Distribution switch control equipment manufacturing industry has a broad market space

As a basic industrial product of the national economy, distribution switch control equipment is widely used in the power industry. Since 2009, China's accumulated investment in power engineering construction has been maintained at more than 730 billion yuan. In 2016, the national electric power project construction completed a total investment of 884 billion yuan, an increase of 3.08% over the previous year, reaching the maximum in recent years. In 2017, the cumulative investment in the nationwide power engineering construction declined, reaching 801.4 billion yuan, a drop of 9.34%. Looking forward to the future, China's power construction investment scale is high, and the market space of the distribution switch control equipment manufacturing industry will continue to be maintained.

First, downstream application market demand expansion

Figure 1: Accumulated investment and year-on-year growth of national power project construction in 2009-2017 (unit: 100 million yuan, %)

Source: China Electricity Industry Prospective Industry Research Institute

The strong development of the national economy has brought tremendous development opportunities to the power distribution switch control equipment manufacturing industry. In particular, high-voltage switch control equipment, frame circuit breakers and molded case circuit breakers have been driven by the rapid growth of power generation equipment in recent years, and the production and sales have been significantly enlarged. . As of the end of 2017, the installed capacity of full-scale power generation equipment in the country reached 17.77 million kilowatts, an increase of 7.67% over the previous year, and the growth rate decreased by 0.54 percentage points from the previous year.

Figure 2: Capacity and growth of national full-caliber power generation equipment in 2007-2017 (unit: 10,000 kW, %)

Source: China Electricity Industry Prospective Industry Research Institute

In recent years, with the rapid development of China's economy, there has been a widespread shortage of electricity in the southeastern coastal areas. The long-standing problem of “re-issuance and light delivery” in China's power development has gradually emerged, highlighting the development of China's power industry. A weak link - the grid facilities are relatively inadequate. After 2006, the construction of power grids exceeded the development of power supply and became the main investment focus of power construction. The proportion of investment in power grids continues to rise, and the proportion of investment structure tends to be reasonable. It has improved the scale of China's power investment in recent years, the growth rate is too fast, and the proportion is too high. The power supply and the power grid have begun to coordinate and develop scientifically. At present, the UHV, distribution network and its new round of rural power grid upgrading and transformation projects have been fully launched, driving the grid investment to grow substantially. In 2017, the investment in power grid construction completed 531.5 billion yuan, down 2.14% year-on-year.

Chart 3: China's power grid investment scale and growth rate in 2009-2017 (unit: 100 million yuan, %)

Source: China Electricity Industry Prospective Industry Research Institute

Second, the industry market is gradually expanding

According to the data of the Prospective Industry Research Institute's "Production and Sales Demand and Investment Forecast Analysis Report of China's Distribution Switch Control Equipment Manufacturing Industry in 2018-2023", the sales revenue of China's power distribution switch control equipment industry in 2017 reached 666.57 billion yuan, a year-on-year increase of 1.58%. Looking forward to the future, China's power construction investment scale is high, and the market space of the power distribution switch control equipment manufacturing industry will continue to be maintained, and it is expected to continue to grow at a low speed.

Chart 4: 2012-2017 China's distribution switch control equipment industry sales revenue and year-on-year growth (unit: 100 million yuan,%)

Source: National Institute of Statistics, Prospective Industry Research Institute

Third, the smart grid, railway electrification construction is expected to drive the industry's development speed to rise

At present, the proportion of smart grid investment in China is relatively low, but with the advancement of grid intelligence, the proportion of intelligent investment in grid investment will be significantly improved. In the first phase of the smart grid (2009-2010), the total investment of the power grid was 551 billion yuan, and the intelligent investment was 34.1 billion yuan. The annual average intelligent investment was 17 billion yuan, accounting for 6.2% of the total investment of the power grid. The second phase ( 2011-2015) The total investment of the power grid is estimated to be 1.5 trillion yuan, the intelligent investment is 175 billion yuan, the annual average power grid investment is 35 billion yuan, accounting for 11.7% of the total investment; the third phase (2016-2020) total investment of the power grid is 1,400 billion yuan, intelligent investment is 175 billion yuan, and the annual average intelligent investment is 35 billion yuan, accounting for 12.5% ​​of the total investment.

Figure 5: Annual average investment scale of power grids at various stages (unit: 100 million yuan)

Source: Prospective Industry Research Institute

The average annual investment of intelligent investment during the “Twelfth Five-Year Plan” period is doubled in the first phase, and the proportion of investment in the power grid has also increased from 6.2% to 11.7%. With the development of smart grid construction, intelligent investment will increase significantly, and the proportion of secondary equipment investment will increase from less than 5% to 12%-15%; the demand for power distribution switch control equipment will expand again, which is expected to drive The growth rate of industry sales revenue rebounded.

Furthermore, according to the medium and long-term railway network plan, by 2020, China's railway operation mileage will be increased from 100,000 km to 120,000 km, and the total investment scale will be increased from 2 trillion yuan to 5 trillion yuan. The electrification rate has increased to 60%. Moreover, this round of railway electrification construction and transformation requires that the utilization rate and localization rate of domestically produced equipment will be increased from the original less than 10% to 70%, which will inevitably bring a large number of orders and good development opportunities to domestic distribution switch control equipment manufacturers. .