In 2023, a new round of construction cycle for ultra high pressure in China has started. The construction cycle for direct current ultra high pressure is about 2 years, and by the end of 2024, it will usher in a peak period of project commissioning.

Considering that most of the revenue from core equipment such as converter valves will be confirmed upon commissioning, the ultra high pressure sector will see a period of performance realization, with some companies' performance realization intensity expected to exceed expectations.

The Gansu to Zhejiang Power Transmission Project is a key project in the national '14th Five-Year Plan' for power development. With a rated voltage of ±800 kV and a rated capacity of 8 million kilowatts, the total investment is approximately 35.3 billion yuan; the project will integrate 11.2 million kilowatts of new energy power sources, and after completion, it will be able to transmit over 36 billion kilowatt hours of electricity annually to Zhejiang. The sender end will gather Gansu's photovoltaic, wind, and energy-saving thermal power through a 750 kV AC system, while the receiver end will connect to Zhejiang Load Center through a 500 kV AC system. The Gansu to Zhejiang Power Transmission Project started construction in July 2024 and is expected to be completed and operational by 2026.

Citic Securities stated in a report that on September 30, 2024, according to the State Grid's e-commerce platform, the State Grid issued the fifth equipment bidding procurement announcement for the 2024 ultra high pressure project, including key equipment such as converter valves, transformers, and combination electrical appliances, which will be used in the ultra high pressure lines such as Aba-Chengdu, Gansu-Zhejiang, and Shaanbei-Anhui that started construction this year.

The ultra high pressure sector is gradually entering a phase of performance realization, with ample project reserves and significant future planning space, leading to the expectation of a double increase in performance orders for related equipment companies.

Citic Securities recommends focusing on core industry chain companies based on the volume increase brought about by ultra high pressure construction and the technological progress brought about by flexible direct current.

Enterprises related to ultra high pressure equipment include:

Sun.King Tech (00580): Announced on September 14, 2024, one of its subsidiaries under the company acted as a supplier, signed a six-party agreement with Changzhou Borui Electrical Automation Equipment Co., Ltd., Nanjing Nanrui Semiconductors Co., Ltd., XJ Electric Co., Ltd., Xi'an Xidian Power System Co., Ltd., and Rongxin Huike Electric Co., Ltd., totaling five parties (hereinafter referred to as "demanding parties"), to procure power electronic devices with an aggregate amount of RMB 0.624 billion for the Gansu-Zhejiang ±800 kV Ultra High Pressure Direct Current Transmission Project (Gandian to Zhejiang Project). On September 30, 2024, a subsidiary under the company acted as the supplier and signed a contract with the purchaser, Nanjing Nanrui Semiconductors Co., Ltd., for an amount of approximately RMB 0.479 billion. Based on this, Nanjing Nanrui will purchase power electronic devices from the aforementioned subsidiary for use in the Saudi Arabia Central-Southern Flexible Direct Project. The Saudi project is another initiative of State Grid Corporation of China (State Grid) to promote Chinese flexible direct current transmission technology overseas. As a supplier of power electronic devices, the group will actively explore the international market in more products and fields while supporting State Grid's efforts to promote flexible direct current technology globally, advancing its internationalization strategy.