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On Wednesday, JPMorgan analyst Stephen Tsui upgraded Huaming Power Equipment (002270:CH) stock rating from Neutral to Overweight and increased the price target to RMB18.50, up from the previous RMB18.00. The upgrade reflects the analyst’s optimism about the company’s potential to gain market share in the global transformer industry, excluding China, where it currently holds less than 5%.
Tsui cited Huaming Power’s competitive pricing, which is estimated to be over 50% cheaper than that of its major competitors, as a key advantage for the company. This pricing strategy positions Huaming Power favorably to expand its market presence and capitalize on the expected growth in transformer capacity.
The analyst forecasts a surge in new orders starting in the second half of 2025, as over 800 units of large power transformer capacity are anticipated to come online globally between the second half of 2025 and 2026. This projection is based on JPMorgan’s estimates.
The demand for high-voltage transformers is projected to grow by a high single-digit percentage annually throughout the decade. This trend is likely to benefit Huaming Power’s export business significantly. The company’s export revenue is expected to increase from approximately RMB400 million in the 2024 estimate to around RMB600 million by the 2026 estimate.
Huaming Power Equipment’s stock upgrade by JPMorgan signals a positive outlook for the company’s growth and market share expansion in the coming years, driven by its competitive pricing and the anticipated increase in global transformer capacity.
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