New Stock Preview | From secondary equipment of power grid to energy storage and AI data center, where is the transformation story of Beijing Sifang Automation at?

Under the push of the dual-carbon target, the construction of the domestic new power system has entered an acceleration phase, and the digital transformation of the power grid, the integration of new energy, and the development of energy storage industry have opened up a new round of growth space for power equipment manufacturers. On June 16, Beijing Sifang Automation (hereinafter referred to as "Beijing Sifang Automation", 601126.SH) officially submitted an application for listing on the Hong Kong Stock Exchange, planning to issue H shares to build an A+H dual capital platform, with Huatai International as the exclusive sponsor. As an old player in the field of relay protection for thirty years, the listing of Beijing Sifang Automation on the Hong Kong Stock Exchange this time is not only to broaden its financing channels, but also to speed up its internationalization strategy and the landing of new power supply solutions for AI data centers against the background of global energy transformation and the explosion of AI computing power. However, behind the steady revenue growth and fruitful research results, the company also faces challenges such as the decline in gross margin brought about by the optimization of product structure and the intensification of competition in emerging businesses. From relay protection to energy storage systems, Beijing Sifang Automation is seeking growth in new areas. It is understood that from 2023 to 2025, Beijing Sifang Automation expects total revenue of 57.51 billion yuan, 69.51 billion yuan, and 81.93 billion yuan, with a compound annual growth rate of approximately 19.4%; the annual net profit is expected to be 6.28 billion yuan, 7.16 billion yuan, and 8.29 billion yuan, reflecting a gradual release of profitability with revenue growth. The core of the performance growth comes from the industry dividend of the construction of the new domestic power system: as the installed capacity of wind power, photovoltaics, and other new energy sources continues to rise, the demand for relay protection equipment, intelligent control systems, and primary and secondary fusion devices in the power grid continues to expand. Beijing Sifang Automation, as a core supplier of State Grid and Southern Power Grid, benefits from the routine bidding procurement and distribution network automation transformation of the two major power grids. According to Frost & Sullivan data, based on 2025 revenue, Beijing Sifang Automation ranks second in the Chinese protection and automation solutions market with a market share of 10.3%, showing a solid industry position. In terms of business structure, the company has formed four major business segments: secondary equipment, power electronics, primary and secondary fusion, and energy storage systems, with relay protection and other secondary equipment as the absolute revenue pillars. In 2025, the revenue from secondary equipment accounted for 75.7%, still the company's core foundation. This also means that the company's business is still fundamentally based on the traditional relay protection market. However, it is worth noting that this revenue structure is beginning to change. From 2023 to 2025, the revenue from energy storage systems increased from 284 million yuan to 586 million yuan, more than doubled in two years; revenue from power electronics increased from 394 million yuan to 701 million yuan, achieving close to double growth. At the same time, revenue from smart operation and maintenance business also increased from 408 million yuan to 657 million yuan. This change corresponds to the direction of the entire power system upgrade. With the continuous increase in the proportion of new energy generation, the traditional power grid is gradually evolving from a centralized system dominated by large-scale thermal power and hydropower to a new power system that operates in coordination with source, grid, load, and storage. In this process, the importance of power electronic equipment, primary and secondary fusion equipment, and energy storage systems continues to increase. According to Frost & Sullivan data, the market size of Chinese new power system solution is expected to increase from 390.5 billion yuan in 2025 to 992.7 billion yuan in 2030, with a compound annual growth rate of 20.5%. The growth rates of energy storage systems, power electronics, and primary and secondary fusion devices are faster, with compound annual growth rates of 54.2%, 26.7%, and 21.4% over the next five years. For Sifang Jibao, this means that there is a greater market space outside its traditional areas of strength. Compared to some new entrants, the company's biggest advantage lies in its long-term accumulated understanding of system-level control capabilities. The power system is not simply a stack of equipment, but a complex coordinated network involving generation, transmission, distribution, and end loads. It is understood that the technical accumulation that Sifang Jibao has formed in large power grid security and stability control enables it to extend to energy storage, power electronics, and energy management systems. In a sense, the new business the company is currently promoting is not crossing boundaries, but a natural extension along the existing technology path. Behind the solid foundation, can the new business take over for growth? However, besides the growth story, Sifang Jibao also faces some "B-side" issues worth being cautious about. It is understood that although the company is continuously expanding into areas such as energy storage and power electronics, by 2025, traditional secondary equipment revenue still accounts for over 75%, with protection and automation business accounting for nearly seventy percent. In other words, the company's current valuation basis still mainly relies on the traditional power grid investment cycle. In recent years, State Grid and Southern Power Grid have continued to increase their investment, providing support for the industry. However, if the future pace of power grid investment changes, or if competition in the relevant equipment market intensifies, the growth rate of the company's core business may be affected. Secondly, there is a downward trend in profitability. According to the prospectus, the company's gross margin has decreased from 33.4% in 2023 to 29.9% in 2025, a continuous decline for three years. During the same period, net profit margin decreased from 10.9% to 10.1%. By business segment, in 2025, the gross margin of the secondary equipment business reached 35.4%, while the gross margin of energy storage systems was only 11.8%, and power electronics business gross margin was 18.9%, and the gross margin of primary and secondary fusion business was only 8.1%, almost all new business segments have profitability issues. Especially in the context of increasing competition in the energy storage industry, there is clear price competition in the system integration. Although Sifang Jibao has a technological advantage, it is still difficult to completely escape the downward pressure on industry-wide profit margins in the short term. At the same time, the company's accounts receivable risks have also increased. According to the prospectus, the company's trade accounts receivable, other accounts receivable, and impairment losses on contract assets increased from 21.65 million yuan in 2023 to 107 million yuan in 2025. Although it is still within a manageable range in terms of the overall scale, as the new energy, power electronics, and other new businesses expand, the company's ability to manage accounts receivable will become an important factor affecting the quality of cash flow. However, from the perspective of cash flow, the company's overall financial position remains relatively robust. From 2023 to 2025, the net cash flow from operating activities reached 1.233 billion yuan, 1.254 billion yuan, and 1.225 billion yuan respectively, maintaining a high level; by the end of 2025, the company had a cash and cash equivalents balance of 3.422 billion yuan. At the same time, the company's net asset size is close to 4.9 billion yuan, and the asset-liability structure is relatively healthy, indicating that even in the face of intensified industry competition, the company still has a strong ability to invest in research and development and strategic expansion. Overall, Sifang Jibao is a typical "old tree sprouting new shoots" type of enterprise. Traditional relay protection business provides a stable source of profit, while the construction of new power system opens up new growth space for the company. Energy storage, power electronics, smart operation and maintenance, AI data center distribution, and other new businesses are gradually growing, but they have not yet reached a stage where they can dominate the company's performance. For the capital market, the biggest focus for Sifang Jibao is not its current performance, but whether it can leverage its over thirty years of accumulated system control capabilities to upgrade from a device supplier to a comprehensive solution platform in the new power system and AI era. If this logic is eventually confirmed, the company's future value reassessment space may not be limited to the traditional power equipment track; but before that, the market still needs to observe its ability to scale up new businesses and whether profitability can be maintained steadily during the transformation process.