Analysis of Investment Opportunities for Power Equipment Enterprises from Rural Power Grid Transformation

Based on the above research data, I now present a systematic and comprehensive

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In December 2025, the National Development and Reform Commission issued the Guiding Opinions on Promoting High-Quality Development of Power Grids, which clearly states: Increase investment in power grids, intensify the transformation and upgrading of existing power grids, and support the construction of a new power system [1]. This top-level design provides strong policy guarantees for rural power grid transformation.

During the 14th Five-Year Plan period, China implemented the Rural Power Grid Consolidation and Upgrading Project, with a total of RMB 25 billion allocated from the central budgetary investment, driving rural power grid investment to exceed RMB 800 billion [2]. In 2025, the gap in residential electricity consumption between urban and rural areas gradually narrowed, and the electrification level continued to improve.

State Grid’s fixed-asset investment during the 15th Five-Year Plan period is expected to reach

, a 40% increase compared to the 14th Five-Year Plan, hitting a record high [1]. The investment growth trajectory is clear:

Year	Investment Scale	YoY Growth Rate	Features
2022	Exceeded RMB 500 billion for the first time	-	First breakthrough threshold
2023	RMB 538.1 billion	7.6%	Steady growth
2024	RMB 608.3 billion	13.0%	Exceeded RMB 600 billion for the first time
2025	Over RMB 650 billion	6.9%	Record high
15th Five-Year Plan (5 years)	RMB 4 trillion	40% growth	Planned investment

China Southern Power Grid has also increased investment in rural power grids, with a cumulative investment of over RMB 170 billion in the past five years for rural power grid transformation and upgrading, and the rural power grid supply reliability rate has reached

[3].

According to Galaxy Securities, in 2025, State Grid:

• Transmission and transformation equipment tender amount
  reached RMB 91.88 billion, with a YoY growth of 25.3%
• Distribution grid regional and joint tender amount
  reached RMB 124.57 billion
• Among which, 10kV high-voltage power cables accounted for 34%, and low-voltage power cables accounted for 18%

The upgrading and transformation of distribution grids, the “capillaries” of the power system, is accelerating, and rural power grid transformation is an important part of it [1].

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Large-scale investment in major power grid projects involves upstream and downstream enterprises in many industrial chains such as power sources, electrical equipment, and raw materials. Increased investment means that related enterprises in the industrial chain will directly benefit, with the transmission path as follows:

Power Grid Investment → Increased Equipment Procurement → Growth in Corporate Orders → Performance Improvement → Valuation Repair

Rural power grid transformation mainly involves the following equipment demand:

Equipment Category	Main Application	Beneficiary Segment
Distribution Transformers	Voltage conversion, power distribution	Core distribution grid equipment
High/Low Voltage Switchgear	Circuit protection, control	Distribution grid switchgear
Power Cables	Power transmission	Line construction
Smart Meters	Electricity metering	Digital transformation
Capacitors/Reactors	Reactive power compensation	Power quality
Circuit Breakers/Disconnect Switches	Fault protection	Line protection

Compared with urban distribution grids, rural power grid transformation has the following characteristics:

1. Wide Coverage
   : Covers most counties and rural areas across the country
2. Small Single Project Amount but Large Total Volume
   : Projects are scattered but the cumulative scale is considerable
3. Urgent Demand for Transformation and Upgrading
   : Replacement of old equipment, grid connection of new energy
4. Policy Inclination Support
   : Key support direction of central budgetary investment

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Indicator	Data
Market Capitalization	USD 15.452 billion
Current Stock Price	$30.78
1-Year Growth Rate	154.59%
P/E	29.04x
ROE	7.67%
YoY Net Profit Growth in the First Three Quarters of 2025	+28%

TBEA is a leading transformer enterprise with in-depth layout in UHV and distribution grid construction. At its performance briefing, the company stated that it expects 4-5 new DC UHV projects to start construction annually in China in the future, and the company will continue to benefit from the growth in power grid investment [1].

Indicator	Data
Market Capitalization	USD 8.012 billion
Current Stock Price	$15.63
1-Year Growth Rate	112.94%
3-Year Growth Rate	220.29%
P/E	66.44x
ROE	5.39%
YoY Net Profit Growth in the First Three Quarters of 2025	+20%

XD Electric is a technology leader in high-voltage switches, transformers and other fields, with products widely used in core projects of UHV and smart grids.

Indicator	Data
Market Capitalization	USD 3.190 billion
Current Stock Price	$23.51
1-Year Growth Rate	28.75%
3-Year Growth Rate	168.07%
P/E	27.78x
ROE	10.50%
Net Profit Margin	8.87%

Pinggao Group is a technology leader in high-voltage switchgear and GIS equipment, with excellent financial indicators in the industry.

Indicator	Data
Market Capitalization	USD 0.423 billion
Current Stock Price	$21.90
1-Year Growth Rate	36.53%
P/E	65.78x
Current Ratio	3.05
Quick Ratio	2.58

Changlan Technology focuses on distribution grid equipment such as cable accessories, and benefits from the growth in demand for cable equipment in rural power grid transformation. On January 15, boosted by State Grid’s investment plan, its stock price rose more than 8% intraday [1].

Smart meters are core equipment for the digital transformation of rural power grids, benefiting from the demand for intelligent upgrading of power grids. The market share of related enterprises in distribution grid tenders continues to increase.

Boosted by news of State Grid increasing investment, the power grid equipment sector rose sharply in the afternoon of January 15:

• Baobian Electric Co., Ltd. (600500.SH) rose more than 8% intraday
• TBEA Co., Ltd. (600089.SH) rose more than 8% intraday
• Changlan Technology Co., Ltd. (002879.SZ) rose more than 8% intraday
• XD Electric Co., Ltd. (601179.SH) rose more than 8% intraday

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From the perspective of financial data, leading power grid equipment enterprises show the following characteristics:

Enterprise	Net Profit Margin	Estimated Gross Profit Margin	ROE	Financial Health
TBEA	5.41%	~18%	7.67%	Low Risk
XD Electric	5.02%	~20%	5.39%	Stable
Pinggao Group	8.87%	~25%	10.50%	Excellent
Changlan Technology	3.53%	~35%	3.03%	Sufficient Liquidity

In the first three quarters of 2025, major power grid equipment enterprises achieved significant performance growth:

• TBEA
  : Net profit attributable to parent company increased by 28% YoY
• XD Electric
  : Net profit attributable to parent company increased by 20% YoY
• Baobian Electric
  : Net profit attributable to parent company increased by 73% YoY

The annual increase in power grid investment has a direct positive catalytic effect on the orders and performance of related companies in the industrial chain [1].

The current valuation of the power grid equipment sector is at a historical median level:

• TBEA: 29.04x (Relatively reasonable)
• XD Electric: 66.44x (Relatively high)
• Pinggao Group: 27.78x (Attractive)
• Changlan Technology: 65.78x (Relatively high)

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1. Continuous Policy Support
   : The national RMB 4 trillion investment plan is clear, and rural power grid transformation is a key focus area
2. High Performance Certainty
   : Leading enterprises have full order books, and performance growth is sustainable
3. Valuation Repair Space
   : The valuation of some high-quality enterprises remains attractive
4. New Energy Consumption Demand
   : The growth of wind and solar installed capacity forces accelerated power grid investment

Investment Type	Recommended Targets	Rationale
Leading Blue-Chip Stocks	TBEA, Pinggao Group	Stable industry position, strong order acquisition capability
High-Elasticity Targets	XD Electric, Baobian Electric	High performance growth rate, high elasticity
Segment Leaders	Changlan Technology	Obvious competitive advantages in the distribution grid segment
Undervalued Targets	Pinggao Group	Low valuation, excellent ROE

1. Policy Implementation Risk
   : Investment progress may be affected by macroeconomic conditions
2. Raw Material Price Fluctuation Risk
   : Prices of raw materials such as copper and aluminum affect gross profit margin
3. Intensified Competition Risk
   : Industry competition may lead to a decline in gross profit margin
4. Valuation Correction Risk
   : Significant short-term gains may lead to correction pressure

(1-3 months): Focus on the power grid equipment sector benefiting from policy favorable factors, especially leading distribution grid equipment enterprises

(3-6 months): Focus on the implementation of orders and the realization of performance

(6-12 months): Focus on the implementation of the 15th Five-Year Plan investment plan and the development of a new generation of power grid technologies

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As an important part of State Grid’s investment, rural power grid transformation will continue to drive equipment demand during the 15th Five-Year Plan period. The RMB 4 trillion investment plan provides a long-term and stable source of orders for power equipment enterprises, and leading enterprises will benefit significantly.

From an investment perspective, it is recommended to focus on:

1. TBEA Co., Ltd. (600089.SH)
   - Absolute leader in transformers, reasonable valuation
2. Pinggao Group Co., Ltd. (600312.SH)
   - Leader in high-voltage switches, excellent ROE
3. XD Electric Co., Ltd. (601179.SH)
   - Core supplier for UHV, high performance growth
4. Changlan Technology Co., Ltd. (002879.SZ)
   - Leader in the distribution grid segment

Investors should allocate assets in the power grid equipment sector rationally based on their own risk preferences and market trends.

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[1] China Business Network - “State Grid Releases Record RMB 4 Trillion Investment Plan with Clear Key Focus Areas” (https://finance.sina.com.cn/roll/2026-01-16/doc-inhhncwz2674898.shtml)
[2] People’s Daily - “What Does This ‘RMB 10 Trillion’ Mean? (New Economic Orientation)” (http://paper.people.com.cn/rmrb/pc/content/202601/19/content_30133496.html)
[3] People’s Daily Online - “Visiting Enterprises to Observe High-Quality Development: A Vivid Practice of China Southern Power Grid’s ‘Four Revolutions, One Cooperation’” (https://www.163.com/dy/article/KJA2DD6D0514E49C.html)