Grid Equipment Sector Strength Drivers and China XD Electric Investment Value Analysis

The global AI competition has driven unprecedented demand for power infrastructure. According to brokerage API data, the demand for electricity from AI data centers is becoming an important growth engine for the grid equipment industry [1]. Specific manifestations include:

• UBS predicts that China’s annual compound growth rate (CAGR) of electricity demand from 2028 to 2030 will be between 8% and 9%, doubling the market’s general forecast
• Among them, artificial intelligence data centers (AIDC) will contribute about 2.3 percentage points of growth
• The CAGR of power infrastructure and power investment is expected to reach around 12%

• The Zhejiang UHV AC Ring Network Project was recently approved with a total investment of approximately 29.3 billion yuan, and is expected to be completed and put into operation in 2029
• Huatai Securities analysis believes that there are many reserved UHV projects currently, and the annual average number of projects started is expected to remain at the high level of “4 DC and 2 AC” [1]
• Orders for main grid equipment enterprises are expected to remain sufficient, and main grid investment is expected to further accelerate during the 15th Five-Year Plan period

Citibank analysis believes that against the backdrop of high global power demand growth, the Fed’s rate cut cycle has reduced the financing costs of long-term grid infrastructure projects, boosting the investment boom [1]. Grid equipment and energy storage companies in the Asian market are at the beginning of a “multi-year structural upward cycle”.

• The National Development and Reform Commission (NDRC) and the National Energy Administration (NEA) issued the “Notice on Optimizing Market Quotations of Concentrated New Energy Power Generation Enterprises” to promote the construction of a new power system
• The component sample of the Hang Seng A-Share Grid Equipment Index has been updated, and the components are more focused on the midstream and downstream grid equipment manufactured goods sector [1]

According to the latest data [0], China XD Electric (601179.SS) has outstanding performance:

• Daily increase: +5.84%, closing price: 9.61 yuan
• 3-month increase: +49.22%
• 6-month increase: +55.75%
• Year-to-date increase: +34.22%
• 3-year cumulative increase: +101.47%

According to brokerage API data [0]:

• Market capitalization: 49.26 billion yuan, ranking among the top in the grid equipment sector
• Current ratio: 1.64, quick ratio:1.37, good short-term solvency
• Net profit margin:5.02%, operating profit margin:6.19%
• Latest quarterly revenue:5.67 billion yuan

####3.

From the industry analysis [2]:

• China XD Electric accounts for about 20% of the market share in UHV equipment bidding
• Its main products include core equipment such as transformers, capacitors, and arresters
• Its customers are mainly large central enterprises such as State Grid and China Southern Power Grid, with excellent credit qualifications

####1.

• The Grid ETF (159320) has performed strongly recently, with its largest holding stock, TBEA, rising by6.18% [1]
• Increased capital attention to the sector and good technical form
• Institutional repositioning demand at the end of the year

####2.

• High certainty on the demand side
  : Multiple demands such as AI data centers, new energy vehicle charging, and renewable energy grid connection are overlapping
• Continuous policy support
  : The construction of a new power system is a long-term national policy
• High technical barriers
  : UHV equipment has high technical thresholds, leading to increased industry concentration
• Large internationalization space
  : China’s grid equipment has global competitiveness

####3.

• Relatively high valuation: current P/E ratio is 40.04 times [0]
• Raw material cost fluctuations: impact from commodity prices such as copper and aluminum
• Geopolitical risks: U.S. lawmakers are reported to urge restrictions on imports of Chinese-made grid components [1]

, the grid equipment sector is expected to continue to strengthen, and China XD Electric, as an industry leader, has strong upward momentum. Technically, it has broken through important resistance levels with good volume confirmation.

, under the superposition of multiple favorable factors such as AI-driven power demand, UHV construction cycle, and policy support, China XD Electric has fundamental support for sustained growth. However, attention should be paid to valuation levels and risk factors; it is recommended to deploy at low prices and not chase high prices.

: Medium to high, suitable for investors with strong risk tolerance.

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[0] Gilin API Data
[1] Jiemian News - “High Global Power Demand Growth and Fed Rate Cuts Boost Long-Term Grid Infrastructure Project Investment” (https://finance.eastmoney.com/a/202512123590032448.html)
[2] Yahoo Finance - “New Main Line of China’s Stock Market Under Global AI Competition: Power, Metals and Energy Storage” (https://hk.finance.yahoo.com/news/全球ai競賽下的中國股市新主線-電力-金屬與儲能-023230277.html)