HUAMING (002270.SZ) Upgrade to Buy on attractive valuation post correction, while stable overseas growth driven by global grid upgrade remains intact

Research evidence excerpt

HUAMING (002270.SZ) Upgrade to Buy on attractive valuation post correction, while stable overseas growth driven by global grid upgrade remains intact

Goldman Sachs Huaming (002270.SZ)

Exhibit 4: We expect Huaming’s overseas On-load Tap Exhibit 5: …given its dominant market share of 90%/35%

Changer (OLTC) revenue (both direct and indirect export) by volume/value in China domestic market, as of 2026E

to increase contribution from 41% contribution in 2026E

to 59% in 2030E, while domestic market growth is around

industry level..

Source: Company data, Goldman Sachs Global Investment Research Source: Company data

Exhibit 6: We expect the global market share to increase Exhibit 7: …driven by on-par product quality, faster lead

from 13% in 2026E to 16% in 2030E in a duopoly market, time, and competitive pricing

competing with Germany private company, MR

Source: Company data, Goldman Sachs Global Investment Research Source: Goldman Sachs Global Investment Research

Valuation: We adopt a 2028E P/E valuation framework (unchanged), consistent with our

approach across AI infrastructure stocks. For Huaming, we apply a target multiple of

22x 2028E P/E, broadly in line with the sector regression of long-term EPS growth

against target-price-implied 2028E P/E for China Industrial Tech sector, as well as the

sector regression for global equipment peers of long-run EPS growth against

target-price-implied 2026E P/E. We believe Huaming deserves a premium multiple

(against 17% EPS CAGR in 2028-30E) given its superior earnings quality, dominant

domestic position and strong cash conversion. Its ROE and CROCI both rank in the first

quartile of our coverage. The company also operates in a global duopoly with durable

barriers to entry, as OLTCs are mission-critical components characterized by long