Investment Rating - The report maintains a "Buy-A" investment rating for the company, with a target price of 81.88 CNY per share [4][7]. Core Views - The company achieved significant revenue growth in H1 2025, with total revenue reaching 2.573 billion CNY, a year-on-year increase of 50.25%. The net profit attributable to shareholders was 216 million CNY, up 17.54% year-on-year [1]. - The growth in revenue is primarily driven by increased demand for cooling solutions in data centers, with liquid cooling revenue exceeding 200 million CNY in H1 2025 [2][3]. - The company has established a comprehensive product layout for liquid cooling solutions and is positioned to benefit from the growing demand for computing power, particularly through partnerships with major clients like Nvidia, ByteDance, Tencent, and Alibaba [3]. Financial Summary - The company forecasts revenues of 6.104 billion CNY, 7.910 billion CNY, and 9.921 billion CNY for 2025, 2026, and 2027, respectively. Net profits are expected to be 611 million CNY, 781 million CNY, and 1.019 billion CNY for the same years [4][11]. - The overall gross margin for H1 2025 was 26.15%, a decrease of 4.84 percentage points year-on-year, attributed to regional sales mix and increased competition in the Chinese market [2]. - The company’s net profit margin for H1 2025 was 8.78%, down 1.92 percentage points year-on-year [2].

Core Viewpoint - The demand for cooling solutions is increasing due to the rising power density of AI chips and servers, with liquid cooling expected to replace air cooling as the mainstream solution by 2026, reaching a market size of $8.6 billion globally [2][3]. Group 1: Liquid Cooling Market Dynamics - The global AI liquid cooling market is projected to grow rapidly, with a forecasted market size of $8.6 billion by 2026, driven by the increasing power density of AI chips and servers [2][3]. - The power density of AI servers is expected to exceed 1MW per cabinet by 2029, highlighting the need for efficient cooling solutions [2][3]. - The liquid cooling market in China is anticipated to grow by 67% year-on-year in 2024, reaching $2.37 billion, with a CAGR of 46.8% from 2024 to 2029 [3][42]. Group 2: Advantages of Liquid Cooling - Liquid cooling systems offer higher cooling efficiency and reduced system power consumption compared to traditional air cooling, making them a preferred choice as power density increases [2][22]. - The cooling efficiency of liquid cooling is significantly higher than that of air cooling, with water's thermal conductivity being over 23 times greater than that of air [22]. - Liquid cooling allows for higher density deployment of computing units, reducing the physical space required and improving overall system performance [22][25]. Group 3: Industry Trends and Developments - Major cloud service providers are significantly increasing their capital expenditures, with the top four North American cloud companies expected to reach $366.1 billion in total capital expenditures by 2025, reflecting strong demand for AI infrastructure [7]. - Companies like Alibaba and ByteDance are ramping up investments in AI and cloud computing infrastructure, with Alibaba planning to invest over $50 billion in these areas over the next three years [8]. - The liquid cooling technology is being rapidly adopted by leading server manufacturers, with companies like Supermicro and HPE launching liquid-cooled server solutions [41][43]. Group 4: Liquid Cooling Technology Types - Liquid cooling can be categorized into indirect contact (cold plate cooling) and direct contact (immersion and spray cooling), with cold plate cooling being the most mature and widely adopted technology [3][30]. - Cold plate cooling systems are expected to lead the market due to their minimal impact on existing infrastructure and superior cooling performance compared to air cooling [3][30]. - Immersion cooling, while offering the best cooling performance, presents higher technical challenges and is still in the exploratory phase [3][30]. Group 5: Energy Efficiency and Cost Savings - Liquid cooling systems can significantly reduce energy costs in data centers, with potential savings in operational costs due to lower energy consumption compared to air cooling systems [25][29]. - The total cost of ownership (TCO) for liquid cooling solutions is expected to be lower than that of air cooling, as they can reduce the need for additional cooling equipment [25][29]. - As data center energy efficiency becomes a regulatory focus, liquid cooling solutions are positioned to meet stringent PUE requirements, enhancing overall energy utilization [17][20].

Summary of Invek's Conference Call Company Overview - Invek's revenue primarily comes from two main product lines: temperature control energy-saving products (approximately 50%) and energy storage business (approximately 40%), with 90% of the latter being energy storage-related income [2][3] - The electronic cooling business (including liquid cooling plates and air cooling components) is expected to become a new growth point for the company [2] Financial Performance - The latest interim report shows that data center revenue grew by over 50%, while energy storage business revenue reached 800 million yuan, a year-on-year increase of approximately 35% [2][4] - Despite a significant apparent decline in gross margin due to accounting standard adjustments, the actual impact on profit was negligible. After excluding these adjustments, the overall gross margin decreased by 2.3 percentage points [5] - Liquid cooling revenue reached 200 million yuan, with a year-on-year growth of over 200%, primarily driven by the expansion of electronic cooling [5] Strategic Advantages - Invek's strategic advantages include a management team focused on profitability, a stable workforce, and a combination of Huawei's innovative spirit and Emerson's quality operational advantages. The company avoids price wars and emphasizes quality and operations [6] - The management team has a strong R&D background, which enhances the company's capabilities in technological innovation and strategic planning [9] Future Development Focus - The future focus for Invek will be on the development of the electronic cooling business, which includes liquid cooling plates and cooling modules for base stations and mining machines. This segment is expected to become a significant third growth curve [7][8] - Inventory and contract liabilities increased at the end of Q2 compared to Q1, providing revenue assurance for Q3 [7] Innovation and R&D - Invek employs a platform-based R&D model that enhances overall efficiency and optimizes product design. This model integrates various development steps to achieve high collaboration and efficiency [10] - The company has demonstrated strong innovation capabilities, particularly in the data center sector, where it has maintained positive growth despite industry pressures [11][12] Liquid Cooling Technology - Invek offers a comprehensive solution in the liquid cooling field, covering both the data center side and server-side cooling, allowing the company to capture 100% of the value chain [13] - The company has established strong partnerships in both domestic and international markets, positioning itself as a leading player in the liquid cooling sector [14] Conclusion - Invek is recognized as a high-quality growth company in the liquid cooling market, with a strong foundation in both domestic and international markets, and a comprehensive capability to provide complete solutions [14]

Performance Summary - In the first half of 2025, the company achieved revenue of 2.573 billion yuan, a year-on-year increase of 50.25% [1] - The net profit attributable to shareholders was 216 million yuan, up 17.54% year-on-year [1] - In Q2 2025, revenue reached 1.641 billion yuan, reflecting a year-on-year growth of 69.67%, with net profit of 168 million yuan, up 37.98% year-on-year [1] Operational Analysis - The company's performance in 1H25 was driven by the dual engines of room temperature control and cabinet temperature control, with revenue from room temperature control energy-saving equipment reaching 1.351 billion yuan, a year-on-year increase of 57.91%, and cabinet temperature control energy-saving equipment revenue at 926 million yuan, up 32.02% year-on-year [2] - The rapid expansion of the liquid cooling market was fueled by downstream computing power investments and high demand for data centers, with liquid cooling-related revenue exceeding 200 million yuan in 1H25 [2] - The company reported a significant increase in orders, with a merchandise account balance of 681 million yuan, up 67.78% from the beginning of the period, and advance sales receipts of 404 million yuan, up 76.25% [2] Business Structure and Competitive Factors - The overall gross margin for 1H25 was 26.15%, a decrease of 2.33 percentage points year-on-year, with room temperature control gross margin at 25.83% and cabinet temperature control gross margin at 28.09% [3] - Revenue from subway air conditioning and bus air conditioning was 24 million yuan and 19 million yuan, respectively, down 50.09% and 29.81% year-on-year, with bus air conditioning gross margin declining due to policy and macroeconomic impacts [3] - Despite short-term pressure on gross margins, the company is optimistic about a rebound as liquid cooling products gain traction in AI data centers [3] Profit Forecast and Valuation - The company forecasts revenues of 6.334 billion yuan, 8.887 billion yuan, and 11.748 billion yuan for 2025, 2026, and 2027, respectively, with net profits of 914 million yuan, 1.352 billion yuan, and 1.960 billion yuan [4] - The current stock price corresponds to a PE valuation of 74.42, 50.31, and 34.71 times for the years 2025, 2026, and 2027 [4]

Group 1 - The core viewpoint of the report is that Yingweike (002837.SZ) is rated as a buy due to strong performance driven by dual growth in data center temperature control and cabinet temperature control in the first half of 2025 [2] - The business structure and competitive factors are expected to put short-term pressure on the gross margin [2] - The liquid cooling segment is anticipated to become another important area for AI export, alongside optical modules, with platform companies likely to benefit significantly [2]

Group 1 - Intel announced the establishment of the Universal Fast Connector Interoperability Alliance on August 20 [1] - The first certified partners of the alliance include Invec (002837), Danfoss, Liminda Technology, Lanke Electric, and Zhengbei Connection [1]

Investment Rating - The report maintains a "Recommended" investment rating for the industry [7] Core Insights - The mechanical export sector shows steady growth, supported by low-altitude economic policies [2][3] - The domestic leading enterprises in the mechanical equipment sector maintain strong competitive advantages in both supply and demand [4] - The report highlights specific investment opportunities in low-altitude economy and mechanical equipment sectors [5] Weekly Market Review - From August 11 to August 15, 2025, the Shanghai Composite Index rose by 1.70%, the Shenzhen Component Index increased by 4.55%, and the ChiNext Index surged by 8.58%. The Shenwan Mechanical Equipment Index rose by 3.21%, outperforming the CSI 300 Index by 0.84 percentage points, ranking 8th among 31 Shenwan first-level industries [12] - Sub-sectors such as general equipment, specialized equipment, and automation equipment saw increases of 3.45%, 4.13%, and 5.45% respectively, while engineering machinery and rail transit equipment experienced slight declines [12][15] Key Sector Tracking Low-altitude Economy - The Yunnan provincial government has issued measures to support the healthy development of the low-altitude economy, including 15 specific initiatives aimed at enhancing safety supervision, supporting drone testing, and expanding international markets [3][21] - Shanghai plans to establish a low-altitude industry fund to encourage research institutions to set up project companies for technological breakthroughs [3] Mechanical Equipment - In July 2025, sales of various types of forklifts reached 118,605 units, a year-on-year increase of 14.4%. Domestic sales accounted for 69,700 units, up 14.3%, while exports totaled 48,905 units, up 14.5% [4] - For the first seven months of 2025, a total of 857,939 forklifts were sold, marking a 12% year-on-year increase, with domestic sales up 10.4% and exports up 15.1% [4] Investment Recommendations - For the low-altitude economy, recommended companies include Deep City Transportation, Sujiao Science and Technology, and Huasheng Group [5] - In the mechanical equipment sector, recommended companies include Sany Heavy Industry, XCMG, and Anhui Heli [5]

Group 1: Macroeconomic Insights - In July, the growth rate of broad fiscal expenditure slowed to 12.1% from 17.6% in June, with an estimated year-on-year growth of 7.6% after excluding special bonds, which is still higher than the nominal GDP growth of 3.9% in Q2, indicating that fiscal easing supports nominal growth [2] - The broad fiscal deficit recorded 352.5 billion yuan, an increase of approximately 213.4 billion yuan year-on-year, highlighting the continued liquidity injection into the real economy through special bonds and capital injections [2] Group 2: Market Activity and Investment Trends - A-share market activity has rebounded, with trading volumes increasing and the number of active retail investors reaching a year-to-date high, indicating sustained interest from retail investors [3] - Private equity product registrations were high, with 666 new products registered in early August, a 6% increase from July, suggesting robust private investment activity [3] - Foreign and insurance capital are expected to be significant sources of incremental investment, with insurance capital's market entry ratio increasing in Q2 2025 [3] Group 3: Industry Developments - The State Administration of Radio and Television's new measures aim to enhance the supply of quality content for television, which is expected to boost viewership and commercial levels in the film and television industry [8] - The strategic importance of rare earths is highlighted, with expectations of price increases due to supply-demand imbalances in 2025-2026, driven by geopolitical factors and domestic policies [9] - The automation of warehousing through robotics is anticipated to transform the logistics industry, with a focus on enhancing efficiency and reducing costs [10] Group 4: Company-Specific Insights - China Everbright Bank has been rated as "Accumulate" with a target price of 4.62 HKD, benefiting from group resources and a strong non-interest income base [12] - Crystal International, a leading garment manufacturer, has been rated "Buy" with a target price of 7.38 HKD, supported by its global presence and strategic acquisitions [13] - Dingdong Maicai, a fresh e-commerce leader, has been rated "Accumulate" with a target price of 2.77 USD, focusing on product strength and market expansion [13] Group 5: Financial Performance Highlights - The financial performance of various companies shows promising growth, with notable increases in revenue and net profit across sectors such as energy, pharmaceuticals, and technology [18][20][22] - For instance, Longyuan Power reported a revenue of 156.57 billion yuan in H1 2025, with a net profit of 33.75 billion yuan, exceeding expectations due to favorable wind power pricing [21] - The performance of companies like Huazhong Medicine and Meihua Biological indicates stable growth and potential for future profitability, supported by innovative product pipelines and market demand [24][33]

Group 1 - The core viewpoint is that the increasing power density of AI chips and servers is driving the transition from air cooling to liquid cooling systems, which are expected to become the dominant solution in the AI era [2][4] - Vertiv predicts that by 2029, the power of a single AIGPU cabinet will exceed 1MW and a single AIPOD will exceed 500kW, posing challenges for cooling systems [2][4] - As rack density rises to 20kW, the advantages of liquid cooling become more pronounced, particularly in terms of energy efficiency and reduced system power consumption [2][4] Group 2 - The liquid cooling market in China is projected to grow by 67.0% year-on-year in 2024, reaching a market size of $2.37 billion, with a CAGR of 46.8% expected from 2024 to 2029 [4][5] - The global AI server liquid cooling market is estimated to reach $3.07 billion in 2025 and $8.58 billion in 2026 [4][5] - The liquid cooling industry is characterized by various technologies, with cold plate liquid cooling leading the way, while immersion and spray cooling are still in the early stages of technological exploration [3][4] Group 3 - The industry chain is rapidly evolving, with upstream components (cold plates, CDU, quick connectors) and midstream players (server manufacturers, solution providers) accelerating their layouts, while downstream cloud providers are adopting liquid cooling at scale [4][5] - Companies such as Vertiv (VRT.US), and others in the supply chain, are recommended for attention due to their technological leadership and active engagement in liquid cooling technology [5]

Core Viewpoint - The liquid cooling sector is experiencing significant growth, driven by advancements in AI and high-performance computing, with companies like Invec benefiting from this trend [1][4][8]. Company Performance - Invec's stock has seen a remarkable increase of 118.18% year-to-date as of August 19, and over 190% since its low on April 9 [1][3]. - The company reported a revenue of 25.73 billion yuan for the first half of 2025, marking a year-on-year growth of 50.25%, with a net profit of 2.16 billion yuan, up 17.54% [5][6]. - Invec's Q2 net profit reached 1.676 billion yuan, reflecting a quarter-on-quarter increase of approximately 249% and a year-on-year growth of 37.98% [5]. Market Dynamics - The liquid cooling industry is gaining traction, with Dell's delivery of Nvidia's high-end GPUs marking a pivotal moment for commercialization [4][8]. - The second-quarter revenue of liquid cooling company Viant exceeded expectations at 26.38 billion USD, prompting an optimistic outlook for the industry [4]. - Invec's financing balance surged from under 600 million yuan to 1.996 billion yuan between early July and August 19, indicating strong market interest [4]. Competitive Landscape - Invec is part of the Nvidia ecosystem, having its UQD products included in Nvidia's MGX ecosystem partnership [1][9]. - The company faces competition from domestic players like浪潮, 华为, and 中科曙光, who are also developing liquid cooling solutions [11]. - Invec's domestic business gross margin has decreased to 22.98%, down from previous years, due to increased competition and changes in sales mix [11]. Future Prospects - Invec is expanding its operations, having recently acquired land for a new R&D and production center with an investment of at least 1 billion yuan [15]. - The company has set ambitious growth targets, aiming for a net profit growth rate of no less than 15%/32%/52% from 2024 to 2026 [15].