The Zhitong Finance App learned that Huaxi Securities released a research report that the global power grid investment boom and demand for power equipment is strong, and power grid investment has entered a boom cycle. Domestically, with large-scale access to new energy sources, the increase in investment in supporting power grids will drive corresponding demand for power equipment; from an overseas perspective, the overseas power equipment market has considerable room, driven by demand such as rapid growth in global new energy installations, power grid transformation and upgrading, increased infrastructure support, and manufacturing expansion. The profit inflection point of the lithium battery industry chain is optimistic about the consumer sector where the boom is picking up; the second half of the year is expected to welcome the peak wind power construction season, and overseas markets can be expected to benefit; demand for photovoltaic terminals continues to grow to grasp the high-quality market layout.

(1) Power grids: Global grid investment boom, strong demand for power equipment

Domestically, with large-scale access to new energy sources, increased investment in supporting power grids will drive corresponding demand for power equipment. According to statistics from the National Energy Administration, in January-May, the power grid project completed an investment of 1703 billion yuan, an increase of 22% over the previous year. From an overseas perspective, power grid investment has entered a boom cycle driven by demand such as rapid growth in global new energy installations, power grid transformation and upgrading, increased infrastructure support, manufacturing expansion, data center construction, and multinational power grid interconnection, and the overseas power equipment market has considerable room.

(2) Lithium batteries: Focus on the profit inflection point of the industrial chain and be optimistic about the consumer sector where the boom is picking up

In terms of new energy vehicles, focus on the profit inflection point of the industrial chain. On the one hand, I am optimistic about the boosting effect of the increase in the operating rate of the industrial chain on profitability after the improvement of the supply and demand pattern; on the other hand, after the impact of factors such as falling product prices in the early stages and the weakening of factors such as high price inventory drag down, the profit level bottoms out or is expected to reach an inflection point. I am optimistic about high-quality targets with leading cost advantages and profitability leading the industry to recover under product structure optimization. On the consumer side, focus on segmented racing tracks such as power tools, PC & mobile phone batteries, etc. In terms of power tools, driven by factors such as the gradual return of manufacturers' inventories to normal combined with changes in the external macro-environment, the power tool industry is expected to gradually recover, which in turn is expected to drive the prosperity of upstream batteries and other sectors. On the consumer electronics side, we are optimistic about the gradual recovery of global PC & mobile phone shipments, and we are concerned about the effects of artificial intelligence etc. on the recovery of the consumer electronics industry chain.

(3) Wind power: Domestic construction is expected to peak in the second half of the year, and overseas markets can be expected to benefit

The number of new wind power installations in China increased year-on-year in January-May, and construction progress of the Seabreeze project is expected to accelerate in the second half of the year. The scale of tenders increased year-on-year, laying the foundation for future installed capacity.

The European maritime climate is rising, and high-quality domestic enterprises are expected to continue to benefit. 1) In terms of inventory, companies with historical order accumulation and orderly delivery are expected to receive effective performance support and smooth domestic project fluctuations. 2) In terms of addition, against the backdrop of rapid growth in demand for European seabreeze and power interconnection, the gap between overseas and local supply and demand is compounded by pre-tenders. Domestic companies are expected to continue to receive overseas orders in the future.

(4) Photovoltaics: Demand for terminals continues to grow, grasping high-quality market layout

On the demand side, the PV market at home and abroad remains booming. The total PV installed capacity in China and the US is expected to rise steadily in April-May, and the scale of module exports continues to grow; on the supply side, prices in the main industry chain continued to decline in the second quarter, and the industry's profit level entered a pressurized range. Considering that the model where the price of the industrial chain operates below the cost line cannot be maintained for a long time, supply-side optimization has begun, and enterprises with cost, channel, and technical advantages are expected to cross the industry cycle. In terms of industry logic, it is recommended to focus on the current photovoltaic bracket and inverter segment where product prices are relatively stable and have a high-quality market layout.

Risk warning: The development of the NEV industry falls short of expectations; improvements in new energy installations and power restrictions fall short of expectations; risk of falling sharply in product prices; falling short of expectations in power grid construction; falling short of expectations in tenders; risk of fluctuations in raw material prices; trade policy risks, etc.