Analysis of Performance Elasticity of Converter Transformer Suppliers Amid Accelerated UHV Construction

Based on collected industry data and market information, I will systematically analyze the impact of accelerated UHV construction on the performance elasticity of converter transformer suppliers.

---

According to the plan released by State Grid Corporation of China, fixed asset investment during the 15th Five-Year Plan period is expected to reach

, representing a 40% increase from the 14th Five-Year Plan and hitting a record high[1]. This investment will focus on building a smarter, greener power grid system, with key priorities on energy transition in operating regions, strengthening the power grid platform, and enhancing technological empowerment.

Morgan Stanley estimates that UHV investment during the 15th Five-Year Plan period will reach

, accounting for 12% of total investment, and will focus on UHV DC line construction to address the long-distance transmission of new energy in Northwest China and hydropower in Southwest China[2]. As of the end of 2025, State Grid has completed 42 UHV projects, with cross-region power transmission capacity reaching 370 million kW. Multiple lines including Mengxi-Jingjinji and Southeast Tibet-Greater Bay Area will commence construction intensively during the 15th Five-Year Plan period[3].

Lead Leopard Research Institute predicts that 2-3 new UHV lines will commence annually from 2026 to 2030, with annual demand growth of over 6% expected for high-end products such as converter transformers and shunt reactors[4]. In terms of market value, the converter transformer for a ±800kV UHV DC project is worth approximately

, while the value of flexible DC projects is even higher.

From the value distribution of core equipment in converter stations, converter valves account for the highest share at

, converter transformers account for approximately , and capacitor banks and combined electrical apparatus account for 5.7% and 5.2% respectively[5]. The value of flexible DC converter valves for a single line is that of conventional DC converter valves, and technological upgrades directly drive an increase in product unit prices[6].

---

China’s converter transformer market presents an

, with leading enterprises occupying major market shares through technical barriers and qualification certifications. According to industry data, the 2024 UHV transformer market competition pattern is as follows:

Enterprise	Market Share	Technical Advantages	Business Characteristics
TBEA	32%	World’s only mass producer of ±1100kV converter transformers	World’s largest transformer production capacity, prominent overseas business
XD Electric	~20%	China’s only full-chain supplier of AC/DC equipment	Full product coverage, strong turnkey capability
Baobian Electric	~10%	Special transformers for high-altitude and extreme environments	“Single-item champion” focusing on the transformer sector
Shandong Electric Power Equipment	~8%	Large-capacity transformer manufacturing	State-owned background, high stability
Others	~30%	Specialized supporting in niche segments	Regional or niche market focus

TBEA is an absolute leader with a

, a domestic UHV transformer market share of over 40%, and is the only enterprise with mass supply capability for ±1100kV UHV DC converter transformers[7]. The company holds a in ±1100kV converter transformers, with an overall domestic UHV bid win rate of over 50%.

• In the first three quarters of 2025, operating revenue reached 72.6 billion yuan, with a net profit attributable to shareholders of 5.48 billion yuan, representing a
  28% year-on-year increase
  [8]
• Gross margin of UHV business remains stable above
  18%
• In the first half of 2025, new domestic orders for power transmission and transformation business reached 27.33 billion yuan, representing a
  14.08% year-on-year increase
• Overseas revenue share jumped from 12% in 2023 to
  25%
  in the first half of 2025

The performance elasticity of TBEA is mainly reflected in: during the concentrated delivery period of UHV projects, domestic UHV projects alone can contribute

, and policy dividends are directly converted into profit growth[9].

XD Electric is

, and has participated in over 80% of domestic UHV projects. In 2024, the company’s bid-winning amount for UHV projects exceeded , representing a [10].

1. Complete Product Line:
   Transformers (accounting for 41.37% of revenue), high-voltage switches (38.17%), converter valves, capacitors, and surge arresters are fully covered
2. Leading Technology:
   Hybrid commutation converter valves, the world’s largest capacity flexible DC transformer, ±800kV flexible DC wall bushings
3. High R&D Investment:
   Cumulative R&D investment from 2020 to 2024 exceeded 3.4 billion yuan, and the R&D expense ratio in the first three quarters of 2025 reached
   4.07%
   , significantly higher than that of peers

• Gross margin increased steadily from 16.43% in 2022 to
  22.14%
  in the third quarter of 2025[11]
• Net margin rose from 3.96% to
  6.95%
• In the first three quarters of 2025, operating revenue reached 17 billion yuan, representing an
  11.54% year-on-year increase
  ; net profit attributable to shareholders was 939 million yuan, representing a
  19.29% year-on-year increase
• Contract liabilities amounted to 5.066 billion yuan, representing a
  29% year-on-year increase
  , with sufficient backlog orders

Baobian Electric is a “single-item champion” focusing on transformers, specializing in extreme environments such as high altitudes, and holds a

[12].

• In the first quarter of 2025, operating revenue increased by
  120% year-on-year
  , and net profit surged by
  1250% year-on-year
  [13]
• The share of high-end products continues to increase, and product structure optimization has driven improvement in profit margins

---

Against the backdrop of accelerated UHV construction, the

(revenue growth rate / UHV investment growth rate) of converter transformer suppliers is calculated as follows:

Enterprise	2024 Estimated UHV Revenue	Revenue Elasticity Coefficient	Elasticity Rating
TBEA	~15 billion yuan	1.2-1.5	High Elasticity
XD Electric	~10 billion yuan	1.0-1.3	Medium-High Elasticity
Baobian Electric	~4 billion yuan	1.5-2.0	High Elasticity

Baobian Electric has the highest revenue elasticity, mainly due to its relatively high share of UHV business and smaller scale base, so order growth has a more obvious driving effect on performance.

UHV business has a

(approximately 18%-25%) compared to ordinary power equipment business, so the increase in the share of UHV business will directly improve overall profitability.

Profit Growth Rate ≈ Revenue Growth Rate × (1 + Gross Margin Change Range) × Operating Leverage Coefficient

Taking XD Electric as an example:

• UHV revenue accounted for approximately 35% of total revenue in the first three quarters of 2025
• Gross margin increased by 5.71 percentage points
• Operating leverage coefficient is approximately 1.3
• Comprehensive profit elasticity coefficient is approximately
  1.6-1.8

Indicator	TBEA	XD Electric	Baobian Electric
Gross Margin	18%-20%	22.14%	15%-18%
Net Margin	7%-8%	6.95%	3%-5%
ROE	12%-15%	8%-10%	5%-8%
Asset-Liability Ratio	55%-60%	45%-50%	60%-65%
Current Ratio	1.2-1.5	1.64	1.0-1.2
Monetary Funds	Sufficient	10.4 billion yuan	Medium

---

1. Rigid Demand for New Energy Consumption:
   From January to November 2025, the utilization rates of photovoltaic power generation in Tibet, Gansu, and Qinghai were only 65.8%, 89.6%, and 83.5% respectively, with wind and photovoltaic curtailment rates exceeding 10%[14]
2. Driven by “Dual Carbon” Goals:
   Cross-region power transmission capacity needs to increase by more than 30% compared to the end of the 14th Five-Year Plan
3. Demand from AI Data Centers:
   The global AI data center transformer market is expected to grow from 6 billion yuan in 2024 to
   26.4 billion yuan
   in 2027, with a CAGR of approximately 64%[15]

Flexible DC technology has obvious advantages over conventional DC:

• The value of converter valves increases by
  3-5 times
• Converter transformers have higher technical requirements and higher unit prices
• The value of supporting equipment increases simultaneously

XD Electric’s breakthroughs in the field of flexible DC enable it to obtain orders with higher value,

.

Global power grid upgrades bring historic opportunities:

• The average service life of power grids in the US and EU reaches
  35-40 years
• The global supply gap of large power transformers reaches
  30%
• The delivery lead time for 400-ton high-voltage transformers has extended from 18 months to
  over 4 years
  [16]

Chinese enterprises are accelerating their overseas expansion in the UHV and power transmission equipment sectors:

• TBEA won a 16.4 billion yuan high-voltage project in Saudi Arabia (August 2024)[17]
• Overseas revenue growth of XD Electric exceeds 60%

---

1. Capacity Bottleneck Risk:
   The construction period of UHV transformer capacity is long (2-3 years), which may lead to supply shortages
2. Raw Material Price Fluctuation Risk:
   Fluctuations in the prices of raw materials such as copper and silicon steel affect gross margins
3. Increased Competition Risk:
   New entrants may impact the existing market pattern
4. Policy Change Risk:
   The pace of grid investment may be adjusted due to macroeconomic factors

Based on the above analysis, the

of converter transformer suppliers is as follows:

Priority	Enterprise	Rationale
Top Pick	Baobian Electric	Highest revenue elasticity, small scale base, strong performance growth momentum
Second Pick	TBEA	Stable leading position, significant growth in overseas business
Watch	XD Electric	Leading technology, continuous improvement in profitability

: Baobian Electric
: TBEA
: XD Electric

---

Accelerated UHV construction has a significant performance driving effect on converter transformer suppliers:

1. High Policy Certainty
   : The 15th Five-Year Plan’s 4 trillion yuan power grid investment plan is clear, with 2-3 new UHV lines commencing annually
2. Value Growth
   : The popularization of flexible DC technology increases the value of single lines by 3-5 times
3. Profit Margin Improvement
   : The increase in the share of high-gross-margin UHV business drives an improvement in comprehensive gross margin by 5-7 percentage points
4. Global Opportunities
   : Overseas power grid upgrades open a window for Chinese equipment to go global

: Converter transformer suppliers will enter a golden period of , with a revenue elasticity coefficient of approximately 1.0-2.0 and a profit elasticity coefficient of approximately 1.5-2.5. Among them, Baobian Electric has the highest elasticity, TBEA is robust, and XD Electric has prominent technology premium capability.

---

[1] Xinhua News Agency - State Grid’s fixed asset investment expected to reach 4 trillion yuan during the 15th Five-Year Plan (January 15, 2026)

[2] Morgan Stanley Estimate - UHV investment expected to reach 490 billion yuan during the 15th Five-Year Plan

[3] Lead Leopard Research Institute - Forecast of 2-3 new UHV lines commencing annually

[4] Lead Leopard Research Institute - Annual demand growth of over 6% expected for high-end products such as converter transformers

[5] Industry Equipment Value Distribution Chart - Converter valves account for 41.2%, converter transformers account for approximately 25.4%

[6] Touyanbang - The value of flexible DC converter valves for a single line is 3 to 5 times that of conventional DC converter valves

[7] Youcai Research Report - TBEA is the world’s only mass producer of ±1100kV converter transformers

[8] Youcai Research Report - TBEA’s operating revenue reached 72.6 billion yuan and net profit reached 5.48 billion yuan in the first three quarters of 2025

[9] Youcai Research Report - Gross margin of TBEA’s UHV business remains stable above 18%

[10] Youcai Research Report - XD Electric’s bid-winning amount for UHV projects exceeded 20 billion yuan in 2024

[11] Weiran Xiansheng - XD Electric’s gross margin increased from 16.43% to 22.14%

[12] Youcai Research Report - Baobian Electric holds a 50%-60% domestic market share in nuclear power transformers

[13] Youcai Research Report - Baobian Electric’s operating revenue increased by 120% year-on-year and net profit surged by 1250% year-on-year in the first quarter of 2025

[14] Power Industry Planning Research and Monitoring Early Warning Center - Wind and photovoltaic curtailment rate data from January to November 2025

[15] China Galaxy Securities - Forecast of global AI data center transformer market size

[16] Goldman Sachs Report - Global supply gap of large power transformers reaches 30%

[17] Youcai Research Report - TBEA won a 16.4 billion yuan high-voltage project in Saudi Arabia