Power Equipment Stocks Surge on Strong Earnings and Sector Tailwinds

Shares in the power equipment sector are demonstrating considerable strength. At the time of writing, HARBIN ELECTRIC (01133) surged 24.59% to HK$16.19. Weichai Power Co., Ltd. (02338) rose 8.36% to HK$32.14. Wasion Holdings Limited (03393) gained 7.94% to HK$19.30. Dongfang Electric Corporation Limited (01072) advanced 5.77% to HK$21.98.

The positive momentum follows an earnings forecast from HARBIN ELECTRIC. The company anticipates its net profit attributable to shareholders for the first half of 2026 will reach approximately RMB 17 billion, representing a year-on-year increase of 61.9%. Analysts at UBS view this forecast as significantly exceeding market expectations. They also highlight the potential for the stock's inclusion in the Southbound Stock Connect program in August as an additional catalyst for re-rating, suggesting the current period presents a buying opportunity.

Key Drivers of the Sector Upswing

The firm believes HARBIN ELECTRIC is entering a structural upcycle for profitability and return on equity, which accelerated in the first half of this year. Key supporting factors include rising capital expenditure in nuclear power and improved visibility from multi-year order backlogs. The company is also well-positioned to benefit from the recovery in thermal power, hydropower, and gas turbine markets.

Underlying Market Trends

A major tailwind for the sector is the confluence of global grid upgrades and the explosive demand for AI computing power, which is propelling the industry into a new growth phase. Earlier this year, the State Grid Corporation of China announced that its fixed-asset investment during the 15th Five-Year Plan period is projected to reach RMB 4 trillion, a 40% increase from the previous plan period and a record high.

Furthermore, the surge in AI computational needs is fundamentally reshaping global power supply and demand dynamics. The United States, as a core hub for global AI data center construction, is facing an unprecedented electricity supply gap. This capacity bottleneck is expected to create spillover opportunities for the Chinese industrial supply chain.