In the first half of the year, China's power equipment industry entered a prosperous cycle driven by the dual wheels of the acceleration of domestic UHV projects and the upgrading of overseas power grids. According to the semi-annual reports and first-half performance forecasts disclosed by relevant companies, the overseas expansion of power equipment enterprises presents a pattern of "both volume and price rising", and the performance elasticity of primary equipment enterprises is particularly prominent. High gross profit margins overseas have become the core engine for the industry to boost profitability. At the same time, the substantial increase in domestic power grid investment has also brought large orders and performance support to power equipment enterprises.
High Profit Margins from Overseas Business Unlock Profit Ceiling
Primary equipment sees surging volume and rising prices
The highlight of power equipment enterprises' going global lies not only in the growth rate on the revenue side but also in their relatively high gross profit margin level. This characteristic is particularly prominent in the primary equipment sector, directly lifting the profit ceiling of enterprises.
Shenma Power is a typical representative of overseas businesses with high gross profit margins. The company's semi-annual report shows that in the first half of the year, it achieved operating revenue of 895 million RMB, a year-on-year increase of 26.98%; realized net profit attributable to parent company was 215 million RMB, a year-on-year increase of 34.01%; the overall gross profit margin reached 47.35%, an increase of 2.95 percentage points year-on-year. The gross profit margins of the three product lines all rose, among which the gross profit margin of rubber sealing parts was 58.8%, and that of composite external insulation products for substations was 47.3%. The growth rate of net profit was significantly higher than that of revenue, highlighting profit flexibility. Its core driving force is the increased proportion of overseas high-margin businesses in business structure—the proportion of overseas revenue has approached 50%.
In an interview with Shanghai Securities News, a relevant person in charge of Shenma Power said that the product design life of the company reaches 40 years, it has a cost advantage over the entire life cycle, and supports a high gross profit margin of more than 45%. In terms of production capacity, the Vietnamese factory has obtained the investment license, and the US factory has completed the signing of the factory lease agreement and accelerated the construction.
Siyuan Electric's semi-annual report also shows the profit advantages of its overseas business. In the first half of the year, the company achieved a revenue of 10.795 billion RMB, a year-on-year increase of 27.05%; the net profit attributable to parent shareholders was 1.464 billion RMB, a year-on-year increase of 13.23%. The overseas revenue reached 3.183 billion RMB, accounting for 29.49% of the total revenue, and the business covers more than 100 countries and regions around the world.
As an enterprise with both R&D and manufacturing capabilities for primary and secondary equipment, SiRMB Electric focuses on primary equipment such as switches and transformers in its overseas business, with high-voltage transformers, tank circuit breakers and disconnectors as the main products sold in the North American market. The gross profit margin in overseas regions reached 33.39%, higher than the company's overall level.
Jinbei Electric's overseas business also achieved impressive growth. According to the semi-annual report, the company achieved operating income of 11.861 billion RMB in the first half of the year, a year-on-year increase of 27.07%; and net profit attributable to the parent company of 317 million RMB, a year-on-year increase of 6.96%. Among them, direct overseas export revenue reached 515 million RMB, a year-on-year increase of 96.87%, and the revenue proportion rose from 2.80% to 4.34%. The semi-annual report disclosed: The direct export volume of the Enameled Wire Industry Center exceeded 5,000 tons for the first time, a year-on-year increase of over 60%; the direct export of the Cable Industry Center achieved relatively rapid growth, and product applications were extended to fields such as power transmission and transformation, wind-solar-storage, and oil and gas engineering. In terms of overseas capacity expansion, Jinbei Electric is steadily advancing the construction of the first phase of the European enameled wire production base, which is expected to enter the trial production stage in the second half of the year. Overseas operations are evolving from single-product export to a coordinated layout of markets, capacity and services.
From an industry perspective, the entry of global power grid investment into a super cycle is the fundamental background for the acceleration of equipment export. The "2026 World Energy Investment Report" released by the International Energy Agency (IEA) shows that the total scale of global power grid investment in 2025 is close to 450 billion US dollars, and it is expected to increase by another 17% in 2026. The delivery cycle of transformers in the United States has been extended by about twice. According to export data compiled by Huatai Securities Research Institute: the export volume of transformers in the first half of the year was 5.15 billion US dollars, a year-on-year increase of 31.3%; the export volume of high-voltage switches was 3.06 billion US dollars, a year-on-year increase of 22.0%. Driven by large-capacity and high-voltage grade products, the pattern of both volume and price increase in the export of primary equipment has been established. Overseas high gross profit margins coupled with high export growth are becoming the core driving force for the profit improvement of the power equipment industry.
Dense Landing of Domestic UHV Orders
Equipment Enterprises Show Earnings Elasticity
In terms of the domestic market, power grid investment is entering an expansion window with strong certainty. At a press conference held on July 30, the National Energy Administration disclosed that power grid investment in the first half of the year increased by 13.5% year-on-year. State Grid Corporation of China's fixed asset investment exceeded 310 billion RMB in the first half of the year, a year-on-year growth of 12.6%. Fifteen UHV projects and 37 pumped storage power stations are under construction simultaneously. The total fixed asset investment during the "15th Five-Year Plan" period will reach 4 trillion RMB, a 40% increase compared with the "14th Five-Year Plan" period. China Southern Power Grid has arranged 180 billion RMB of fixed asset investment for 2026, hitting a new high for five consecutive years. Citing an article from the National Energy Administration, the China Electricity Council stated that the national power grid fixed asset investment during the "15th Five-Year Plan" period will reach 5 trillion RMB, with about 15 new UHV DC green power major channels put into operation.
This investment cycle is directly transmitted to the equipment side, and the intensive implementation of State Grid's tender orders will provide solid performance support for listed companies. Changgao Electric stated that regarding State Grid orders, the company has announced three winning bids in 2026. The winning products cover core categories of primary equipment such as combined electrical appliances, circuit breakers, disconnectors, and switchgear, with a cumulative winning bid amount of approximately 940 million RMB. The abundant orders lay the foundation for the continuous release of performance in the second half of the year.
Fengan Co., Ltd. expects its first-half net profit attributable to parent to be 75 million to 100 million RMB, a year-on-year increase of 741.98% to 1022.64%; its non-net profit is 60 million to 90 million RMB, achieving a substantial turnaround from losses. As one of the few domestic enterprises capable of manufacturing ultra-high voltage transmission line towers with voltage levels of 1000 kV and below, Fengan Co., Ltd. has issued multiple project winning bid announcements since 2026, with a cumulative winning bid amount of approximately 1.1 billion RMB.
Fengfan Co., Ltd. stated at the results briefing held in May that the first-quarter performance inflection point was mainly driven by the successive delivery of overseas tower projects. Referring to the data from Fengfan Co., Ltd.'s 2025 annual report, the gross profit margin of its overseas business reached 28.36% in that year, much higher than the 6.32% of its domestic business. It is evident that the increased delivery volume overseas had a significant effect on boosting the current period's profits.
Overall, the power equipment industry showed a high prosperity pattern of "internal and external resonance" in the first half of the year. According to forecasts by relevant institutions and reports, the prosperity of the power equipment industry driven by the "two-wheel drive" is expected to rise further in the coming years.
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