XJ Electric Co., Ltd. (000400)

Equity Research Report　|　Industry: Electrical Machinery and Equipment Manufacturing, Power Equipment　|　Report Date: September 13, 2026　|　As of the close on September 11, 2026; certain technical indicators use data retrieved as of September 11, 2026 at 06:50 GMT, while the Bollinger Bands reflect the latest available calculation around September 10, 2026. Some data points have different update times.

This report was automatically compiled by AI based on publicly available information and is for reference only. It does not constitute investment advice.

1. Executive Summary

XJ Electric saw “largely stable revenue but a significant profit decline” in the first half of 2026: operating revenue reached RMB 6.525 billion, up 1.21% year on year; net profit attributable to the parent was RMB 416 million, down 34.40% year on year; recurring net profit attributable to the parent was RMB 403 million, down 34.73% year on year; comprehensive gross margin was approximately 19.90%; and net cash flow from operating activities was negative RMB 311 million. Profit pressure was mainly related to the concentrated delivery of low-priced smart-meter and certain distribution-network orders, declining product gross margins, slower revenue recognition for DC transmission projects, and higher credit impairment losses. It is not yet possible to conclude that full-year results have entered a turnaround phase.

The company’s core business remains concentrated in smart substation and distribution systems, smart meters, and smart medium-voltage power supply and consumption equipment. These three businesses together accounted for approximately 74.7% of core operating revenue in 2025. Smart substation and distribution systems generated revenue of RMB 4.107 billion, with a gross margin of 29.52%; smart meters generated revenue of RMB 3.946 billion, with a gross margin of 21.16%; and smart medium-voltage power supply and consumption equipment generated revenue of RMB 3.150 billion, with a gross margin of 22.07%. The company has turnkey capabilities for UHV DC and VSC-HVDC equipment. Its winning bids for the first four batches of State Grid UHV projects in 2026 exceeded RMB 2.6 billion. However, revenue recognition for these orders still depends on project delivery, acceptance, settlement, and contractual terms.

In 2025, the company recorded operating revenue of RMB 14.992 billion, down 12.27% year on year; net profit attributable to the parent was RMB 1.167 billion, up 4.50% year on year; and comprehensive gross margin rose to 23.36%. The improvement was mainly driven by the contraction of low-margin EPC and systems-integration businesses, product-mix optimization, and better cost management. However, gross margin declined significantly in the first half of 2026, indicating that the delivery of low-priced orders and the recognition schedule of high-margin DC transmission projects remain key drivers of earnings volatility. Customer concentration is relatively high: the top five customers accounted for 68.37% of sales in 2025, while State Grid and its subsidiaries accounted for 51.89% of operating revenue.

As of September 11, 2026, the company’s share price was RMB 20.64, below multiple short-, medium-, and long-term moving averages. MACD was below the zero line, and cumulative net outflows from major funds over the past 10 trading days were approximately RMB 39.93 million. Technical and fund-flow indicators remained weak. RSI14 was approximately 29.47, and the share price was below the recent lower Bollinger Band, indicating some oversold characteristics but insufficient evidence of a trend reversal. Based on a market capitalization of approximately RMB 21.0 billion, the forward-looking P/E ratio was approximately 22x. The valuation depends on earnings recovering and resuming growth after 2027 in line with institutional forecasts.

2. Company Overview

2.1 Basic Information

2.2 Core Businesses and Product Portfolio

• Smart substation and distribution systems: Including relay protection systems, substation monitoring systems, smart-substation systems, industrial control systems, smart primary-secondary integrated equipment, distribution terminals, and distribution-automation systems. Revenue in 2025 was RMB 4.107 billion, accounting for approximately 27.39% of core operating revenue, with a gross margin of 29.52%.
• DC transmission systems: Including DC transmission converter valves, DC measurement equipment, DC transmission control and protection systems, DC simulation systems, digital converter stations, and converter-valve operation and maintenance services. The company has turnkey and overall-solution capabilities for ±1,100 kV and below UHV DC transmission equipment and ±800 kV and below VSC-HVDC transmission equipment. Revenue in 2025 was RMB 685 million, accounting for approximately 4.57% of core operating revenue; its gross margin did not meet the 10% revenue threshold for separate disclosure by the company.
• Smart meters: Including smart meters, smart electricity-consumption terminals, electricity-usage collection systems, miniature circuit breakers, and IoT switches. Revenue in 2025 was RMB 3.946 billion, accounting for approximately 26.32% of core operating revenue, with a gross margin of 21.16%. The company disclosed that it ranked first overall in market share in the State Grid smart-meter metering segment in 2025, but did not disclose a specific market-share percentage.
• Smart medium-voltage power supply and consumption equipment: Including switches, transformers, reactors, arc-suppression-coil grounding equipment, and ring-main units. Revenue in 2025 was RMB 3.150 billion, accounting for approximately 21.01% of core operating revenue, with a gross margin of 22.07%.
• New energy and systems integration: Covering renewable-energy generation, energy storage, grid-forming PCS, hydrogen-production power supplies, and engineering consulting, design, and systems integration. Revenue in 2025 was RMB 1.421 billion, accounting for approximately 9.48% of core operating revenue, with a gross margin of 13.80%. Revenue in this segment declined significantly year on year, and project recognition schedules and project-based business volatility remain relatively high.
• Charging and battery-swapping equipment and other manufacturing services: Including AC/DC charging piles, liquid-cooled supercharging piles, power supplies, as well as manufacturing services for chassis, cabinets, outdoor enclosures, switching mechanisms, electronic-panel assembly, and surface coating. Revenue in 2025 was RMB 1.120 billion, accounting for approximately 7.47% of core operating revenue and up 4.26% year on year; its gross margin did not meet the 10% revenue threshold for separate disclosure by the company.

2.3 Position in the Industry Chain and Cost-Profit Structure

XJ Electric is positioned in the upper-middle portion of the power-equipment industry chain, with operations covering transmission and distribution equipment, power automation, smart metering, and new-energy and energy-storage systems integration. Smart substation and distribution systems, smart meters, and smart medium-voltage power supply and consumption equipment together accounted for approximately 74.7% of core operating revenue in 2025 and form the company’s revenue base. Although DC transmission systems account for a relatively small share of revenue, they have high technical barriers and strategic importance.

• The company uses a centralized procurement model. Major purchases include primary-equipment components, electronic components, secondary-equipment components, steel, nonferrous metals, nonmetallic materials, production lines, R&D and testing equipment, and related services. For converter valves, protection and control systems, and smart meters, electronic components, power semiconductors, control boards, communications components, and structural parts are also important cost items. However, the company has not disclosed the precise cost breakdown for each material category.
• Procurement from the top five suppliers in 2025 amounted to RMB 2.376 billion, or 13.25% of total annual procurement. Procurement from China Electrical Equipment Group and its subsidiaries amounted to RMB 1.311 billion, or 7.31% of total procurement. Supplier concentration is lower than customer concentration, and dependence on any single external supplier is relatively limited.
• The company lacks complete pricing power over upstream costs such as steel, nonferrous metals, electronic components, and power semiconductors. Overall, it follows a manufacturing model in which technical products command a certain premium while the company remains partly a price taker for raw materials. The specific proportion of material costs has not been disclosed, so the contribution of individual cost items cannot be estimated.
• Major customers include State Grid and its subsidiaries, China Electrical Equipment Group and its subsidiaries, power-generation companies, industrial customers in petrochemicals, coal, and metallurgy, rail-transit customers, new-energy, energy-storage, and charging and battery-swapping customers, and overseas power customers.
• Sales to the top five customers in 2025 totaled RMB 10.250 billion, or 68.37% of annual sales. Sales to State Grid and its subsidiaries totaled RMB 7.779 billion, or 51.89% of operating revenue, while sales to China Electrical Equipment Group and its subsidiaries totaled RMB 1.159 billion, or 7.73% of operating revenue. These figures are based on 2025 data. Except for State Grid and China Electrical Equipment Group, the other top-five customers were anonymized, making it impossible to further assess their specific industries or individual credit quality.
• Orders are obtained mainly through centralized tenders, framework procurement, and project tenders. Customers such as State Grid have strong bargaining power over product pricing, delivery, quality, and operating reliability. Standard meters, switchgear, and certain distribution equipment are more susceptible to centralized-tender price pressure.
• In high-voltage DC control and protection, VSC-HVDC converter valves, and high-end relay protection, technology, qualifications, historical engineering records, and long-term operating records create relatively high entry barriers. Once a supplier enters the core supply system, customer replacement costs are relatively high, giving the company a relatively strong competitive position.
• As of December 31, 2025, accounts receivable were RMB 7.100 billion, equivalent to approximately 47.36% of operating revenue; inventories were RMB 3.453 billion, or approximately 23.03% of operating revenue; and contract liabilities were RMB 2.242 billion, or approximately 14.95% of operating revenue. Net cash flow from operating activities was RMB 2.670 billion, higher than net profit attributable to the parent of RMB 1.167 billion. Accounts receivable declined from RMB 8.794 billion at the end of 2024 to RMB 7.100 billion. These figures indicate that power-grid equipment projects continue to tie up substantial receivables and inventory, although collections, advance receipts, and operating cash flow improved in 2025. The proportion of accounts receivable to revenue alone cannot directly determine the company’s actual bargaining power with State Grid. Project acceptance, retention payments, bill settlement, project progress, and related-party transactions may also affect working capital.
• Customer concentration is significantly higher than supplier concentration: the top five customers accounted for 68.37% of total sales in 2025, and State Grid and its subsidiaries accounted for 51.89% of operating revenue; the top five suppliers accounted for 13.25% of total procurement. All of these concentration figures are based on 2025 annual data. Some customer names were anonymized, and the research materials did not provide top-five customer or supplier data for other years, so long-term changes in concentration should not be inferred.

The company is positioned in the upper-middle portion of the power-equipment industry chain. Gross margins in standard equipment manufacturing and systems integration are relatively limited, while some upstream raw-material costs are largely accepted at market prices. Technology-intensive segments such as UHV DC converter valves, DC control and protection, relay protection, and smart metering have relatively high entry barriers and offer certain technical premiums. Future margin expansion will depend primarily on a higher contribution from high-margin UHV DC, VSC-HVDC, relay-protection, and smart substation and distribution businesses, together with improvements in centralized procurement, smart manufacturing, product standardization, and cost management, rather than simply on declines in upstream raw-material prices.

3. Financial Data and Valuation Analysis

3.1 Recent Operating Performance

The latest formal financial report is the 2026 interim report disclosed on August 20, 2026. Recurring net profit attributable to the parent in the first half of 2026 was RMB 403 million, down 34.73% year on year; basic EPS was RMB 0.4096, down 34.68% year on year; weighted average ROE was 3.40%, down 2.09 percentage points from the same period last year; and net cash flow from operating activities was negative RMB 311 million, compared with RMB 1.120 billion in the same period last year.

Revenue grew only slightly in the first half of 2026, while both net profit attributable to the parent and recurring net profit attributable to the parent declined by approximately 34%. Gross margin was 19.90%, down approximately 3.86 percentage points year on year, and operating cash flow deteriorated significantly. Profit pressure was mainly related to the concentrated delivery of low-priced meter and distribution-network orders, lower gross margins for certain products, slower recognition of DC transmission projects, and increased credit impairment losses. Net profit attributable to the parent in the second quarter rose approximately 175% sequentially from the first quarter, and the year-on-year decline narrowed relative to the first half. Nevertheless, profit remained in year-on-year decline, and this is not sufficient to confirm a full-year turnaround. In 2025, revenue declined while net profit attributable to the parent grew, mainly because the company reduced low-margin EPC and systems-integration business, optimized its revenue mix, and improved cost control.

3.2 Earnings Forecasts

Forecast data come from the Tonghuashun earnings-forecast page as of September 11, 2026. Approximately 16 institutions issued forecasts during the past six months. Tonghuashun’s institutional forecasts are secondary compilations of brokerage research and do not constitute formal company guidance. Institutions generally expect profit growth in 2027–2028 to exceed that in 2026, but forecast dispersion is significant. Key disagreements concern the pace of gross-margin recovery for low-priced orders, UHV project delivery schedules, and the strength of power-grid investment.

3.3 Valuation and Institutional Ratings

As of the close on September 11, 2026, the share price was RMB 20.64. With total shares of approximately 1.019 billion, market capitalization was roughly RMB 21.0 billion based on the closing price and total shares. The forward P/E ratio was approximately 22.15x, the forward P/E based on recurring earnings was approximately 23.18x, and the P/B ratio was approximately 1.54x. As of June 30, 2026, EPS was approximately RMB 0.93. Based on the multi-institution average forecasts from Tonghuashun, forecast P/E ratios for 2026–2028 were approximately 16.3x, 13.1x, and 11.4x, respectively. Based on 2026 EPS of approximately RMB 1.16 under the Huatai Securities or Huayuan Securities forecasts, 2026 forecast P/E was approximately 17.8x. Huatai Securities’ target price of RMB 26.68 implies a P/E of approximately 23x based on EPS of approximately RMB 1.16. Guotai Haitong’s target price was RMB 27.60, while CICC’s earlier target price was RMB 35. The current valuation is not high, but it depends on earnings recovering and resuming growth after 2027 in line with forecasts. Key uncertainties include the wide range of 2026 earnings forecasts, significant interim-report gross-margin pressure, UHV DC project recognition schedules, pricing of distribution-network and meter orders, and the recovery of operating cash flow. Key items to monitor include the amount of UHV DC project revenue recognized in the second half, DC transmission gross margin, pricing of distribution-network and meter orders, operating cash-flow recovery, and whether full-year 2026 net profit attributable to the parent can reach RMB 1.2–1.3 billion or more.

4. Recent News and Announcements

4.1 2026 Interim Report: Revenue Stable, Net Profit Attributable to the Parent Down 34.40% Year on Year

The company disclosed its 2026 interim report and related announcements on August 20, 2026. Operating revenue in the first half of 2026 was RMB 6.525 billion, up 1.21% year on year; net profit attributable to shareholders of the listed company was approximately RMB 416 million, down 34.40% year on year; and basic EPS was approximately RMB 0.41. In investor-relations meeting records, the company stated that the profit decline was mainly due to a 3.85-percentage-point year-on-year decline in comprehensive gross margin. Factors included the recognition during the period of low-priced smart-meter and certain distribution-network orders won last year, as well as the fact that certain large DC transmission projects had not yet reached the stage for concentrated revenue recognition.

4.2 Interim Cash Dividend Plan Approved by the Board

On August 20, 2026, the company disclosed its 2026 interim profit-distribution plan. Based on total share capital of 1,018,622,249 shares as of June 30, 2026, it proposed a cash dividend of RMB 1.64 per 10 shares, including tax, to all shareholders, with an estimated total cash dividend of approximately RMB 167.05 million. No bonus shares will be issued, and no capitalization of capital reserves will be conducted. The announcement stated that the plan had been approved by the board and did not need to be submitted to the shareholders’ meeting.

4.3 Strong UHV Order Backlog; Winning Bids for First Four State Grid Batches Exceed RMB 2.6 Billion

At investor-exchange events on August 20 and August 26, 2026, the company stated that its winning bids for the first four batches of State Grid UHV projects in 2026 exceeded RMB 2.6 billion, up more than 60% year on year. These orders will be fulfilled in an orderly manner according to project progress and contractual terms. The company also stated that certain large projects in the DC transmission segment had not yet been recognized on a concentrated basis in the first half of 2026. This information was an operational explanation provided during investor exchanges, rather than a new independent order announcement. Actual revenue recognition depends on project delivery, acceptance, settlement, and contractual terms.

4.4 Won RMB 1.36 Million CGN New-Energy Project; No Corresponding Formal Announcement Located

Public information on September 10, 2026 indicated that the company won the bid for the “2026 Smart Integrated Energy Management Platform Project Data IoT and Standardization System Procurement Project” of CGN (Beijing) New Energy Technology Co., Ltd., with a winning bid amount of RMB 1.36 million. The information came from the project transaction-result announcement and media reports. As of the research memorandum date, no corresponding formal voluntary disclosure announcement by the company had been located on cninfo.com.cn. The project is small relative to the company’s overall business scale and should be treated as a routine business development.

4.5 State Grid’s Fourth 2026 Substation-Equipment Tender Attracts Market Attention

From September 8 to 10, 2026, market information indicated that State Grid’s fourth 2026 substation-equipment tender totaled approximately RMB 11.4 billion. The market paid attention to XJ Electric’s winning-bid share and ranking in niche products such as relay protection and switchgear. The information mainly came from media and industry statistics, rather than a currently verified formal company announcement. Specific winning-bid amounts, order contracts, and delivery schedules have not been fully confirmed through formal company announcements and therefore cannot be directly included as new orders or in earnings forecasts.

4.6 Repurchase and Cancellation of 64,010 Restricted Shares

The company held a board meeting on July 21, 2026 and disclosed the related announcement on July 22. Because one incentive participant was transferred to another position, one resigned, and eight participants partially met or failed to meet the assessment requirements for the second unlocking period, the company proposed to repurchase and cancel a total of 64,010 restricted shares that had not yet been unlocked. The adjusted repurchase price was RMB 10.776 per share. The announcement estimated that after completion, total share capital would decline from 1,018,622,249 shares to 1,018,558,239 shares, with registered capital correspondingly reduced by RMB 64,010. As of September 12, 2026, no further announcement confirming completion of the repurchase and cancellation had been located. The final change in share capital will be subject to the China Securities Depository and Clearing Corporation registration results and subsequent company announcements.

4.7 Third-Quarter 2026 Earnings Preview: No Formal Disclosure Located as of This Date

As of September 12, 2026, no formal earnings preview, earnings flash, or preliminary increase/decrease announcement for the first three quarters of 2026 had been located for XJ Electric. The company’s 2026 interim report and investor-exchange materials disclosed that net profit attributable to the parent declined 34.40% year on year in the first half, but this cannot be directly equated with a full-year or third-quarter earnings preview. Subsequent formal company disclosures should prevail.

4.8 Major Shareholder Developments: No New September 2026 Increase, Reduction, or Equity-Change Announcement Located

As of this date, no new September 2026 announcement on shareholding increases, reductions, or equity changes by the company’s controlling shareholder, actual controller, or major shareholders had been located. According to publicly available 2026 interim materials, the number of shareholders as of June 30, 2026 increased by approximately 9,494 households from March 31, 2026, or approximately 6.90%. This represents a change in the number of shareholder accounts and does not indicate purchases or sales by any specific major shareholder.

4.9 Regulatory and M&A Matters: No Recent Major Penalties or New Major Acquisitions Located

As of September 12, 2026, no public information had been located indicating recent regulatory penalties, investigations, inquiry letters, or major risk warnings involving the company. Nor had any new major acquisition, asset restructuring, or share issuance for asset purchases been located. Among the public information on companies applying for registration of main-board M&A restructurings published by the China Securities Regulatory Commission as of September 11, 2026, no clearly relevant matter involving XJ Electric was found.

5. Share-Price Performance and Technical Analysis

5.1 Price Overview

5.2 Technical Indicators

As of September 11, 2026, XJ Electric closed at RMB 20.64, approximately 40.4% below its 52-week high of RMB 34.65 and approximately 6.6% above its 52-week low of RMB 19.37. After a volume-backed rise on September 4, the share price declined continuously. It is currently below MA10, MA20, MA50, and MA200, creating concentrated moving-average resistance around RMB 20.9–21.3. MACD is below the zero line, with DIF below DEA, indicating that the short-term trend remains weak. RSI14 of approximately 29.47 indicates some oversold characteristics, but RSI at shorter, medium, and longer periods remains in the neutral zone. It is therefore more appropriate to describe the stock as “short-term weak with some oversold characteristics,” rather than as having confirmed a trend reversal. The Bollinger Band data show the share price below the lower band, leaving room for a technical rebound, but the weak channel remains intact. On fund flows, large and extra-large orders showed clear net inflows during the volume-backed rise on September 4, but major funds recorded a cumulative net outflow of approximately RMB 39.93 million over the past 10 trading days, indicating that inflows failed to persist. Recent turnover value has generally been RMB 160–320 million, with low-to-medium turnover. Further share-price gains still require incremental funds. In terms of shareholder structure, the controlling shareholder owns nearly 38%, and the top 10 shareholders hold approximately 44% in aggregate, including institutional funds such as social-security funds, insurers, public funds, and ETFs. However, the increase in shareholder accounts and the decline in top-10 holdings from the first quarter may indicate greater dispersion of holdings. The relevant data are as of March 31 and June 30, 2026 and therefore have a quarterly lag.

5.3 Short-Term Outlook (Next Week; Scenario Analysis for Reference Only)

⚠️ Risk warning: The following content is a subjective scenario analysis based on closing data, historical prices, and technical indicators as of September 11, 2026. It does not constitute investment advice or a single-point target-price forecast.

① Key Technical Levels

② Scenarios for the Next Week (Subjective Weights, Not Statistical Probabilities)

• Weak range-bound consolidation (relatively high subjective weight, approximately six-tenths; this weight reflects a subjective judgment based on current technical indicators and fund flows and is not a statistical probability): Price range of RMB 20.45–21.30. Trigger conditions include support near RMB 20.45 without a decisive break through RMB 20.90–21.30, turnover value remaining within the recent normal range of approximately RMB 160–320 million, a lack of sustained catalysts for the power-equipment sector, and MACD remaining below the zero line while the decline narrows. This scenario is broadly consistent with the combination of bearish moving averages, overall net outflows from major funds over the past 10 trading days, and RSI14 near the weak zone.
• Further weakness: (medium subjective weight; this weight reflects a subjective judgment based on current technical indicators and fund flows and is not a statistical probability): Price range of RMB 19.35–20.45. Trigger conditions include a decisive close below RMB 20.45, a significant increase in daily turnover while large and extra-large orders continue to show net outflows, broad weakness in the power-equipment sector or declining market risk appetite, and a failed rebound near RMB 20.45 that creates new short-term resistance. The RMB 20.0 round-number level should be observed first, followed by the strong-support zone of RMB 19.35–19.70. A volume-backed decline would indicate potentially stronger position turnover and selling pressure.
• Stronger rebound (low subjective weight; this weight reflects a subjective judgment based on current technical indicators and fund flows and is not a statistical probability): Price range of RMB 20.90–21.80, with the RMB 22.0 area to be observed in a strong scenario. Trigger conditions include reclaiming RMB 20.90–21.00, a further volume-backed breakout above RMB 21.30 with at least one trading day of closing confirmation, daily turnover value consistently reaching approximately RMB 350 million or more, major funds shifting from consecutive net outflows to consecutive net inflows, and simultaneous strength in power-equipment or UHV-related sectors. Before trading volume and major funds confirm the move, a one-day rebound should be viewed more as an oversold bounce than confirmation of a trend reversal.

③ Fund-Flow and Liquidity Background

As of September 11, 2026, daily turnover value was approximately RMB 281 million and the turnover rate was approximately 1.34%. Turnover value over recent sessions was approximately RMB 164–589 million, with RMB 160–320 million being the more common range; the RMB 589 million on September 4 represented a clear volume expansion. Current turnover value increased from September 10 but has not reached the September 4 level. With a market capitalization of approximately RMB 21.0 billion and daily turnover value of approximately RMB 200–300 million, liquidity is acceptable under normal trading conditions. When turnover falls to approximately RMB 150–200 million, further share-price gains require stronger incremental fund support. Low turnover combined with a weak decline may indicate insufficient buying rather than heavy selling. In terms of holdings, the number of shareholders was approximately 147,100 as of June 30, 2026, and the top 10 shareholders held approximately 43.96% in aggregate; as of March 31, 2026, the top 10 tradable shareholders held approximately 46.38% in aggregate. China Electrical Equipment Group Co., Ltd., the largest shareholder, held approximately 37.92% as of June 30, 2026. The top 10 shareholders continued to include institutional funds such as social-security funds, insurers, public funds, ETFs, and Hong Kong Securities Clearing Company. These shareholder data have a quarterly lag, and holdings may have changed during the period leading up to September 11, 2026.

Observable volume-confirmation signals: If daily turnover value remains above RMB 350 million over the coming week, the share price simultaneously reclaims the RMB 20.90–21.30 resistance zone, and major funds record consecutive net inflows, this could confirm improved short-term fund participation. If volume expands only during a decline without reclaiming the resistance zone, it should be interpreted primarily as position turnover or selling-pressure release rather than confirmation of an upward move.

④ Points to Monitor (Observation Framework Only, Not Trading Instructions)

• Observe whether the RMB 20.45–20.65 support zone holds; if it fails, monitor the RMB 19.35–19.70 strong-support zone.
• Observe whether the RMB 20.90–21.30 moving-average resistance zone can be broken with increased turnover.
• Observe whether turnover value can rise from the recent normal range of RMB 160–320 million to above RMB 350 million while the price simultaneously reclaims the resistance zone.
• Observe whether large and extra-large orders shift from net outflows to consecutive net inflows; all of the above are observation frameworks, not trading instructions.

The above scenario analysis is based on closing data as of September 11, 2026 and calculations using historical prices and technical indicators. Short-term share prices may also be affected by news, fund flows, broader market conditions, and other factors. Technical indicators have inherent lags and limitations. This analysis does not guarantee future actual performance or constitute a recommendation to buy or sell. Investors should independently assess the latest market information and bear investment risks themselves.

6. Industry Landscape and Competitor Analysis

6.1 Industry Overview

XJ Electric operates in the power-equipment and power-automation industries, with businesses covering high-voltage and UHV transmission, main-grid automation, medium-voltage distribution and smart power supply and consumption, smart meters, new-energy systems integration, and charging and battery-swapping equipment. Long-term industry demand comes from UHV main-grid construction, large renewable-energy bases and long-distance transmission, new power-system development and distribution-network upgrades, renewable-energy integration and energy storage, smart meters and low-voltage electricity digitalization, as well as electrification among rail-transit, petrochemical, data-center, and industrial customers. According to the company’s 2025 annual report, national investment in power-grid construction totaled RMB 639.5 billion in 2025, up 5.1% year on year, while cumulative national power-generation capacity reached 3.89 billion kW.

6.2 Competitive Landscape

• High-voltage and UHV transmission and main-grid automation include converter valves, DC control and protection, relay protection, substation automation, and dispatch automation. Technical barriers, operating-reliability requirements, and customer-access barriers are high, and the market is concentrated among a small number of leading companies.
• Medium-voltage distribution and smart power supply and consumption include ring-main units, switches, distribution automation, smart terminals, and primary-secondary integrated equipment. Demand is supported by distribution-network investment, renewable-energy grid connection, and urban-grid upgrades, but the number of suppliers is larger and price competition is more pronounced.
• Smart meters are characterized by large-scale manufacturing and centralized tenders. New-energy systems integration and charging and battery-swapping equipment have more participants, with greater project-based, price, and technology-route competition.
• Overall industry competition is characterized by concentration among leaders and differentiation by segment. A small number of companies participate primarily in high-end relay protection, UHV DC control and protection, and dispatch automation, while medium- and low-voltage distribution, smart electricity use, and new-energy systems integration have more participants and compete more on cost, delivery, channels, and project experience.
• Entry barriers in niche industries mainly arise from accumulated technology, operating references, product certifications, customer access, and long-term service capabilities. The research memorandum did not use specific market-share figures that could not be cross-verified through company announcements or authoritative tender data.

6.3 Major Competitors

XJ Electric competes with NARI Technology and NR Electric mainly in high-end relay protection, UHV DC control and protection, dispatch automation, and flexible transmission. Competition with Sifang, Guodian Nanjing Automation, and Dongfang Electronics extends more into distribution automation, smart electricity consumption, renewable-energy grid connection, energy storage, and industrial control. XJ Electric’s differentiation lies in its comprehensive business portfolio, supported by the China Electrical Equipment Group system, spanning grid transmission and distribution equipment, power automation, smart meters, UHV DC equipment, and new-energy systems integration. Earnings improvement depends on increasing the contribution of high-technology and high-margin businesses, while the company must continue to address centralized power-grid tenders, project-based delivery, and price competition in medium- and low-voltage equipment.

7. Risk Factors

• Smart-meter and distribution-network businesses face centralized-tender and low-priced-order pressure. The concentrated delivery of low-priced orders in the first half of 2026, together with lower gross margins for smart meters and certain distribution-network products, caused comprehensive gross margin to decline approximately 3.85–3.86 percentage points year on year. If order pricing does not recover sufficiently, margins may remain under pressure.
• Revenue recognition for DC transmission projects has a strong project-based nature. Certain large DC transmission projects had not been recognized on a concentrated basis in the first half of 2026. Although winning bids for the first four State Grid UHV batches exceeded RMB 2.6 billion, actual earnings still depend on delivery, acceptance, settlement, and contractual terms, creating a risk that order fulfillment and recognition may fall short of expectations.
• Customer concentration is high. The top five customers accounted for 68.37% of annual sales in 2025, while State Grid and its subsidiaries accounted for 51.89% of operating revenue. Centralized-tender customers have strong bargaining power over price, delivery, quality, and reliability. Lower tender prices or changes in project schedules could affect revenue and gross margin.
• Operating cash flow and working capital require continued monitoring. Net cash flow from operating activities was negative RMB 311 million in the first half of 2026, while accounts receivable and inventories at the end of 2025 were RMB 7.100 billion and RMB 3.453 billion, equivalent to 47.36% and 23.03% of 2025 operating revenue, respectively. Slower project acceptance, collections, or inventory turnover could increase cash-flow and credit-impairment pressure.
• New-energy and systems-integration business has relatively weak earnings stability. Revenue from this segment was RMB 1.421 billion in 2025, with a gross margin of 13.80%. Revenue declined significantly year on year, while project-recognition schedules and project-based business remained volatile. A renewed increase in low-margin systems integration or project-based business could weaken overall profitability.
• The company faces multi-layered competition in high-end power automation and medium- and low-voltage equipment. NARI Technology, NR Electric, Sifang, Guodian Nanjing Automation, and Dongfang Electronics have formed competitive positions in relay protection, DC transmission control and protection, distribution automation, renewable-energy grid connection, and industrial control, respectively. This could pressure the company’s order acquisition, pricing, and market share.
• Institutional earnings forecasts are highly uncertain. The current valuation is approximately 22x forward P/E, and institutions expect significant profit growth in 2027–2028. However, forecasts differ over low-priced-order gross-margin recovery, UHV project delivery, and power-grid investment intensity. If earnings recovery falls short of expectations, support for the current valuation could weaken.
• Technical and fund-flow indicators are weak. As of September 11, 2026, the share price was below MA10, MA20, MA50, and MA200; MACD was below the zero line; and major funds recorded cumulative net outflows of approximately RMB 39.93 million over the past 10 trading days. If support near RMB 20.45 fails, the RMB 19.35–19.70 area may come into focus, implying relatively high short-term volatility risk.

8. Conclusion and Outlook

The company’s medium- and long-term growth drivers mainly come from UHV and VSC-HVDC transmission, relay protection, smart substations and distribution, distribution-network upgrades, and smart metering. Technical qualifications, historical engineering references, customer-access qualifications, and long-term operating records provide certain barriers for high-end products. Winning bids for the first four State Grid UHV batches in 2026 increased by more than 60% year on year. If the related projects are delivered and recognized as planned, they could support a recovery in DC transmission and other high-technology product businesses. Multi-institution average forecasts project net profit attributable to the parent of RMB 1.290 billion, RMB 1.597 billion, and RMB 1.845 billion for 2026–2028, respectively. However, these are not formal company guidance, and institutions differ over the pace of low-priced-order gross-margin recovery, UHV project delivery, and the intensity of power-grid investment.

The near-term earnings outlook should focus on the recovery of earnings quality, including the amount of UHV DC project revenue recognized in the second half, DC transmission gross margin, pricing of smart-meter and distribution-network orders, operating cash flow, and changes in credit impairment. The company’s interim dividend plan of RMB 1.64 per 10 shares was approved in the first half of 2026, but cash dividends cannot substitute for an assessment of earnings and cash-flow improvement. Overall, the company has a relatively complete power-equipment business portfolio and a strong power-grid customer base. However, short-term earnings are in a transition period involving order mix and project recognition. Whether the growth thesis is realized will depend on the ramp-up of high-margin businesses and the easing of pressure from low-priced orders.

Technically, RMB 20.45–20.65 is the recent support zone to monitor, while RMB 20.90–21.30 is the dense moving-average resistance zone. Before turnover, major-fund flows, and price action improve simultaneously, a one-day rise is better viewed as a technical rebound rather than confirmation of a trend reversal. The feasibility of institutional earnings forecasts should be reassessed dynamically in light of formal company disclosures, order delivery, and cash-flow changes.

Data Sources

• XJ Electric (000400)_Company Announcements_XJ Electric: 2024 Annual Report_Sina Finance_Sina.com
• XJ Electric (000400)_Company Announcements_XJ Electric: 2025 Annual Report_Sina Finance_Sina.com
• https://disc.static.szse.cn/download/disc/disk03/finalpage/2026-04-11/3ffe5f89-4106-4c37-889e-63181d32aef6.PDF?n=%E8%AE%B8%E7%BB%A7%E7%94%B5%E6%B0%94%EF%BC%9A2025%E5%B9%B4%E5%B9%B4%E5%BA%A6%E6%8A%A5%E5%91%8A.PDF
• XJ Electric Co., Ltd. 2025 Annual Report
• SZ.000400 XJ Electric - A-share Real-Time Quote - Company Information - etnet Hong Kong
• Sifang (601126)_IPO Prospectus Details_Beijing Sifang Automation Co., Ltd. IPO Prospectus_Sina Finance_Sina.com
• NARI Technology: 2025 Annual Report_Stock Channel_Securities Star
• Nanjing NR Electric Co., Ltd.—Company Overview
• Sifang (601126)_Company Announcements_Sifang: 2025 Annual Report_Sina Finance_Sina.com
• Company Announcements_Guodian Nanjing Automation: 2025 Annual Report_Sina Finance_Sina.com
• Dongfang Electronics Co., Ltd. 2025 Annual Report
• XJ Electric (000400)_Company Announcements_XJ Electric: 2026 Interim Report_Sina Finance_Sina.com
• XJ Electric (000400) Earnings Forecasts_F10_Tonghuashun Financial Services
• XJ Electric (000400)_Company Announcements_XJ Electric: 2025 Final Financial Results and 2026 Financial Budget Report_Sina Finance_Sina.com
• [[Soochow Securities]: 2026 Interim Report Review: Short-Term Earnings Under Pressure; UHV Flexible DC Transmission and Overseas Markets Poised for Growth—Shuidi Research](https://www.sdyanbao.com/detail/982074)
• XJ Electric (000400): Deepening Data-Center Deployment and Continued Overseas Market Breakthroughs_Sina Finance_Sina.com
• XJ Electric (000400): Results Slightly Below Expectations; Time to Optimize Structure and Improve Efficiency_Sina Finance_Sina.com
• Institutional Ratings|Huatai Securities Gives XJ Electric a “Buy” Rating
• XJ Electric Co Ltd (000400) Historical Prices—Investing.com
• List of Main-Board-Listed Companies on the Shenzhen Stock Exchange
• XJ Electric (000400): Won a Procurement Project from CGN (Beijing) New Energy Technology Co., Ltd., with a Winning Bid Amount of RMB 1.36 Million_Sina Finance_Sina.com
• XJ Electric (000400) Stock News_Sina Finance_Sina.com
• XJ Electric (000400)_Company Announcements_XJ Electric: Investor Relations Activity Record—August 20, 2026_Sina Finance_Sina.com
• Stock Code: 000400  Stock Abbreviation: XJ Electric  Announcement No.: 2026-31
• XJ Electric (000400)_Company Announcements_XJ Electric: Investor Relations Activity Record—August 26, 2026_Sina Finance_Sina.com
• Stock Code: 000400  Stock Abbreviation: XJ Electric  Announcement No.: 2026-25
• XJ Electric (000400) Announcements (All)—Lixinger
• XJ Electric (000400) Corporate Events_F10_Tonghuashun Financial Services
• Administrative Licensing Matters: Public Notice of Basic Information on Companies Applying for Registration of Main-Board M&A Restructurings in 2026—China Securities Regulatory Commission

This report was automatically retrieved, compiled, and generated by AI based on information from public channels. The information is current through the close on September 11, 2026; certain technical indicators use data retrieved as of September 11, 2026 at 06:50 GMT, while the Bollinger Bands reflect the latest available calculation around September 10, 2026. Some data points have different update times and may have timeliness differences. Specific data should be verified against the company’s formal announcements and authoritative data terminals. This report is for information and research reference only and does not constitute investment advice. Investors should make independent judgments and bear investment risks themselves.