Caitong: Power grid investment sees a good start as direct current infrastructure construction accelerates.

Caitong released a research report stating that in the first quarter of 2026, the total investment in the power grid has exceeded 160 billion yuan. State Grid has completed fixed asset investment exceeding 129 billion yuan (a year-on-year increase of 37%), and Southern Power Grid has completed fixed asset investment of 38.45 billion yuan (a year-on-year increase of 50%). The new infrastructure is aimed at defying the economic cycle and is expected to start overall project construction in the "Sixteenth Five-Year Plan". Furthermore, the National Energy Administration has accelerated the pre-work for key UHV (Ultra High Voltage) transmission, DC back-to-back projects, and inter-provincial exchange and mutual support projects, which is expected to drive the development of the flexible and direct current industry chain. Caitong's main points are as follows: - The investment in the power grid plays a countercyclical regulatory role, and UHV investment is still the current focus. - It is planned that the investment in the power grid will exceed 5 trillion yuan during the "Fifteenth Five-Year Plan" period. - By looking ahead, the new market of the Yajiang Hydropower Station has opened up future line reserves for the UHV industry, and the overall project construction is expected to start in the "Sixteenth Five-Year Plan". It is suggested to pay attention to main power grid stocks with high performance certainty such as Henan Pinggao Electric, NARI Technology, Xj Electric Co.,ltd., China XD Electric, Beijing Sifang Automation, Fujian Yongfu Power Engineering. As for offshore-related stocks and transformer upstream stocks, the report recommends companies like Sieyuan Electric, Hainan Jinpan Smart Technology, Eaglerise Electric & Electronic, TBEA Co., Ltd., GuangZhou BaiYun Electric Equipment, Chongqing Wangbian Electric(Group)Corp., Ningbo Sanxing Medical Electric, Hexing Electrical, Willfar Information Technology, Huaming Power Equipment, Jiangsu Shemar Electric, HONGYUAN MAGNET WIRE, Gold Cup Electric Apparatus, and GUANGXIN TECHNOLOGY. Risk warning: The growth rate of power grid investment may not meet expectations; the approval pace of UHV lines may be slower than expected; industry competition may intensify.