The domestic main network equipment is expected to enter a period of intensive delivery in the third quarter of 2024, and bidding for domestic distribution equipment is expected to start in the fourth quarter of 2024 to the first half of 2025.
Zhitong Finance and Economics APP learned that Guosen Securities released a research report stating that in the third quarter of 2024, domestic main network equipment is expected to enter a period of intensive delivery, with bidding for domestic distribution equipment expected to start from the fourth quarter of 2024 to the first half of 2025. The relevant enterprises are expected to have strong performance, maintaining a growth trend for at least the next year. In terms of energy storage, the overseas energy storage installation market has shown signs of recovery since this year, with power inverter demand starting to rebound. At the same time, product prices have begun to stabilize, showing positive prospects for the valuation attractiveness of the power inverter sector after the fundamentals have bottomed out. The potential decrease in long-term overseas capital costs is expected to drive further growth in energy storage installations, especially in the large-scale energy storage and commercial energy storage markets.
Guosen Securities' main points are as follows:
The power grid investment is expected to usher in a new cycle.
Domestically, in the third quarter of 2024, domestic main network equipment is expected to enter a period of intensive delivery, with bidding for domestic distribution equipment expected to start in the fourth quarter of 2024 to the first half of 2025. The related companies are expected to perform strongly and to maintain a growth trend for at least the next year. Overseas, with the development of new energy, increasing electricity consumption, the renovation of old power grids, and other multiple demands, the power grid investment cycle is expected to be long-lasting. Chinese companies are expected to increase their market share overseas. Key focus areas include ultra-high voltage and distribution network companies with overseas layouts such as Henan Pinggao Electric, Eaglerise Electric & Electronic, Huaming Power Equipment, Nari Technology, Sieyuan Electric, Hexing Electrical, and XJ Electric Co., Ltd.
Wind power equipment is expected to undergo a reversal.
Recently, domestic offshore wind power tenders have significantly recovered, with key projects expected to start construction one after another by the end of 2024. The 2025-2026 European offshore wind power tenders are expected to enter a window period, with domestic marine cable and pile head enterprises benefiting greatly from tight overseas supply. Domestic onshore wind turbine unit prices have stabilized, signaling a profit bottom, while rapid growth in export orders provides long-term profit elasticity. Key areas to watch include wind turbine companies and leading component enterprises such as Goldwind Science & Technology, Zhuzhou Times New Material Technology, Sany Heavy Energy, and China Intergrator.
The lithium battery production and sales remain strong.
The demand for the auto market in October is expected to continue to improve, with new models being delivered one after another and existing models having improved cost performance, which is expected to help drive the Q4 demand higher. At the same time, policies supporting the replacement of old cars with new ones and the subsidy replacement are further increasing, which is expected to continue to drive the demand for new energy vehicles and power batteries. In terms of major battery materials, the production of cathodes, anodes, separators, and electrolytes is expected to increase month-on-month, and the capacity utilization of top material companies is expected to improve. In terms of profitability, the profitability of batteries and upstream segments such as cathodes and electrolytes is expected to stabilize, while the competition pressure in segments like separators continues, and profitability may continue to face challenges. Key focus on Contemporary Amperex Technology, Zhuhai Guanyu, TBEA Co., Ltd., and Hongfa Technology among others.
Global energy storage installations are expected to experience explosive growth.
Since the beginning of this year, the overseas market for energy storage installations has shown signs of recovery, with power inverter demand starting to grow again. At the same time, product prices have begun to stabilize. According to data from the US Energy Information Administration (EIA), the cumulative installed large-scale energy storage capacity in the US from January to August reached 5.96GW, up 58% year-on-year. The EIA predicts that by the end of 2024, the annual energy storage installations will reach 15.31GW, up 140% year-on-year. In the domestic market, the demand for energy storage installations continues to grow rapidly. According to a summary of bidding information on the Polaris Energy Storage Network, the bidding capacity for domestic energy storage system projects from January to September 2024 was 57.9GWh, up 5% year-on-year. Looking ahead in the medium to long term, emerging markets such as Asia, Africa, and Latin America will continue to increase their demand for energy storage installations.
Guosen Securities expressed optimism about the fundamentals of the power inverter sector after hitting the bottom in valuation attractiveness. The expected drop in long-term overseas capital costs is likely to drive the demand for solar energy storage installations further, especially in the large-scale storage and commercial and industrial energy storage markets. Key focus on Sungrow Power Supply, EVE Energy Co., Ltd., Shenzhen Sinexcel Electric, and Shenzhen Hopewind Electric among others.
Risk warning: risks of policy changes; significant fluctuations in raw material prices; electric vehicle production and sales falling short of expectations.
