Zhitong Finance and Economics learned that CICC released a research report saying that with the global energy transition, the power grid infrastructure needs to be strengthened urgently, the demand for power equipment in the domestic and foreign markets continues to pick up, and the industry's prosperity continues to rise. The bank is optimistic about the long-term layout of overseas strategy of the head enterprises to grasp the overseas power equipment market for a long period of time. It is recommended that investors continue to pay attention to the investment opportunities in the power equipment sector in 2024, and focus on the three main investment lines of power equipment going overseas, flexible direct transmission, and distribution network.
CICC's main views are as follows:
Power equipment going overseas: global power grid investment is accelerating, and enterprises are ushering in an opportunity period of "tight overseas supply and demand".
The rapid growth of new energy installed capacity on the global power generation side has made the demand for power grid expansion and intelligent transformation more and more urgent, and overseas policies have made frequent efforts to promote the improvement of power grid investment. From the perspective of the supply side, affected by factors such as a long expansion cycle, imperfect industrial chain support, and scarcity of workers, the bank believes that it will be difficult for the overseas supply side to release a large amount of production capacity within three years, and it will be difficult to solve the problem of tight supply and demand in the short term. The bank is optimistic about the long-term layout of overseas strategy of the head enterprises to grasp the overseas power equipment market for a long period of time.
Flexible direct transmission: technological breakthroughs help open up market space, and core equipment manufacturers are expected to continue to benefit.
Under the trend of AC and DC hybrid power grid and large-scale new energy transmission, the use of flexible DC transmission technology is the necessary route to build a new power system in the future. In recent years, technological breakthroughs have helped flexible DC transmission open up application space, and the value of key equipment has increased significantly, and the bank estimates that the space of flexible converter valves in the "14th Five-Year Plan" is about 20 billion yuan, and the "15th Five-Year Plan" is expected to further increase the volume. At present, the core equipment manufacturers are leading in technology and have a concentrated pattern, and the bank believes that it is expected to fully benefit from the increase in the penetration rate of flexible straightening.
Distribution network: A new round of rural network transformation and intelligent distribution network improvement is expected to drive distribution network investment to bottom out.
The distribution network is a relatively weak link in China's power system, and investment lags behind during the "14th Five-Year Plan" period. The development of large-scale distributed photovoltaic is constrained by the capacity of the distribution network, and high-voltage fast charging may further increase the demand for distribution network transformation. The bank believes that under the joint catalysis of a new round of rural network transformation and modern smart distribution network, distribution network investment is expected to bottom out, and distribution network investment will increase by about 2% year-on-year in 2024.
Risk Warning:Investments in the power grid are less than expected;Overseas policies are less than expected, geopolitical risks;The implementation of the electricity market-oriented reform policy is less than expected.