Sealand Securities released a research report stating that global grid investments in many regions are expected to maintain growth over the next decade. Regionally, China's power supply and demand are expected to ease during the "16th Five-Year Plan" period, with grid investment likely to remain resilient. In the United States, utility capital expenditure is projected to have a compound annual growth rate of 4.6% from 2025 to 2029, with data centers being a significant incremental driver for power infrastructure investment. Due to prominent power supply bottlenecks in the U.S., investment is skewed towards power generation. The current cycle of power infrastructure investment remains highly active, and overseas expansion serves as a crucial long-term driver for corporate earnings growth. Within specific sectors, focus on equipment in short supply for primary equipment, business extension into AI data centers for power distribution, and new growth curves for meter companies. The main views of Sealand Securities are as follows:
Power Infrastructure: Global grid investments in many regions are expected to maintain growth over the next decade, but regional power supply and demand dynamics differ. Regional Perspective: 1) China: Power supply and demand are expected to ease during the "16th Five-Year Plan" period, with grid investment likely to remain resilient. 2) United States: Utility capital expenditure is projected to have a CAGR of 4.6% from 2025-2029; data centers are a key incremental driver for power infrastructure investment, with investment favoring power generation due to acute supply bottlenecks. 3) Others: Electricity consumption growth in Europe is expected to rise, while emerging economies continue to show strong power demand. Technology Perspective: The penetration rate of new energy continues to increase; various grid-forming technologies like STATCOM and VSC-HVDC are beginning to enter a volume growth phase. Green hydrogen and green methanol represent long-term technological trends for new energy integration and deep decarbonization, with demand beginning to emerge under policy catalysts.
Data Centers: Data centers are a major driver of power infrastructure investment globally, particularly in the United States. Power Demand: Forecasts for U.S. data center load growth vary widely; the U.S. Department of Energy projects an additional 52GW of load by 2030 compared to 2024, while some institutions predict up to 109GW. Supply Bottlenecks: 1) Delivery lead times for power transformers remain persistently high, currently still exceeding 100 weeks. 2) Leading manufacturers have gas turbine production slots booked until 2028, driven by gas equipment replacement cycles, rapid AI data center expansion, and energy transition. Technology Trends: 1) SST represents the evolutionary direction for data center power supply technology, offering optionality value for traditional power equipment companies. 2) Supercapacitors are expected to accelerate adoption in AI data centers and potentially within power systems.
Power Equipment Overseas Expansion: Overseas expansion is a vital long-term source of earnings growth for companies. Focus on equipment in short supply for primary equipment, business extension into AI data centers for power distribution, and new growth curves for meter companies.
Power Trading: Significant reforms are imminent for China's power industry. The foundational condition is the easing trend in China's power supply and demand, coupled with the rising share of new energy. Policy catalysts include the full market participation of new energy by the end of 2025 and near-complete coverage of provincial spot markets. The trend involves new energy power forecasting becoming increasingly essential and sustained growth in the retail market.
Investment Recommendations: Power infrastructure investment remains robust; maintain a "Recommended" rating for the power equipment industry. Data Center Focus: Data centers are a key driver of power infrastructure investment globally. 1) Prioritize power equipment shortages related to the North American market, with relevant targets including Siyuan Electric (002028.SZ), and TBEA Co., Ltd. (600089.SH) and China XD Electric (601179.SH), which have power transformer export capabilities. 2) Monitor new power supply technologies for data centers, with relevant targets including SF Electric (601126.SH), China XD Electric (601179.SH), Jinpan International (688676.SH), Eaglerise Electric & Electronic (002922.SZ), and Liangxin Co., Ltd. (002706.SZ). 3) Watch domestic and Southeast Asian data center power infrastructure-related targets like Wasion Holdings (03393) and Mingyang Electric (301291.SZ), as well as European power infrastructure-related targets like Sanxing Medical (601567.SH) and Jinbei Electric (002533.SZ).
Meter Focus: Meter companies are the "vanguard" of China's power equipment overseas expansion, possessing outstanding advantages in local overseas operations, and are expected to develop new growth curves beyond meters. Focus on Wasion Holdings and Haixing Electric (603556.SZ); watch Sanxing Medical (601567.SH) and Wasion Information (688100.SH).
Power Trading Focus: Guoneng Rixin (301162.SZ) and Longshine Group (300682.SZ) are positioned to benefit from opportunities arising from power market reforms and the application of AI in the power sector.
UHV Focus: Grid infrastructure investment is still expected to grow steadily and is less affected by external geopolitical risks, making it suitable for strategic allocation. Watch TBEA Co., Ltd. (600089.SH), China XD Electric (601179.SH), Pinggao Electric (600312.SH), NARI Technology (600406.SH), and XJ Electric (000400.SZ).
Risk Warnings: 1) AI data center infrastructure bubble; 2) New energy development falling short of expectations; 3) Overseas grid construction and upgrades lagging behind expectations; 4) International market risks; 5) Deterioration of competitive landscape for domestic companies; 6) Uncertainty regarding the future performance of key companies under focus.