东方电气（1072.HK）新订单增长良好；更多燃气轮机销往数据中心

Dongfang Electric (1072.HK) Decent New Order Growth; More Gas Turbine Sales to Data Centers CITI'S TAKE We hosted an investor call with Dongfang Electric (‘DF’) on 9 Jul. Thecompany has had steady operational performance year to date. Its neworders were +10% yoy in 5M26, in line with its full-year target. Order backlogwas +7% to Rmb150bn by end 5M26. Our 2026-28E net profits are cut 1-6% on more prudent revenue and margin assumptions. Our DF TP is -44%to HK$30/share based on 15x 2027E PER. We attribute its share pricepullback in recent months as likely owing to more realistic revenuerealization from its gas turbine export (Rmb2bn pa or <3% total revenue in2026-27E and Rmb6bn or 7% of total revenue in 2028E). DF is our top pickin the PRC power plant equipment sector with the most diversified productmix. Its 11.2x 2027E PER is not high. We transfer coverage of DF to PierreLau from Bella Tian. Price (09 Jul 26 16:10)HK$22.46Target priceHK$30.00↓from HK$54.00Expected share price return33.6%Expected dividend yield3.6%Expected total return37.1%Market CapHK$77,675MUS$9,904M Rising gas turbine production capacity amid high demand—DF has gas turbineproduction capacity of 50MW each of 10-12 units pa. The production capacitywould rise to 30 units by end 2027E after Ph.1 expansion at capex of Rmb760m. Ph.2expansion is in planning. The company has orders on hand of 20 sets for gas turbinegenerators of 50MW each so that its gas turbine production capacity would berunning at full utilization in 2025-26E with 12-month lead time. Getting new orders for gas turbine exports for data centers—DF signed neworders for sales of 10 units at Rmb150-200m each in 1H26 expecting to make GPmargin >30%. The products are for data centers in Canada with the orders placed bytheir representatives in mainland China; orders for another 10 units could be signedfrom the same customer in 2H26E. Inquiries from the US data centers could rendermore new orders ahead, pending UL certification from the US (while Canadiancertification has already been secured). DF also provides after-sale services as wellas repairs & maintenance for these exports. DF sold its 50MW gas turbine toKazakhstan previously. Decent product quality—The energy conversion efficiency of DF’s 50MW gas turbine is64%, 2ppts below those made by Siemens. DF views its gas turbine sales as competitivein terms of pricing and delivery time. 80-90% of gas turbine sales proceeds are receivedon product delivery. Meanwhile, DF’s capacity expansion to make 200MW gas turbinesunder cooperation with Mitsubishi Heavy (7011 JT, Buy) is in planning stage. Suchpotential product could be made in 2028E and used in the domestic market. PRC Power Plant & Grid Equipment Sector Pierre Lau, CFAAC+852-2501-2716pierre.lau@citi.com Bella Tianbella.tian@citi.com Satisfactory Business Performance We hosted an investor call with Dongfang Electric (‘DF’) on 9 Jul. The company hashad steady operational performance year to date. Its new orders were up 10% yoy in5M26, in line with its full-year target to rise the same extent. Its new orders wereRmb117.2bn in 2025, including Rmb5.4bn or 4.6% from overseas. Order backlogwas +7% to Rmb150bn by end 5M26, from Rmb140bn by end 2025. Revenue andprofit growth were on-track year to date. More Gas Turbine Sales to Overseas Data Centers DF has gas turbine production capacity of 50MW each of 10-12 units pa. Theproduction capacity would rise to 30 units by end 2027E after Ph.1 expansion atcapex of Rmb760m. Ph.2 expansion is in planning. The company has orders onhand of 20 sets for gas turbine generators of 50MW each so that its gas turbineproduction capacity will be running at full utilization in 2025-26E with 12-monthlead time. New orders were signed in 1H26 for sales of 10 unitsat Rmb150-200m eachmaking GP margin >30% to data centers in Canada placed by their representativesin mainland China; orders for another 10 units could be signed from the samecustomer in 2H26E. Inquiries from the US data centers could render more neworders ahead, pending UL certification from the US (while Canadian certificationhas already been secured). DF also provides after-sale services as well as repairs &maintenance for these exports. It sold its 50MW gas turbine to Kazakhstanpreviously. The energy conversion efficiency of DF’s 50MW gas turbine is 64%,2ppts belowthose made by Siemens. DF views its gas turbine sales as competitive in terms ofpricing and delivery time. 80-90% of gas turbine sales proceeds are received onproduct delivery. DF’s capacity expansion to make 200MW gas turbines under cooperation withMitsubishi Heavy(7011 JT, Buy) is in planning. Such potential product probablycould be made in 2028E and used in the domestic market. Revenue Rise of Hydropower Equipment from Pump Storage DF forecasts its revenue from hydropower equipment sales to rise to Rmb10bn in2029/30E(comprising 80% from pump storage facilities), from Rmb3.9bn in2025. Its orders for hydropower equipment ke