Global Power Equipment Supercycle Begins, Nomura Initiates Coverage on Three Stocks with Buy Ratings

Overview

Nomura Securities released an in-depth report suggesting global power equipment demand is entering a long-term upward cycle (supercycle). The report identifies AI data center construction, EV and renewable energy adoption, and overseas grid modernization as the three core drivers. Against this backdrop, leading Chinese supply chain companies are well-positioned to capture overseas demand spillover. The report initiates coverage on Jinpan Technology, Haomai Technology, and Shenma Electric Power with Buy ratings, highlighting their competitive advantages in respective segments and their ability to benefit from industry tailwinds.

Core views

Industry perspective: Global power equipment demand reaches a long-term inflection point. In the US, AI data center construction drives upward revisions in power load forecasts, with Grid Strategies projecting 3.7% annual growth in US power load from 2025-2030, with data centers contributing 55% of incremental demand. In China, grid investment during the 15th Five-Year Plan period (2026-2030) is expected to average 1 trillion yuan annually, driven by UHV and distribution network upgrades. Overseas, aging grids and energy transition in Europe and the US create incremental demand, with supply shortages for certain products. Company perspective: Three stocks correspond to three investment themes. Jinpan Technology aligns with AI data center power architecture upgrades, leading in modular power equipment and solid-state transformers, with 197% YoY growth in data center revenue in 2025 and projected 40% net profit CAGR from 2026-2028. Haomai Technology benefits from gas turbine component demand driven by AI base-load power, expanding from global leadership in tire molds to large components and CNC machines, with global market share expected to rise from 6% in 2024 to 10% in 2028. Shenma Electric Power addresses insulator demand from grid upgrades and UHV construction, as the global leader in composite insulators with projected market share growth from 8% in 2024 to 18% in 2028.

Analysis framework

The report combines top-down macro drivers with bottom-up stock selection. First, macro data (e.g., power load growth, grid investment plans) confirms the industry's upward cycle (inflection point analysis). Second, macro demand is broken down into specific product demand (e.g., solid-state transformers, gas turbine components, composite insulators) to match Chinese companies with relevant technical capabilities and overseas certifications. Finally, PE valuation is applied, referencing peer valuation levels and incorporating growth expectations to derive target prices. For example, faster-growing Jinpan Technology is assigned a 55x 2026F PE, while steadily growing Shenma Electric Power receives a 62x 2026F PE premium.

Methodology notes

• Valuation MethodPE/PEG valuation

  PE Valuation Method

  The report applies PE valuation to all three stocks, deriving target prices by multiplying 2026 forecast EPS by target PE multiples. Peer average PEs are referenced, with premiums or discounts applied based on growth expectations to reflect growth-valuation alignment.

• Industry Analysis FrameworkSupply-demand framework

  Supply-Demand Analysis

  The core logic is built on supply-demand analysis, noting power equipment supply shortages in regions like the US, while Chinese supply chains offer capacity and cost advantages, leading to the conclusion that Chinese companies benefit from overseas demand spillover.

• Cycle & Sentiment FrameworkInflection Point Analysis

  Industry Upward Cycle Judgment

  Through indicators like rebounding power load growth and upward revisions in grid investment plans, the report concludes that the global power equipment industry is transitioning from stability into a long-term upward cycle (supercycle), forming the premise for stock selection.

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, solid-state transformer, and HVDC product demand growth

  Strengths

  Leading in modular power equipment, rich data center project experience, well-established overseas presence

  Weaknesses

  Emerging business progress depends on industry chain coordination, valuations partially reflect expectations

  Comparison

  Compared to peers, it has earlier product positioning in AI data centers and superior overseas client resources

  Risks

  Orders below expectations, overseas expansion slowdown, emerging business progress slower than expected

• Haomai Technology (002595.SS)

  Benefits from AI data center base-load power demand, increased gas turbine component orders

  Strengths

  Strong large component manufacturing capabilities, global clients like Siemens, capacity expansion supports growth

  Weaknesses

  Slower growth in tire mold business, affected by downstream auto cycles

  Comparison

  In gas turbine components, it entered overseas supply chains earlier than domestic peers with high certification barriers

  Risks

  Weak downstream tire demand, slower-than-expected CNC machine localization, forex volatility risks

• Shenma Electric Power (603530.SS)

  Benefits from domestic and overseas grid upgrades and UHV construction, rising composite insulator penetration

  Strengths

  Global leader in composite insulators, internationally advanced product performance, participates in standard-setting

  Weaknesses

  Raw material price volatility affects profits, uncertainty in overseas factory ramp-up

  Comparison

  Compared to traditional insulator firms, it has higher technical barriers in composites and superior overseas gross margins

  Risks

  Product quality risks, forex volatility risks, raw material price fluctuations

Key data

• US Power Load Growth Forecast (2025-30)3.7%Up from 2.8% in 2024, with data centers contributing 55% of incremental demand
• China Grid Annual Investment (15th Five-Year Plan)1 trillion yuan2026-2030 period, including UHV and distribution network upgrades
• Jinpan Technology 2026-28 Net Profit CAGR40%Benefiting from AI data centers and overseas orders
• Shenma Electric Power 2026-28 Net Profit CAGR32%Benefiting from UHV and overseas grid upgrades
• Haomai Technology Gas Turbine Component Market Share Target (2028)10%6% in 2024, benefiting from overseas gas turbine demand

Impact & implications

The report suggests that the global power equipment supply chain is undergoing structural reshaping, with Chinese leaders poised to gain higher overseas market share due to manufacturing capabilities and cost advantages. For investors, this implies medium-to-long-term allocation value in the power equipment sector, particularly for companies with overseas certifications and global delivery capabilities. AI data center construction is not only a short-term catalyst but also a core long-term demand driver, offering high visibility for related power equipment suppliers' performance.

Risks

• Orders below expectations: Power equipment is the core business, and client orders are leading indicators of future performance
• Overseas expansion slowdown: Affected by trade friction, industrial policies, and competitive environments, overseas revenue growth may face obstacles
• Emerging business progress slower than expected: AI data center-related products depend on industry chain coordination, valuations partially reflect expectations
• Raw material price volatility: Rising costs for winding yarn, silicone rubber, and other materials may erode profits
• Forex volatility risks: High export business exposure makes pricing and forex gains/losses sensitive to currency fluctuations
• Product quality risks: Quality issues in critical components like insulators may cause grid failures, impacting brand reputation

What to watch

• AI data center-related order fulfillment and growth rates
• Domestic UHV project construction pace and tender situations
• Overseas factory (e.g., US, Malaysia) capacity ramp-up progress
• Commercialization progress of emerging products like solid-state transformers
• Raw material price trends and companies' cost-pass-through capabilities