Global Power Equipment Enters a Super Cycle; Initiate Coverage on Jinpan, Himile, and Shenma

Overview

This report, published by Nomura Securities, posits that the global power equipment industry is entering a long-term upward 'super cycle' driven jointly by AI data centers, renewable energy penetration, and grid modernization. Despite trade friction risks, leading Chinese power equipment suppliers—thanks to their product iteration capabilities, overseas customer certifications, and delivery track records—are well-positioned to benefit from spillover overseas demand. The report initiates coverage and highlights three A-share companies: Jinpan Technology (benefiting from data center power architecture upgrades), Himile Technology (benefiting from gas turbine component demand), and Shenma Electric (benefiting from domestic and international grid and UHV projects)—all assigned 'Buy' ratings.

Core views

Demand Side: Dual drivers of AI and grid upgrades. The report notes that global electricity load growth is accelerating significantly, with the U.S. being the primary source of incremental demand. Grid Strategies forecasts U.S. electricity load to grow at an average annual rate of 3.7% from 2025–2030, with summer peak load increasing by 166 GW—of which 90 GW (55%) will come from data centers. In Europe, EV adoption and renewable energy installations will also drive renewed electricity demand growth. Domestically in China, annual grid investment during the '15th Five-Year Plan' period is expected to reach RMB 1 trillion, providing clear incremental demand from UHV and distribution grid upgrades. Supply Side and Competitive Landscape: China’s supply chain holds global competitiveness. With overseas markets like the U.S. facing domestic supply shortages (e.g., a 100% shortfall in generator transformer capacity), Chinese manufacturers—with mature production capabilities and cost advantages—are rapidly integrating into the global supply chain. The report emphasizes that Chinese companies with established overseas client bases and product certifications hold distinct advantages in fast-evolving or high-certification-barrier niches. Company-Specific Theses: 1. Jinpan Technology (688676): Core thesis centers on power architecture upgrades driven by AI data centers. As data centers shift toward 800V high-voltage DC architectures, demand for solid-state transformers (SST) and HVDC modules is surging. Jinpan leads in modular power equipment and solid-state transformers, reporting a 197% year-over-year increase in data center revenue in 2025 and successfully entering the global data center supply chain. The report forecasts its net profit CAGR at 40% from 2026–2028. 2. Himile Technology (002595): Core thesis hinges on gas turbine component exports driven by AI-related baseload power demand. AI data centers require stable and rapid power connections, boosting gas turbine demand. Himile, a global leader in tire molds, has expanded into large mechanical components and CNC machine tools, with its gas turbine parts business already supplying global leaders like Siemens. The report expects its global gas turbine component market share to rise from 6% in 2024 to 10% by 2028. 3. Shenma Electric (603530): Core thesis is driven by composite insulator demand from domestic and international grid upgrades. China plans to commission 15 UHV DC projects during the '15th Five-Year Plan,' while aging grids in Europe and the U.S. are due for renewal—both boosting composite insulator penetration. As the global leader in composite insulators, Shenma benefits from dual tailwinds. The report forecasts its global market share to increase from 8% in 2024 to 18% by 2028.

Analysis framework

The report employs a hybrid approach combining top-down industry analysis with bottom-up company selection. First, it quantifies electricity load growth and grid investment scale across major markets (U.S., Europe, China, Middle East) using macro and industry data from third-party sources (e.g., Grid Strategies, Wood Mackenzie, McKinsey) to establish a long-cycle bullish (Beta) thesis for the sector. Second, it conducts value chain transmission analysis. Macro-level power demand is broken down into specific equipment categories: AI data centers → power architecture upgrades (solid-state transformers, HVDC); baseload power → gas turbines; grid expansion → insulators and transmission/distribution equipment. This combination of 'volume-price breakdown' and 'supply-demand framework' helps pinpoint high-growth sub-sectors. Finally, at the company level, the report prioritizes 'overseas capability' and 'product iteration ability.' It particularly focuses on whether companies have overseas certifications, long-term delivery records, and R&D progress in new products (e.g., solid-state transformers)—using these as core criteria for identifying Alpha returns. Valuation uses relative P/E multiples, adjusted for each company’s growth (EPS CAGR) and profitability (ROE) versus peers to assign premiums or discounts.

Methodology notes

• Industry/Value Chain Analysis FrameworkSupply-demand framework

  Supply-Demand Framework

  The report analyzes global power equipment through supply shortages (e.g., insufficient U.S. domestic capacity) and surging demand (from AI and renewables), concluding the industry is in a supply-constrained upcycle—forming the core macro rationale for stock appreciation.

• Industry/Value Chain Analysis FrameworkUpstream-Midstream-Downstream Transmission

  Upstream-Midstream-Downstream Transmission

  The report traces upstream power demand growth (e.g., AI data center electricity consumption) down to midstream equipment segments (e.g., transformers, gas turbines, insulators), enabling precise identification of high-growth niches and beneficiary companies.

• Valuation MethodPE/PEG valuation

  PE/PEG Valuation

  The report uses P/E multiples for valuation, adjusting for each company’s expected earnings growth (EPS CAGR) and ROE relative to peers to determine valuation premiums or discounts—reflecting PEG-based thinking.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Jinpan Technology (688676.SS)

  Benefits from AI data center power architecture upgrades, driving demand for solid-state transformers and HVDC products

  Strengths

  Leader in modular power equipment and solid-state transformers; already in global data center supply chain; 197% YoY data center revenue growth in 2025

  Weaknesses

  Expected profit growth slightly below peer average, resulting in a modest valuation discount

  Comparison

  Stronger positioning in AI-related power products and overseas customer base compared to peers

  Risks

  Orders falling short of expectations, slower-than-expected overseas expansion, delays in emerging businesses

• Himile Technology (002595.SS)

  Benefits from gas turbine and component exports driven by AI baseload power demand

  Strengths

  Large mechanical components business supplies global leaders like Siemens; strong integrated casting and machining capabilities; capacity expansion underway

  Weaknesses

  Tire mold business may face higher compliance costs due to EU regulations; uncertainty around domestic CNC machine tool substitution

  Comparison

  Unique client access and delivery track record in gas turbine components niche

  Risks

  Weak downstream tire demand, slower-than-expected CNC localization, FX volatility

• Shenma Electric (603530.SS)

  Benefits from composite insulator demand driven by domestic and international grid upgrades and UHV projects

  Strengths

  Global leader in composite insulators; internationally competitive product performance; benefits from China’s 15 planned UHV DC projects and overseas grid renewals

  Weaknesses

  Raw material price volatility may pressure margins; uncertainty around overseas factory ramp-up speed

  Comparison

  Higher expected profit growth and ROE versus peers, justifying a valuation premium

  Risks

  Product quality issues, FX fluctuations, raw material price volatility

Key data

• U.S. Average Annual Electricity Load Growth (2025–2030)3.7%Up from 2.8% in 2024
• U.S. Summer Peak Load Increase (2025–2030)166 GWOf which 90 GW, or 55%, comes from data centers
• China's Annual Grid Investment During '15th Five-Year Plan'RMB 1 TrillionFor UHV rollout and distribution grid upgrades
• Global Solid-State Transformer Market Size (2030E)>USD 2.5 BillionDriven by AI data center power architecture upgrades
• Jinpan Technology's 2025 Data Center Revenue Growth197%Year-over-year surge, becoming a key growth driver
• Himile Technology's Global Gas Turbine Component Share (2028E)10%Up from 6% in 2024
• Shenma Electric's Global Composite Insulator Share (2028E)18%Up from 8% in 2024

Impact & implications

The report argues that the global power equipment 'super cycle' presents a rare window for Chinese manufacturers to expand overseas. For Jinpan Technology, Himile Technology, and Shenma Electric, this means not only short-term order growth but also structural elevation in their global supply chain status and market share. Investors should monitor these companies’ overseas capacity deployment, customer certification progress, and commercialization of new products (e.g., solid-state transformers). Meanwhile, the certainty of domestic grid investment provides a performance safety net.

Risks

• Orders below expectations: Core power equipment businesses rely on client orders; weaker-than-expected order intake would impact revenue and profit growth
• Slower overseas expansion: Trade tensions, policy shifts, and changing competitive dynamics could hinder international growth
• Slow progress in emerging businesses: Delays in commercializing new products like solid-state transformers could cap valuations
• Weak downstream demand: Softening tire industry demand could hurt Himile’s mold business
• FX volatility: High export exposure makes earnings vulnerable to significant RMB exchange rate fluctuations
• Raw material price volatility: Rising costs of materials like silicone rubber or aluminum ingots—if not passed through—could compress margins
• Product quality risk: Major quality failures in critical components like insulators could cause grid incidents and severely damage brand reputation

What to watch

• Securing of AI data center-related orders
• Production ramp-up progress at overseas factories (e.g., Malaysia, U.S.)
• Approval and construction pace of domestic UHV projects
• Commercialization and customer certification progress for new products like solid-state transformers
• Raw material price trends and evidence of pricing power