China Power and Renewables Singapore roadshow feedback: export equipment demand remains strong, while valuation, geopolitics, and execution are the main areas of debate

Overview

This report is a summary of investor feedback following Morgan Stanley's Singapore marketing for the China power and renewables sector. The core conclusion is that investors remain strongly interested in China's power equipment, transmission and distribution equipment, gas turbine components, and the European offshore wind supply chain, with noticeably greater interest than in downstream utilities. The companies receiving the most attention include Sieyuan Electric, Anhui Yingliu Electromechanical, Dajin Heavy Industry, and Jiangsu Zhongtian Technology.

Core views

The report argues that AI power demand and energy security are the two long-term themes driving industry growth. Although the relevant stocks have already risen 43-92% year to date and investors have valuation concerns, Morgan Stanley believes Sieyuan and Yingliu are still not overly expensive relative to global peers. In the short term, pressure on Sieyuan's first-quarter gross margin may already be partly reflected in the stock's consolidation, while a later product mix shift toward higher-margin transformers and switchgear could support margin recovery. Over the long term, a higher share of overseas revenue brings geopolitical and tariff risks, though the degree of impact varies by company.

Analysis framework

Based on investor roadshow discussions in Singapore, the report reviews the stocks investors care about most, portfolio crowding, thematic understanding, valuation comparisons, overseas revenue exposure, tariff risks, and execution risks, and combines these with Morgan Stanley's existing sector coverage and stock ratings to form its judgment.

Methodology notes

• Valuation comparison2026E PEG relative valuation

  Use expected price/earnings-to-growth ratios to compare valuation pressure between Chinese equipment exporters and global peers.

  The report notes that Sieyuan and Yingliu trade at 0.8-1.0x 2026E PEG, while most global peers trade at 1.2-3.3x, with Siemens Energy at about 0.9x, and therefore concludes that valuations of the relevant Chinese companies are not obviously stretched.

• Thematic investingDual themes of AI and energy security

  Use AI power demand and energy security as growth drivers for power equipment and utilities.

  AI development and conflict in the Middle East have strengthened investor confidence in demand for power grids, power equipment, gas turbines, and related export chains.

• Risk assessmentOverseas revenue exposure and execution risk

  Assess geopolitical, tariff, and execution uncertainty through overseas revenue share, regional market dependence, and project delivery cycles.

  The report estimates that in 2026 overseas revenue will account for 30-50% for Sieyuan, ZTT, and Yingliu, and more than 80% for Dajin; therefore Dajin is more sensitive to the European market and potential tariffs, while Yingliu faces uncertainty from its transition in heavy-duty gas turbine blades and delays in U.S. grid connection.

Asset mapping & comparison

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

• Sieyuan Electric Co.Ltd. (002028.SZ)

  Beneficiary target of power grid equipment exports and higher-margin transformers/switchgear

  Strengths

  Investor positioning is the fullest; overseas country mix is relatively diversified; the global transformer shortage remains severe; the report believes tariff risk is limited.

  Weaknesses

  Q4-25 gross margin came in slightly below expectations, and the market is focused on Q1-26 earnings and margin pressure.

  Comparison

  2026E PEG is about 0.8-1.0x, which the report considers not expensive relative to global peers.

  Risks

  Short-term gross margin weaker than expected, valuation pullback, or overseas demand/deliveries below expectations.

• Anhui Yingliu Electromechanical Co Ltd (603308.SS)

  Beneficiary target of gas turbine blades and the energy security theme

  Strengths

  Historical data show it has cost pass-through ability amid China-U.S. trade friction; investor discussion is high but positioning is relatively light.

  Weaknesses

  The business focus is shifting from small blades to heavy-duty gas turbine blades, which may lengthen the revenue recognition cycle.

  Comparison

  Like Sieyuan, the report believes its 2026E PEG is about 0.8-1.0x, below most global peers.

  Risks

  Delays in U.S. grid connection, execution uncertainty in heavy-duty gas turbine blades, and volatility in order revenue recognition timing.

• Dajin Heavy Industry (002487.SZ)

  Beneficiary target of European offshore wind construction and rising share for Chinese suppliers

  Strengths

  Has supply chain opportunities in the expansion of European offshore wind; the company plans European local assembly plants and stronger local partnerships to mitigate risk.

  Weaknesses

  Overseas revenue is expected to account for more than 80% in 2026, implying high dependence on the European market.

  Comparison

  Compared with Sieyuan and ZTT, long-only fund positioning is lighter; discussion is high but risk debate is also more pronounced.

  Risks

  Tariffs pushed by European local competitors, delays in European offshore wind construction, and product shipments or project execution below expectations.

• Jiangsu Zhongtian Technology Co. Ltd. (600522.SS)

  Target linked to improving optical fiber supply-demand and structural offshore wind opportunities

  Strengths

  Investor positioning is second only to Sieyuan, benefiting from imbalance in optical fiber supply and demand and structural demand in offshore wind.

  Weaknesses

  The market is focused on how long the optical fiber supply-demand imbalance can last.

  Comparison

  Positioning is relatively high among the most discussed stocks.

  Risks

  Optical fiber upcycle lasting less than expected, volatility in offshore wind demand, and overseas revenue risk.

• Huaming Power Equipment (002270.SZ)

  Target within the power equipment niche supply chain

  Strengths

  Included in the report's coverage and disclosed stock list, with an Overweight rating.

  Weaknesses

  Investors are concerned about the supply-demand landscape and the trajectory of market share gains.

  Comparison

  Its largest competitor, MR, is adding new capacity, which may affect the market landscape.

  Risks

  Intensifying competition and pressure on pricing or share from new capacity coming online.

• Ningbo Sanxing Medical Electric Co. Ltd. (601567.SS)

  Equipment-related target with low valuation and awaiting clearer earnings recovery

  Strengths

  Some long-only investors expressed interest because of its low valuation.

  Weaknesses

  Visibility on the timing of earnings recovery remains insufficient.

  Comparison

  Compared with the four most discussed companies, the market is more focused on confirmation of its earnings recovery.

  Risks

  Earnings recovery later than expected, valuation remaining depressed, or insufficient improvement in orders or margins.

Key data

• Most discussed stocksSieyuan, Yingliu, Dajin, ZTTAmong them, Sieyuan has the highest investor positioning, followed by ZTT; positioning in Yingliu and Dajin is lighter, especially among long-only funds.
• Year-to-date gains in related stocks43-92%This is one of the main reasons investors have concerns about short-term valuation.
• Sieyuan and Yingliu 2026E PEG0.8-1.0xThe report says this is below most global peers at 1.2-3.3x, except Siemens Energy at about 0.9x.
• 2026 overseas revenue exposureSieyuan/ZTT/Yingliu at 30-50%, Dajin above 80%The share of overseas revenue determines a company's sensitivity to geopolitics, tariffs, and local execution risk.
• Industry viewAsia Pacific Industry View: AttractiveThe report disclosure page lists the China utilities industry view as Attractive.

Impact & implications

For portfolios, the report reinforces the view that China's power equipment export chain is receiving more attention than downstream utilities. Near-term stock price performance has already been strong, and valuations and first-quarter earnings could drive volatility; however, if AI power demand, energy security, the global transformer shortage, and European offshore wind construction continue to advance, leading equipment companies may still benefit. Stock selection needs to differentiate among the certainty created by tight global supply-demand conditions, each company's overseas market structure, and project delivery and tariff risks.

Risks

• Related stocks have posted large year-to-date gains, increasing short-term valuation and profit-taking pressure.
• Sieyuan's first-quarter earnings and gross margin may come in below market expectations.
• Geopolitics, tariffs, and lobbying by overseas local competitors may affect equipment exporters.
• Dajin has high dependence on the European market, and delays in European offshore wind construction may affect shipments.
• Yingliu's transition in its heavy-duty gas turbine blade business may lengthen the revenue recognition cycle and be affected by delays in U.S. grid connection.
• Huaming faces supply-demand and market share pressure from competitor capacity expansion.
• There is uncertainty over how long ZTT's optical fiber supply-demand imbalance will persist.

What to watch

• Sieyuan's Q1-26 gross margin and the progress of product mix improvement toward transformers/switchgear for the full year.
• Whether the global transformer shortage continues and the visibility of overseas orders for Chinese equipment exporters.
• Whether Europe introduces tariff or localization policy changes targeting Chinese offshore wind suppliers such as Dajin.
• Yingliu's heavy-duty gas turbine blade revenue recognition, order delivery, and U.S. grid connection progress.
• The pace of European offshore wind project construction and product shipment schedules.
• How long ZTT's optical fiber supply-demand gap lasts and the contribution from its offshore wind business.
• Whether long-only funds are willing to increase positions further in lightly held names such as Yingliu and Dajin.