Sinolink: Focusing on the main line of offshore power equipment and paying attention to domestic margin restoration.

Sinolink released a research report, focusing on the main line of equipment going overseas, and paying attention to domestic marginal repair. 1) Main line one: Long-term high prosperity for power transformers. Focus on overseas market channel layout leaders, export companies of power transformers with customer base and competitive advantages. 2) Main line two: AIDC-related SST new technology adapts to high computing power density technical changes. It is recommended to focus on leading enterprises in the SST field with deep technological reserves, first-mover advantages, and smooth progress in overseas medium-voltage equipment business. 3) Main line three: Expected repair in the domestic market. Since 2016, the approval and bidding for UHV has accelerated, main network bidding has remained prosperous, and prices in the power distribution sector are being repaired, focusing on UHV and main network direction. Key points of Sinolink are as follows: Going overseas The demand for self-built substations in American data centers is strong for the long term, weak power grids in Europe limit the development of renewable energy, overseas power grid investments are increasing, international power equipment leaders are performing well, and exports of high-voltage equipment are expected to remain prosperous in the long term. 1) From 2026 to 2030, nearly 16,000 miles of new 345kV and above high-voltage transmission lines are planned in the United States (about equal to the total from 2010 to 2025), and there is a 120GW gap between the planned expansion of renewable energy in Europe by 2030 and the existing grid capacity; 2) To match the demand for grid upgrades and expansions, US utilities continue to raise CAPEX guidance, with CAPEX expenditure from 2026 to 2030 increasing by 17% to 44% compared to 2025-2029; European utility companies' grid capital expenditures have increased by 14% to 62% compared to the previous year; 3) Driven by AI demand and renewable energy, overseas power equipment leaders have achieved record high electrical orders, with Siemens Energy/GEV/Eaton/ABB's electrification businesses cumulative order growth of 27%/48%/30%/26% year-on-year; 4) High growth in exports of high-voltage transformers from China and South Korea validates the demand for high-voltage equipment prosperity: In the first quarter of 2026, the export amount of transformers from China reached $2.5 billion, up 38% year-on-year, with exports of power transformers (>10MVA) reaching approximately $1.2 billion, up 76% year-on-year. From a value perspective, the export ASP index of transformers from China has been increasing since 2021, reaching 277 in the first quarter of 2026 (2015=100); South Korean companies have long been major suppliers of transformers to Europe and the US, with South Korea exporting transformers to the US (10MVA and above) reaching $280 million in the first quarter of 2026, up 86% year-on-year. SST: Accumulating deep deposits overseas, power equipment companies are running towards the field Under the trend of distribution architecture upgrade driven by AIDC, the medium-voltage industry chain is experiencing a technological paradigm shift from traditional transformers to solid-state transformers (SST). 1) Power equipment companies are accelerating their layout of SST due to strategic defense, business model upgrades, and channel reuse considerations. Some domestic manufacturers have already achieved breakthroughs in overseas markets (including the North American market) in the early years, accumulating a deep customer base and channel barriers; 2) From the perspective of overall competition, AIDC SST is not a standardized general electrical equipment, the real scarcity lies in customer specification definition rights, medium-voltage system engineering capabilities, and high-frequency power electronics productization capabilities; 3) In terms of industry pace, considering the evolution trend of downstream direct current voltage and industry maturity, the bank believes that the application difficulty increases in the order of microgrids, renewable energy, charging piles, distribution networks, rail transportation, AIDC. Future key areas of focus include the release of cloud factory specifications, progress in prototype validation, small batch orders for HVDC, and endorsements by leading manufacturers for the 800VDC architecture. Domestic: Under the trend of synergy between algorithms and electricity, the high growth of electricity network investment in the "15th Five-Year Plan" is clear, UHV tenders are accelerating, main networks remain prosperous, and attention should be paid to the profit repair of meters and distribution networks. The total investment planned for the "15th Five-Year Plan" for the three major power grids exceeds 5 trillion yuan, focusing on the coordinated expansion of main and microgrid distribution, digital upgrades. In the first quarter of 2026, State Grid/Southern Power Grid/Inner Mongolia Power Group's investments increased by 37%/50%/16% year-on-year; The second round of tenders for 1000kV GIS for UHV saw a significant increase, with subsequent tenders expected to focus on direct current, with a significant probability of increased bidding volume for the whole year; The first two batches of tenders for the main network slowed down, but are expected to remain at high levels for the whole year; Prices for distribution equipment have been repaired. Risk Warning: Grid investment falls short of expectations; installation of new energy capacity falls short of expectations; electricity policy effects fall short of expectations; downstream demand falls short of expectations; and raw material prices rise.