Power Equipment: Continue to be optimistic about energy-saving, emission reduction and new energy industries

We continue to be optimistic about the energy-saving and emission-reduction industry, and we expect that the support policy will still be introduced in the fourth quarter. In addition, the revitalization plan for the emerging energy industry is expected to be introduced in the fourth quarter and will promote the new energy sector. Although the grid investment has declined this year, with the introduction of the “Twelfth Five-Year Plan” of the two networks, attention has been paid to the UHV and intelligent concentration of grid investment restructuring. We give the power equipment and new energy industry an "overweight" rating.

The point of support rating

Energy-saving emission reduction is optimistic about the frequency converter, denitrification and residual heat and residual pressure. Judging from the macro perspective, the focus of China’s economic development this year will shift from “guaranteing growth” to “adjusting structure”, and related industries such as energy saving and emission reduction are expected to receive full support of national policies. We forecast that the average annual growth rate of the energy-saving industry will reach 30% in the next five years, and the growth rate of some sub-sectors will exceed 50%. Our most promising areas include low- and medium-voltage inverters, denitrification, and waste heat and residual pressure utilization.

New energy is optimistic about nuclear power and photovoltaics. The growth of nuclear power is the most certain and the barriers to entry are high. This is the most promising new energy sub-sector. Thanks to the pull of demand in the German market, the entire PV market is booming in both production and sales. Due to the sharp increase in demand, the oversupply of polysilicon has improved compared to last year. Polysilicon demand is temporarily in short supply.

Grid equipment is optimistic about UHV, intelligence and internationalization. It is expected that the "12th Five-Year Plan" grid investment scale will remain large, but the growth rate will slow down. We propose to pay attention to structural adjustment in grid investment: UHV and intelligence. In addition, the "Twelfth Five-Year Plan" will become a strategic period for the internationalization of the layout, and it is recommended to pay attention to internationalization.