Rotation-driven pullback creates accumulation opportunities in selected power equipment and wind power names

Overview

This report is JPMorgan's industry blog on China utilities and renewable energy, focusing on recent allocation opportunities in Asian power equipment, China's upstream wind power, and distributed energy storage-related names after sharp pullbacks. The report points out that the sector correction was affected by concerns over data center grid-connection delays, geopolitics, EU trade risks, and sector rotation, but utilities and grid demand still have structural support, while China's offshore wind fundamentals are also improving.

Core views

The core view of the report is that recent share price declines do not equate to fundamental deterioration; instead, they provide an accumulation window for quality names. Orient Cables received a share price catalyst from RMB 5.2 billion in new orders, and with very low EU exposure, improved visibility from higher domestic offshore wind policy targets, valuation at about 14x FY27E P/E, and earnings CAGR above 30% for 2025-2027E, the report maintains OW. Goldwind-H has likewise undergone a pullback of more than 30%, but its EU exposure is not large, and expectations for improved profitability in its turbine business remain intact. For Deye, the reopening of the Strait of Hormuz caused short-term share price volatility, but oil prices may be supported by restocking demand, and the economics of distributed solar PV plus energy storage may remain resilient.

Analysis framework

The report adopts a combination of event-driven analysis and fundamental review: it first identifies the market factors behind the recent sector correction, then compares orders, valuation, earnings growth, trade risk exposure, and visibility of industry demand; for Deye, it also incorporates oil price assumptions, diesel costs, the payback period of distributed solar PV plus energy storage, and demand experience after the European energy crisis to judge demand resilience.

Methodology notes

• Valuation-growth alignmentComparison of price-to-earnings ratio and earnings CAGR

  Use FY27E P/E and 2025-2027E earnings CAGR to assess post-correction valuation attractiveness.

  Orient Cables' roughly 14x FY27E P/E corresponds to earnings CAGR above 30% for 2025-2027E, and the report believes the valuation is attractive relative to its growth.

• Event-driven analysisOrder catalyst and share price pullback review

  Analyze the relationship among Orient Cables' RMB 5.2 billion in new orders, the share price rebound, and the previous 30% correction.

  The report believes the new orders may prompt investors to reassess Orient Cables, while the prior pullback was mainly driven by sentiment and sector rotation.

• Demand sensitivity analysisOil prices, diesel prices, and the economics of distributed solar PV plus energy storage

  Use Brent oil prices, diesel costs, and project payback periods to evaluate DG ESS demand resilience.

  JPM Research expects average Brent prices of about US$96 in 2026. High diesel prices help sustain the economics of distributed solar PV plus energy storage, and under an ideal high-utilization scenario, the payback period declines from about 20 months to 10 months.

Asset mapping & comparison

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

• Orient Cables 603606.SS

  Core recommended name; the report maintains OW and suggests accumulation.

  Strengths

  Additional RMB 5.2 billion in new orders, very low EU exposure, improving visibility for domestic offshore wind, and attractive valuation relative to earnings growth.

  Weaknesses

  Recently affected by industry sentiment and thematic rotation, with the share price pulling back sharply since mid-May.

  Comparison

  About -30% since mid-May, underperforming the SHCOMP Index at about -4% over the same period.

  Risks

  Offshore wind project rollout slower than expected, broader spread of trade-friction sentiment, and insufficient catalysts for valuation recovery.

• Goldwind-H 2208.HK

  OW-rated China upstream wind power name; the report recommends accumulating after the pullback.

  Strengths

  Limited EU exposure, and the report expects improving profitability in the turbine business segment.

  Weaknesses

  The share price has also corrected more than 30% since mid-May, dragged down by trade tensions and sector rotation.

  Comparison

  Down more than 30%, underperforming the HSCEI Index at about -5% over the same period.

  Risks

  Turbine profit recovery below expectations, orders or policy progress weaker than expected, and continued pressure on sector sentiment.

• Deye 605117.SS

  OW-rated DG ESS-related name; the report views the share price pullback as an accumulation opportunity.

  Strengths

  High diesel prices and the economics of distributed solar PV plus energy storage support demand resilience, while post-European energy crisis experience shows demand can be sustainable.

  Weaknesses

  Oil prices and news related to the Strait of Hormuz drive short-term share price volatility.

  Comparison

  On the relevant news day, it fell as much as about 8% at the open and closed down about 3%, underperforming the SHCOMP at about +2% that day.

  Risks

  A sharp fall in oil prices weakening substitution economics, DG ESS demand below expectations, and increased short-term trading volatility.

• Hyosung Heavy Industries 298040.KS

  One of the OW-rated Asian power equipment names.

  Strengths

  The report says more than 90% of its new orders come from U.S. utilities and the power grid, making it less vulnerable to potential data center delays.

  Weaknesses

  The sector as a whole is affected by data center grid-connection delays and valuation digestion.

  Comparison

  About 25x 2028E P/E.

  Risks

  Slower U.S. grid orders, valuation compression, and disruptions from geopolitics or fund flows.

• Wasion Holdings 3393.HK

  One of the quality China power equipment names.

  Strengths

  The report notes valuation at about 12x one-year forward P/E, earnings growth above 20% annually, and limited EU tariff risk.

  Weaknesses

  Lack of strong short-term catalysts and affected by sector rotation.

  Comparison

  Chinese companies have less than 10% market share in the EU, and the report believes EU tariff risk is limited.

  Risks

  Changes in overseas trade policy, order growth below expectations, and continued valuation pressure.

Key data

• Orient Cables new ordersRMB 5.2 billionThe company's share price rebounded after announcing the new orders, and the report believes this may prompt investors to refocus on its fundamentals.
• Orient Cables share price pullbackabout -30% since mid-MayOver the same period, the SHCOMP Index was about -4%, and the report believes Orient Cables' pullback is not justified relative to fundamentals.
• Orient Cables valuationabout 14x FY27E PERBased on consensus expectations and corresponding to earnings CAGR above 30% for 2025-2027E.
• Pullback in China and South Korea power equipment stocksdown more than 20%-30% from April highsMainly reflects concerns over data center grid-connection delays, geopolitics, and a lack of short-term catalysts.
• Wasion Holdings valuationabout 12x one-year forward P/EThe report mentions annualized earnings growth above 20%, making it one of the quality China power equipment names.
• Deye intraday movementdown as much as about 8% at the open, closing down about 3%Affected by news of the reopening of the Strait of Hormuz; the SHCOMP was up about 2% that day.
• Brent oil price outlookaverage price of about US$96/bbl in 2026JPM Research believes restocking demand will limit downside for oil prices.
• DG solar PV + energy storage payback periodabout 10 monthsThe report says the payback period in an ideal high-utilization remote-island scenario has fallen from about 20 months to 10 months.

Impact & implications

In terms of investment implications, the report tends to view recent sector rotation and risk-event-driven pullbacks as buying windows for selected stocks rather than signals of weakening industry fundamentals. Orient Cables and Goldwind-H benefit from improving visibility for domestic offshore wind, while Deye benefits from the economics of distributed solar PV plus energy storage under high energy prices. Share prices may still fluctuate in the short term due to oil prices, geopolitics, and trade news, but the report believes the medium-term allocation value of quality names has improved.

Risks

• EU trade tensions or tariff risks may continue to weigh on sentiment toward China's upstream wind power and power equipment.
• Data center grid-connection delays may affect demand expectations for some power equipment.
• Geopolitics and news related to the Strait of Hormuz may bring volatility to oil prices and DG ESS names.
• Rotation of funds out of power equipment, wind power, and energy storage themes into other themes may delay valuation recovery.
• If the rollout pace of domestic offshore wind projects falls short of expectations, order catalysts for names such as Orient Cables will weaken.

What to watch

• Orient Cables' subsequent offshore wind order intake and the pace of local government launches of new projects in 2H26.
• Tendering and construction progress after the implementation of China's national 2030 offshore wind target.
• Whether the improvement in Goldwind-H's turbine business profitability materializes.
• Brent oil and diesel price trends, and their impact on DG solar PV plus energy storage payback periods.
• EU trade policy, tariff risks, and changes in Chinese companies' exposure to the European market.
• Subsequent orders in the Asian power equipment sector, progress in data center grid connection, and U.S. utility grid demand.