2026年展望：启动电力基础设施；买入AI及出口相关变压器和储能

export-related transformerand ESSPrice Objective Change 2026:ForecastChinagridinvestmentgrowthof10% ChinaAl Infrastructure We remain positive on power equipment and EsS names,especially the ones with exportgrowth and/ or Al infrastructure angle. Preferred stocks: Sieyuan (export growth) and Sungrow (ESS growth). Buy rated Hainan Jinpan (Al infra) and Huaming (high margin). Weforecast Chinapower grid investment to reach over RMB3.8tn during the15th FYP vsc.RMB2.8tn during the 14th FYP. We believe the growth rate will be front-loaded to 1H ofthe 15th FYP, with China grid investment growth at 10% in 2026E to RMB710-720bn andanother 7% in 2027E driven by renewables'curtailment pressure,grid digitalizationcountercyclical investment, and growing power demand in electrification and AIDCdemand.Specifically, we expect UHV investment growth at 18%/13% YoY in 2026/27 asit has lagged behind the pipeline in recent years but expect four UHVDC lines to beapproved in 2026.For power distribution,we forecast 9%/7% YoY investment growth in2026/27 with urges of grid digitalization.Also, we expect smart meters to see ASPrecovery and tendering volume to reach 65m units in 2026 after the headwinds in 2025.Buy transformer export names; raise POs of grid coverages Matty Zhao >>Research AnalystMerrill Lynch (Hong Kong) matty.zhao@bofa.comPeterWang>>Research AnalystMerill Lynch (Hong Kong) +852 3508 7185peter.wang2@bofa.com In 11M25, China transformer exports were +35% YoY (above our 30% target). In 2026, weexpect exports to further hike by over 25%, driven by the 1) necessity of replacing aging infra; 2) development of renewable energies; and 3) surging demand from Al. In 11M25,China transformer/high-voltage switch exports were up 35%/29% YoY.We raise our PEmultiple for transformer to 33x (from 32x) on the more positive outlook for domesticdemand and export momentum and roll over our earnings based on average2026/27EPER.We raise our PO on Buy rated Sieyuan to RMB183 from RMB156, given our expectation of43%/30% in 2025/26E earnings growth and margin improvement on R&D for high-voltageproducts. Reiterate Buy on Jinpan based on its highest-among-peers exposure in the US andpotential breakthrough in SST. We lift our PO to RMB104 from RMB87, based on SOTP (75xPER for AIDC-related segment, 33x PER for non-AIDC segment). Buy rated Huaming and Nari.ExpectESSinstallationtogrow33%;BuyratedSungrow We seeglobal BESS installation to grow33%/25%to360/450GWh in 2026/27,driven by favorable policies, renewables' curtailment pressure, AlDC demand, expansion ofrevenuesources.We expect2026/27ESSbatteryshipment to reach760/910GWh,+41%/+20% YoY.Upside risk comes from higher-than-expected inventory accumulation.Downside risks are the US tariff and FEOC constraint on US projects. We maintain ourBuy rating and PO on Sungrow, given 1) it is a key beneficiary of ESS growth. ESS willstrong brand image, with likely capacity expansion in overseas; 3) its 41%/17% earningsgrowth in 2025/26Eat 18x 2026E PER; and 4) potential long-term upside from AIDC.Recent lithium prices rally poses short term margins concern, and we expect to it to passthrough upstream prices in Mid-term. China grid investment to grow 10%/7% in 2026/27E 2026 is the first year of the 15th Five Year Plan (FYP), and we reiterate our positive view on grid investment mainly driven by still-rising demand from renewables' curtailmentpressure, grid digitalization, countercyclical investment, and growing power demand inelectrification and data centers.China Southern Power Grid (CSG) announced a capex plan of RMB24bn in power grid infrastructure in 1Q26, +20% YoY.In Dec 2025, China National Energy Administration(NEA)and China NationalDevelopment and ReformCommission (NDRC)alsoemphasized on the need for high-quality development of power girds.We forecast China power grid investment to reach over RMB3.8tn during 15th FYP vs. c.RMB2.8tn during 14th FYP. We believe the growth rate will be front-loaded to 1H of the15th FYP, with China grid investment growth at 10% in 2026E to RMB710-720bn andanother 7% in 2027E. of data centers and, thus, requires more power distribution equipment (transformers).We forecast 18% 2025-30 CAGR on Al-related power grid capex in China. TUHV Exhibit 7: UHV will likely represent 14% of China grid investment in2026EBreakdown of grid investment Growth rate of grid investment by categoryA Source: SGCC, BofA Global Research estimates Source: SGCC, BofA Global Research estimates In 2024/25,the new construction startpace of UHVDC lagged behind, with two(Gansu- Zhejiang, Shannxi-Anhui)/one (Tibet - Great Bay Area) UHVDC line starting construction.In 2026,wenow estimate the pace of UHV tendering and approval to accelerate giventhe grid curtailment pressure and forecast four UHVDC lines to be approved in 2026. Interms of investment, we estimate the growth rate of UHV investment to decelerate at18%/13%YoYin2026/27due to aslower pace of UHVDC approval inprevious years.Fo