Power Equipment & New Energy: February 2026 Investment Strategy

Outperform the Market | Space PV Emerges as a New Frontier; Global AI Capex Drives AIDC Power Demand

Date: February 2026
Sector: Power Equipment & New Energy
Rating: Outperform the Market (Maintained)
Analysts: Wang Weiqi, Li Hengyuan, Wang Xiaosheng, Xu Wenhui, Li Quan, Yuan Yang
Contact: Wang Zhexuan

Executive Summary

The Power Equipment and New Energy sector demonstrated robust resilience in January 2026, with the Shenwan Power Equipment Index rising by 4.05%, outperforming the broader market (CSI 300 +1.65%). As we enter February 2026, the investment landscape is being reshaped by three transformative forces: the emergence of Space Photovoltaics (PV) driven by commercial aerospace giants, the exponential growth in AI Data Center (AIDC) power infrastructure fueled by unprecedented global tech capital expenditures, and the accelerating industrialization of Solid-State Batteries (SSB).

Our core thesis for February 2026 rests on the following pillars:

1. Space PV: The Next High-Growth Frontier: Following Elon Musk’s announcement at Davos regarding a 100GW annual PV capacity target for SpaceX and Tesla dedicated to space-based AI data centers and Starlink satellites, the sector has gained significant momentum. Chinese PV leaders are actively engaging in technical exchanges and layout preparations. We recommend focusing on equipment manufacturers and top-tier module companies with space-ready technologies (e.g., heterojunction, perovskite).
2. AIDC Power Equipment: Benefiting from Global Capex Surge: Major global tech giants (Amazon, Google, Meta) have announced aggressive 2026 capital expenditure plans, with year-over-year growth ranging from 50% to over 100%. This surge directly translates into demand for transformers, switchgear, HVDC/UPS, and power supply units (PSUs). Companies with strong export capabilities and high-end product portfolios are poised to benefit.
3. Solid-State Battery Industrialization Accelerating: Significant milestones were achieved in January 2026, including strategic partnerships in materials (Enjie Shares), equipment breakthroughs (Lead Intelligent, United Winners Laser), and vehicle prototypes (FAW Hongqi, Geely). The industry is transitioning from R&D to pilot and initial mass production phases.
4. Energy Storage: Policy-Driven Profitability Recovery: The implementation of capacity electricity price mechanisms in China, coupled with strong demand in the US (driven by AIDC load) and Europe (grid instability), is driving global storage installations. We forecast global storage installations to reach 455 GWh in 2026, a 40% YoY increase. Industry consolidation and "anti-involution" policies are expected to stabilize prices and improve margins.
5. Wind Power: Profitability Repair & Export Growth: Domestic onshore wind installations are expected to grow by 10-20% in 2026, with order books full and prices supported. Offshore wind is seeing a resurgence in bidding, with 2026 potentially marking the start of deep-sea development. Export volumes are ramping up, contributing to a resonance of domestic and international prosperity.

We maintain an "Outperform the Market" rating for the sector. Key recommendations include leaders in AIDC power equipment, space PV layout, solid-state battery supply chains, and wind power exports.

Key Takeaways

1. Market Performance Review: Sector Outperforms in January

• Index Performance: In January 2026, the Shenwan Power Equipment Index rose 4.05%, ranking 20th among the 31 Shenwan Level 1 industries. The CSI 300 Index rose 1.65% during the same period.
• Valuation Status:
  • P/E Ratio: The sector’s trailing twelve-month (TTM) P/E ratio stood at 41.05x at the end of January. Historically (since 2015), the median P/E is 35.5x, with a range of 14x–100x. The current valuation reflects a moderate premium, indicating improved investor sentiment.
  • P/B Ratio: The Price-to-Book ratio was 3.41x, above the historical median of 3.04x (range: 1.56x–7.3x).
• Sub-Sector Highlights:
  • Top Performers: PV Auxiliary Materials (+16.33%), Thermal Power Equipment (+16.26%), and Grid Equipment (+14.59%) led the gains.
  • Individual Stocks: The top gainers in January included Junda Shares (+84.6%), Mingyang Smart Energy (+60.2%), China XD Electric (+59.3%), Haiyou New Material (+55%), and Huadian Heavy Industries (+43%). These moves were largely driven by thematic catalysts such as space PV expectations and grid investment announcements.

2. AIDC Power Equipment: Capital Expenditure Boom Drives Demand

The intersection of Artificial Intelligence and power infrastructure is creating a structural growth opportunity. The energy intensity of AI computing is significantly higher than traditional cloud computing, necessitating substantial upgrades in power delivery and management systems.

Global Tech Giants’ 2026 Capex Plans:

Source: Company Reports, Wind, Guosen Securities Economic Institute

Investment Logic:
* Power Density Increase: AI servers require higher power density, driving demand for advanced cooling solutions, high-efficiency transformers, and uninterruptible power supplies (UPS).
* Grid Connection Challenges: The rapid deployment of data centers is straining local grids, necessitating investments in substation equipment, switchgear, and high-voltage direct current (HVDC) transmission links.
* Key Beneficiaries: Companies specializing in dry-type transformers, box-type substations, and power electronics for data centers are well-positioned.
* Recommended Stocks: Jinpan Technology (transformers for data centers), Xinte Electrical (specialty transformers), Hopewind Electric (power conversion), Shenghong Shares (energy storage & charging modules), Zhongheng Electric (HVDC & power supplies).

3. Space Photovoltaics: A Strategic New Frontier

Space-based solar power (SBSP) and photovoltaics for space applications represent a high-value niche that bypasses terrestrial land and weather constraints.

Recent Catalysts:
* Elon Musk’s Announcement: At the January 2026 Davos Forum, Musk announced that SpaceX and Tesla aim to achieve 100 GW/year of PV production capacity each within three years. Crucially, 100 GW of this capacity is designated for space-based AI data centers and Starlink satellites.
* Chinese Industry Engagement: According to reports, Musk’s team conducted technical surveys of leading Chinese PV firms in late January, including TCL Zhonghuan, Jinko Solar, and Jingsheng Mechanical & Electrical. The focus was on equipment, wafers, cells, and modules, with particular interest in Heterojunction (HJT) and Perovskite technologies due to their high efficiency and radiation resistance potential.
* Domestic Progress:
* State-Owned Enterprises: The Eighth Academy of CASC (China Aerospace Science and Technology Corporation) has matured triple-junction gallium arsenide (GaAs) cells with >30% efficiency.
* Commercial Collaboration: Multiple Chinese PV firms are actively collaborating with commercial aerospace entities. The Shanghai Solar Energy Engineering Research Center is advancing low-cost perovskite/crystalline silicon tandem cells for space environments.
* International Context: ESA’s SOLARIS program aims for in-orbit demonstrations by 2030. Japan successfully tested microwave power transmission from space in late 2025.

Investment Implications:
* Technology Shift: Space PV requires higher efficiency, lighter weight, and greater radiation hardness than terrestrial PV. This favors advanced cell technologies (HJT, Perovskite, GaAs) and specialized packaging.
* Supply Chain Opportunities:
* Equipment: Manufacturers of precision coating and laser processing equipment.
* Modules: Leading component makers with R&D capabilities in space-grade modules.
* Recommended Stocks: Maxwell Technologies (Maiwei Shares) (HJT equipment leader), Jinko Solar (module leader with space initiatives), Junda Shares (N-type cell leader), Risen Energy (diversified technology portfolio).

4. Solid-State Batteries (SSB): From Lab to Pilot Lines

January 2026 marked a pivotal month for the industrialization of solid-state batteries, with progress across materials, equipment, and automotive applications.

Key Developments:

• Materials Sector:
  • Enjie Shares signed strategic cooperation agreements with Enli Power (Jan 20) and Gotion High-Tech (Jan 27) to collaborate on key materials for solid-state batteries, including separators and solid electrolytes.
  • Easpring Material Technology had its biphasic composite ultra-high nickel cathode material for SSBs included in the SASAC’s "Central Enterprise Technological Innovation Achievement Recommendation Directory (2024 Edition)."
• Equipment Sector:
  • Lead Intelligent launched a new generation of dry-coating solutions on February 3, addressing a critical manufacturing bottleneck for SSBs.
  • United Winners Laser announced on February 5 that it has supplied full solid-state battery equipment to pilot lines for two top-tier customers.
  • Qingyan Nano shipped dry electrode equipment to a leading Japanese automaker in late January.
  • Tesla confirmed scaled mass production of dry electrode processes on February 1.
• Automotive Applications:
  • FAW Group: The first prototype vehicle equipped with FAW’s self-developed Hongqi all-solid-state battery rolled off the line on January 21. This marks the entry into real-vehicle testing after 470 days of concentrated R&D, achieving breakthroughs in sulfide electrolytes and 10Ah/60Ah cell performance.
  • Geely: Announced on January 22 that its self-developed all-solid-state battery pack will complete its first下线 (roll-off) in 2026, initiating vehicle installation verification.

Investment Logic:
* Industrialization Timeline: The industry is moving from laboratory samples to pilot lines and initial vehicle integration. 2026–2027 is expected to be the critical window for commercial validation.
* Value Chain Shift: SSBs require new materials (solid electrolytes, lithium metal anodes, high-nickel cathodes) and new processes (dry coating, isostatic pressing). Traditional liquid electrolyte and separator markets may face disruption, while new material suppliers will gain share.
* Recommended Stocks:
* Materials: Xiamen Tungsten New Energy, Ronbay Technology, Easpring Material Technology.
* Equipment: Lead Intelligent, United Winners Laser.
* Battery Makers: CATL, EVE Energy (leaders in R&D and scaling).

5. Energy Storage: Global Demand Surge & Policy Support

The global energy storage market is experiencing robust growth, driven by policy reforms in China, AI-driven load growth in the US, and grid stability needs in Europe.

Market Forecast 2026:
* Global Installations: Expected to reach 455 GWh, a 40% YoY increase.
* Utility-Scale (Large Storage): 413 GWh (+40% YoY).
* Residential Storage: 23 GWh (+15% YoY).
* C&I Storage: 19.5 GWh (+93% YoY).

Regional Dynamics:

• China: Policy-Driven Profitability
  • Capacity Electricity Price Mechanism: The National Development and Reform Commission (NDRC) and National Energy Administration (NEA) issued notices establishing capacity electricity prices for independent grid-side storage. Compensation is based on coal-fired capacity prices, adjusted for peak-shaving capability.
  • Impact: Provinces like Inner Mongolia, Hebei, Gansu, Ningxia, and Xinjiang have implemented these policies. Project IRRs are improving to the 8–12% range, stimulating investment.
  • Data: In 2025, domestic storage system tenders reached 184.2 GWh (+138% YoY). New installations totaled 189.48 GWh (+73% YoY).
• United States: AIDC Driving Demand
  • Load Growth: The rapid expansion of AI data centers is causing localized power shortages, accelerating the need for large-scale storage to ensure reliability and manage peak loads.
  • Data: EIA data shows 2025 utility-scale storage additions reached 14.07 GW (+35% YoY). For 2026, EIA forecasts 24.38 GW of new installations, a 73% YoY increase.
• Europe: Grid Stability & Arbitrage
  • Drivers: Grid instability and widening spot market peak-valley price spreads (including negative pricing events) are enhancing storage economics.
  • Data: 2025 cumulative installations reached 27.1 GWh (+24% YoY). Utility-scale storage grew 68% to 15 GWh. However, residential storage declined 10% to 9.8 GWh due to market saturation and lower electricity prices in some regions.
• Emerging Markets:
  • Southeast Asia, South Africa, and Australia are seeing strong residential storage growth due to grid instability.
  • Middle East, India, and Brazil are emerging as hotspots for utility-scale projects, supported by government incentives.

Supply Side & Profitability:
* Consolidation: "Anti-involution" policies in China are accelerating industry consolidation, reducing irrational price competition.
* Price Trends: Battery cell prices have bottomed out and are showing signs of recovery. System integration quotes are beginning to reflect cost increases, improving margins for integrated players.
* Overseas Margins: Companies with strong overseas exposure continue to enjoy higher profitability due to sustained demand and less intense competition.

Recommended Stocks: CATL, EVE Energy, Deye Shares, Hopewind Electric, Shenghong Shares, Kelong Electric.

6. Wind Power: Profitability Repair & Export Expansion

The wind power sector is entering a phase of healthy growth, characterized by stable domestic demand, improving profitability, and expanding export opportunities.

Onshore Wind:
* Installations: 2026 domestic new installations are projected to grow by 10–20%, reaching record highs.
* Profitability: After a period of intense price competition, onshore turbine gross margins are expected to bottom out in Q4 2025/Q1 2026 and recover quarter-by-quarter in 2026.
* Orders: Order books are full, providing visibility and support for pricing.
* Components: Volume growth with stable prices ("Volume Up, Price Stable") is expected for components in 2026. Market share concentration among leaders is increasing.

Offshore Wind:
* Installations: 2026 offshore installations are forecast at 10–12 GW.
* Bidding: Pending projects are abundant, with 2026 bidding volumes expected to exceed 10 GW.
* Deep-Sea Era: 2026 is viewed as the inaugural year for deep-sea offshore wind development in China. This drives demand for higher-specification cables and foundations (monopiles/jackets).
* Exports: European offshore wind bidding and installations, which were sluggish from 2022–2025, are expected to pick up in 2026. Chinese leaders in cables and foundations are well-positioned to capture overseas market share.

Recommended Stocks:
* OEMs: Goldwind, Sany Heavy Energy, Mingyang Smart Energy, Yunda Shares.
* Components: Times New Material (blades), Jinlei Shares (spindles), Riyue Shares (castings).
* Offshore Leaders: Dongfang Cable (subsea cables), Haili Wind Power (foundations), Dajin Heavy Industry (towers/foundations), Taisheng Wind Power, Delijia (gearboxes).

7. Grid Equipment: Domestic Investment & Overseas Breakthroughs

Domestic Outlook:
* Investment Scale: State Grid’s fixed asset investment during the "15th Five-Year Plan" (2026–2030) is expected to reach RMB 4 trillion, a 40% increase over the "14th Five-Year Plan." This underscores the grid’s role as an economic stabilizer.
* Key Segments:
* UHV (Ultra-High Voltage): Bidding and construction are rebounding from a trough. Flexible DC technology penetration is increasing.
* Smart Meters: New standards are driving replacement cycles and value-added services.
* Distribution Network: Upgrades are needed to accommodate distributed renewables and EV charging, creating opportunities for software and hardware upgrades.

Export Outlook:
* Global Gap: IEA estimates global grid investment will rise from $310B/year (2016–2022) to $500B/year (2023–2030), approaching $800B by 2030.
* Supply Constraints: Overseas suppliers face labor, approval, and capacity bottlenecks.
* Chinese Opportunity: Chinese enterprises are breaking into high-end markets in Europe and North America, offering competitive high-voltage products. The export boom is expected to continue exceeding expectations in 2026.

Recommended Stocks: Sifang Shares, Jinpan Technology, Sieyuan Electric, Huaming Equipment, Megmeet, Zhongheng Electric, Pinggao Electric, Xuji Electric, Sanxing Medical, Haixing Power, Kaifa Technology.

8. Traditional PV: Supply Clearing & Technology Iteration

While Space PV captures attention, the terrestrial PV market is undergoing a critical supply-side adjustment.

• Supply Clearing: "Anti-involution" policies are helping to clear excess capacity. We expect the supply-demand balance to improve, leading to stabilized profits.
• Profit Recovery: The polysilicon segment is likely to see profit recovery first due to its position in the value chain and capacity rationalization.
• Technology Trends:
  • Silver Reduction: Silver-free or low-silver pastes are becoming key to cost reduction. Copper paste mass production is a key monitorable metric for 2026.
  • Perovskite: Industrialization is accelerating. Monitor pilot line progress and efficiency records.
  • Semiconductor Cross-over: PV equipment firms are leveraging their expertise in vacuum, laser, and crystal growth to enter the semiconductor equipment market.

Recommended Stocks: GCL Technology (polysilicon leader), Tongwei Shares, Polymer Materials (silver paste).

Risks / Headwinds

Investors should be aware of the following risks that could impact the sector’s performance:

1. Policy Volatility:
   • Changes in subsidy policies for renewable energy or energy storage in key markets (China, US, Europe) could affect project economics.
   • Trade barriers, tariffs, or local content requirements in the US and Europe could hinder Chinese exports of PV modules, batteries, and grid equipment.
2. Raw Material Price Fluctuations:
   • Significant increases in the prices of copper, aluminum, lithium, nickel, or silver could raise production costs for grid equipment, batteries, and PV modules, squeezing margins if costs cannot be fully passed downstream.
3. EV Sales Miss:
   • If global electric vehicle sales growth falls short of expectations, demand for power batteries and related materials could weaken, impacting the lithium battery supply chain.
4. Technological Disruption:
   • Rapid shifts in battery technology (e.g., faster-than-expected adoption of SSBs or alternative chemistries) could render existing production lines obsolete, leading to asset impairment for lagging players.
5. Grid Connection Delays:
   • Bottlenecks in grid connection approvals or transformer availability could delay the commissioning of renewable energy and storage projects, deferring revenue recognition for equipment suppliers.
6. Geopolitical Tensions:
   • Escalating geopolitical conflicts could disrupt supply chains, particularly for critical minerals and cross-border trade in high-tech energy equipment.

Rating / Sector Outlook

Sector Rating: Outperform the Market (Maintained)

We maintain a positive outlook on the Power Equipment and New Energy sector for February 2026 and the remainder of the year. The sector is transitioning from a phase of pure capacity expansion to one driven by technological innovation, global market expansion, and profitability repair.

Key Investment Themes for 2026:

1. AI-Driven Power Infrastructure: The secular growth trend in AI capex provides a highly visible demand stream for power equipment. This is a high-certainty theme with strong earnings visibility for leading suppliers.
2. Space Economy Integration: Space PV represents a nascent but high-potential growth vector. Early movers in equipment and specialized modules will command valuation premiums.
3. Solid-State Battery Commercialization: As SSBs move from pilot to pre-mass production, companies with verified supply chain positions in materials and equipment will see re-rating.
4. Global Energy Storage Resilience: Policy support in China and demand growth in the US/Europe create a balanced global demand profile. Industry consolidation is improving the competitive landscape and margins.
5. Wind Power Export & Offshore Revival: The combination of domestic stability and overseas growth offers a compelling risk-reward profile for wind OEMs and component suppliers.

Valuation Perspective:
The sector’s current P/E of ~41x is above its historical median but justified by the improved growth quality and the emergence of new high-margin segments (AIDC, Space, SSB). We expect earnings growth in 2026 to support current valuations, particularly for companies with strong export exposure and technological moats.

Investment View & Recommended Portfolio

Based on the analysis above, we recommend a diversified portfolio focusing on leaders in high-growth sub-sectors. Below is a detailed look at key recommended companies, their investment logic, and financial projections.

1. AIDC & Grid Equipment Leaders

These companies are primary beneficiaries of the global AI capex surge and domestic grid modernization.

2. Space PV & Advanced PV Technology

Companies with technological leadership in HJT, Perovskite, or specific space-related collaborations.

*Note: Specific EPS/PE data for some PV stocks may vary based on latest consensus; ratings reflect strategic positioning.

3. Solid-State Battery & Lithium Chain

Leaders in SSB materials, equipment, and integrated battery manufacturing.

4. Wind Power: OEMs & Offshore Leaders

Companies benefiting from domestic growth, export expansion, and offshore wind revival.

5. Energy Storage Integrators & Components

Detailed Sector Analysis & Data Tracking

To provide a comprehensive view, we delve deeper into the data tracking and specific industry dynamics for each sub-sector.

A. AIDC Power Equipment: Deep Dive

Market Size Estimation:
According to Semianalysis and Guosen Securities estimates, the global market for AIDC-specific power equipment (transformers, switchgear, UPS, PSUs) is expanding rapidly. The incremental power load from AI data centers is projected to grow significantly through 2030.

• Transformer Demand: AI data centers require specialized dry-type transformers due to safety and space constraints. The global shortage of transformers has led to extended lead times and price increases, favoring established manufacturers with scalable production.
• Power Supply Units (PSUs): The shift to higher wattage GPUs (e.g., NVIDIA’s Blackwell series) requires more efficient and higher-density PSUs. This creates opportunities for companies like Megmeet and Zhongheng Electric that can deliver high-efficiency modular power solutions.
• Cooling Integration: While primarily a thermal issue, power distribution is closely linked to cooling efficiency. Liquid cooling systems require precise power management, creating integrated opportunities for power and thermal solution providers.

Data Tracking:
* US Cloud Capex: The combined capex of Amazon, Microsoft, Google, and Meta is expected to exceed $500 billion in 2026, with a significant portion allocated to AI infrastructure.
* China’s Digital Economy: Domestic internet giants and telecom operators are also increasing capex for AI computing centers, supporting domestic grid and power equipment suppliers.

B. Space Photovoltaics: Technical & Commercial Viability

Technical Requirements:
Space PV differs fundamentally from terrestrial PV:
1. Radiation Hardness: Cells must withstand high-energy particle bombardment. GaAs and certain perovskite formulations show superior resistance.
2. Weight & Flexibility: Launch costs are weight-sensitive. Thin-film and flexible crystalline silicon modules are preferred.
3. Efficiency: Higher efficiency reduces the area and weight required for a given power output. HJT and Perovskite/Silicon tandems offer >30% efficiency potential.
4. Temperature Extremes: Modules must operate in extreme vacuum and temperature cycles.

Commercial Landscape:
* SpaceX/Starlink: The primary driver. Starlink satellites currently use traditional solar arrays, but future generations and space-based data centers will require higher power densities.
* Chinese Commercial Aerospace: Companies like Galaxy Space and LandSpace are emerging, creating a domestic supply chain demand for space-grade PV.
* Government Programs: China’s "Guowang" satellite constellation and other national projects provide a baseline demand for high-reliability space PV.

Investment Strategy:
Focus on companies with:
* Proven R&D in HJT or Perovskite.
* Existing relationships with aerospace institutes (e.g., CASC).
* Precision manufacturing capabilities (laser processing, thin-film deposition).

C. Solid-State Batteries: Industrialization Roadmap

Timeline:
* 2024–2025: Lab-scale breakthroughs and pilot line construction.
* 2026: Pilot production for niche applications (e.g., high-end EVs, drones). Vehicle validation begins.
* 2027–2028: Initial mass production for premium EV models. Cost parity with liquid lithium-ion batteries remains a challenge.
* 2030+: Widespread adoption as manufacturing scales and costs decline.

Key Technical Hurdles:
1. Solid Electrolyte Interface (SEI): Stability between the solid electrolyte and electrode is critical for cycle life.
2. Manufacturing Process: Dry electrode coating and isostatic pressing are new processes that require specialized equipment.
3. Material Costs: Lithium metal anodes and sulfide electrolytes are currently expensive. Scaling production is key to cost reduction.

Company-Specific Updates:
* Enjie Shares: Its partnership with Gotion High-Tech focuses on integrating solid electrolytes into existing separator production lines, leveraging its scale.
* Lead Intelligent: Its dry-coating solution eliminates the need for solvents, reducing cost and environmental impact, a key advantage for SSB manufacturing.
* FAW & Geely: Their vehicle prototypes demonstrate that integration challenges (packaging, thermal management) are being addressed.

D. Energy Storage: Policy & Market Dynamics

China’s Capacity Electricity Price Mechanism:
* Mechanism: Storage stations receive a fixed capacity payment based on their rated power, similar to coal plants. This provides a stable revenue stream, reducing reliance on volatile arbitrage income.
* Impact on IRR: Projects that previously struggled to achieve >6% IRR can now reach 8–12%, making them bankable and attractive to independent power producers (IPPs).
* Long-Duration Storage: The policy favors longer-duration storage (4h+), boosting demand for larger battery systems.

US Market:
* IRA Impact: The Inflation Reduction Act’s Investment Tax Credit (ITC) continues to support storage deployment.
* Interconnection Queues: While queues are long, projects tied to data centers or critical load areas are prioritized, accelerating their timeline.

Europe:
* Market Coupling: Enhanced market coupling allows for better cross-border energy trading, increasing the value of storage in arbitraging price differences between countries.
* Regulatory Support: EU regulations are increasingly recognizing storage as a distinct asset class, facilitating grid access and remuneration.

E. Wind Power: Supply Chain & Pricing

Pricing Trends:
* Onshore Turbines: Prices have stabilized around RMB 1,500–1,800/kW (excluding tower). Further declines are limited by raw material costs and manufacturers’ need for profitability.
* Offshore Turbines: Prices are higher, around RMB 3,000–3,500/kW, reflecting higher technical complexity and installation costs.
* Components: Tower and foundation prices are linked to steel prices. Cable prices are stable, with high-voltage subsea cables commanding premium margins.

Export Opportunities:
* Europe: European wind developers are seeking diverse supply chains to reduce dependency on single sources. Chinese manufacturers offer competitive pricing and proven technology.
* Emerging Markets: Vietnam, India, and Brazil are expanding wind capacity, offering opportunities for Chinese OEMs with EPC capabilities.

F. Grid Equipment: Investment Cycle

State Grid Investment:
* 15th Five-Year Plan: The projected RMB 4 trillion investment represents a significant acceleration. Priority areas include:
* UHV DC: For transmitting renewable energy from western China to eastern load centers.
* Distribution Automation: To manage distributed PV and EV charging.
* Digital Grid: Using AI and IoT for predictive maintenance and load forecasting.

Overseas Markets:
* Europe: Aging grid infrastructure requires replacement. Chinese transformers and switchgear are gaining traction due to shorter lead times compared to European suppliers.
* Middle East: Large-scale grid expansions in Saudi Arabia and UAE offer opportunities for EPC contracts and equipment supply.

Financial Analysis & Valuation Framework

Valuation Methodology:
We employ a combination of P/E, PEG, and DCF models to value companies in the sector.
* High-Growth Segments (AIDC, SSB, Space PV): We use PEG ratios, accepting higher P/E multiples for companies with >30% earnings growth.
* Mature Segments (Wind, Traditional PV, Grid): We use P/E and dividend yield metrics, focusing on stability and cash flow.
* Cyclical Segments (Polysilicon, Lithium Materials): We look at P/B and cyclical P/E averages, timing entries based on supply/demand inflection points.

Key Financial Metrics to Monitor:
1. Gross Margin Trends: Watch for margin expansion in wind OEMs and storage integrators as prices stabilize.
2. Order Backlog: For wind and grid equipment, backlog provides revenue visibility for 12–24 months.
3. R&D Spending: High R&D intensity is crucial for SSB and Space PV leaders. Monitor R&D as a % of revenue.
4. Overseas Revenue Share: Companies with higher overseas exposure generally enjoy better margins and diversification.

Risk-Adjusted Returns:
Given the sector’s volatility, we recommend a barbell strategy:
* Core Holdings: Stable, high-dividend grid and wind leaders (e.g., Goldwind, Pinggao Electric).
* Growth Satellites: High-beta AIDC and SSB plays (e.g., Jinpan Technology, Lead Intelligent).

Conclusion

The Power Equipment and New Energy sector in February 2026 presents a compelling investment opportunity, driven by structural shifts rather than just cyclical recovery. The convergence of AI-driven power demand, space exploration, and next-generation battery technology creates new growth engines that complement the steady recovery in traditional wind, solar, and grid sectors.

Investors should prioritize companies with:
1. Technological Moats: Leaders in HJT, SSB, and high-voltage equipment.
2. Global Reach: Companies successfully exporting to high-margin markets in Europe and the US.
3. Policy Alignment: Beneficiaries of China’s grid investment and capacity electricity price mechanisms.

We maintain our Outperform the Market rating and encourage investors to position themselves in the recommended portfolio to capture the multi-year growth trends unfolding in this dynamic sector.

Appendix: Detailed Data Tables

Table 1: PV Monthly Production, Installation & Export (Dec 2025)

Source: National Energy Administration, General Administration of Customs, Solarzoom, SMM, PV Infolink

Table 2: PV Main Chain Price Data (Jan 28, 2026)

Source: Solarzoom, SMM, PV Infolink

Table 3: Main Chain Profit Distribution (RMB/W, M10, Single Glass, TOPCon)

Note: Gross profit data is calculated based on cost models and does not consider inventory effects. It may not represent actual corporate profitability.

Table 4: Auxiliary Material & Raw Material Prices (Jan 28, 2026)

Source: SMM, Baiinfo

Disclaimer

Analyst Certification:
The analysts named in this report certify that all of the views expressed in this report accurately reflect their personal views about the subject securities or issuers. No part of the analysts' compensation was, is, or will be directly or indirectly related to the specific recommendations or views expressed in this report.

Investment Rating Definitions:
* Outperform the Market: Expected to outperform the relevant market index by more than 10% over the next 6–12 months.
* Neutral: Expected to perform within ±10% of the relevant market index.
* Underperform the Market: Expected to underperform the relevant market index by more than 10%.

Important Disclosures:
This report is prepared by Guosen Securities Co., Ltd. The information contained herein is based on sources believed to be reliable, but Guosen Securities does not guarantee its accuracy or completeness. This report is for informational purposes only and does not constitute an offer to sell or a solicitation of an offer to buy any securities. Investors should make their own investment decisions based on their individual circumstances and consult with their financial advisors if necessary. Guosen Securities and its affiliates may hold positions in the securities mentioned in this report and may engage in transactions in these securities from time to time.

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