China Power T&D Equipment Equities: Getting back to speed

We lower our grid capex forecasts for China by 1-2% in 2026-28 to reflect a slower-than-expected grid investment pace YTD. We now expect 7% y-o-y growth (previously 9% y-o-y) in China's grid capex in 2026, accelerating to 8% y-o-y in 2027 (previously 6% y-o-y). We believe spendings are delayed rather than lost as the State Grid remains committed to a 40% increase in its FAI in the 15th Five-Year Plan (2026-30). Lower grid capex in the initial years of the 15th FYP period should translate into higher capex in the latter years. Hence, we raise our 2029-30 grid capex forecasts by 1-3%. We see signs of a speed-up in grid capex and UHV project approvals. In August-September 2026, grid investments grew 18% y-o-y (vs +1% y-o-y in 7M26). On 15 October 2026, three UHV lines with a total investment of RMB59.1bn - representing 56% of the UHV investment sum approved YTD - were approved. This is after the People's Bank of China (PBOC) expanded the eligibility for Pledged Supplementary Lending (PSL)