Guolian Minsheng Securities: The prosperity of the engine industry is spreading, and the entire industrial chain market has entered the fast lane of growth.

Guolian Minsheng Securities released a research report stating that, driven by the demand for power in the AIDC sector, the gas turbine industry has entered a long upturn cycle. Overseas leading orders and price indices are rising simultaneously, with high service proportions leading to an upward shift in valuation. The domestic industry chain is accelerating the absorption of external demand overflow through domestic substitution and capacity expansion. The firm recommends focusing on three main themes: first, bullish on domestic gas turbine complete machines and integrated leaders; second, paying attention to core component manufacturers and supporting equipment manufacturers entering the supply system of overseas major engine factories; and third, bullish on targets deeply tied to the natural gas generator supply system. The main points of Guolian Minsheng Securities are as follows: Global gas turbines are highly prosperous Driven by AI computing power, grid updates, and coal-to-gas conversions, the global gas turbine industry is experiencing a new strong upward cycle. Demand is driven by three core forces: the rapid growth of AI computing power brings electricity demand, data center power consumption is growing exponentially, and gas power generation, with its advantages of high stability, small footprint, and ability to provide 24x7 uninterrupted power supply, has become the core option for supplying power to AI data centers of North American tech giants; under the global energy transition trend, natural gas is driving the coal-to-gas transition process; existing units are entering a peak period of replacement and upgrade, with over 50% of the grid infrastructure in developed economies having a service life exceeding 20 years, leading to demand for equipment upgrades and maintenance. Heavy-duty gas turbines are the preferred choice for core power supply, with light-duty gas turbines serving as flexible backups. They have the ability for rapid start-stop and can be quickly deployed through modular design to adapt to distributed energy, peak shaving, and fast energy replenishment scenarios. Global gas turbine market Under the background of overseas capacity expansion, the opportunity for domestic substitution has become prominent. The global gas turbine complete machine market presents a highly concentrated oligopoly, with GEV, Mitsubishi Heavy Industries, and Siemens Energy collectively holding about 85% of the market share. Currently, the three major engine manufacturers are in a phase of expanding orders and capacity, and the shortage of core components resulting from this has become a key bottleneck restricting the release of global engine manufacturing capacity, creating a historic opportunity for domestic components to enter the global supply chain. Natural gas generators The rapid response choice for medium and small-power scenarios, natural gas generators, with their advantages of short construction cycles, flexible deployment, and environmental and economic benefits, have become the preferred solution for quickly meeting power demand in medium and small-power scenarios. With a delivery period of 18 to 36 months, significantly shorter than the 3-5 years for heavy-duty gas turbines, they effectively meet the overflow demand for gas turbines, rapidly penetrating scenarios such as backup power for data centers, distributed power generation, and industrial loads. Industry leading companies such as Caterpillar and Wartsila continue to secure large orders, and the industry is entering a period of high prosperity and expansion. Aviation modified engines Derived from aviation technology, a rapid peak shaving tool, aviation modified engines are derived from the modification of core aircraft engines, inheriting their high efficiency, lightweight, and fast start-stop characteristics, and are core equipment for grid peak shaving and distributed energy. The global market is dominated by GEV, Siemens, and Baker Hughes, with a combined market share of about two-thirds. Its core application scenarios are concentrated in fast peak shaving power stations, distributed energy, offshore oil and gas platforms, etc. With the advantages of aviation technology accumulation and the refurbishment of retired aircraft engines, long-term growth is stable. Risk warning: risks of fluctuations in raw material prices, international trade frictions, exchange rate fluctuations, and deviations in data forecasting.