Any firm that can grab a piece of the pie of the fast-growing power grid or railway networks on the mainland should feel lucky. Sun King Power Electronics Group has a piece of both.
The soon-to-be-listed company mainly manufactures the key apparatus for power transmission on high voltage grids, which increases voltage before power is transmitted and decreases it at the destination. It also produces an expensive power module for the locomotive headstock which adjusts electricity frequency so the engine can be regulated.
Xiang Jie, chairman and chief executive of Sun King, said: 'The power grid and train networks are sectors so important that they may affect national security.'
He said Beijing has ordered that at least 70 per cent of the equipment in these two industries be supplied from within China.
Xiang said there are no authoritative statistics on the current progress of localisation in the sectors.
Market sources said Sun King is seeking a listing in Hong Kong and that the initial public offering to raise up to US$100 million will be launched on Thursday. Xiang declined to comment on reports of a listing.
He did say that China is the biggest spender on power grids and railway equipment in the world. Purchases in the sector on the mainland account for 60 per cent of the international market, he said.
China is building a network of fast trains across the country. The outdated railway networks have been a bottleneck for the country's economic development. Beijing announced a 4 trillion yuan (HK$4.62 trillion) stimulus package two years ago in the wake of the international financial crisis.
'Most of the investment has gone to railway construction,' Xiang said.
Power plants on the mainland are mostly located in remote and less-developed western and central areas, while the flourishing coastal provinces are hungry consumers.
Sun King's products enable China to transmit power on the 500kV grid, as well as the 800kV grid, based on its own technology. The 800kV grid is unique on the mainland.
Xiang said: 'We are the fourth company in the world acquiring the technology of power transmission through a high-voltage grid.'
The other three are all foreign companies.
The mainland grid lags behind the country's power generating capability and Beijing has announced a plan to invest 4 trillion yuan in construction of smart power grids over 10 years, starting this year.Topics: Electricity Distribution Electric Power Transmission Systems