Analysis of the Reasons for the Strong Performance of Jiangsu Huachen (603097) and Its Sustainability

Jiangsu Huachen (603097), as a transformer R&D, manufacturing, sales and service provider [2], recently entered the strong stock pool mainly driven by both industry and company fundamentals:

• Global Supply Shortage
  : Transformers are key components of power infrastructure, and there is a serious global supply gap because production requires skilled workers with a 3-5 year training cycle, making it impossible to expand capacity quickly [4].
• Sustained Demand Growth
  : The global transformer market size is expected to grow from 586 billion USD in 2021 to 1030 billion USD by 2031, with a compound annual growth rate of 6.1% [4].
• Energy Transition Promotion
  : Power system modernization, grid construction in developing countries, and new energy grid connection demand jointly drive transformer demand growth [4].

• Capacity Expansion
  : The company’s total number of employees has increased from more than 900 to 1500, accelerating production capacity expansion [4].
• International Layout
  : Plans to establish a joint venture factory in Europe, adopt the “component export + local assembly” model to expand overseas markets, and has entered the site selection stage in Romania [4].

• Persistence of Supply Shortage: The long training cycle for skilled workers leads to slow industry capacity expansion, and the supply gap may persist in the medium to long term [4], providing stable growth space for the company.
• Growth Potential of International Layout: Entry into the European market will help the company diversify regional risks while benefiting from local power system transformation demand [4].

• Raw Material Price Fluctuations
  : Transformer production relies on raw materials such as copper and silicon steel sheets, and price fluctuations affect profitability.
• Industry Competition
  : The transformer industry is highly competitive, and the company needs to maintain technological and cost advantages.
• Overseas Market Risks
  : International layout faces risks such as exchange rate fluctuations and policy changes.

• The industry’s supply-demand gap is expanding, and the company as a major domestic producer will continue to benefit [4].
• Energy transition policy support drives long-term growth in transformer demand [4].

Jiangsu Huachen’s recent strong performance benefits from multiple positive factors at both industry and company levels. Technically, there is an obvious short-term rise with expected increased trading volume; the medium-term trend is supported by the supply-demand gap and has sustained upward potential. Investors need to pay attention to industry policies, the progress of the company’s capacity expansion, and key price levels (recent platform consolidation price, historical high).

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: This report provides information collection, analysis and market background to support decision-making, and is not investment advice, trading recommendation or financial guidance.