[Electrical Equipment Stock Analysis] Dongfang Electric rose 7% yesterday, then fell back 2% today. Analysis: Optimistic about power equipment stocks. AI development and energy demand are expected to keep the power gap at least until 2030.

Power equipment stocks failed to build on the previous day’s gains. Dongfang Electric （01072） Last year’s results rose 31% more, along with an increased final dividend; after the share price rose 7.8% on Wednesday, it gave back more than 2% on Thursday. Shanghai Electric （02727） and Harbin Electric （01133） Last year’s profit jumped 60% and 58% respectively, and the share price also eased 2% to 4% on Thursday.

A securities analyst said in this newspaper’s video program that he is optimistic about the long-term investment trend in the power equipment industry. The reason is that AI development and growth in energy demand are expected to keep the electricity shortfall at least going through 2030. “With increased power generation demand, power generation companies naturally now need to purchase equipment earlier,” so the relevant stocks were driven higher over the past period. After the recent pullback, valuations are not considered particularly expensive at present. However, the price-to-earnings ratios of some individual stocks exceed 20 times, so there may be further chances for valuations to fall.

The analyst believes that the three major power equipment stocks had strong earnings momentum last year, and the growth is expected to be sustainable into 2026. Investors may consider making long-term arrangements when share prices pull back in the near term. He is more bullish on Dongfang Electric because the company’s business has multiple growth drivers. In particular, it has a high share in the nuclear power equipment sector, and its earnings growth also accelerated in the second half of last year, making it worth looking higher. Nuclear power-related stocks are also favored for China General Nuclear Power （01816） , as he believes earnings will help support the current valuations. He also likes another energy equipment stock, China Energy Engineering （03996） , saying its products help improve the stability of power supply.

After power equipment stocks saw a pullback from their highs in March, this year so far, Dongfang Electric’s share price has still accumulated gains of more than 43%, Harbin Electric has climbed more than 25%, China Energy Engineering has risen 21%, while Shanghai Electric has fallen cumulatively by more than 2%.

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