The Zhitong Finance App learned that China Galaxy Securities released a research report saying that due to economic recovery and rapid AI development, global electricity demand continues to grow. Combined with the need for new energy grids and grid renewal, global grid investment is expected to double to 600 billion US dollars in 2030, and power equipment companies going overseas are expected to fully benefit. The wind power industry curbs internal consensus and large-scale trend. Profits are expected to improve, long-term demand in the global market is stable, and wind power overseas is expected to benefit. Furthermore, complex changes in the current global situation will accelerate energy transformation, and demand in the overseas optical storage market will be viewed positively. Energy storage will still be the highest growth track in '24, where high competition and high growth coexist.

The main views of China Galaxy Securities are as follows:

Bidding picked up, laying the foundation for 25 years of high installed capacity growth.

According to incomplete statistics from Fengmang Energy, in the first three quarters of 2024, a total of 109.3GW fan purchases (including international and framing) by OEM manufacturers increased 46%. The whole machine concentration is high and the pattern is stable. Lufeng's top 5 are Goldwind Technology, Envision Energy, Yunda Co., Ltd., Mingyang Intelligence, and Sany Heavy Energy, accounting for a total of 74.8%. Haifeng's top 5 are Goldwind Technology, Mingyang Intelligence, Electric Wind Power, Dongfang Electric, and Envision Energy, accounting for a total of 100%.

Profitability is expected to improve by curbing the trend of internal consensus superposition and large-scale expansion.

At the wind energy exhibition, 12 domestic wind power manufacturers signed the “China Wind Power Industry Self-Regulatory Convention on Maintaining a Fair Competition Environment in the Market”, which focuses on solving 3 major issues, including vicious competition at low prices. Looking at new products, offshore continues to be large in megawatts, reaching a maximum of 26 MW, while landwind products remain between 10-15 MW. The bank believes that larger fans can reduce unit costs, and that with the bid price of the whole machine stabilizes, the profit of the whole machine manufacturer is expected to improve. Furthermore, larger fans are driving larger components, and there may be phased supply and demand shortages for large megawatt parts, and parts manufacturers are expected to benefit.

The long-term demand for global wind power is worry-free, and wind power overseas is expected to benefit.

In the long run, global demand is strong, and ocean breezes contribute elasticity. According to GWEC forecasts, the total number of new wind power installations in the world in 24-28 reached 781 GW, with a CAGR of 9.4%, of which 652 GW/129 GW of land/sea wind, CAGR reached 6.6%/25%. In the short to medium term, European ocean wind will experience rapid growth in 2025. The UK awarded the 5.34 GW sea wind contract in the sixth round, and Germany plans to tender for 8 GW of sea wind in 2024. Domestic wind power component exporters are expected to benefit from the high increase in European sea breezes. Machine manufacturers are rushing to lay out in emerging markets, and there is great potential.

Domestic deep-sea trends remain unchanged, and short-term benefits are expected to continue to be realized.

Since Q3 in China, ocean wind movements have been frequent. Yangjiang Fanshi won the bid for the first and second 500kV submarine cable and construction of the East Cable, EPC tenders for the Guangdong Yangjiang Fanshi 2 offshore wind farm, and the Qingzhou 5 and 7 Sea Cable centralized delivery project environmental impact assessment documents for review; Jiangsu 2.65GW is expected to commence construction within the year. The 14th Five-Year Plan period is nearing its end. Domestic wind power is being connected to the grid at an accelerated pace. As the peak season for construction, Q4 is likely to usher in a small climax in grid connection.

Increased contribution from wind power to rural areas and wind turbine transformation.

Since this year, the Development and Reform Commission and the Energy Administration have successively issued the “Notice on Organizing and Implementing the “Thousand Villages, and the General Plan Preparation Outline for the “Thousand Villages, and the Province (Autonomous Regions and Municipalities Directly Under the Central Government) to Control the Wind”. Looking at the overall progress of each province, there is generally no more than 20MW per village; sharing project revenue through “village-enterprise cooperation”, land investment, and setting up public service jobs is the main cooperation model; in terms of grid connection and consumption, with the exception of Gansu for full internet access, most provinces arrange for grid companies to implement guaranteed grid connection. Feed-in tariffs are implemented in accordance with the new energy feed-in tariff policy of the year they were connected to the grid, encouraging participation in market-based transactions. Some requirements include allocating energy storage and building a comprehensive energy system. The bank expects the installed capacity of decentralized wind power to reach 10 GW in 2025, with an average of about 20 GW/year during the 15th Five-Year Plan period. The upgrading of wind turbines coincides with large-scale equipment updates. Under incremental finance, the bank is optimistic about upgrading wind power facilities and equipment.

High frequency data

1) New energy vehicles: Domestic NEV sales volume in September 2024 was 1.287 million units (+42.37% YoY);

2) Photovoltaics: 20.89GW of new installed capacity was added in September 2024 (+32.38% YoY);

3) Wind power: 5.51GW of installed capacity added in September 2024 (+20.83% YoY);

4) Electricity investment: From January to September 2024, the country invested 994.1 billion yuan in electricity (+12.65% year over year).

Investment advice

Power grid: Domestic and overseas power grid construction is booming, and it is recommended to grasp the three major areas of benefit

1) The State Grid and Southern Grid Mid-Year Conference will increase grid investment in 2024. UHVDC is the basic investment in power grids, and the trend is clear. Focus on Guodian Nanrui (600406.SH), Xuji Electric (000400.SZ), China Xidian (601179.SH), Pinggao Electric (600312.SH), TBEA (), Sifang Co., Ltd. (USD), etc.; 600089.SH 601126.SH

2) The right time for the power equipment to go to sea. Focus on Jinpan Technology (688676.SH), Huaming Equipment (002070.SZ), Siyuan Electric (002028.SZ), Yangdian Technology (301012.SZ), Haixing Electric (603556.SH), Samsung Medical (601567.SH), Linyang Energy (), Xuji Electric (000400.SZ), Guodian Nanrui (Singapore), Kelu Electronics (002121.SZ), Oriental Electronics (000682.SZ), Juhua Technology (601222.SH 600406.SH 300360.SZ), Weisheng Information (688100.SH) (computer group coverage);

3) Strong digital intelligence power grids have sprung up a “small but beautiful” blue ocean market in some segments, such as virtual power plants, power forecasting, digital twins, etc. It is recommended to focus on Guodian Nanrui (600406.SH), State Grid ICT 600131.SH (), Dongfang Electronics (000682.SZ), and Jinzhi Technology (002090.SZ).

Energy storage: The bank believes that complex changes in the current global situation will accelerate energy transformation, positively views the demand in the overseas optical storage market, and suggests focusing on inverter companies with strong profits and dominant brand channels. The new domestic energy storage system achieved impressive results of over 45 GWh in 2023. High competition and high growth coexist, and domestic tenders are getting stricter. They are optimistic about leading companies with scale and brand advantages, and it is recommended to pay early attention to long-term energy storage fields, such as Goodway (688390.SH), Deye Co., Ltd. (605117.SH), Paineng Technology (688063.SH), and Sunshine Power (300274.SZ).

Photovoltaics: From January to September of 2024, the domestic installed capacity was added by 160.88GW, an increase of 24.77%. It can still maintain a high growth rate, and demand is expected to remain supported throughout the year. There are left-side layout opportunities in 24Q4 and 25H1. The bank believes that it will positively view the subsequent development of the photovoltaic industry in the short, medium and long term, and suggests paying attention to:

1) The initial pressure period is long, or the auxiliary material process that reverses first, such as Follett (601865.SH), Foster (603806.SH), etc.;

2) Leading companies under the tide of overseas travel, such as Artes (688472.SH), Jingao Technology (002459.SZ), Trina Solar (688599.SH), etc.; 688223.SH

3) New technology represents enterprises, such as GCL Technology (3800.HK), Oriental Risheng (300118.SZ), etc.

Lithium battery: The performance of 24Q3 companies is basically in line with expectations, and batteries are still an advantage. The operating rate of the gold, nine, and silver industries has entered a continuous improvement channel, and the pressure on corporate profits has been relieved. It is recommended to focus on leading material companies with relatively strong performance and clear competitive advantages, as well as leading cell companies that continue to recover. It is recommended to focus on Ningde Times (300750.SZ), Everweft Lithium Energy (300014.SZ), Dangsheng Technology (300073.SZ), Betray (835185.BJ), Kodali (002850.SZ), Enjie Co., Ltd. (002812.SZ), Tianci Materials (002709.SZ), Tiannai Technology (688116.SH), etc.

Wind power:

1) Sea Breeze: In the domestic market, the bank expects 10-12GW/16-20GW of sea breezes in 2024/2025, with a year-on-year increase of 58%/64% (median), unchanged in the deep-sea trend. The proposal focuses on Dongfang Cable (603606.SH), Qifan Cable (605222.SH), Daikin Heavy Industries (002487.SZ), Tianshun Wind Energy (002531.SZ), Haili Wind Power (301155.SZ), and Taisheng Wind Energy (300129.SZ), which are relevant standards for Haifeng.

2) Land wind: The exchange of large to small and decentralized wind power is expected to be a new growth point for the industry. The bank expects that the replacement of large to small and decentralized wind power installations will reach 20 GW/year in 24-25. The bank expects to add about 70-80 GW/75-85 GW of installed capacity in 2024/2025, an increase of 7%/7% (median value), focusing on Goldwind Technology (002202.SZ), Yunda (300772.SZ), Sany Heavy Energy (688349.SH), and landwind component manufacturers Tianshun Wind Energy (002531.SZ), Jinlei (300443.SZ), and Riyue (603218.SH).

3) Going overseas: According to GWEC data, in 2024-2028, the total installed capacity of the global sea breeze/land wind was increased by 138 GW/653 GW, and the CAGR reached 28%/6.6%. In 2024-2028, 44% of Europe's new seabreeze was installed in the UK, Germany 15%, Poland 11%, the Netherlands 8%, France 6%, and Denmark 5%. It is recommended to focus on Goldwind Technology (002202.SZ), Sany Heavy Energy (688349.SH), Dongfang Cable (603606.SH), Daikin Heavy Industries (002487.SZ), and Tianshun Wind Energy (002531.SZ), which have gone overseas smoothly.

Risk warning: the risk that industry policies fall short of expectations; the risk that new technology will not advance as expected; the risk of sharp rise in raw material prices and difficulties in business operations; the risk of overseas political turmoil and deterioration of the trade environment.