Leading power equipment companies see explosive growth—not just in the US! Europe is also facing a power shortage!
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Electricity is power!
Sieyuan Electric, the leading exporter of power equipment, released its 2025 performance report, surpassing market expectations. Both year-on-year and quarter-on-quarter results accelerated, once again validating the high growth and profitability of the industry's overseas expansion!
In the next 10 years, Europe needs €3 trillion in investment to upgrade its power grid, while the US is expected to invest $700 billion before 2030. Is the journey of Chinese power equipment companies just beginning? Which companies in segmented sectors have competitive power in this supercycle?
1. What happened? Industry leader's breakout performance
Electricity is power!
Sieyuan Electric, one of the leading export companies in power equipment, yesterday released its 2025 performance, exceeding market expectations, and showing signs of acceleration both year-on-year and quarter-on-quarter. The stock hit its daily limit today.
Let's look at the company's specific business.
The company expects to achieve revenue of 21.205 billion yuan in 2025, up 37% YoY, and net profit attributable to the parent company of 3.163 billion yuan, up 54% YoY. Net profit after deductions: 2.958 billion yuan, up 58% YoY. For Q4 2025, revenue is expected at 7.378 billion yuan, up 46% YoY and 40% QoQ; net profit attributable to parent at 997 million yuan, up 79% YoY and 18% QoQ; net profit after deductions at 922 million yuan, up 95% YoY and 15% QoQ. Overseas new market clients broke through smoothly; performance exceeded market expectations.
Benefiting from continued breakthroughs in overseas business, the company's profitability is improving. In 2025, the company's net margin attributable to parent is 14.92%, up 1.66 percentage points YoY. Net margin after exclusions is 13.95%, up 1.80 percentage points YoY. In Q4 2025, net margin is 13.51%, up 2.47 percentage points YoY, and net margin after exclusions is 12.50%, up 3.13 percentage points YoY. The company's profitability improves YoY every quarter, and the rate of improvement is increasing. With delivery of orders for high-voltage power transformers and tank-type circuit breakers in the North American market, the company's profit margin is expected to further rise.
From a business logic perspective, the company's domestic grid expansion business develops core products like SSC and grid-forming energy storage, becoming a single champion in segmented areas. Its international business is booming. In 2025, overseas orders are expected to grow over 50% YoY, with highlights in North American market breakthroughs. In the global grid “supercycle” and wave of AI infrastructure construction, the company has the opportunity to become a first-tier international power equipment supplier.
2. Why is it important? Supercycle milestone
In the next five years, global energy transition and the wave of AI will drive a “China power equipment premium” supercycle. This performance report by Sieyuan Electric is a milestone in the supercycle, worth close attention to business details. Currently, the global power system is experiencing its most profound paradigm shift since the era of Edison. In its latest research, Goldman Sachs points out that the global grid equipment market faces "structural shortages". These shortages are fueled not only by replacement needs in Western countries’ aging grids, but also by explosive growth in AI data centers (AIDC) requiring far more electricity. Against this backdrop, Chinese power equipment companies, relying on extremely high delivery efficiency, full industry-chain cost advantages, and leading UHV (Ultra High Voltage) technology, are transforming from “domestic suppliers” into “global challengers.”
Beyond the well-known US grid market, Europe is nurturing a huge, uniquely structured incremental market relatively open to China’s supply chain. Under the dual pressures of Europe’s “AI computing catch-up” and “deep decarbonization of the energy mix”, a unique demand for offshore wind and cross-border grid interconnection equipment is emerging. Chinese leading power equipment companies, with cost, technology iteration speed, and large project delivery experience, will see structural growth opportunities in this strategic European market, realizing a new globalized balance.
Current market conditions in Europe are as follows:
① Construction accelerating, demand surging: Europe, the world's third largest data center market, is catching up. The EU launched the “InvestAI” plan, aiming to triple data center capacity. In 2024, investment in European data centers hit a historic high of $69 billion, driven mainly by North American cloud service giants (CSPs). CBRE predicts that in 2025 European data center supply will reach 871MW, a 34% YoY increase.
② Power bottlenecks are obvious: Data centers are “electricity tigers.” In core FLAP-D hub cities—Frankfurt, London, Amsterdam, Paris, Dublin—data centers consume 33%-42% of electricity, and Dublin as much as 80%. ICIS estimates that by 2030 European data centers will increase their power share from 3% to 4.5%, with growth contribution exceeding electric vehicles. Existing grids, especially in these core cities, are unable to meet explosive demand because of limited capacity and long queuing times for access (over 8 years).
(Market performance of European power operators and submarine cable manufacturers)
Europe faces dual pressure: green supply constraints and cost challenges—
① Natural gas receding, renewables take the lead: Unlike the US, Europe's power transition is more decisive. In 2024, EU gas-fired power dropped for the fifth year in a row; renewables now make up 47% of generation. High and volatile gas prices mean relying on gas is neither economical nor sustainable for new demand.
② Wind becomes the mainstay, especially offshore wind: Wind is the EU's second largest power source. More importantly, in PPAs signed by data center operators to meet net zero commitments and government mandates (e.g., Germany requiring data centers to use 100% renewables from 2027), wind accounts for over 50%. Offshore wind makes up the bulk of data center PPA construction capacity due to its stable output and large scale, fitting large data centers' demand profiles closely.
③ Geographic center shift and Nordic rise: Due to grid saturation and high electricity prices in FLAP-D, data center construction is shifting north to the Nordics. In the first three quarters of 2025, 57% of European AI data center agreements came from Nordic countries.
Europe’s chosen path to address these dilemmas is precisely the field in which Chinese companies are globally competitive, forming two clear investment themes:
Main line one: Deep overseas opportunities in the offshore wind industry chain
Europe is a birthplace and largest market for offshore wind. To meet renewable goals, especially to provide green electricity for the northward-moving data centers, major offshore wind projects are planned in the North Sea, Baltic Sea, etc. The EU aims for 60GW offshore wind by 2030, requiring thousands of large turbines and supporting infrastructure.
China’s industry enjoys competitive advantages:
① Turbines and core components: Chinese manufacturers like Mingyang Smart have rapidly advanced in large scale, typhoon resistance, and deep-sea technology, now competitive with international giants, with clear cost and delivery advantages.
② Offshore engineering base construction: Dajin Heavy Industry, Haili Wind Power and others lead in production capacity for towers, jackets, piles, and have supplied top European projects (e.g., UK Moray West).
③ Subsea cables: One of the most technically demanding segments. Leaders like Orient Cable have mastered ultra-high voltage AC/DC subsea cables, received international certification, and secured orders in Europe and Southeast Asia. The need for high-voltage subsea cables for interconnections and offshore wind is huge in Europe, and China may break the long-standing monopoly held by Prysmian, Nexans, etc.
Main line two: Equipment demand for grid upgrades and cross-border interconnection
To bring cheap green power from the Nordics (hydro, wind) to load centers in Western/Southern Europe and boost grid resilience, mass upgrades and expansion are needed—especially for cross-border interconnections. According to ENTSO-E, cross-border transmission capacity needs to rise from 126GW to 161GW by 2030. “Offshore corridors” in the North Sea and Baltic will account for 30% of growth.
China’s industry enjoys competitive advantages:
① Primary equipment for transmission and transformation: Sieyuan Electric, Huaming Equipment, China XD, TBEA, etc., are mature in high/ultra-high voltage transformers and GIS, widely used in complex domestic grid projects, capable of providing advanced equipment for Europe’s high-voltage projects.
② Flexible DC transmission (VSC-HVDC): The optimal solution for long-distance, large-capacity offshore wind grid connection and grid asynchrony. Chinese companies, with engineering experience from State Grid and Southern Grid, have mastered full-cycle design, manufacturing, and commissioning—one of few able to offer full solutions.
③ Smart distribution equipment: To support distributed energy access and demand-side management, Europe needs to upgrade its distribution network. Companies like Jinpan (dry transformers), Igor (high-frequency magnetic components), etc., are competitive in energy efficiency and intelligence and already supply to Europe’s high-end market.
Europe’s market is more open, focusing more on project cost, reliability, and delivery efficiency, providing space for China’s cost-effective and quality products.
3. What to watch next? Segments and industry leader value logic
Why can Chinese manufacturing enjoy this new premium?
① Delivery cycle: The “time dimension” of core competitiveness
Goldman Sachs' research on Sieyuan Electric finds Chinese leaders deliver transformers in about 6-9 months, while global rivals (Hitachi Energy, Siemens Energy, GE Vernova) have stretched delivery cycles to 2-3 years. In a race-against-the-clock environment for AIDC construction, this delivery gap is a real competitive barrier.
② Full industry chain vertical integration and cost premium
China’s power equipment industry has a complete chain—from raw materials (grain-oriented silicon steel, copper) to key parts (tap changers, bushings, insulation) to system integration. Amid global inflation and labor shortage, Chinese manufacturing costs are 30%-40% lower than comparable Western products, while still maintaining high gross margins—demonstrating strong cost-passing power.
In the past, the market thought power equipment was a low-margin manufacturing sector, but Sieyuan Electric’s financials are disproving this view. As overseas orders rise (overseas gross margin is usually 10-15 points higher than domestic), leading domestic companies’ overall gross margin is moving into an uptrend. Let’s look at which segment leaders have windows for industry windfalls:
① Core segment of transmission and transformation: transformers and switchgear
Value logic: Transformers are the “heart” of the grid. With global shortages, their premium potential is the highest.
② Key “choke point” of transformers: tap changers
Value logic: Tap changers (OLTC) are the critical adjustment parts for transformers, with extremely high technological barriers—only a handful of companies globally master them.
Industry leaders have over 90% share in China and are second only to Germany’s MR globally. The business logic is akin to “razor and blade”; maintenance and replacement parts generate high cashflow and profits.
③ Ultra-high voltage (UHV) and grid brain: secondary equipment and turnkey capability
Value logic: UHV is China’s global “golden business card”, key to resolving energy mismatch.
Leader NARI is the top player in grid digitization and dispatch. Its major advantage is being the absolute backbone for national grid, with monopoly tech in dispatch, substation automation, and HVDC protection. As construction of new-type power systems accelerate, demand for “software-defined” and “digital” functions in the grid is surging. NARI benefits from booming UHV tenders at home and has irreplaceable value in overseas high-end integrated/control system bids.
④ Distribution and AIDC-specific equipment: new overseas directions
Value logic: As distribution grids shift from “one-way” to “two-way interactive” flows, upgrade opportunities are vast.
Overseas emerging market grid buildout is moving from zero to one; Haixing Power expanded from smart meters into microgrids, storage and EPC projects, building a closed loop of “product + service”. Industry leaders have capacity and delivery advantages overseas.
In summary, the power equipment industry is currently in a “low debt, high cash, full orderbook” state. Compared to US peers (e.g., Eaton, Schneider) with PEs of 30–40×, China’s industry leaders remain at 15–25×. As global capital embraces the “power equipment supercycle”, Chinese companies still have windfalls ahead. As high-margin overseas orders (usually 10–15% higher than domestic) peak in delivery in 2026–2027, relevant industry leaders’ performance may see continued compound growth.
Risk Warning & DisclaimerThe market has risks; investment requires caution. This article does not constitute individual investment advice, nor does it take into account the particular investment objectives, financial condition, or needs of specific users. Users should consider whether any opinions, views, or conclusions herein fit their own circumstances. Investing based on this is at your own risk.
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