Maintain Buy: AIDC power supply systems and overseas orders support TGOOD's upside potential

Overview

This report focuses on Qingdao TGOOD Electric (300001.SZ)'s core electrical equipment business, AIDC data center power supply solutions, overseas order expansion, and improving profitability in the EV charging business. After an investor call with the company's board secretary, Citi believes the newly launched AI PowerHouse is an innovative integrated solution for data center power infrastructure that can meet demand for high energy efficiency, cost savings, and rapid deployment of 800V DC power supply. Despite a lower 2026E profit forecast due to reduced solar project revenue, the report maintains a Buy rating and target price of Rmb49.6/share.

Core views

The core views include: first, AI PowerHouse, through prefabrication, integration, and efficient SST technology, is expected to lower both construction and electricity costs for data center power supply; second, TGOOD's accumulated capabilities in high-voltage prefabricated cabin-type substations and power electronics form a differentiated competitive edge; third, overseas order growth may become a near-term catalyst, especially demand from the Middle East; fourth, the impact of slower solar installations on revenue is limited and is expected to be offset by demand from other industries; fifth, the EV charging business, supported by network scale and better utilization, is expected to drive margin improvement.

Analysis framework

The report combines company call notes, management guidance, business segment assumptions, scenario assumptions, and SOTP valuation, with a focus on analyzing growth drivers, margin elasticity, and downside risks across the electrical equipment, data center power supply, and EV charging businesses.

Methodology notes

• Valuation methodSum-of-the-parts valuation (SOTP)

  A target price is derived by assigning valuation multiples separately to the EV charging business and the electrical equipment business and then summing them.

  Citi applies 2027E 15x P/E to the EV charging business and 2027E 30x P/E to the electrical equipment business, referencing the industry average of Chinese grid equipment companies, to derive a target price of Rmb49.60/share.

• Scenario analysisBull/base/bear case assumptions

  Valuation elasticity is measured through changes in revenue growth, gross margin, and EV charging utilization.

  The base case includes 10% YoY growth in 2026E sales revenue for high-voltage prefabricated cabin-type substations, 25% gross margin for electrical equipment, and 7.2% average EV charging utilization; the bull and bear cases adjust assumptions for revenue growth, gross margin, and utilization respectively.

• Earnings forecastComparison of company forecasts and consensus expectations

  Citi's earnings forecasts are compared with Bloomberg consensus expectations to assess differences versus market expectations.

  The report states that Citi's 2026E net profit forecast is 5% below consensus, mainly due to lower revenue assumptions; 2027-28E net profit forecasts are close to consensus expectations.

Asset mapping & comparison

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

• 300001.SZ / Qingdao TGOOD Electric

  The covered stock in the report; Citi maintains a Buy rating.

  Strengths

  It has scale advantages in high-voltage prefabricated substations, integrated capabilities in data center power supply systems, overseas order expansion, and an EV charging network foundation.

  Weaknesses

  The 2026E earnings forecast is affected by declining solar project revenue, and the EV charging business still depends on improving utilization.

  Comparison

  Compared with competitors focused only on HVDC or SST components, TGOOD emphasizes its prefabricated integrated system capability from 110/220kV high-voltage input to 800V DC output.

  Risks

  New EV charging capacity additions come in slower than expected, competition causes charging utilization to fall below expectations, and demand for renewable-energy electrical equipment is weaker than expected.

• AI PowerHouse / AIDC power supply system

  A potential new growth curve targeting efficient power supply and rapid deployment needs for data centers.

  Strengths

  It can shorten construction cycles, simplify power conversion steps, reduce equipment count, improve energy efficiency, and lower token electricity costs.

  Weaknesses

  There is not yet a unified industry standard, and commercial demand still requires validation through data center customer orders.

  Comparison

  Compared with traditional distributed power supply architectures, management believes the integrated solution can deliver about 20% cost savings.

  Risks

  The pace of adoption by data center customers, progress in standardization, and intellectual property protection may affect the ramp-up pace.

• TELD / EV charging business

  A subsidiary and important business segment of the company, supporting the SOTP valuation.

  Strengths

  It has been China's largest EV charging solution provider since 2016, and the scale of its charging network helps improve profitability.

  Weaknesses

  Profit elasticity depends on improving average charging utilization.

  Comparison

  In the valuation, the EV charging business uses 2027E 15x P/E, lower than the electrical equipment business at 2027E 30x P/E.

  Risks

  Charging station expansion is slower than expected or competition intensifies, causing utilization to fall below expectations.

Key data

• RatingBuyCiti maintains a Buy rating.
• Target priceRmb49.60/shareThe target price is derived from SOTP valuation.
• 2026E earnings forecast revision-6%The 2026E profit forecast was lowered due to reduced solar project revenue.
• Difference versus 2026E consensus expectations5% belowCiti's 2026E net profit forecast is 5% below Bloomberg consensus expectations.
• AI PowerHouse token electricity cost savingsapproximately 30%Compared with traditional power supply structures, management expects the integrated solution to reduce token electricity costs by about 30%.
• Construction cycle improvementConstruction time reduced by 80% to 150 daysA shorter construction cycle helps lower related costs such as land, labor, and management expenses.
• SST energy efficiency98.51%The company's SST technology achieves 98.51% energy efficiency.
• Integrated system cost savingsapproximately 20%Compared with traditional power supply architectures using standalone components, the integrated system can save about 20% in costs.
• Global market share of high-voltage prefabricated substationsover 40%The company has nearly 30 years of experience in high-voltage prefabricated substations.
• Overseas sales coveragemore than 60 countriesExisting business products are sold in markets such as the Middle East, Europe, and Australia.
• New overseas orders last yearRmb1.2-1.3bnManagement expects new overseas orders this year to exceed last year's level.
• Gross margin of prefabricated substations25%The company expects prefabricated substation gross margin to remain at 25%.
• Gross margin of overseas sales35% or aboveGross margin of overseas sales is higher than the overall gross margin of prefabricated substations.
• Overall gross margin of domestic electrical equipment20-23%The overall average gross margin of electrical equipment sold domestically is 20-23%.
• Impact from decline in solar installation demandRmb300-500mnManagement expects this year's revenue impact to be about 2-3% of 2025 revenue, which can be offset by demand growth from other industries.

Impact & implications

The investment implication of this report is that TGOOD's valuation drivers may expand from traditional new-energy electrical equipment demand to data center power infrastructure and overseas grid equipment orders. If AI PowerHouse gains validation from data center customers and overseas orders materialize as expected, the company's electrical equipment business could achieve higher growth and a better gross margin mix. However, EV charging utilization, charging capacity expansion, and demand for new-energy electrical equipment remain key variables affecting whether the share price reaches the target price.

Risks

• New EV charging capacity additions are slower than expected.
• Competition causes EV charging utilization to fall below expectations.
• Demand for electrical equipment in the renewable energy sector is weaker than expected.
• AIDC power supply system order conversion and standardization progress are slower than expected.
• Overseas order landing, delivery, or gross margin comes in below management expectations.

What to watch

• Validation and order progress of AI PowerHouse among data center customers.
• Whether new overseas orders exceed last year's Rmb1.2-1.3bn, especially projects in Saudi Arabia and Oman.
• Whether 2026E sales revenue for high-voltage prefabricated cabin-type substations achieves 10% YoY growth.
• Whether electrical equipment gross margin remains around 25%, and whether overseas sales gross margin stays at 35% or above.
• Whether average EV charging utilization reaches or exceeds the 2026E base-case assumption of 7.2%.
• Whether the actual impact of declining solar installation demand on full-year revenue is kept within the Rmb300-500mn range.