In the second quarter, online bidding was significantly better than the first quarter, and the third batch of power transmission and transformation bidding for State Grid began.
With the arrival of hot summer weather, China's electricity consumption will usher in a peak period.
The spokesperson of the National Development and Reform Commission stated that it will strengthen cross-provincial power dispatching, make use of the different characteristics of power load in various regions, carry out cross-provincial and cross-regional mutual assistance for surplus and shortage, and effectively solve outstanding contradictions and problems through emergency dispatch when necessary.
Sinolink research report shows that there are four investment themes in the power equipment sector:
1) Export of power equipment: China's export of power equipment has a clear upward trend, and there is serious imbalance between supply and demand overseas. Subsequent events such as overseas power grid investment planning, customs export exceeding expectations, and individual stock performance exceeding expectations will catalyze this trend.
2) Power reform: policies will drive the industry into the second growth curve.
3) Ultra high pressure transmission lines and main grid: there is strong demand for the second batch of wind and solar power bases to be transmitted externally, and there are still multiple line gaps. Subsequent events such as newly disclosed transmission lines, increased flexibility and penetration rate, and individual stock performance exceeding expectations will catalyze this trend. 4) Grid transformation: policy and tendering in some provinces increased year-on-year, and subsequent events such as policy and tendering exceeding expectations, and individual stock breakthroughs in bidding will catalyze this trend.
China Securities research report pointed out domestic power grid investment:
①Demand for ultra-high voltage is expected to continue to be released in the second half of the year. With equipment gradually entering the delivery period and achieving performance, it is expected that the construction of ultra-high voltage will be further accelerated;
②In the second quarter, online bidding was significantly better than the first quarter, and the third batch of power transmission and transformation bidding for State Grid began.
Electric power outflow industry chain:
①Global new energy installed capacity growth;
② Grid upgrading and construction;
③ Manufacturing industry returning/data center and other user-side increments, overseas demand will continue to improve.
On the supply side, the overall supply-demand is tight; the short-term high copper prices have caused short-term pressure on the profitability of some primary equipment companies, but the impact on high-voltage switches and export transformers is slightly weaker.
The power equipment sector is still the most certain direction in the new electricity industry, and it is recommended to maintain a relatively high allocation ratio.
Power equipment related enterprises:
Wasion Holdings (03393): Wasion Holdings is a leading supplier of energy metering equipment, systems, and services in China. The company's core products and services are electric AMI business, communication and fluid AMI business, and ADO business. The company's overseas business has significant advantages, and it currently has three factories overseas, in Mexico, Brazil, and Tanzania in Africa. The largest contribution is the Mexican factory, with a full production capacity of about 1.2 billion yuan; the newly-built Hungarian factory is designed to be the same size as Mexico and is expected to be put into production in April 2024. In 2023, the proportion of the company's overseas business revenue is about 25%, and it is expected to increase to around 30% in 2024. Currently, the Mexico market has entered a five-year meter replacement cycle, with strong and sustainable demand, and the company will further radiate its business to the surrounding areas of Mexico, and the future growth of overseas business is promising.
Dongfang Electric Corporation (01072): In the domestic market, stabilize the order for large-cap stocks, consolidate and enhance the advantages of traditional industries, and accelerate the breakthroughs in new industries and fields. Promote water, coal, nuclear, gas to continue to lead. In the overseas market, the overseas market achieved a revenue of 7.66 billion yuan in 2023, accounting for 12.62%, a year-on-year increase of 3.71 percentage points. The company's wind power strives to enter the first echelon, completes international type certification for key models, and strives for independent brand breakthroughs overseas, and orderly expands overseas marketing organizations and layouts.