In-depth Analysis of Core Competitiveness of NARI Technology Co., Ltd. (SH600406) in the Smart Grid Sector

In-depth Analysis of Core Competitiveness of NARI Technology Co., Ltd. (SH600406) in the Smart Grid Sector

NARI Technology Co., Ltd. is a leading enterprise in China’s energy power and industrial control sectors. Founded in 2001, it is directly supervised by the State-owned Assets Supervision and Administration Commission of the State Council (SASAC) and is a “Demonstration Enterprise for Sci-tech Reform” under SASAC [1]. With energy power intelligence as its core, it is a major provider of integrated solutions for the energy internet, with businesses covering power grid, power generation, rail transit, water conservancy and water supply, municipal public utilities, industrial and mining sectors, etc. Its products and services are available across China and in more than 100 countries and regions [2].

In terms of market performance, NARI Technology has shown a steady growth trend. As of January 19, 2026, the company’s market capitalization reached RMB 210.432 billion, with a stock price of USD 26.20 (equivalent to approximately RMB 190). Its stock price has risen 14.56% in the past year, 16.81% cumulatively in the past three years, and 54.48% in the past five years, reflecting the market’s recognition of the company’s long-term value [0]. The company has won the A-level evaluation for information disclosure from the Shanghai Stock Exchange for ten consecutive years, been selected into the “Central Enterprise ESG · Pioneer 100 Index” for three consecutive years, and been rated as a benchmark “Sci-tech Reform Enterprise” by SASAC [3].

NARI Technology has formed four industrial clusters: “Smart Grid, Digital-Energy Integration, Low-Carbon Energy, and Industrial Internet”, and built an industrial layout with power grid business as the “basic foundation”, and non-power grid and overseas businesses as the “growth drivers” [3]. Among them, the smart grid segment is the company’s core business and revenue pillar, accounting for approximately 66% of the company’s total revenue in 2024.

The company’s smart grid business covers the entire power grid process, from large power grid safety and stability, dispatching, transmission, substation, distribution, power consumption to microgrid, smart park, energy efficiency services, etc. The main products include [1][4]:

Product Category	Main Products
Power Grid Safety and Stability	Power grid safety and stability analysis and control, system protection, source-grid-load-storage coordinated control
Power Grid Dispatching	New-generation dispatching technical support system, electricity market trading platform
Power Transmission Technology	UHVDC transmission system, flexible AC transmission system, converter valve
Substation Technology	New-generation centralized control system, new-generation independent and controllable substation monitoring, relay protection
Power Distribution Technology	Unified platform for smart distribution grid, medium and low-voltage flexible interconnection of distribution grid
Power Consumption Technology	New-generation smart electricity meter, new-type acquisition terminal, demand-side response, virtual power plant

NARI Technology’s multiple core products in the smart grid sector are in a leading position in the industry [4]:

• Smart Grid Primary and Distribution Grid Dispatching and Monitoring Automation System
  : National-level single-item champion product in manufacturing
• Flexible DC Converter Valve
  : National-level single-item champion product in manufacturing, with a market share of approximately 42%
• Power Control and Protection Equipment
  : National-level single-item champion product in manufacturing

The company has been approved to build the “National Key Laboratory of Power Grid Operation Risk Prevention Technology and Equipment”, and has professional laboratories for regional integrated energy, smart distribution grid, DC distribution grid, etc., providing a solid R&D foundation for technological innovation [1].

NARI Technology occupies an absolute leading position in the field of key smart grid equipment, with multiple core products holding a market share of over 50% [4][5]:

Product Segment	Market Share	Industry Position
UHV Converter Valve	42% (historical high of 80%)	Ranked 1st in China
DC Control and Protection System	Approximately 50%	Ranked 1st in China
Relay Protection Equipment	45%+	Industry leader
Substation Automation	55%+	Industry leader
Dispatching Automation	60%+	Industry leader

According to the bidding data of State Grid’s DC UHV equipment in 2021, the company’s overall market share reached 51.2%, with a 57.6% share in converter valve bids and a 52.0% share in DC control and protection device bids, both ranking first in China [4]. In UHVDC transmission projects, the company monopolizes over 70% of the core market. For example, it won a converter valve order worth RMB 2.175 billion in the Gansu-Zhejiang Flexible DC Project, capturing 50% of the market share [5].

NARI Technology attaches great importance to technological innovation, maintaining a high level of R&D investment [5]:

• R&D Investment Scale
  : R&D investment reached RMB 3.215 billion in 2024, with R&D expense ratio maintaining a high level of 5.6%
• R&D Achievements
  : Possesses 34 world-leading achievements, and obtained 400 patent authorizations in 2023
• Standard Setting
  : Led the formulation of 3 international standards, holding important discourse power in the direction of industry technological development

In terms of talent reserve, the company has established a “Ten-Year Grind” team for scientific and intelligent application research on power grid operation, built the AI4EMS technical paradigm, and carried out key technological research on new power system dispatching optimization based on artificial intelligence [2]. At the same time, it has established a “Ten-Year Grind” team for high-voltage and high-power semiconductor devices, focusing on overcoming core technologies such as high-end power chips and high-reliability low-loss module packaging.

Enterprise	R&D Investment (RMB 100 million)	R&D Expense Ratio
NARI Technology	32.15	5.6%
Sifang Electric Co., Ltd.	6.56	Approximately 9%
Xuji Electric Co., Ltd.	8.2	Approximately 4%
Industry Average	5.8	Approximately 3-4%

NARI Technology has a full industrial chain capability covering from hardware equipment → software systems → integrated solutions → full-life cycle services [6]. This integrated advantage is reflected in:

1. One-stop Service Capability
   : Customers only need to contact one team to obtain full-process services from design planning, equipment supply, software platform to post-operation and maintenance
2. Hardware-Software Collaboration
   : In-depth collaboration between hardware and software forms a system-level advantage, greatly improving customer stickiness
3. High Substitution Barrier
   : Competitors find it difficult to replace the company in terms of overall solutions, forming a “deep and wide” moat

Three of the company’s subsidiaries have won the title of the first batch of “Excellent-level Smart Factories” in China, and the “UHV DC and Flexible Transmission High-end Equipment R&D Team” has been awarded the National Excellent Engineer Team [1].

NARI Technology’s controlling shareholder is State Grid Electric Power Research Institute Co., Ltd., and its ultimate controller is SASAC [6]. This “national team pedigree” brings multiple advantages:

• Natural Trust Endorsement
  : Has inherent advantages in participating in major State Grid projects, technical standard setting, and planning and design
• Resource Acquisition Capability
  : Has information and relationship advantages in bidding for major projects
• Policy Support
  : Easier to obtain policy support and R&D resources

The company holds multiple high-level qualifications, including Grade 1 Information System Integration and Service, and Grade A Specialized Design for Building Intelligent Systems [2].

Based on the latest financial data, NARI Technology is in a healthy financial condition [0]:

Indicator	Value	Industry Comparison
Price-to-Earnings Ratio (P/E)	26.19x	Moderate in the industry
Price-to-Book Ratio (P/B)	4.25x	-
Return on Equity (ROE)	16.21%	Higher than industry average (approximately 12%)
Net Profit Margin	12.55%	Excellent in the industry
Current Ratio	1.95	Financially stable
Quick Ratio	1.54	Strong short-term solvency

In 2024, the company achieved operating revenue of RMB 57.417 billion, a year-on-year increase of 11.15%; net profit attributable to shareholders of the parent company was RMB 7.61 billion, a year-on-year increase of 6.06%. Total assets, operating revenue, net profit and other indicators all hit record highs [3]. In 2024, the company signed new contracts worth RMB 66.32 billion, a year-on-year increase of 13.78%, and had outstanding orders of RMB 50.697 billion at the end of the year, providing a solid guarantee for future performance growth [5].

NARI Technology is actively deploying in the field of artificial intelligence, focusing on smart dispatching and smart operation and maintenance, and exploring innovative applications of scientific computing and large models in the power industry [2]. The company’s strategies include:

• Building a digital twin base to construct a high-fidelity dynamic virtual model of the physical power grid in the digital space
• Empowering all links such as dispatching operation, production control, and frontline operations through data mining and intelligent deduction
• Promoting in-depth integration of new-generation artificial intelligence and power technology

In the semiconductor field, the company has achieved important breakthroughs [2]:

• 4500V/3000A IGBT has been put into operation and verified in pilot demonstration projects
• Self-developed IGBT devices have been applied in batches in the energy storage field
• The IGBT packaging and testing production line has been successfully put into operation, effectively guaranteeing the R&D and manufacturing needs of independent technology products

The company is actively cultivating emerging businesses such as IGBT and operation robots, and strengthening the layout of energy storage and hydrogen power businesses [3]. Facing the trend of in-depth integration of the energy revolution and digital revolution, it focuses on cultivating innovative business formats such as power internet of things, smart energy services, and collaborative computing power networks.

In 2024, the company’s overseas business revenue soared by 135.1% to reach RMB 3.279 billion, and it won bids for projects such as the Saudi ADMS operation and maintenance project and flexible DC valve project [5]. The expansion of international business has achieved new breakthroughs, opening up new growth space for the company.

Enterprise	2024 Revenue	Core Advantage Segments
NARI Technology	RMB 57.4 billion	Full industrial chain, smart grid leader
Xuji Electric Co., Ltd.	Approximately RMB 24 billion in orders	UHVDC, distribution automation
Sifang Electric Co., Ltd.	RMB 6.95 billion	Relay protection, distribution automation
XD Electric Co., Ltd.	Approximately RMB 18 billion	High-voltage switch, transformer

1. Scale Advantage
   : Revenue scale far exceeds peers, more than 8 times that of Sifang Electric Co., Ltd.
2. Technological Advantage
   : Leading technologies in UHV, flexible DC, dispatching automation and other segments
3. Market Advantage
   : Leading market share of core products, strong order acquisition capability
4. Brand Advantage
   : Central enterprise background + industry leader, strong brand premium capability
5. R&D Advantage
   : Sustained high R&D investment, strong technological iteration capability

1. Accounts Receivable Risk
   : Large volume of accounts receivable, potential bad debt risk
2. UHV Construction Cycle Risk
   : Business is highly correlated with UHV construction, and construction pace may affect performance
3. Intensified Industry Competition
   : Increasingly fierce competition in the power equipment industry may affect gross profit margin
4. Cash Flow Fluctuation Risk
   : Net cash flow from operating activities was negative in the first half of 2024

The current P/E ratio is 26.19 times, lower than the average level of the smart grid industry (approximately 30 times), and the P/B ratio is 4.25 times. Considering the company’s industry position and growth potential, the valuation is relatively attractive [0].

1. Construction of New Power Systems
   : Large-scale grid connection of new energy sources such as wind power and photovoltaics drives the intelligent upgrade of power grids
2. Accelerated UHV Construction
   : UHV investment is expected to grow during the 15th Five-Year Plan period
3. Distribution Grid Transformation
   : Access of distributed photovoltaics and electric vehicle charging piles drives the intelligentization of distribution grids
4. Overseas Market Expansion
   : Rapid growth of international business opens up new growth space

From a technical analysis perspective, the company’s stock price is in an upward trend [0]:

• The stock price is above the 50-day moving average (RMB 23.20) and 200-day moving average
• The MACD indicator shows a long position arrangement
• A breakout signal has recently appeared, and its validity needs to be confirmed
• Short-term support level is USD 24.05, resistance level is USD 26.84

As the absolute leader in China’s smart grid sector, NARI Technology has the following core competitive advantages:

1. Full Industrial Chain Coverage Capability
   : Integrated solutions from hardware to software, and from equipment to systems
2. Leading Core Technologies
   : World-leading technologies in UHVDC, flexible power transmission, relay protection and other segments
3. Leading Market Share
   : The market share of core products has long remained at 40%-60%, with a stable leading position
4. Central Enterprise Background Advantage
   : Resource advantages and trust endorsement brought by SASAC’s holding
5. Sustained Innovation Capability
   : High R&D investment and “Ten-Year Grind” teams ensure technological leading position

Driven by the construction of new power systems and the “Double Carbon” goals, NARI Technology will continue to benefit from major opportunities such as intelligent upgrade of power grids, accelerated UHV construction, and distribution grid transformation. Relying on its profound technological accumulation and market advantages, the company is expected to maintain its leading position in the wave of energy revolution and achieve sustained and stable development.

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[0] Jinling API Data - NARI Technology Company Overview, Financial Data, Technical Analysis

[1] 2024 Annual Report Summary of NARI Technology Co., Ltd. (https://file.finance.qq.com/finance/hs/pdf/2025/04/29/1223374375.PDF)

[2] NARI Technology Institutional Research Minutes (https://www.fxbaogao.com/detail/5040873)

[3] NARI Technology Participates in Collective Performance Briefing of State Grid-controlled Listed Companies, Demonstrating Excellent Development Results (http://www.naritech.cn/content-37-1748220770400.html)

[4] In-depth Research Report on NARI Technology (600406.SH) (https://pdf.dfcfw.com/pdf/H3_AP202304111585323862_1.pdf)

[5] NARI Technology Peer Comparison and Existing Issues (https://xueqiu.com/4819465144/341195467)

[6] From “Power Grid Brain” to Energy Internet, NARI Technology Tells a New Story of High-Quality Development of China’s Energy (https://www.caiwennews.com/article/1406778.shtml)

: The above chart shows NARI Technology’s core competitiveness in the smart grid sector, including a comparison of core product market shares, R&D investment comparison, 2024 revenue structure, and financial health status compared with the industry. The data shows that the company’s market share in converter valves, DC protection systems, relay protection and other segments is in a leading position in the industry, its R&D investment far exceeds that of peers, and its financial indicators are healthy and stable.