CITIC Construction Investment: Optimistic about investment prospects in the electricity shortage industry chain

The Zhitong Finance App learned that CITIC Construction Investment released a research report saying that in July 2026, the US transformer price index rose again, increasing by about 4% over the previous month. In addition to the increase in the price of raw materials, tight supply and demand is still an important factor in price increases. Investment in North American power grids is expected to enter a long-term upward trend; under stricter approvals and tight equipment supply, the number of AIDC plans continues to grow, and demand for terminals remains high. The cumulative orders from leading overseas power equipment companies continued to reach new highs, and the imbalance between supply and demand worsened the tension. Chinese companies have profoundly benefited from imbalances in global supply and demand, and have already entered a long golden period of going overseas. Under the logic that China has formed an advantage in the entire power equipment industry chain, investment in AI computing power continues to increase in North America, European energy needs to be transformed, and the supply and demand for lithium batteries is tightening, sectors such as new energy, energy storage, lithium power, and power grids are expected to rise.

CITIC Construction Investment's main views are as follows:

In July 2026, the US transformer price index rose again, increasing by about 4% over the previous month. In addition to the increase in the price of raw materials, tight supply and demand is still an important factor in price increases. Investment in North American power grids is expected to enter a long-term upward trend; under stricter approvals and tight equipment supply, the number of AIDC plans continues to grow, and demand for terminals remains high. The cumulative orders from leading overseas power equipment companies continued to reach new highs, and the imbalance between supply and demand worsened the tension. Chinese companies have profoundly benefited from imbalances in global supply and demand, and have already entered a long golden period of going overseas.

Demand: Global high voltage+AIDC supporting power equipment continues to be booming

1) In July 2026, the US transformer price index rose again, increasing by about 4% over the previous month. In addition to the increase in the price of raw materials, tight supply and demand is still an important factor in price increases.

2) High-voltage grids: North American grid investment is expected to enter a long-term upward trend. Data center: Under stricter approvals and tight equipment supply, the number of AIDC plans continues to grow. In 2026, the vacancy rate of data centers in North America was only 1%. It has maintained this level for 3 consecutive years, indicating that demand for terminals has remained high

Supply and demand: Accumulated orders from leading overseas power equipment companies continued to reach new highs, and the imbalance between supply and demand worsened the tension

1) As of the latest performance period in 2026, the cumulative orders for Hyosung Heavy Industries/Hitachi Energy/GE Vernova power grid business at the end of the period grew by about 64%/52%/64% year-on-year.

2) Driven by the construction of North American data centers and global power grids, demand from leading companies continues to rise, while it is difficult for the supply side to scale up in the short term, and cumulative orders continue to reach new highs.

Chinese companies have profoundly benefited from the imbalance between global supply and demand, and have already entered a long golden period of going overseas

1) Exports to the US: In January-July, the export scale of power transformers was nearly 4 billion yuan, the largest, with a year-on-year increase of more than 50%. In particular, the export growth rate of high-capacity transformers over 10 MVA has maintained a growth rate of nearly 100% month by month.

2) Orders from leading companies continue to confirm the seascape: Siyuan Electric's 2026H1 year-end contract debt was about 3.83 billion yuan, an increase of 29% over the beginning of the year; Jinpan Technology signed new overseas orders of 4.2 billion yuan for 2026H1, an increase of 271% over the previous year.

Key companies: Electric power equipment has both high prosperity and strong fundamentals.

Risk warning:

1) Demand side: changes in national infrastructure policies have led to power investment falling short of expectations; power grid investment falls short of expectations; demand for power equipment has declined due to a decline in the growth rate of installed energy; the growth rate of electricity consumption in the whole society has declined; the progress of the two networks has fallen short of expectations; the progress of UHV construction has fallen short of expectations, etc.

2) Supply side: Prices of commodities such as copper resources and steel have risen; the supply of power and electronic devices is tight, and the progress of localization falls short of expectations.

3) Policy aspects: Support related to the new electricity market fell short of expectations; progress in the electricity price mechanism fell short of expectations; progress in the electricity spot market fell short of expectations; differences in electricity peak and valley prices fell short of expectations, etc.

4) In terms of the international situation: the energy crisis is being mitigated more quickly, energy prices are falling faster; barriers to international trade are deepening, etc.

5) Market side: The competitive landscape has changed drastically; increased competition has caused the profitability of all aspects of power equipment to fall short of expectations; transportation and other expenses have risen.

6) Technical aspects: The progress of technical cost reduction is lower than expected; technical reliability is difficult to further improve, etc.