NARI Technology China Summit feedback: 2030 revenue target of Rmb100bn, with overseas and non-grid businesses becoming growth priorities

Overview

This report is Morgan Stanley's post-China Summit 2026 feedback on NARI Technology. The core information centers on the company's medium- to long-term revenue target, business mix shift, overseas expansion, growth among non-grid customers, IGBT localization progress, and valuation methodology and upside/downside risks. Overall tone is positive, but it is more a conference note and operating target summary than a report with a clear rating change.

Core views

NARI Technology hopes to strengthen its manufacturing capabilities during the 15th Five-Year Plan period and, beyond its existing R&D advantages, drive an upgrade in its business structure. The company targets Rmb100bn in revenue by 2030, which versus Morgan Stanley's estimate of Rmb64.5bn for 2025 implies a 9%-10% CAGR for 2026-2030. The company expects 2025 revenue growth above its >12% guidance, with earnings growth close to 10% still on track, and it expects a similar trend in 2026. Non-grid and overseas businesses are the main sources of increment: non-grid customer revenue grows 25%-30%, overseas revenue rises about 90% in 2025, and overseas new orders double.

Analysis framework

The report is mainly based on management feedback from the China Summit, combined with Morgan Stanley ModelWare framework and DCF valuation assumptions, to assess the company's medium- to long-term growth targets, changes in business mix, and key technology progress. The focus is not on short-term share price catalysts, but on the achievability of revenue targets, higher overseas and non-grid business contribution, progress in smart transmission and distribution contracts, and the pace of IGBT localization applications.

Methodology notes

• Valuation methodDiscounted cash flow (DCF)

  Base-case valuation

  The report discloses that the base case uses a DCF method, with terminal value based on capitalizing terminal free cash flow forecasts, a WACC of 8.0%, and a terminal growth rate of 2%.

• Cost of capital assumptionsWACC and cost of equity

  Discount rate assumptions

  The report assumes a cost of equity of 9.5%, beta of 1.2, a risk-free rate of 2.1%, an equity risk premium of 4.5%, and a China premium of 2.0%; after-tax cost of debt is 4.5%, and the target debt-to-capital ratio is 40%.

• Data sourceMorgan Stanley ModelWare

  Internal model framework

  Unless otherwise noted, report metrics are based on the Morgan Stanley ModelWare framework; consensus data is provided by Refinitiv Estimates, and e represents Morgan Stanley Research estimates.

Asset mapping & comparison

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

• NARI Technology 600406.SS

  Core coverage name

  Strengths

  Clear revenue targets, a solid foundation in grid automation and intelligent transmission/distribution, faster growth in overseas and non-grid business, and new growth points from IGBT localization and energy storage-related products.

  Weaknesses

  The business is still affected by the pace of grid investment; gross margins for non-grid customers are usually lower than in grid business; higher overseas contribution requires sustained order intake and delivery capability.

  Comparison

  The company aims to reduce grid business revenue share from about 70% in 2024 to 50%-65% in the medium term, while raising overseas order share from about 10% in 2025 to 15% by 2030, showing a more diversified structure than historically.

  Risks

  Lower-than-expected smart distribution grid investment, slower-than-planned execution of transmission/distribution contracts, and margin pressure from intensified bidding competition.

• Smart grid and transmission/distribution industrial chain

  Primary demand source

  Strengths

  Higher smart distribution grid investment and faster execution of existing smart transmission/distribution contracts could provide upside.

  Weaknesses

  Industry investment pace is tied to policy arrangements; if actual investment falls short of targets, order intake and revenue recognition will be affected.

  Comparison

  The report lists both smart distribution grid investment and smart transmission/distribution contract progress as upside and downside risks, indicating that this variable has a significant impact on valuation and earnings sensitivity.

  Risks

  Investment shortfall, contract progress below plan, and bidding price competition.

• Overseas power equipment and energy storage market

  Growth expansion direction

  Strengths

  Overseas revenue grew about 90% in 2025, new orders doubled, and key products cover ESS, PCS, EMS, integrated solutions, grid automation, and AMI.

  Weaknesses

  Overseas business is expanding from a low base; orders, delivery, certification, local competition, and geopolitical risks may all affect sustainability.

  Comparison

  Overseas revenue share rose from about 3%-4% in prior years to about 10% in 2025, and the company targets a 15% overseas order share by 2030.

  Risks

  Overseas project delivery underperformance, exchange-rate and policy changes, and intensified international competition.

Key data

• 2030 revenue targetRmb100bnThe company targets revenue of Rmb100bn by 2030.
• 2025 revenue estimate base~Rmb64.5bnMorgan Stanley estimates 2025 revenue at about Rmb64.5bn.
• Implied 2026-2030 revenue CAGR9-10%Derived from the 2030 Rmb100bn target versus the estimated 2025 revenue.
• 2025 revenue growth outlook>12%The company expects 2025 revenue growth to be above its 12% guidance.
• 2025 earnings growth outlookclose to 10%The company believes earnings growth close to 10% remains on track.
• 2030 overseas order mix target15%The company plans to lift the share of overseas orders to 15% by 2030.
• 2025 overseas revenue mix~10%This is a clear increase from about 3%-4% in earlier years.
• 2025 overseas revenue growth~90%Overseas revenue grew about 90%, and overseas new orders doubled.
• 2025 new order growth>10%Overall new orders grew by more than 10%.
• 2025 non-grid new order growth>20%New orders in non-grid business grew by more than 20%.
• Non-grid customer revenue growth25-30%Revenue growth from non-grid customers remained in the 25%-30% range, though gross margins are typically lower than grid business.
• Mid-term grid business revenue mix target50-65%Grid business revenue share was about 70% in 2024, and the company aims to reduce it to 50%-65% in the medium term.
• High-voltage IGBT grid-connection testing~500-600 unitsAbout 500-600 units of the 4500V/3000A product completed grid-connection testing in 2H25.
• Expected IGBT application timing2H26The company expects the 4500V/3000A product to begin application in 2H26.
• DCF WACC8.0%The weighted average cost of capital used in the report's base-case DCF.
• DCF terminal growth rate2%The terminal growth rate assumption disclosed in the report.

Impact & implications

The meeting feedback reinforces NARI Technology's medium- to long-term growth logic: traditional grid business remains the foundation, while overseas, non-grid, energy storage, and power electronics localization are increasing growth flexibility. If the company can achieve its 2030 revenue target and stabilize gross margins, the market may pay more attention to its ability to expand from a grid equipment leader into a diversified energy digitalization and power electronics platform. It should be noted, however, that lower gross margins in non-grid business, execution difficulty in overseas expansion, and the pace of smart grid investment may still affect earnings quality.

Risks

• Actual smart distribution grid investment comes in below target.
• Existing smart transmission/distribution contracts progress slower than planned.
• Intensified bidding competition in transmission/distribution contracts pressures margins.
• Rapid non-grid revenue growth comes with gross margins that are usually lower than grid business, potentially diluting overall gross margin.
• Rapid overseas expansion may face delivery, certification, competition, exchange-rate, and regional policy risks.
• If grid-connection testing, field testing, and large-scale application of IGBT products proceed slower than expected, the contribution from localization may be weaker.

What to watch

• Whether actual 2025 revenue growth exceeds the 12% guidance and earnings growth remains close to 10%.
• Whether the 2026 revenue and earnings trend continues the 2025 growth momentum.
• Whether non-grid new orders and customer revenue growth can be sustained, and whether gross margins remain stable.
• Whether the overseas revenue share can continue to rise from about 10% in 2025 toward the 15% overseas order target by 2030.
• Whether grid business revenue share can gradually fall from about 70% in 2024 to 50%-65% in the medium term.
• Whether the 4500V/3000A IGBT product can begin application as expected in 2H26.
• Progress in grid-connection testing for the 5000A product and field testing for the 6500A product.
• Progress in smart distribution grid investment and smart transmission/distribution contract execution.