Solid Domestic Market Position with Groundbreaking Overseas SST Expansion

China XD Electric maintains a leading and entrenched position in China’s power equipment market while achieving a pivotal overseas breakthrough with its Solid-State Transformer (SST) business. The company consistently ranks first in domestic UHV new projects and State Grid centralized bidding programs, with both winning volume and market share continuing to improve in China Southern Grid procurement markets. Most recently, the company secured its first overseas SST order for data center applications, marking a landmark milestone in its global market penetration and cross-border business layout.

Investment Thesis & Valuation

We forecast robust and steady profit growth for the company from 2026 to 2028. Net profit attributable to parent shareholders is projected to reach RMB 1.544 billion, RMB 1.867 billion and RMB 2.246 billion, representing YoY growth rates of 21.6%, 20.9% and 20.2%, respectively. Corresponding EPS will stand at RMB 0.30, RMB 0.36 and RMB 0.44. In consideration of the company’s dominant market position, sustained growth momentum and peer valuation benchmarks, we assign a 2026E PE multiple of 55x, deriving a target price of RMB 16.5, and maintain an “Accumulate” rating.

Booming Domestic and Overseas Power Equipment Demand

Domestically, China’s power grid investment will accelerate substantially during the 15th Five-Year Plan period. State Grid’s fixed asset investment is expected to reach RMB 4 trillion, representing a 40% increase compared with the 14th Five-Year Plan era. Grid upgrading will advance on two major tracks: iterative optimization of backbone UHV transmission corridors and intelligent renovation of distribution networks, creating sustained domestic demand for high-end power equipment.

Globally, accelerating energy transition and power grid modernization drive continuous growth in overseas grid construction and renovation investment. According to the International Energy Agency (IEA), global grid investment is expected to reach USD 520–620 billion by 2030, with robust incremental demand emerging across Belt and Road regions and emerging markets.

Consolidated Domestic Leadership and Accelerated Global Expansion

China XD Electric retains absolute industry leadership in domestic core grid markets. The company secures top rankings in State Grid’s UHV project tenders and centralized bulk procurement, while continuously lifting bidding scale and market penetration in China Southern Grid’s procurement system. Beyond traditional grid equipment, the company deepens strategic cooperation and business penetration in high-end sectors including nuclear power, pumped storage and offshore wind power, further enriching its domestic revenue base.

For international business expansion, the company comprehensively restructured its overseas operational system, strengthened strategic cooperation with world-class energy and power equipment giants, and implemented differentiated performance assessment mechanisms for global business units. It actively scales market share in key regions including the Middle East, South America and Southeast Asia, with the proportion of equipment export orders steadily rising.

SST Business Achieves Breakthrough Overseas Commercialization

The company’s emerging Solid-State Transformer (SST) business achieved a historic overseas breakthrough with a newly secured cross-border data center order, covering four sets of 13.8kVAC/800VDC SST equipment. The deal represents the company’s formal entry into the international high-end power electronics market and verifies global recognition of its SST technological competitiveness.

Domestically, China XD Electric’s SST products are widely deployed in distribution network and data center scenarios. Its 10kV/2.42MVA SST equipment serves the national East-to-West Data Hub project in Guian New Area, while the 10kV/2MVA/750V model has been officially commissioned in the company’s smart optical-storage-charging integrated energy park. The progressive domestic and overseas commercialization of SST products lays a solid foundation for the company’s long-term growth in smart grid and new energy high-end equipment tracks.