A research report from Guolian Minsheng Securities indicates that recent remarks from Donald Trump highlight the inability of the aging U.S. power grid to meet the substantial electricity demands of AI development, prompting a call for technology companies to build their own power plants. Currently, maintenance for heavy-duty gas turbines is still primarily handled by original equipment manufacturers like Siemens Energy, while maintenance orders for small and medium-sized gas turbines are increasingly being outsourced to third-party service providers. Driven by the power requirements of AI data centers, the gas turbine and natural gas engine industries are entering a prolonged upcycle. Overseas leaders are seeing simultaneous increases in orders and price indices, with high service revenue contributions leading to an upward re-rating of valuation multiples. Domestic supply chains are accelerating their capture of spillover international demand, supported by local component substitution and capacity expansion capabilities. The main viewpoints of Guolian Minsheng Securities are as follows:
**Event: Trump Urges AI Giants to Build Power Plants** Donald Trump recently stated that the aging power grid cannot meet the massive electricity needs of AI development and has urged technology companies to construct their own power generation facilities. On March 4, seven major tech giants, including Amazon and Microsoft, will gather at the White House to formally sign the "Ratepayer Protection Commitment." These companies will commit to building or procuring power for new AI data centers independently, moving away from reliance on the public grid, aiming to ensure AI development without causing residential electricity price increases.
**AI Data Centers Unlock New Growth for Gas Turbines** (1) For the 2025 fiscal year, Siemens' undelivered order backlog has reached a new high of €138 billion. Siemens has outlined clear long-term capacity expansion plans, aiming to increase capacity to over 30GW by 2030. (2) GE Vernova secured approximately 20GW of new gas turbine orders in 2024, double the amount from 2023. As foreign OEMs revise their capacity expansion plans upward and face significant bottlenecks in their local supply chains, the number and share of domestic suppliers within the OEMs' incremental capacity are expected to accelerate. The high demand is rapidly transferring to domestic component manufacturers.
**While New Gas Turbine Demand is Strong, the Global Service Market Enters a Long, High-Certainty Growth Phase** Currently, maintenance for heavy-duty gas turbines remains dominated by OEMs like Siemens Energy, while maintenance orders for small and medium-sized turbines are gradually shifting to third-party repair companies. Following industry patterns, the maintenance market typically peaks about 10 years after the new equipment market peaks, suggesting a rapid growth period around 2035-2040. The industry is currently in an upcycle for maintenance services, with substantial future growth potential.
**Gas Turbine Capacity Expansion is Slow, Making Natural Gas Engines a New Trend for Primary Power** The focus on addressing North America's power shortage is expanding from gas turbines to natural gas engines. The advantages of natural gas engines (including medium-speed and high-speed engines) are their significantly shorter construction cycles compared to gas turbines and nuclear power, along with substantially lower fuel costs than diesel. Consequently, natural gas engines are rapidly transitioning from peaking and backup power sources to becoming the primary power source for data centers and industrial loads. The natural gas engine industry is expected to enter a high-growth window lasting 5-10 years. Current core international suppliers of natural gas engines include Caterpillar, Wärtsilä, Cummins, and Jenbacher. Following this industry trend, two main investment themes are identified: (1) Chinese core suppliers for international natural gas engine manufacturers. (2) Chinese natural gas engine manufacturers capable of exporting to North America.
**Investment Recommendation** Driven by AIDC power demand, the gas turbine and natural gas engine industries are in a long-term upcycle. Overseas leaders are experiencing rising orders and price indices, with high service revenue shares leading to valuation expansion. Domestic supply chains are quickly capturing spillover international demand through component localization and capacity expansion. The report recommends Liande Co., Ltd. (605060.SH) and suggests monitoring Yingliu Co., Ltd. (603308.SH), Wanze Co., Ltd. (000534.SZ), Haomai Technology (002595.SZ), Xizi Clean Energy (002534.SZ), BoYing Special Welding (301468.SZ), and Changbao Co., Ltd. (002478.SZ).
**Risk Warning** Potential risks include intensifying competition, AIDC construction falling short of expectations, and fluctuations in raw material prices.
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