Core Insights - Solid-State Transformers (SST) are leading innovations in power transmission and distribution, utilizing power electronics and high-frequency electromagnetic induction principles [1][2] - China has established a well-defined vertical industry chain for SST, with upstream focusing on wide bandgap semiconductors and soft magnetic materials, midstream on modular manufacturing, and downstream on applications in smart grids and data centers [1][6] - The SST industry is transitioning from technology validation to large-scale commercialization, driven by AI computing power and energy transition, despite facing technical bottlenecks [1][12] Industry Overview - SST, also known as Power Electronic Transformer (PET), replaces traditional transformer components with semiconductor devices to achieve voltage transformation and electrical isolation [2][3] - The main types of SST include AC-SST, DC-SST, and Hybrid-SST, each serving different applications from smart grids to data centers [4][5] Cost Structure - The cost structure of SST is heavily concentrated in upstream components, with power electronic devices accounting for approximately 40% of costs, followed by high-frequency transformers, structural cooling, and control systems each at about 15% [8][10] Market Dynamics - The demand for SST is rapidly diversifying, primarily driven by global energy transition and digital infrastructure development, with AI data centers being the largest application segment [11][12] - The Chinese silicon carbide (SiC) market is projected to grow from approximately 1.6 billion yuan in 2024 to 1.91 billion yuan in 2025, indicating strong growth potential [10] Development Status - The SST industry in China is at a critical stage of transitioning from technology validation to commercialization, with challenges including high costs and lack of standards [12][13] - Major companies like China Xidian and TBEA are leading the market, with significant shares in high-end applications [15] Future Trends - The industry is expected to see breakthroughs in material performance and technology, leading to cost reductions and performance improvements [16] - Application scenarios are anticipated to expand from data centers and smart grids to electric vehicle charging and industrial applications [17] - The competitive landscape will evolve, emphasizing technology, capital, and supply chain capabilities, with a focus on domestic material sourcing [18]

Core Insights - Sifang Co., Ltd. experienced a stock decline of 1.23% on November 17, with a trading volume of 817 million yuan, indicating a negative market sentiment [1] - The company reported a financing net buy of -24.03 million yuan on the same day, suggesting a higher level of selling pressure compared to buying [1] - As of September 30, 2025, Sifang Co., Ltd. achieved a revenue of 6.132 billion yuan, reflecting a year-on-year growth of 20.39%, and a net profit of 704 million yuan, up 15.57% year-on-year [2] Financing and Margin Trading - On November 17, Sifang Co., Ltd. had a financing buy amount of 67.68 million yuan, with a total financing balance of 870 million yuan, accounting for 3.77% of its market capitalization [1] - The financing balance is above the 90th percentile of the past year, indicating a high level of leverage [1] - The company also had a margin trading balance of 1.1928 million yuan, with a short selling volume of 42,000 shares on the same day [1] Shareholder and Dividend Information - As of September 30, 2025, the number of shareholders decreased by 14.71% to 33,800, while the average number of circulating shares per person increased by 17.34% to 24,274 shares [2] - Since its A-share listing, Sifang Co., Ltd. has distributed a total of 4 billion yuan in dividends, with 1.599 billion yuan distributed in the last three years [3] - The top ten circulating shareholders include significant institutional investors, with changes in holdings indicating varying levels of confidence among major stakeholders [3]

Core Viewpoint - Solid State Transformers (SST) are expected to become the ultimate solution for AIDC power management due to their high efficiency and low footprint, with Delta's 800V SST system reaching MW-level capacity and Nvidia planning full deployment of its 800V high-voltage direct current architecture by 2027 [1][2]. Group 1: Industry Trends - Data centers are moving towards higher power levels, with power supply system efficiency becoming crucial as single cabinet power has increased from 8KW to over 30KW, and Nvidia's single cabinet power reaching 120KW [2]. - Traditional DC distribution methods are facing bottlenecks due to space limitations, copper overload, and low conversion efficiency, necessitating a new power supply architecture [2]. - In typical AIDC projects, power-related equipment costs account for nearly 50% of total costs, indicating high value and continuous iteration [2]. Group 2: SST Advantages - SST achieves high efficiency by replacing traditional transformers with high-frequency power electronics, allowing for system efficiencies of up to 98% [3]. - SST's modular design significantly reduces equipment size by approximately 40%, integrating rectification, conversion, and inversion processes [3]. Group 3: Market Opportunities - The 800V HVDC is seen as a starting point for SST penetration, offering active flexibility and green electricity adaptability, which can open broader application markets [4]. - SST can actively control power quality, addressing grid disturbances and load fluctuations, while also supporting bi-directional power flow [4]. - The new grid architecture using SST can accept 50%-70% renewable energy, improving performance by 1.3-2 times compared to traditional grid structures [4]. Group 4: Related Companies - Key players in SST systems include Sifang Co., Ltd. (601126.SH), China XD Electric (601179.SH), Jinpan Technology (688676.SH), and Xinte Electric (301120.SZ) [5]. - Companies involved in SST materials include Keli (002782.SZ) and Yunlu Co., Ltd. (688190.SH), with products covering a wide frequency range [5].

Investment Rating - The investment rating for the company is "Buy" and is maintained [6] Core Views - The company reported a revenue of 6.13 billion yuan for the first three quarters of 2025, representing a year-on-year increase of 20.4%. The net profit attributable to the parent company was 700 million yuan, up 15.6% year-on-year, while the net profit excluding non-recurring items was 680 million yuan, an increase of 14.5% year-on-year [2][4] - In Q3 2025 alone, the company achieved a revenue of 2.11 billion yuan, reflecting a year-on-year growth of 30.6%, although it saw a quarter-on-quarter decline of 3.7%. The net profit for the same quarter was 230 million yuan, up 22.8% year-on-year and down 2.9% quarter-on-quarter [2][4] Summary by Sections Financial Performance - For the first three quarters of 2025, the company's gross profit margin was 30.77%, a decrease of 2.93 percentage points year-on-year. In Q3 2025, the gross profit margin was 31.24%, down 2.97 percentage points year-on-year but up 1.83 percentage points quarter-on-quarter [10] - The total operating expenses for the first three quarters of 2025 accounted for 17.64% of revenue, a decrease of 2.53 percentage points year-on-year. In Q3 2025, the expense ratio was 17.71%, down 4.76% year-on-year [10] Business Development - The company is expanding its non-grid business, which is expected to contribute significantly to revenue growth. The new products and technologies are beginning to penetrate the market more rapidly [10] - The company anticipates that the net profit attributable to the parent company for 2025 could reach 844 million yuan, corresponding to a price-to-earnings ratio of approximately 28 times [10]

Core Viewpoint - The company has obtained multiple software and hardware invention patents in the SST technology direction, including medium-frequency isolation technology, and aims to maintain its technological leadership and strengthen its patent barriers [1] Group 1 - The company has received authorization for several patents related to SST technology [1] - The focus on maintaining a technological edge indicates a strategic commitment to innovation [1] - The emphasis on building a strong patent barrier suggests a proactive approach to competitive positioning in the market [1]

Core Viewpoint - The company has successfully developed a new "medium-frequency isolation single-phase topology" technology in collaboration with Tsinghua University, which reduces both core loss and switching loss, breaking through the efficiency ceiling of traditional high-frequency topologies. This represents a significant leap from "application optimization" to "underlying architecture innovation" in SST technology [1]. Group 1 - The company has obtained multiple software and hardware invention patents in the SST technology field, including the medium-frequency isolation technology [1]. - The company aims to maintain its technological leadership and strengthen its patent barriers to create a robust competitive advantage [1].

Market Performance - The grid equipment sector increased by 1.56% compared to the previous trading day, with Moen Electric leading the gains [1] - The Shanghai Composite Index closed at 4029.5, up 0.73%, while the Shenzhen Component Index closed at 13476.52, up 1.78% [1] Stock Performance - Moen Electric (002451) closed at 15.19, up 9.99% with a trading volume of 1.1685 million shares and a transaction value of 1.731 billion [1] - Shun Na Co. (000533) closed at 10.37, up 9.97% with a trading volume of 1.1758 million shares and a transaction value of 1.169 billion [1] - Zhongli Group (002309) closed at 4.22, up 9.90% with a trading volume of 2.5457 million shares and a transaction value of 1.066 billion [1] - Other notable performers include Xidian New Energy (603312) up 8.43% and Butong Line Micro (605196) up 7.75% [1] Capital Flow - The grid equipment sector saw a net inflow of 322 million from institutional investors, while retail investors experienced a net inflow of 70.6355 million [2][3] - Notable net inflows from major stocks include Shun Na Co. with 303 million and Si Yuan Electric (002028) with 137 million [3] Individual Stock Capital Flow - Shun Na Co. had a major net inflow of 303 million, accounting for 25.90% of its total capital flow [3] - Other stocks with significant net inflows include TBEA (600089) with 22 million and Zheng Tai Electric (601877) with 14.6 million [3] - Conversely, retail investors showed a net outflow in several stocks, including TBEA and Zheng Tai Electric, indicating a divergence in investor sentiment [3]

Core Viewpoint - On November 13, three listed companies will have their restricted shares unlocked, with a total market value of approximately 210 million yuan [1] Group 1: Company Specifics - Sifang Co., Ltd. (Stock Code: 601126) will unlock 5.7162 million shares under equity incentive restrictions [1] - Tianyoude Liquor (Stock Code: 002646) will unlock 2.832 million shares under equity incentive restrictions [1] - China Post Technology (Stock Code: 688648) will unlock 3.4 million shares without specified restrictions [1]

Core Insights - The A-share market's power grid equipment sector surged by 12.45% in the first trading week of November, driven by the dual narratives of AI catalysis and energy transformation [1][2] - The sector's performance raises questions about the underlying earnings support and growth potential amid the AI-driven electricity demand surge [1] Market Performance - The Shenwan Power Grid Equipment Index rose by 12.46% over the week, reaching 5872.41 points, with a year-to-date increase of 43.11%, marking the highest level since June 2015 [2] - 16 stocks within the power grid equipment sector reached historical highs, with notable performers including Zhongneng Electric, Moen Electric, and Tebian Electric [2] Industry Dynamics - Since May, trading activity in the power grid equipment sector has increased, with the index showing seven consecutive months of gains, primarily due to AI-related electricity shortages [3] - The U.S. Energy Information Administration (EIA) predicts that electricity consumption will reach record highs in 2025 and 2026, driven by AI and data center expansion [3] - Goldman Sachs forecasts a 175% increase in global electricity demand from AI data centers by 2030 compared to 2023 [3] Investment Trends - The State Grid Corporation of China reported over 420 billion yuan in fixed asset investments from January to September, a year-on-year increase of 8.1% [3] - Major projects in high-voltage direct current (HVDC) engineering are underway, with total investments expected to exceed 650 billion yuan in 2025 [3] Financial Performance - The power grid equipment sector reported a revenue of 263.7 billion yuan and a net profit of 22.2 billion yuan in the first three quarters, reflecting year-on-year growth of 12% and 14%, respectively [4][5] - Significant performance disparities exist within the sector, with non-UHV main networks showing a net profit growth of 38.2%, while distribution and meter companies faced declines [5] Export Growth - China's transformer exports reached 6.22 billion USD from January to September, a 39% increase year-on-year, driven by demand from Europe and North America [5] - High-voltage switch exports also grew by 31.2%, with a notable monthly increase of 55.7% in September [5] Institutional Investment - Public fund holdings in the power grid equipment sector decreased slightly in the third quarter, with a total market value share of 0.6% [6] - Institutional investors are favoring companies with strong overseas demand and those involved in data center business growth, such as Siyuan Electric and Tebian Electric [6] Technological Advancements - Companies like Jinpan Technology are focusing on solid-state transformer (SST) technology, which is seen as a suitable solution for future energy demands [6][7] - Jinpan Technology has developed an SST prototype for HVDC applications, with plans for further testing and certification [7]

Investment Rating - The report maintains a "Buy" rating for the company with a target price of RMB 35.70 [7]. Core Insights - The company aims to achieve new order targets exceeding RMB 10 billion for the year, with significant growth expected in the renewable energy sector and international business [1][2]. - The SST (Solid State Transformer) business is highlighted as a key area of growth, with the company providing a full range of critical equipment and solutions for data center power distribution systems [3][5]. Summary by Sections New Orders - In 2024, the new order amount is projected to be RMB 8.5 billion, with a target of exceeding RMB 10 billion in 2025, representing a year-on-year growth rate of approximately 20%. The growth rates for different sectors are: over 15% for the grid sector, around 30% for the renewable energy sector, and over 10% for traditional power generation and industrial sectors [2]. Renewable Energy Business - The renewable energy business is expected to maintain rapid growth due to several factors, including the impact of policy changes and the expansion of product offerings. The company is one of the candidates for a framework agreement for distributed phase-shifting transformers with Huaneng Group [2][4]. International Business - The strategic adjustments in international business are showing results, with overseas orders expected to reach RMB 500-600 million for the year, up from RMB 370 million in 2024. The company has already secured RMB 410 million in new orders in the first three quarters of 2025, a significant increase from RMB 150 million in the same period last year [2]. SST Business - The company offers a range of SST products with high efficiency (up to 99%) and reliability (99.99%). It has several benchmark projects demonstrating its capabilities in providing critical equipment and solutions for data center power distribution systems [3][5]. New Products - The company has launched the first energy-based SVG in Xinjiang, which is designed to support high proportions of renewable energy integration and enhance grid stability [4]. Profit Forecast and Valuation - The company’s net profit is projected to be RMB 845.59 million, RMB 988.59 million, and RMB 1.15 billion for the years 2025, 2026, and 2027, respectively, with a compound annual growth rate of 17.14%. The target price is based on a 30x PE ratio for 2026 [5][11].