Soochow Securities: GEV Raises Expansion & Earnings Targets, Bullish on Gas Turbine Industry Growth

Stock News12-15

Soochow Securities reported that GEV secured 114 gas turbine orders in Q1-3 2025, up 46% YoY, including 69 heavy-duty gas turbine orders (+57% YoY). Meanwhile, Siemens’ gas service business signed €18.2 billion in new orders (+42% YoY).

GEV has accelerated its annual gas turbine production target of 20GW from Q3 2026 to H1 2026 and further raised its expansion plan to 24GW by 2028. To support this, GEV plans to invest $10 billion in capital expenditures from 2025–2028.

The surge in AI data center construction has driven significant electricity demand, with stringent requirements for reliability and stability. Gas turbines are poised to become the optimal short-term power solution for data centers due to their rapid deployment, stable output, and low resource requirements.

**Key Insights:** 1. **Order Growth**: GEV and Siemens saw robust order increases, with GEV’s Q1-3 gas turbine orders up 46% YoY (heavy-duty units +57%) and Siemens’ gas service orders rising 42% YoY. 2. **Capacity Expansion**: GEV’s revised 20GW target to H1 2026 and 24GW by 2028 reflects strong demand. The company will invest $10 billion to support this expansion. 3. **Earnings Upgrade**: GEV raised its 2028 revenue guidance from $45 billion to $52 billion, with adjusted EBITDA margins up from 14% to 20%.

Given the complex supply chain shared with aerospace and defense sectors, gas turbine capacity expansion remains constrained, underscoring the industry’s upward trajectory.

**Domestic Opportunities**: With global gas turbine markets dominated by Siemens, GE, Mitsubishi Heavy Industries, and Caterpillar (via Solar Turbines), Chinese manufacturers have substantial substitution potential. Recommended stocks: - **Jereh Group (002353.SZ)**: Partnered with Siemens and Baker Hughes, secured $200M+ orders from U.S. AI firms. - **Hi-Mile (002595.SZ)**: Key supplier of turbine cylinders/rings to Siemens, GE, and Mitsubishi. - **Yingliu (603308.SH)**: Specializes in high-barrier turbine blades, gaining market share. - **Landing (605060.SH)**: Casting supplier to Caterpillar, poised to benefit.

**Risks**: AI investment delays, trade tensions, and slower domestic substitution progress.

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