports of distribution products.

**Grid Digitalization**: Performance rebounded quarter-on-quarter, supported by recovering State Grid digital tenders and faster power market development. Companies hold ample orders, with Q4 deliveries likely to optimize business structures. Increased AI-related investments could further bolster long-term growth.

**Stock Recommendations**: 1) **Ultra-High Voltage**: Henan Pinggao Electric (600312.SH), Nari Technology (600406.SH), China XD Electric (601179.SH), XJ Electric (000400.SZ). 2) **Global Power Equipment Expansion**: Sieyuan Electric (002028.SZ), Huaming Power Equipment (002270.SZ), Wasion Holdings (03393), Ningbo Sanxing Medical Electric (601567.SH), Hainan Jinpan Smart Technology (688676.SH), Beijing Baination Pictures (300291.SZ), Hexing Electrical (603556.SH), Hebei Huatong Wires & Cables (605196.SH), Gold Cup Electric Apparatus (002533.SZ), TBEA (600089.SH). 3) **Smart Grid & Distribution**: Beijing Sifang Automation (601126.SH), State Power Rixin Technology (301162.SZ), Willfar Information Technology (688100.SH), Longshine Technology Group (300682.SZ), State Grid Information & Telecommunication (600131.SH).

**Risks**: Potential shortfalls in domestic grid investment, changes in international trade policies, and currency fluctuations.

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