In-Depth Analysis of XD Electric (601179.SS)'s Industry Position in the UHV Sector

Based on collected data and market information, I provide you with a detailed analysis of XD Electric’s industry position in the UHV sector.

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Based on the bidding data of the 4th batch of UHV equipment by State Grid in 2025, among the total bidding amount of RMB 16.879 billion, XD Electric won bids worth RMB 3.152 billion, accounting for a

and ranking first in the industry[1][2].

Product Category	Market Share	Industry Ranking	Key Competitors
UHV Equipment (Overall)	18.7%	1st	NARI Technology (18.1%), TBEA (15.7%)
Transformer	26.3%	1st	Tianwei Baobian (25.0%), TBEA
Converter Transformer	35.5%	1st	TBEA, Baobian Electric
Gas Insulated Switchgear (GIS)	25.0%	1st (Tied)	Pinggao Electric (25.0%)
Converter Valve	21.2%	3rd	NARI Technology, XJ Electric

Historical data shows that the company’s market share in State Grid’s UHV equipment bidding has remained stable. In the full year of 2024, the company ranked first with a

[1]. Such sustained market leadership reflects the technological advantages of the company’s products and customer recognition.

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XD Electric has built a solid technological moat in the UHV sector:

• Over 3,800 authorized patents in total
  , and participated in formulating
  76% of national standards for UHV
• Independently developed
  1100kV GIS equipment
  successfully broke ABB’s monopoly
• Holds a 35.5% market share in the converter transformer segment, firmly ranking in the industry’s first tier
• R&D expense ratio of 4.07%, with key investment in cutting-edge technologies such as solid-state transformers and GIL[1]

The company’s products cover the entire industrial chain of UHV equipment, with core products including:

Product Line	Competitive Advantage	Industry Position
Transformer Business	Centralized procurement of upstream raw materials + internal cost reduction and efficiency improvement	Expected 2024 revenue of RMB 10.05 billion
Switch Business	Increased proportion of high-margin UHV revenue within the grid	Expected 2024 revenue of RMB 8.61 billion
Converter Valve	Core equipment for DC UHV	21.2% market share
GIS	Independent technological breakthrough	Tied for first place with Pinggao Electric

The financial performance in the first three quarters of 2025 showed a trend of “steady progress”[1][3]:

Indicator	Value	Year-on-Year Change
Operating Revenue	RMB 16.959 billion	+11.85%
Net Profit Attributable to Shareholders	RMB 939 million	+19.29%
Gross Profit Margin	22.14%	+1.66 pct
Net Profit Margin	6.95%	+0.43 pct

: The net profit growth rate (19.29%) is significantly higher than the revenue growth rate (11.85%), reflecting continuous improvement in the company’s profitability, with obvious effects of product structure optimization driven by the increased proportion of high-margin UHV equipment.

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Although the UHV equipment market has high concentration, competition remains fierce. According to 2025 bidding data, the company leads NARI Technology by a narrow margin of

[1].

Competitor	Advantage Segment	Competitive Strategy
NARI Technology	Converter valves and DC control & protection systems (market share over 50%)	Leading in core technologies for DC power transmission
TBEA	Transformer market (share of about 35%)	Stronger in UHV AC segment
Pinggao Electric	GIS (tied for first place, 46% market share for 1000kV GIS)	Obvious advantages in 1000kV products
XJ Electric	Converter valves (market share of about 27%)	DC power transmission equipment supplier

1. Ranked first in overall UHV equipment
   : Tops in comprehensive ranking across all product categories
2. Absolute leadership in converter transformers
   : 35.5% market share represents a significant advantage
3. Central enterprise background
   : A subsidiary of China Electrical Equipment Group, with strong resource integration capabilities
4. Leading overseas layout
   : Two overseas bases, XD Electric Egypt and XD Electric Indonesia, have been completed and put into operation

1. Relatively weak in converter valve segment
   : 21.2% market share, lagging behind NARI Technology and XJ Electric
2. Narrow gap with catch-up competitors
   : NARI Technology (18.1%) is closely following
3. Price competition pressure
   : Market share competition may put pressure on gross profit margin

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Policy/Plan	Core Content	Impact on the Company
2025 Grid Investment	RMB 825 billion (a record high)	Sustained growth in demand for UHV equipment
UHV Construction Scale	40% increase compared to the 14th Five-Year Plan	Abundant order sources
“Work Plan for Stabilizing Growth in the Electric Power Equipment Industry (2025-2026)”	Industry policy support	Favorable development environment

1. New energy grid connection demand
   : Strong demand for power transmission from wind and solar bases, with UHV as the main investment direction for the power grid
2. Deep-sea offshore wind power development
   : New demand for submarine cables and power transmission equipment
3. Equipment renewal and operation & maintenance
   : Demand for replacement of existing equipment
4. Overseas market expansion
   : Grid construction in countries along the “Belt and Road” brings incremental market opportunities

• 5 UHV DC lines are expected to start construction
• High investment intensity is expected to be maintained during the 15th Five-Year Plan period
• Based on the calculation of 100GW incremental installed capacity of large bases, about 4 DC transmission channels are needed annually

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Indicator	Value	Evaluation
ROE (Return on Equity)	5.39%	At the industry’s normal level
Net Profit Margin	5.02%	Profitability is improving
Current Ratio	1.64	Good short-term solvency
Quick Ratio	1.37	Good short-term solvency

1. Cash flow pressure
   : Operating cash flow in the first three quarters was RMB 555 million, a year-on-year decrease of 60.44%, mainly due to increased inventory preparation and longer collection periods[1]
2. Scale of accounts receivable
   : Accounts receivable amounted to RMB 10.662 billion, accounting for 22.37% of total assets, with a majority of 1-2 year aging
3. Inventory backlog
   : Inventory reached RMB 5.672 billion, a year-on-year increase of 15.4%

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Indicator	Value	Industry Comparison
Price-to-Earnings Ratio (P/E)	54.37x	Higher than the industry average
Price-to-Book Ratio (P/B)	2.90x	Within a reasonable range
YoY Price Increase	+76.17%	Strong performance

: Solid but facing challenges

Assessment Dimension	Conclusion
Market Share	✅ Solid (Ranked first in overall UHV equipment, but leading edge is only 0.6 percentage points)
Technological Barriers	✅ Strong (Over 3,800 patents, participated in formulating 76% of national standards)
Product Coverage	✅ Comprehensive (Full industrial chain layout of transformers, GIS, and converter valves)
Profitability	✅ Improving (Gross profit margin hits a three-year high)
Competitive Pressure	⚠️ Need attention (NARI Technology and TBEA show obvious catching-up momentum)

1. Short-term (1-2 years)
   : XD Electric’s leading position in UHV equipment is
   relatively solid
   . Although the 18.7% market share lead is not large, relying on technological accumulation and central enterprise background, it can maintain its first-tier position.

2. Medium-to-long term (3-5 years)
   : The industry competitive landscape may change, requiring attention to:
   • NARI Technology’s expansion in converter valves and DC control & protection segments
   • TBEA’s continuous catching-up in the transformer segment
   • Pinggao Electric’s neck-and-neck competition in the GIS segment

3. Investment Suggestion
   : As a core supplier of UHV equipment, the company benefits from accelerated grid investment and growing demand for new energy grid connection. However, it is necessary to closely monitor changes in gross profit margin, cash flow improvement, and market share competition dynamics.

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[1] Eastmoney Wealth Account - In-Depth Research Report on XD Electric (https://caifuhao.eastmoney.com/news/20251213132235500126590)

[2] Soochow Securities - XD Electric (601179): A New Cycle of Global Grid Construction, the Established King Takes Off Again (https://pdf.dfcfw.com/pdf/H3_AP202406141636230194_1.pdf)

[3] Sinolink Securities - Continued Development of Diversified Demand, Overseas and Off-Grid Markets Bring New Opportunities (https://pdf.dfcfw.com/pdf/H3_AP202411241641042820_1.pdf)

[4] Sina Finance - 2025 Analysis of the Industrial Chain, Market Status and Development Trends of China’s UHV Power Grid Industry (https://finance.sina.com.cn/stock/relnews/cn/2025-06-18/doc-infamzsm9127696.shtml)