Equity Research: Power Equipment & New Energy Sector Weekly

Date: February 9, 2026
Analyst: Dongwu Securities Research Team
Rating: Overweight (Maintained)
Subject: Lithium Battery Seasonal Trough Ends; Space PV Emerges as a Long-Term Growth Vector

Executive Summary

The Power Equipment sector (SW Index 10727) demonstrated resilience during the week of February 2–6, 2026, rising 2.2% and outperforming the broader market indices (Shanghai Composite -1.27%, Shenzhen Component -2.11%). This outperformance was driven by strength in the Photovoltaic (+3.43%) and Electrical Equipment (+2.2%) sub-sectors, while Lithium Batteries (+0.77%) showed modest gains amidst seasonal adjustments.

Our core investment thesis for 2026 centers on three pivotal trends:
1. Energy Storage Supercycle: Driven by the implementation of national capacity compensation电价 (capacity tariff) policies, robust demand in large-scale storage (expected >60% growth in 2026), and the emergence of AI data center storage needs.
2. Lithium Battery Recovery: The industry is exiting the traditional Q1淡季 (off-season). With March production schedules projected to hit new highs (+15% MoM) and lithium carbonate prices stabilizing near cost-support levels, we anticipate a profitability inflection point for battery and material leaders.
3. Technological Frontiers: Humanoid robots are entering their "Year 1" of mass production (led by Tesla Gen3 expectations), and Space Photovoltaics (Space PV) is emerging as a disruptive long-term growth avenue, complementing terrestrial solar markets which face short-term headwinds from silver price volatility and inventory corrections.

We maintain an Overweight rating on the sector. We strongly recommend overweight positions in Large-Scale Storage Integrators, Leading Battery Manufacturers (CATL, EVE Energy), and Core Humanoid Robot Supply Chain companies (Sanhua Intelligent Controls, KeDaLi).

Key Takeaways

1. Market Performance & Sentiment

• Sector Rotation: Capital flows favored Photovoltaics and Grid Equipment. Top gainers included Hangdian Shares, Sanbian Sci-Tech, and Jinsheng Electromechanical.
• Valuation Context: Despite recent rallies, valuations for leading battery and storage firms remain attractive relative to their 2025-2026 earnings growth potential. The market is beginning to price in the recovery of margins rather than just volume growth.

2. Energy Storage: Policy Tailwinds & Global Demand Surge

• Policy Catalyst: The national rollout of capacity compensation mechanisms is a game-changer. Provincial实施细则 (implementation rules) are expected to follow, unlocking revenue visibility for standalone storage projects.
• Demand Dynamics:
  • China: January procurement reached 36.3 GWh. Ningxia led with 7.76 GWh. The average price for 4-hour systems has risen 42% over the last six months to ~0.592 RMB/Wh, indicating a healthy correction from previous lows.
  • USA: Large-scale storage installations in 2025 totaled 13.6 GW / 38.8 GWh (+31% / +39% YoY). Driven by the "Big Beautiful Bill" incentives and AI data center power needs, 2026 US large-storage installations are projected to reach 80 GWh (+51% YoY).
  • Europe & Emerging Markets: European household storage inventory destocking is complete, with shipments recovering. Commercial & Industrial (C&I) storage is exploding. We forecast global storage installations to grow >60% in 2026, with a 3-year CAGR of 30-50%.
• Investment Implication: Strongly recommend large-scale storage integrators (Sungrow, Haibo Sichuang) and battery leaders with overseas exposure.

3. Lithium Batteries & EVs: Approaching the Inflection Point

• Sales Data:
  • China: January NEV wholesale estimates were 900,000 units (+1% YoY). While sequential decline (-40% MoM for major OEMs) reflects seasonal factors and policy withdrawal effects, the trend is normalizing. BYD sold 210,000 units (-30% YoY), but exports remained strong (100,000 units).
  • Europe: January sales in 9 key countries reached 209,000 units (+23% YoY), with penetration at 29.4%. Germany, UK, and France showed double-digit YoY growth.
  • Outlook: We expect 2026 domestic NEV sales to grow 5%+, with average battery capacity per vehicle increasing by 10%. Export growth is projected at 50%, driving total wholesale volume up 13%.
• Supply Chain & Prices:
  • Lithium Carbonate: Prices dropped to ~13.30-13.45 RMB/kg (-11% to -16% WoW) due to increased Chilean exports (22,893 tons in Jan) and weak pre-holiday demand. However, downstream buyers are indicated to enter the market aggressively if prices break below 130,000 RMB/ton.
  • Production Schedules: February output is down ~10-15% due to the Lunar New Year. However, March排产 (production schedules) are expected to rise by >15% MoM, signaling the end of the trough.
  • Pricing Power: Battery spot prices have adjusted to ~0.38 RMB/Wh. Material price hikes for small customers are landing; large customer contracts are expected to reflect these increases post-March.
• Solid-State Battery (SSB) Momentum: 2026 Q1 is seeing accelerated catalysts. CATL’s sodium-ion batteries will debut in Changan vehicles. Enjie signed agreements with Enli and Gotion High-Tech for solid-state electrolytes/separators. Musk announced scaled-up dry electrode production for Tesla’s 4680 cells.
• Investment Implication: Overweight Battery and Separator sectors. Top picks: CATL, EVE Energy, Enjie, Tianci Materials, Hunan Yuneng.

4. Photovoltaics: Short-Term Pressure, Long-Term Innovation

• Market Status: Demand is temporarily weak. Silver price volatility has increased module costs to ~0.80 RMB/W. Module prices are under pressure, with distributed modules quoting 0.80-0.88 RMB/W but transacting lower (0.75-0.80 RMB/W).
• Supply Chain Prices:
  • Polysilicon: Stable at ~57 RMB/kg. Inventory remains high; producers are maintaining discipline but demand is lukewarm.
  • Wafers: Prices continue to slide. N-type 210R wafers fell 6.9% to 1.35 RMB/piece.
  • Cells/Modules: TOPCon 182 cells stable at 0.47 RMB/W. Modules stable at 0.85 RMB/W.
• Strategic Shifts:
  • Space PV: Identified as a major future增量 (incremental) market. Musk’s vision of 100GW space + 100GW ground capacity highlights the potential. Technologies like GaAs, P-type HJT, and Space Perovskite are early beneficiaries.
  • Corporate Moves: Tesla repurposing Buffalo factory for 10GW PV module production. Sungrow building a 20GW inverter/12.5GWh storage plant in Poland.
• Investment Implication: Cautious on mainstream module makers due to margin compression. Favor equipment manufacturers and those布局 (positioning) in Space PV (e.g., Junda Shares, Mingyang Smart Energy).

5. Wind Power: Offshore Wind Resilience Amidst Trade Headwinds

• Trade Risk: The EU Commission launched an in-depth investigation into Goldwind on Feb 3, 2026, alleging unfair subsidies. This poses a short-term sentiment risk but is unlikely to alter the structural demand for offshore wind in Europe.
• Domestic Trends:
  • Tendering: January tendering was 6.38 GW (-19% YoY), all onshore. Offshore tendering remains paused.
  • Pricing: Onshore wind turbine bids averaged 1,578 RMB/kW (ex-tower). Prices are stabilizing, with gross margins expected to repair as competition rationalizes.
  • Outlook: 2025 domestic offshore wind installations are projected at 8GW+. The "Three-Year Action Plan" is expanding domestic offshore space. European offshore wind remains in a sustained boom cycle.
• Investment Implication: Overweight Offshore Wind. Recommend cable and foundation suppliers (Oriental Cable, Dajin Heavy Industry) and整机 (OEM) leaders with margin recovery potential (Mingyang, Goldwind).

6. Humanoid Robots: The "0-to-1" Explosion

• Industry Milestone: Analogous to the EV sector in 2014, we are in the early commercialization phase. Tesla Gen3 is expected in 2026 Q1, with market launch in 2027. Long-term TAM is estimated at 100 million units.
• Capital & Tech Progress:
  • Shanghai-based humanoid robot firm raised nearly 100 million RMB in Pre-A+ funding.
  • Beijing Humanoid Robot Innovation Center raised >700 million RMB.
  • Hubei’s "GigaBrain-0.1" model ranked 2nd globally in embodied AI benchmarks.
• Supply Chain Opportunities: Focus on deterministic suppliers to Tesla and core component leaders.
  • Actuators/Joints: Sanhua Intelligent Controls, Tuopu Group.
  • Reducers/Harmonic Drives: KeDaLi, Leaderdrive.
  • Screws/Sensors: Zhejiang Rongtai, Beite Technology.
• Investment Implication: Aggressively overweight the robot supply chain. The valuation logic is shifting from pure automotive parts to high-multiple robotics exposure.

7. Grid & Industrial Control: Steady Growth & AI Synergies

• Grid Investment: 2025 grid investment grew, driven by UHV (Ultra-High Voltage) projects and equipment renewal. State Grid tenders for transformers and switchgear showed double-digit growth.
• Industrial Control: December PMI returned to expansion at 50.1%. Lithium, packaging, and logistics sectors are recovering. Robotics and machine tool output grew significantly (+28% and +9.7% YoY respectively).
• AIDC (AI Data Centers): Rising power density requirements are driving demand for high-voltage DC and Solid State Transformers (SST). Chinese companies with overseas channels (e.g., Siyuan Electric, Liangxin Shares) are well-positioned.

Detailed Sector Analysis & Data

A. Lithium Battery & EV Supply Chain Price Monitor

Source: SMM, Baiinfo, Wind, Dongwu Securities Institute

Analysis: The sharp decline in lithium carbonate prices is primarily a function of seasonal demand weakness and increased imports from Chile. However, the price elasticity of downstream materials is limited. As we move into March, the combination of restocking and higher production schedules will likely stabilize material prices. The profitability gap between top-tier and second-tier material suppliers is widening, favoring leaders with cost advantages (e.g., Tianci, Hunan Yuneng).

B. Global Energy Storage Installations & Trends

United States:
* 2025 Full Year: 13.6 GW / 38.8 GWh installed.
* Q3 2025: 14.5 GWh (+38% YoY). Large-scale storage accounted for 13.6 GWh.
* 2026 Forecast: 80 GWh total installation. Data centers are expected to contribute 37 GWh of this demand.
* Driver: The "Big Beautiful Bill" (US Infrastructure/Climate legislation) continues to drive ITC (Investment Tax Credit) utilization. Domestic cell capacity remains insufficient, keeping Chinese supply chains relevant despite tariff concerns.

Europe:
* Germany: Dec 2025 Large Storage: 151 MWh (-29% YoY). Full year 2025 Large Storage: 1,122 MWh (+92% YoY). Household storage is declining (-24% YoY for 2025) as inventory normalizes, but C&I storage is showing signs of life.
* UK: Q3 2025 Grid-connected Large Storage: 372 MW (+830% YoY). 2026 full-year connection forecast: 2-2.5 GWh (+30-50% YoY). Long-duration storage (>8h) incentives are reshaping project economics.

China:
* January 2026 Procurement: 36.3 GWh.
* Price Trend: 4-hour system EPC均价 (average price) rose 42% in 6 months to 0.592 RMB/Wh. This indicates that the "race to the bottom" in pricing is ending, improving margins for integrators.
* Policy: Ningxia, Gansu, and Shandong are refining grid access and capacity compensation rules. Gansu’s "Zero-Carbon Park" initiative mandates storage capacity ratios, creating structured demand.

C. Photovoltaic Supply Chain Price Monitor

Source: SolarZoom, PV InfoLink, Dongwu Securities Institute

Analysis: The PV sector is in a consolidation phase. The surge in silver prices has increased non-silicon costs, squeezing module maker margins. However, the inability of prices to fall further suggests a floor has been reached. The Space PV narrative is gaining traction as a hedge against terrestrial saturation. Companies investing in BC (Back Contact) technology and space-grade encapsulation materials are viewed favorably.

D. Wind Power Tendering & Pricing

January 2026 Tendering Summary:
* Total Volume: 6.38 GW (All Onshore).
* YoY Change: -19.19%.
* Offshore: 0 GW tendered (YoY -100%).
* Average Bid Price (Onshore, ex-tower): 1,578 RMB/kW.
* Average Bid Price (Onshore, incl. tower): 2,027 RMB/kW.

Recent Major Awards:
* Hainan CZ2 Offshore Phase II (576MW): Electric Wind Power pre-selected as supplier.
* Shandong Ju County Onshore (175MW): CSSC Science & Technology consortium pre-selected.

Analysis: The absence of offshore tenders in January is temporary; several large projects in Shandong and Jiangsu are expected to tender in H1 2026. Onshore prices have stabilized, allowing OEMs to restore gross margins to healthier levels (15-20%). The EU investigation into Goldwind is a geopolitical risk but does not change the fundamental supply/demand tightness in the global offshore wind market.

Corporate Updates & Strategic Moves

1. Capacity Expansion & Internationalization

• Sungrow: Announced a €230 million investment in Poland for a manufacturing base with 20GW inverter and 12.5GWh storage capacity. This strategically bypasses trade barriers and serves the European market locally.
• EVE Energy: Malaysia Phase II plant commenced production (680 million cylindrical cells/year). Partnered with Indonesian state-owned ANTAM for a full EV battery supply chain project in Indonesia.
• CATL: Signed agreement with Quanzhou City for a new新能源电池 (new energy battery) production base, enhancing its domestic footprint. Secured a 10GWh storage project in Europe via partnership with Schroders Greencoat.
• Dajin Heavy Industry: Signed MoU with Zima Group to build a manufacturing plant in Gijon, Spain, for offshore wind foundations.

2. Technology & Product Launches

• Tesla: Announced scaled-up production of dry electrode technology for 4680 cells at its Texas factory. Repurposed Buffalo, NY factory for 10GW PV module production. Launched new residential solar panels (TSP-415/420).
• NIO: CEO William Li confirmed the company will achieve its first quarterly net profit in Q4 2025.
• Changan Automobile: CATL’s sodium-ion batteries will be installed in Changan vehicles for the first time, undergoing winter testing.
• QuantumScape: Activated its "Eagle" pilot line in San Jose for solid-state battery trial production, supplying samples to OEMs like Volkswagen.

3. Financial & Regulatory News

• Ronbay Technology: Fined 9.5 million RMB by CSRC for misleading disclosures regarding a 120 billion RMB contract with CATL.
• Tianqi Lithium: Plans to dispose of up to 1.14% of CALB and 1.25% of SQM shares to improve liquidity.
• Gotion High-Tech: Private placement raising up to 5 billion RMB for battery projects.
• Magmic: Completed private placement of ~31.3 million shares, raising net proceeds of 2.63 billion RMB.

Risks / Headwinds

While the outlook is positive, investors must monitor the following risks:

1. Policy Uncertainty:

   • US Trade Policy: Potential changes to the "Big Beautiful Bill" or new tariffs on Chinese battery/PV components could disrupt export margins.
   • EU Investigations: The ongoing probe into Goldwind and potential anti-subsidy investigations into Chinese EVs/batteries could limit market access in Europe.
   • Domestic Subsidies: The withdrawal of purchase tax exemptions in China has caused short-term demand volatility. Further policy shifts could impact consumer sentiment.

2. Price Competition & Overcapacity:

   • PV Sector: Despite production cuts, inventory levels remain high. If demand does not recover as expected in H2 2026, price wars could resume, eroding margins.
   • Lithium Materials: If lithium carbonate prices fall below 100,000 RMB/ton, it could trigger inventory write-downs and destabilize the pricing structure for downstream materials.

3. Macroeconomic Factors:

   • Interest Rates: High interest rates in the US and Europe continue to impact the financing costs for large-scale renewable energy and storage projects, potentially delaying IPP (Independent Power Producer) investments.
   • Global Growth: A slowdown in global manufacturing (reflected in PMI data) could dampen demand for industrial automation and EVs.

4. Technology Execution Risk:

   • Solid-State Batteries: While progress is being made, mass commercialization timelines may slip. Failure to meet cost or performance targets could delay adoption.
   • Humanoid Robots: Mass production yields and cost reduction for Tesla and other OEMs face technical hurdles. Delays in Gen3 launch could impact supply chain valuations.

Rating / Sector Outlook

Overall Sector Rating: Overweight (Maintained)

We believe the Power Equipment sector is transitioning from a phase of "capacity expansion-driven growth" to "technology and profitability-driven growth." The worst of the price wars in lithium and PV appears to be behind us, while new growth engines (Storage, Robots, Space PV) are accelerating.

Sub-Sector Ratings:
* Energy Storage: Overweight. Highest visibility for growth and margin improvement.
* Lithium Batteries: Overweight. Inflection point in profitability; leaders gaining share.
* Humanoid Robots: Overweight. High beta, high growth potential. Early-stage investment opportunity.
* Wind Power (Offshore): Overweight. Structural growth story intact despite short-term tendering lulls.
* Photovoltaics: Neutral. Wait for clearer signs of demand recovery and inventory clearance. Focus on niche tech (BC, Space PV).
* Grid/Industrial Control: Overweight. Defensive growth with AI/Data Center upside.

Investment View & Recommended Portfolio

We recommend a barbell strategy: combining high-certainty cash-flow generators (Battery Leaders, Grid Equipment) with high-growth thematic plays (Humanoid Robots, Space PV, Solid-State Batteries).

Top Picks (Strong Buy)

Secondary Picks (Buy/Accumulate)

• Materials: Tianci Materials (Electrolyte leader, elastic to Li price stabilization), Hunan Yuneng (LFP cathode leader, tight supply for high-end products), Shanghai Putailai (Anode leader, solid-state equipment layout), Fulin Precision (High-compaction LFP, robot layout).
• Resources: Ganfeng Lithium, Zhongkuang Resources, Yongxing Materials (Benefit from lithium price stabilization and resource self-sufficiency).
• PV Tech: Junda Shares (TOPCon leader, investing in Space PV), Aiko Solar (ABC technology leader), Foster (Film leader, space encapsulation).
• Robotics Supply Chain: Zhejiang Rongtai (Mica/Screws), Beite Technology (Screws), Leaderdrive (Harmonic reducers), Weichuang Electric (Servo/Control).
• Grid/Storage: Haibo Sichuang (Large storage integrator), Deye Shares (Hybrid inverter/Storage, emerging markets), GoodWe (Inverter recovery), Oriental Cable (Offshore wind cables).

Watch List (Monitor for Entry)

• Longi Green Energy: BC technology ramp-up in 2026 could lead the cycle recovery.
• Trina Solar: Storage business entering harvest phase.
• Goldwind: Monitor outcome of EU investigation; domestic margin recovery remains strong.
• NARI Technology: Grid automation leader, steady growth.

Strategic Allocation Advice

1. Core Holding (50%): CATL, Sungrow, Siyuan Electric. These provide stability and consistent earnings growth.
2. Growth Satellite (30%): Sanhua, KeDaLi, Enjie, EVE Energy. These offer higher beta linked to robotics and battery tech innovation.
3. Thematic Speculation (20%): Space PV stocks (Junda, Mingyang), Solid-State Battery material suppliers (Shanghai Washba, Xiamen Tungsten New Energy), and smaller robot component players.

Conclusion:
The Power Equipment sector in 2026 is defined by differentiation. The era of broad-based beta is over; alpha will be generated by companies with technological moats (Solid-State, Robots, Space PV), global manufacturing footprints (to navigate trade barriers), and superior cost control. We advise investors to rotate out of pure capacity-play names and into technology leaders and integrated solution providers. The current market dip offers an attractive entry point for long-term positions in the recommended top picks.

Disclaimer: This report is for institutional investors only. It does not constitute investment advice. Please refer to the full disclaimer in the original source document. Market data is as of February 6, 2026. Forecasts are subject to change based on market conditions.