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Driven by the improvement of both profitability and valuation, the new energy sector of the power equipment industry outperformed the Shanghai and Shenzhen 300 in 2013, out of the warming market. At present, the plate PE has reached 30 times, which is a historical high. We expect that the total investment of the industry will continue to grow steadily in the next few years. Therefore, it is judged that there will not be an overall big market in the power equipment sector in 2014, but there are still structural opportunities. The investment theme can be based on the concept of beautiful China and new urbanization. Leadership, it is recommended to pay attention to topics such as UHV, distribution network, photovoltaic power plant and distributed, wind power, rail transportation, energy saving EMC and other topics.
Power Grid: UHV and Distribution Network Prosperity Determined
From January to November this year, grid investment increased by 6.1% year-on-year. Our overall judgment on grid investment is steady and rising, and investment opportunities still depend on structural grasp. In the current stage of smart grid construction, UHV, distribution grids, and intelligence are the focus of investment. The prosperity is still sustainable, and leading enterprises will benefit from it. At the same time, the peak construction of the distribution network will also bring high demand for low-voltage electrical appliances.
Traditional power: Thermal power continues to decline, and hydropower may exceed expectations
Since 2012, thermal power approval, investment, and installed capacity have shown a downward trend, and it is expected that it will continue to decline in the next few years. Hydropower start-up approvals last year and this year were lower than expected. We believe that as a clean and efficient energy source, the logic that there is still room for explosion in the next few years is still valid. With the successive implementation of various tasks of the new government, the approval progress next year may exceed expectations.
New energy: photovoltaic power plant development benefits more, wind power inflection points lead to opportunities
After the promulgation of detailed rules and the improvement of various rules, domestic distributed photovoltaic installations next year are likely to achieve the 8GW target, which is extremely flexible. In terms of centralized power generation, as system costs continue to decrease, power station development is still a link that benefits faster and to a greater degree. The improvement trend of downstream demand for wind power has been established, and the industry concentration has increased rapidly. We believe that the wind power industry will give birth to high-performance elastic stocks next year. Nuclear power advises to pay attention to the new army of private enterprises.
Rail transit: there are high-speed rail near, look at vehicles from a distance
In the next few years, high-speed rail investment will remain at a peak. After that, the growth of railway investment will continue to slow down. Railway investment will structurally shift from lines to vehicles. We believe that individual stocks should be selected from the following aspects: benefit from the high growth of the industry in the next few years, have a larger market share increase and import substitution space, and complete the conversion of product layout in the investment cycle conversion of lines to vehicles.
Energy saving: focus on waste heat power generation and EMC mode
We believe that the industries that benefit from energy-saving investments should benefit from national investment, and there is still plenty of room for waste heat power generation. The energy-saving and emission-reduction mechanism will gradually become market-oriented and in line with international standards. From next year, the development speed of the EMC model may exceed market expectations.