Smart meters have limited inventory space

It is expected that the total number of tenders for smart meters in 2012 will be 55 million units, down from a year earlier. In 2011, the State Grid completed a tender for smart meters of approximately 67.65 million units. We believe that the smart meter tender has reached the inflection point, the peak year of smart meter bidding is 2011, and the single batch peak is the second batch of 2012 that is currently bidding.

In 2012, the actual installed capacity of smart meters may decline year-on-year in 2011. We expect that the State Grid will complete the installation of 45 million smart meters in 2012, of which the State Grid has completed 12 million installations in the first four months. In 2011, the State Grid plans to complete the installation of 50 million smart meters at the beginning of the year and actually complete the installation of 51.62 million smart meters. In early 2012, State Grid plans to complete the installation of 37 million smart meters. Since the smart meters can serve the ladder price reforms very well and the internal power of the construction is strong, we expect that the installed capacity in 2012 will be 45 million.

It is expected that there will be two tenders in 2012. According to the timing of the bidding by the State Grid, there will still be one tender for each of the subsequent third and fourth quarters. We do not rule out the possibility that the State Grid smart meter bidding and installation will continue to accelerate. However, due to the limited stock space, the accelerated installation is also overdrawing the amount of construction in the future, which intensifies the downside expectations of the industry fundamentals and is not favorable.

Harvesters, concentrators, and terminals have begun to increase in volume, and the trend can be sustained for one year. Because the electricity information collection equipment and the smart meter have a matching relationship, the installation of the electricity information collection equipment lags behind the installation of the smart meter, and the lag time is about six months to one year. From the amount of tenders and installations of smart meters, it can be seen that the trend can maintain a period of about one year. It is expected that tenders for concentrators, collectors and collection terminals will maintain a high point during the year.