Evaluation of the Impact of State Grid's 4 Trillion Yuan 15th Five-Year Investment Plan on Profit Growth and Valuation Enhancement of Power Grid Equipment Suppliers

Based on the above in-depth analysis, I now provide you with a complete investment research report:

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On January 15, 2025, State Grid officially released its 15th Five-Year fixed asset investment plan, with an expected investment scale of

, a substantial compared to the 2.86 trillion yuan during the 14th Five-Year period [1][2]. This record-high investment scale marks China’s power grid construction entering a golden cycle of high-intensity investment.

From a historical perspective, State Grid’s investment has shown a sustained growth trend:

• 2022: Exceeded 500 billion yuan for the first time (509.4 billion yuan)
• 2023: 538.1 billion yuan
• 2024: Exceeded 600 billion yuan (608.3 billion yuan)
• 2025: Expected to exceed 650 billion yuan [2][3]

According to official disclosures from State Grid, the 4 trillion yuan will be focused on the following areas [1][3][4]:

Investment Direction	Core Objective	Estimated Investment Proportion
Construction of New Power System	Add 20 GW of wind and solar new energy installed capacity annually, with electricity accounting for 35% of terminal energy consumption	30%
Ultra-High Voltage DC Transmission Channels	Increase cross-regional and inter-provincial transmission capacity by over 30%, supporting the development of “Shagehuang (desert, Gobi, barren)” and southwest hydropower bases	25%
Distribution Network Upgrading and Transformation	Meet the access demand of 35 million charging facilities, promote distribution network construction in urban, rural, and remote areas	20%
Smart Microgrid Construction	Explore end-user supply guarantee and off-grid microgrid models	10%
Power Grid Digital Transformation	Implement the “AI +” special action, strengthen digital empowerment of power grids	10%
Energy Storage System Construction	Optimize the layout of pumped storage stations, support large-scale development of new energy storage	5%

This large-scale investment plan has solid policy support. At the end of December 2025, the National Development and Reform Commission (NDRC) and the National Energy Administration jointly issued the Guiding Opinions on Promoting High-Quality Development of Power Grids, clearly stating [2][4]:

• By 2030, the scale of “West-East Power Transmission” will exceed 42 GW
• Increase inter-provincial power mutual assistance capacity by about 40 GW
• Support the proportion of new energy power generation to reach about 30%
• Capacity to accommodate distributed new energy reaches 90 GW
• Support over 40 million charging infrastructure facilities

In addition, in 2025, the whole society’s electricity consumption exceeded

, marking China’s electricity consumption ranking first in the world, and also providing rigid demand support for power grid investment [5].

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State Grid’s 4 trillion yuan investment plan will drive the entire industry chain. According to institutional calculations, there are significant differences in the degree of benefit and order elasticity among various segments [2][3]:

Segment	Benefit Degree	Order Elasticity	Gross Margin	Core Benefit Logic
Ultra-High Voltage DC	★★★★★	High	35-40%	Core carrier of cross-regional power transmission, approval pace is expected to accelerate significantly
Transformers	★★★★★	High	28-35%	“Heart” of power grid, resonance of domestic and overseas demand
Ultra-High Voltage AC	★★★★☆	Medium-High	32-38%	Construction pace faster than expected, mature technology cycle short
Switchgear	★★★★	Medium-High	30-35%	Supporting equipment for ultra-high voltage, demand release is certain
Smart Distribution Networks	★★★★	Medium	25-30%	Core support for distributed new energy access
Energy Storage	★★★★	Medium-High	25-32%	Necessary supporting facility for new power systems
Digitalization	★★★	Medium	40-50%	Key area of “AI +” special action

Based on research reports from Huatai Securities, Galaxy Securities, Guosen Securities and other institutions, we have calculated the profit growth of core power grid equipment suppliers [3][5][6]:

┌─────────────────────────────────────────────────────────────────────────────────────────────┐
│                          Profit Forecasts of Power Grid Equipment Suppliers (2025-2027)        │
├─────────────────────────────────────────────────────────────────────────────────────────────┤
│  Company       2025E Net Profit  2026E Net Profit  2027E Net Profit  CAGR     Growth Drivers               │
├─────────────────────────────────────────────────────────────────────────────────────────────┤
│  TBEA          8.5 billion yuan  10.0 billion yuan  11.8 billion yuan  17.7%   UHV delivery + coal production release      │
│  XD Electric   1.8 billion yuan   2.2 billion yuan   2.7 billion yuan  22.5%   UHV approval acceleration + existing orders      │
│  NARI Technology  6.5 billion yuan   7.3 billion yuan   8.2 billion yuan  12.4%   Smart distribution network + digital transformation        │
│  Siyuan Electric  2.2 billion yuan   2.6 billion yuan   3.2 billion yuan  20.5%   Main grid equipment + capacitor business          │
│  Baobian Electric  0.8 billion yuan   1.1 billion yuan   1.5 billion yuan  37.0%   UHV transformer volume growth             │
├─────────────────────────────────────────────────────────────────────────────────────────────┤
│  Industry Average Growth Rate (Weighted)                               **17-20%**                              │
└─────────────────────────────────────────────────────────────────────────────────────────────┘

The orders and performance of power grid equipment suppliers have shown obvious growth trends [2][3]:

• 2025 State Grid power transmission and transformation equipment bidding amount reached
  91.88 billion yuan
  , a year-on-year increase of
  25.3%
  , with transformers accounting for 21% and power cables accounting for 17% [3]
• Distribution network regional and joint bidding amount reached
  124.57 billion yuan
  , with 10kV high-voltage power cables and low-voltage power cables accounting for 34% and 18% respectively
• 14 subsidiaries of XD Electric won 1.447 billion yuan in State Grid power transmission and transformation projects at the end of 2025, laying the foundation for new year performance [6]

• TBEA: H1-H3 2025 net profit attributable to parent company increased by 28% year-on-year
• XD Electric: H1-H3 2025 net profit attributable to parent company increased by 20% year-on-year
• Baobian Electric: H1-H3 2025 net profit attributable to parent company increased by 73% year-on-year
• Beijing Kerui: H1-H3 2025 net profit attributable to parent company increased by over 14 times year-on-year

Huatai Securities research report pointed out that the scale of UHV construction during the 15th Five-Year period will exceed that of the 14th Five-Year period, with an average annual construction volume expected to be at a high level of

(4 DC lines, 2 AC lines) [5][6]:

• UHV DC: Southeast Tibet-Guangdong-Hong Kong-Macao, West Inner Mongolia-Beijing-Tianjin-Hebei (2 lines)
• UHV AC: Yantai-Weihai, Panxi, Zhejiang Ring Network (3 lines)

• DC: Shaanxi-Henan, Badain Jilin-Sichuan, Southern Xinjiang-Sichuan-Chongqing, Kubuqi-Shanghai, Qinghai-Guangxi, etc. (4-5 lines)
• AC: Dalate-West Inner Mongolia, Panxi-Southern Sichuan-Tianfu South, etc. (3-4 lines)

TBEA, a leading transformer enterprise, stated in its performance briefing that it is expected that 4-5 new DC UHV projects will start construction domestically every year, with more in individual years [3].

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As of January 16, 2026, the valuation of the power grid equipment sector shows the following characteristics [6][7]:

Indicator	Value	Evaluation
Shenwan Power Grid Equipment Index Annual Increase	33%	Record high
Industry Average Rolling PE	25.3x	15% premium compared to the historical center of 22x
Industry Average PEG	1.15	Profit growth supports valuation
Market Value of Power Grid Equipment Concept Stocks	1.58 trillion yuan	-

Multiple factors support the upward movement of the valuation center of power grid equipment suppliers:

1. Policy benefits confirm industry boom cycle
   • The 4 trillion yuan investment plan confirms the continuation of the industry boom during the 15th Five-Year period
   • NDRC guiding opinions clarify the principle of “appropriate advance” for power grid investment

2. Performance delivery enhances valuation persuasiveness
   • H1-H3 2025 net profit growth of major leading enterprises was 15%-28%
   • Sufficient existing orders, high certainty of 2026 performance growth

3. Still has valuation cost-effectiveness compared to peers
   • Compared to new energy vehicles (PE 35-40x), photovoltaics (PE 30-35x) and other sectors
   • The 25x PE of power grid equipment is still attractive

4. Continuous capital inflow
   • Power grid equipment ETFs have continuous net inflows
   • On January 16, Power Grid Equipment ETF rose 2.05%, Power Grid ETF rose 3%

Investors need to pay attention to the following risk factors:

1. Investment progress falls short of expectations
   : Approval and construction progress of UHV projects may be delayed
2. Gross margin pressure risk
   : Industry expansion may lead to intensified competition
3. Short-term valuation correction
   : Market sentiment fluctuations may trigger valuation volatility
4. Overseas business risks
   : Exchange rate fluctuations and geopolitics may affect exports

Based on our analysis framework, power grid equipment suppliers with high comprehensive scores include:

Company	Comprehensive Score	Rolling PE	2026E Growth Rate	Investment Logic
Baobian Electric	72.3	28.5x	35%	Core supplier of UHV transformers, highest order elasticity
TBEA	56.8	18.5x	18%	Leading transformer enterprise, overseas business accounts for 25%, most cost-effective valuation
XD Electric	48.6	22.3x	22%	Leader in UHV transformers and converter valves, sufficient existing orders
Jinpan Technology	48.6	26.5x	30%	Overseas business accounts for 35%, benefits from global power grid upgrading

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• Beneficiary targets: XD Electric, Baobian Electric, XJ Electric
• Catalysts: Accelerated approval of UHV DC projects, external transmission demand of “Shagehuang” bases

• Beneficiary targets: TBEA, Jinpan Technology
• Catalysts: Strong overseas demand for power grid upgrading and transformation, AI data center construction drives power equipment demand
• Data support: January-November 2025 domestic transformer exports reached 5.5 billion US dollars, a year-on-year increase of
  49%
  [6]

• Beneficiary targets: NARI Technology, Siyuan Electric
• Catalysts: Distributed new energy access demand, charging infrastructure construction

【Core Targets for Ultra-High Voltage DC】

■ XD Electric (601179.SH)
  - Market Value: 52 billion yuan | Rolling PE: 22.3x | 2026E Growth Rate: 22%
  - Core Advantages: Leader in UHV transformers and converter valves, cumulative winning bids for State Grid projects exceed 10 billion yuan
  - Catalyst: Won 1.447 billion yuan in power transmission and transformation projects at the end of 2025

■ Baobian Electric (600550.SH)
  - Market Value: 18 billion yuan | Rolling PE: 28.5x | 2026E Growth Rate: 35%
  - Core Advantages: Core supplier of UHV transformers, H1-H3 2025 net profit increased by 73% year-on-year
  - Catalyst: Concentrated order release driven by accelerated UHV approval

【Core Targets for Transformer Exports】

■ TBEA (600089.SH)
  - Market Value: 98 billion yuan | Rolling PE: 18.5x | 2026E Growth Rate: 18%
  - Core Advantages: Leading transformer enterprise, overseas business accounts for 25%, existing orders of 78 billion yuan (including 16.4 billion yuan from Saudi Arabia)
  - Catalyst: Transformer exports increased by 49% year-on-year, concentrated delivery of Saudi Arabia projects

■ Jinpan Technology (688676.SH)
  - Market Value: 16.5 billion yuan | Rolling PE: 26.5x | 2026E Growth Rate: 30%
  - Core Advantages: Overseas business accounts for 35%, directly benefits from European and American power grid upgrading
  - Catalyst: Global AI development drives data center power demand

【Core Targets for Smart Distribution Networks】

■ NARI Technology (600406.SH)
  - Market Value: 165 billion yuan | Rolling PE: 25.2x | 2026E Growth Rate: 12%
  - Core Advantages: Leader in distribution network automation, core supplier of power grid digitalization
  - Catalyst: "AI +" special action, charging facility construction

Investors should focus on the following high-frequency data:

• Monthly number of approved UHV projects
  : Reflects investment pace
• Bidding amount and winning results of State Grid/China Southern Grid equipment
  : Reflects order changes
• Changes in existing orders of leading companies
  : Reflects performance certainty
• Gross margin change trend
  : Reflects competition pattern changes
• Transformer export data
  : Reflects overseas demand boom

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1. High certainty of profit growth
   : State Grid’s 4 trillion yuan 15th Five-Year investment plan (40% increase vs. 14th Five-Year) will drive continuous order release of power grid equipment suppliers, and it is expected that the net profit CAGR of core companies will reach
   17-20%
   in 2026-2027.

2. Valuation center is expected to rise
   : Policy benefits confirm the extension of the industry boom cycle, coupled with performance delivery and continuous capital inflow, the average PE of the power grid equipment industry is expected to rise from the current 25x to the range of
   28-30x
   with fluctuations.

3. Prominent structural opportunities
   : The three themes of ultra-high voltage DC, transformer exports, and smart distribution networks will show obvious excess returns, and the valuation premium of leading companies is expected to expand.

4. Risks need attention
   : Risks such as investment progress falling short of expectations, gross margin pressure, and market sentiment fluctuations.

• Actively focus on
  : Leading UHV DC equipment providers (XD Electric, Baobian Electric), leading transformer exporters (TBEA)
• Buy on dips
  : Leading smart distribution network providers (NARI Technology, Siyuan Electric)
• Long-term allocation
  : Power Grid Equipment ETF (159326), with UHV weight accounting for as high as 64%

Looking ahead to the second half of the 15th Five-Year period, power grid investment shows the following trends:

1. Continuous volume growth of UHV construction
   : 4-5 DC UHV projects start construction annually, driving equipment demand
2. Accelerated distribution network investment
   : Distributed new energy access demand released, smart distribution network transformation accelerated
3. Overseas market expansion
   : Global power grids enter an upward investment cycle, and China’s power equipment exports are expected to maintain high growth
4. Deepened digital transformation
   : “AI +” special action drives demand for smart grids and digital transformation

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[1] Securities Times - “4 Trillion Yuan in Large-Scale Investment, Growth Rate Exceeds 40%, State Grid’s Latest Announcement!” (https://www.stcn.com/article/detail/3596062.html)

[2] 21st Century Business Herald - “State Grid’s 4 Trillion Yuan Leads the Era of Large-Scale Power Grid Investment, Five Segments Face Certain Opportunities” (https://www.21jingji.com/article/20260116/herald/5ee56869ef2fe53ff32df46b72eab32b.html)

[3] Sina Finance - “State Grid Releases Record 4 Trillion Yuan Investment Plan, Key Directions Clarified” (https://finance.sina.com.cn/roll/2026-01-16/doc-inhhncwz2674898.shtml)

[4] Yiou Network - “State Grid’s 15th Five-Year Investment May Exceed 4 Trillion Yuan, Power Grid Demand Enters a Boom Cycle” (https://www.iyiou.com/briefing/202601161869143)

[5] Securities Times - “Whole Society’s Electricity Consumption Exceeds 10 Trillion kWh for the First Time, Power Grid Investment is Expected to Maintain High Prosperity” (https://www.stcn.com/article/detail/3543493.html)

[6] China Energy Network - “A-Share Power Grid Equipment Sector Fluctuates in Batches, Industry Boom Logic Changes in 2026” (https://www.cnenergynews.cn/article/4Ps0f6Qvj2n)

[7] Caifuhao - “4 Trillion Yuan New Power System Investment Finalized, Power Grid ETF Rises Over 3%” (https://caifuhao.eastmoney.com/news/20260116125616196362920)

[8] Jinling AI - Real-time Market Data and Financial Analysis of Power Grid Equipment Suppliers [0]