China Power T&D Equipment Eye on UHV and secondary equipment

Research evidence excerpt

China Power T&D Equipment Eye on UHV and secondary equipment

Equities ● Electrical Equipment

13 May 2026

Investment summary

The share prices of the six power equipment stocks we cover (Pinggao, Xuji, Nari, Huaming,

Sieyuan, Chint) have dropped 2-30% since early March (vs CSI 300 index up 3%), spurred by profit-

taking activities. We believe the correction provides a good entry opportunity given our positive view

on China’s grid investment outlook, and expect 9% growth in 2026, up from 5% in 2025. The

tendering size of backbone network equipment rose 21% y-o-y in the state grid’s last transmission

and transformation equipment tendering (2nd batch, 2026), signaling an upturn. We believe the

concerns on grid equipment price cuts are behind us as the ASPs of distribution equipment and

smart meters have rebounded since 2H25 (Exhibit 2-3).

In addition to ultra-high voltage (UHV) equipment, which we continue to believe will be a focus area

for grid investments in the 15th FYP (2026-30) (China Power T&D Equipment: Set for a strong start to

the 15th FYP, 28 January 2026), we also foresee opportunities in secondary equipment on the

development of virtual power plants (VPPs). On 25 March 2025, the NDRC issued Guiding

Opinions on Accelerating the Development of Virtual Power Plants. It was the first time that a

general arrangement of VPP development was introduced nationwide. The development of VPP

requires the distribution network to be smarter and more flexible to achieve real-time monitoring

and management of the power system. This should generate demand for more secondary

equipment, we believe.

Preferred stocks: We prefer Nari and Pinggao. We expect Nari to benefit from rising secondary