Morgan Stanley: Sieyuan Electric (002028.SZ) — Staying the Course
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Morgan Stanley maintains an Overweight rating on Sieyuan Electric with a target price of 252.8 yuan, citing robust order growth and sustained gross margin expansion. The firm projects 2025 new orders will surge 35% year-over-year to approximately 29 billion yuan. This includes overseas order growth exceeding 45% to 11 billion yuan and domestic order growth surpassing 25% to 18 billion yuan. Overseas markets are benefiting from market share gains across North America, Europe, and the Middle East, particularly driven by U.S. AI data center capital spending on large transformers and switchgear. Domestically, Sieyuan's share in State Grid's 750kV GIS centralized procurement jumped from 13% in 2024 to 20% in 2025.
Gross margins are projected to expand by 1.3 and 0.5 percentage points in 2026 and 2027 to 33.6% and 34.2% respectively. Overseas gross margins should reach 40.2% and 40.7% for the same period. The company's net profit is expected to grow at 54%, 51%, and 37% from 2025 through 2027. At the current stock price of 208.0 yuan, the valuation corresponds to 34 times and 25 times price-to-earnings ratios for 2026 and 2027. While this represents a premium to domestic peers, Morgan Stanley considers it justified by strong earnings momentum and margin improvement potential. The target price implies roughly 22% upside, underpinned by energy storage growth, supercapacitor applications, and higher ultra-high voltage direct current participation.