(Photo courtesy of Hero)
China opens a new round of distribution network growth cycle //
On April 11, many stocks in the A-share electrical power grid sector performed strongly. Among them, China Xidian, Huashengchang, Xinhongtai daily limit, Xu Ji Electric, Xinling Electric, Huaming Equipment, Jinpan Technology, Samsung Medical, Pinggao Electric closed up 8.52%, 10.02%, 7.33%, 7.31%, 7.26%, 7.13% respectively.
According to industry news, recently, 1 batch of State Grid metering equipment (1 batch of electric energy meters) won the bid, and the total amount of the winning bid was 12.38 billion yuan, a decrease of 13.23% month-on-month and a year-on-year increase of 37.28%. According to the data of the State Grid e-commerce platform, the number of winning bidders for electricity meters is generally maintained at more than 70 as a whole, and the market is scattered. A total of 81 companies won the bid in this batch.
It is worth mentioning that on the same day, Xili Technology announced that it won the bid for the State Grid A-level single-phase smart energy meter, B-level three-phase smart energy meter, C-level three-phase smart energy meter and concentrator and collector, with a total amount of 240 million yuan (tax included).
According to the analysis of Galaxy Securities, the State Grid meter will usher in a new round of replacement peak in 2024-2025. State Grid plans to bid for three batches of electric energy meters in February, July and October in 2024, which is higher than the usual two batches of the year, and the agency believes that the annual bidding amount is expected to exceed expectations, and the overall number of tenders is expected to reach 90 million to 100 million. Assuming that the proportion of the demand for electricity meters at all levels and the unit price of winning bids remain consistent with those in 2023, the bidding amount of electric energy meters in 2024 is expected to exceed 25 billion yuan, a year-on-year increase of 32%. Considering that 2014-2015 is the peak of the bidding for the first generation of smart meters, the rotation cycle will be extended to about 10 years under the gradual promotion of the state replacement strategy, and the new generation of smart meter technical standards are gradually implemented, and it is expected that the meters will usher in a new round of replacement peak in 2024-2025.
In addition, the National Development and Reform Commission and the National Energy Administration revised and issued the Implementation Measures for the Division of Distribution Areas for Incremental Distribution Business. Huafu Securities believes that the official version of the implementation measures for the division of distribution areas of incremental distribution network business has been released, and the construction of distribution network is expected to enter a high boom cycle.
By reviewing the relevant policies of the distribution network during the "12th Five-Year Plan" and "13th Five-Year Plan" period and the changes in investment growth during the corresponding period, and combined with the relevant policies during the "14th Five-Year Plan" period launched by the National Development and Reform Commission and the Energy Administration in the second half of 2023 to the first half of 2024, Tianfeng Securities expects that the promotion of relevant policies is expected to bring a new round of distribution network investment growth cycle, and the proportion of distribution network investment in the last round of distribution network growth cycle increased from 53.2% in 2017 to 63.3% in 2019 , which will fall back to 55% in 2023, the agency expects 2024 to be the starting point of this growth cycle.
Overseas power grids enter a new round of replacement cycle //
In addition to the domestic market, the overseas market of power grid equipment is also worth paying attention to. From January to February, the cumulative export value of transformers in mainland China was 3.903 billion yuan, a year-on-year increase of 60.8%, and the cumulative export of electricity meters from January to February increased by 32% year-on-year.
Due to the low concentration of overseas power grid suppliers, domestic power equipment enterprises have good conditions for going overseas. Guotai Junan Securities pointed out that there is a lag in power grid investment in countries around the world led by Europe and the United States, and it is urgent to increase power grid investment. On the other hand, the fact that the power grid construction cycle is much longer than the new energy construction cycle makes it impossible for European and American countries to quickly make up for the gap between the grid carrying capacity and the new energy grid connection demand, and the lack of investment in the power grid may become a huge obstacle to the clean energy transition. On the other hand, with the increase in social electricity consumption and the gradual increase in the proportion of clean energy generation in emerging market countries, governments around the world are actively deploying power grid investment plans, but problems such as electrification rate and grid reliability cannot keep up, and financial resources are insufficient to support grid investment.
The agency further pointed out that overseas power grids have entered a new round of replacement cycle, and overseas power grids have broad investment space. There is a broad space for investment in overseas power grids, Europe and the United States may invest more than 1.4 trillion US dollars before 2030, and the world is expected to invest 500 billion US dollars per year in the power grid, and power grid investment will further increase after 2030.
It is worth noting that many companies in the industry recently released their 2023 annual reports, Xu Ji Electric achieved a net profit attributable to the parent company of 1.005 billion yuan, a year-on-year increase of 28.03%, and Pinggao Electric's net profit attributable to the parent company was 816 million yuan, an increase of 284.47% year-on-year. In addition to the high performance growth, the overseas business will progress smoothly in 2023, and Xu Ji Electric will sign the second phase of Chile's AMI and Italy's medium voltage metering in 2023. Pinggao Electric signed the largest single overseas order for 24-36KV ring main unit products, Indonesia Nansu Electric Integration and other engineering contracts, and the overseas progress was accelerated.
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