Envicool(SZ:002837) Tianfeng Securities·2024-08-22 08:43Investment Rating - The report maintains a "Buy" rating for the company, with a target price set at 20.8 CNY, indicating a potential upside of 10%-20% over the next six months [6]. Core Insights - The company reported strong financial performance for the first half of 2024, achieving revenue of 1.713 billion CNY, a year-on-year increase of 38.24%, and a net profit of 183 million CNY, up 99.63% year-on-year [1]. - The demand for liquid cooling solutions in data centers is expected to drive sustained high growth, particularly due to the increasing need for energy-efficient cooling products [2][5]. - The company has established strong relationships with major domestic clients, including Tencent and Alibaba, and is making progress in expanding its overseas market presence, notably with Intel [4]. Financial Performance - The company achieved a gross margin of 30.99% and a net margin of 10.70% in the first half of 2024, with a slight decrease in gross margin compared to the previous year [3]. - In Q2 2024, the company reported a revenue of 967 million CNY, a 35.92% increase year-on-year, and a net profit of 121 million CNY, reflecting an 81.86% growth [2]. - The company’s revenue from energy-saving products for data center cooling reached approximately double that of the same period last year [2]. Business Segmentation - The energy-saving products for data center cooling generated 856 million CNY in revenue in the first half of 2024, marking an 85.91% increase year-on-year, while cabinet cooling products saw a revenue of 702 million CNY, a 6.11% increase [2]. - The company has launched the Coolinside liquid cooling solution, with over 900 MW of liquid cooling projects delivered, positioning itself to capitalize on industry opportunities [5]. Future Outlook - The company is expected to benefit from the AI wave and the increasing penetration of liquid cooling solutions, with projected net profits of 520 million CNY, 710 million CNY, and 950 million CNY for 2024, 2025, and 2026, respectively [6]. - The report anticipates a PE valuation of 29, 21, and 16 times for the years 2024, 2025, and 2026, respectively, indicating a favorable investment outlook [6].