Nomura: Shemar Electric (603530) Composite Insulator Leader Rides Grid Upcycle
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Nomura initiates coverage on Shemar Electric with a Buy rating and a target price of 28.00 yuan, based on 40 times the 2026 price-to-earnings ratio. As the leading composite insulator manufacturer with an approximate 30% market share, the company is strategically positioned to capitalize on the global upcycle in power grid investment.
During China's 14th Five-Year Plan, ultra-high voltage investment is projected to exceed 300 billion yuan, generating substantial demand. First-quarter 2025 revenue already surged 30% year-over-year, with net profit jumping 40%, validating the growth trajectory. International business contributes roughly 25% of revenue, serving Europe and Southeast Asia, benefitting from global grid modernization needs.
The company is effectively upgrading its product mix toward higher-margin offerings, with composite insulators carrying gross margins near 45%. Nomura forecasts a 25% revenue CAGR and a 35% net profit CAGR from 2025 to 2027. Predicted earnings per share for 2025, 2026, and 2027 are 0.70 yuan, 0.90 yuan, and 1.15 yuan, respectively. A planned 30% capacity addition in 2025 will support order fulfillment. Key risks include raw material price fluctuations and slower international expansion.