Sieyuan Electric's 2025 results were in line with expectations, with 2026 order guidance up 30% YoY

Overview

This report is Goldman Sachs' review of Sieyuan Electric's 2025 results. In 4Q25, the company reported revenue of Rmb7,712mn, gross profit of Rmb2,180mn, EBIT of Rmb1,150mn, and net profit of Rmb959mn, up 53%, 38%, 71%, and 72% YoY, respectively, broadly in line with the preannouncement and Goldman Sachs expectations. Full-year revenue was Rmb21,539mn, up 39% YoY; net profit was about Rmb3,150mn, up 54% YoY.

Core views

Goldman Sachs maintains its Buy view. The core logic is that Sieyuan Electric continues to gain share in multiple State Grid equipment tenders, while overseas grid upgrade cycles, aging infrastructure renovation, renewable energy integration, and global power transformer supply shortages jointly support export growth. Management guided 2026 orders at Rmb37.5bn, up 30% YoY, and Goldman Sachs believes the company has a chance to exceed this guidance; transformers are still expected to be the main driver of overseas growth.

Analysis framework

The report assesses the company's fundamentals from dimensions including earnings delivery, revenue and gross margin by product, export revenue by region, order guidance, State Grid tender share, overseas supply-demand dynamics, EPS revisions, and target price methodology. Valuation uses 25x 2028E P/E and discounts it back to 2027E at a 10% cost of equity, deriving a 12-month target price of Rmb223.9.

Methodology notes

• Valuation methodsDiscounted P/E target price

  2028E P/E discounting

  Goldman Sachs uses 25x 2028E P/E as the basis and discounts it back to 2027E using a 10% cost of equity, maintaining the 12-month target price at Rmb223.9.

• Factor analysisGS Factor Profile

  Growth, financial returns, valuation multiples, and composite factors

  Goldman Sachs Factor Profile provides investment context for stocks by comparing growth, financial returns, valuation multiples, and composite percentiles versus the market and industry peers.

• M&A scenarioM&A Rank

  Acquisition probability score

  Goldman Sachs uses an M&A rank from 1 to 3 to assess the probability that a covered company becomes an acquisition target; this report discloses the methodology only and does not use it as a core driver of Sieyuan Electric's target price.

Asset mapping & comparison

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

• Sieyuan Electric 002028.SZ

  Core covered name

  Strengths

  Ranks near the top in multiple State Grid categories, with advantages in product quality, operating efficiency, overseas certification, and delivery capability; overseas grid upgrades and transformer shortages provide growth opportunities.

  Weaknesses

  A rising mix of low-margin businesses such as EPC, ESS, and power electronics may pressure short-term gross margin; some overseas revenue recognition is delayed.

  Comparison

  The company continues to gain share in State Grid tender categories including GIS, disconnectors, instrument transformers, arc suppression coils, and SVC/STATCOM, competing with Pinggao, XD, Taikai, TBEA, SDEE, and others.

  Risks

  Overseas execution below expectations, margins below expectations, slower data center construction, and disruptions in shipping and customs clearance.

• 002353.SZ

  Industry reference company

  Strengths

  The report cites Jereh's industry information on Middle East shipping detours and longer delivery cycles.

  Weaknesses

  Not covered and not an investment rating subject of this report.

  Comparison

  Used as a side reference to observe the impact of Middle East shipping disruptions on related companies.

  Risks

  Not applicable; this report does not provide an investment recommendation on it.

Key data

• 4Q25 revenueRmb7,712mn, up 53% YoY5% above Goldman Sachs expectations, broadly in line overall.
• 4Q25 net profitRmb959mn, up 72% YoY1% below Goldman Sachs expectations.
• 2025 full-year revenueRmb21,539mn, up 39% YoY2% above Goldman Sachs' previous expectation.
• 2025 full-year net profitapproximately Rmb3,150mn, up 54% YoYBasically in line with Goldman Sachs' previous expectation.
• 2026 order guidanceRmb37.5bn, up 30% YoYGoldman Sachs believes it may exceed this target, supported by global grid upgrade demand and rising overseas market share.
• 2026 revenue recognition guidanceRmb27bn, up 25% YoYBelow Goldman Sachs' estimate of Rmb28.9bn, up 34% YoY.
• Export revenue share27% in 202534% in 1H25, falling to 23% in 2H25, mainly due to delayed revenue recognition.
• Switchgear revenueRmb8,935mn, up 29% YoY, gross margin 37%Driven by share gains in GIS, circuit breakers, and disconnectors in State Grid tenders.
• Transformer product revenueRmb4,633mn, up 38% YoY, gross margin 37%Management estimates about 80% of transformer sales were driven by exports.
• EPC revenueRmb2,542mn, up 131% YoY, gross margin 12%A higher mix of low-margin business dragged down 4Q25 gross margin.
• ESS revenueRmb1,531mn, up 121% YoY, gross margin 12%Gross margin improved from 3% in 2024 to 12% in 2025.
• EPS forecast2026E/2027E/2028E at Rmb5.73/Rmb7.75/Rmb9.80Slightly reduced from the previous Rmb5.74/Rmb7.79/Rmb9.81.
• Target priceRmb223.912-month target price maintained unchanged.

Impact & implications

If order growth and overseas revenue outperform expectations, Sieyuan Electric's revenue growth, margins, and valuation support may continue to improve. The report emphasizes that the global power transformer shortage may last at least until 2030E, while the global grid upgrade cycle may continue through 2040E-2050E, giving the company's overseas business long-term growth visibility.

Risks

• Overseas execution risk.
• Margins may come in below Goldman Sachs expectations.
• A slowdown in data center construction pace.
• Middle East shipping route detours, slower customs clearance, and rising freight rates may affect revenue recognition.
• A rising mix of low-margin EPC, ESS, and power electronics businesses may pressure gross margin.

What to watch

• Whether 2026 order growth can exceed the company's 30% YoY guidance.
• Whether domestic grid-side orders can maintain low-double-digit growth.
• Share changes in State Grid tenders for categories such as SVC/STATCOM, relay protection, GIS, and disconnectors.
• The duration of the overseas transformer supply-demand gap and capacity changes among major global manufacturers.
• Revenue contribution from U.S. data center customers and its uplift to overall margins.
• The impact of Middle East business disruptions on quarterly revenue recognition and delivery cycles.