Summary of the Conference Call for Feilong Co., Ltd. Company Overview - **Company**: Feilong Co., Ltd. - **Industry**: Liquid Cooling Pumps, Robotics, Automotive Components Key Points and Arguments Liquid Cooling Pump Business - Feilong Co., Ltd. has nearly monopolized the domestic market for liquid cooling pumps, with high technical barriers and profit margins significantly exceeding traditional automotive businesses. It is projected that revenue from the liquid cooling sector will exceed 100 million yuan by 2025, indicating substantial domestic and international market potential, which could yield profits several times that of the main business [2][4][5] - The company has achieved remarkable progress in the liquid cooling pump sector, with a high market share and capacity utilization rate. The profit margins in this area are much higher than those in traditional automotive sectors [4][9] Robotics Business - The robotics segment of Feilong Co., Ltd. faces significant expectation gaps, with the market lacking sufficient awareness of its potential. The company plans to leverage its existing products, including motor controllers, to enter the industrial internet platform and extend into modules and liquid cooling products, which could become new growth drivers [2][6] - Feilong Co., Ltd. has strong motor capabilities, developed through long-term research in electronic water pumps, which positions it well for expanding its robotics business [6][8] Server Electronic Water Pump Sector - Feilong Co., Ltd. has established itself as a market leader in the server electronic water pump sector and has successfully expanded into overseas markets. The company plans to extend its product line towards modules, potentially including reducers or screw rods, which may require mergers or partnerships [2][7] Financial Performance - For 2025, Feilong Co., Ltd. expects to achieve a net profit of over 400 million yuan, with the potential for higher profits when considering the liquid cooling and robotics businesses. The current valuation is approximately 8 billion yuan, with a price-to-earnings ratio of less than 20, indicating high growth expectations for the coming years [3][9][10] - The automotive business is projected to maintain a compound annual growth rate of 15% to 20% over the next three years, providing a solid foundation for overall financial performance [3][9] Investment Recommendation - Investment in Feilong Co., Ltd. is recommended due to its low valuation, high growth potential, and strong customer relationships, particularly with companies like Xiaomi, Chery, and Xpeng. The company’s ability to extend into modules and its strong motor capabilities are expected to enhance stock value [10][11] - The market currently underestimates the stock's potential, but as time progresses, its value is expected to be recognized, presenting a strong buying opportunity during any market corrections [11] Additional Important Insights - The domestic market potential for liquid cooling pumps is estimated to be over 1 billion yuan, while the international market could reach 4 to 5 billion yuan, totaling several billion in revenue if the company captures a significant market share [5]

Group 1: Company Performance and Financials - The company has achieved continuous revenue and profit growth for 14 years, benefiting from diversified business operations and increased R&D investment [1] - The comprehensive gross margin for Q4 2024 and Q1 2025 has decreased, primarily due to a new accounting policy that shifted after-sales service costs to the cost side, impacting Q4 results [2] - The gross margin change for Q1 2025 is approximately -0.46% year-on-year, with normal fluctuations expected due to variations in product and customer mix [2] Group 2: Market and Business Environment - Trade tariffs between the US and China may raise costs for overseas customers, potentially suppressing demand for the company's energy storage business [1] - The high inventory levels at the end of 2024 and Q1 2025 are attributed to project-based sales with long confirmation cycles, expected to convert to revenue in the next 1-2 quarters [3] - The market for data center cooling in China is accelerating, driven by AI business demands, with further growth anticipated in 2025 [5] Group 3: Product and Technology Insights - Liquid cooling applications in computing equipment and data centers are driven by increased heat density and improved cooling system efficiency [6] - The procurement decision-makers for liquid cooling components vary, including chip manufacturers, server vendors, and cloud service providers [7] - The cold plate products for server liquid cooling present high barriers to entry due to design, manufacturing processes, and significant capital investment [8]

Group 1 - AI technology is driving transformation across industries, with AI computing infrastructure evolving from single GPU clusters to integrated AI factories [1][2] - Single GPU clusters have been essential for AI model training but are increasingly inadequate for complex applications, leading to the emergence of comprehensive AI factories that integrate computing, storage, networking, and cooling systems [1] - Integrated AI factories enhance development efficiency and operational performance for various AI tasks through dynamic resource allocation and advanced data management [1] Group 2 - The demand for distributed computing is growing exponentially as AI enters the inference paradigm and multi-agent systems, necessitating innovations in liquid cooling, high-bandwidth memory, and dedicated interconnect networks [2] - The strategic significance of AI infrastructure has transcended technical aspects, becoming crucial for national competitiveness and data sovereignty in the digital age [2] - Countries and large enterprises are actively establishing AI sovereignty capabilities and deploying local AI factories tailored to their unique advantages and needs, such as Indonesia and India focusing on cultural adaptation and Germany on railway automation [2] Group 3 - The global development of AI infrastructure is characterized by specialization, sovereignty, and regional differentiation, presenting a historical opportunity for countries and enterprises to build AI systems that meet their development needs [3] - Leveraging AI technology is essential for driving comprehensive digital transformation and initiating a new chapter in the development of the digital economy [3]

Core Insights - The 2025 MiaoSuan Technology and Hengtong New Product Launch Conference highlighted the importance of AI technology and liquid cooling innovations in enhancing computing power for green intelligent computing [1] - The Chinese AI computing power market is projected to reach $25.9 billion, reflecting a 36.2% growth from 2024 [1] - The new generation of immersion liquid cooling products was unveiled, marking a significant advancement in collaboration between MiaoSuan Technology and Hengtong [1] Group 1 - MiaoSuan Technology's new product features a single-layer immersion liquid cooling architecture, capable of deploying six 5U immersion liquid cooling servers within four hours, catering to the edge computing needs of small and medium enterprises [1][2] - The modular server design by Ruiqi allows for flexible assembly of CPU, storage, GPU, and power modules, optimizing cooling efficiency and energy consumption by over 30% [2][3] - The immersion cooling solution enhances energy utilization, achieving a Power Usage Effectiveness (PUE) as low as 1.15, with specific areas reaching 1.09 [3] Group 2 - MiaoSuan Technology aims to integrate energy-saving and full-stack operation and maintenance strategies to promote large-scale application of innovative immersion liquid cooling technology [3] - A strategic cooperation agreement was signed with Atec Innovations Sdn Bhd to collaborate on innovative liquid cooling technology development and ecosystem integration [5] - The conference included discussions on the liquid cooling industry's growth, technological advancements, and energy management to foster a thriving ecosystem and commercial viability [4]

Core Viewpoint - The article discusses the growth and investment opportunities in the AI computing center market in China, particularly focusing on the Huawei Ascend ecosystem and its associated companies across four key areas: complete machines, power supply, cooling, and connectivity [2]. Group 1: Complete Machines - The newly added computing power in 2024 is expected to reach approximately 20,000 PFlops, with the investment scale of China's intelligent computing center market projected to reach 288.6 billion yuan by 2028. In 2023, the market size was 87.9 billion yuan, showing a year-on-year growth of over 90% [3]. - As of August 2024, there are over 300 intelligent computing center projects in China, with a total announced computing power exceeding 500,000 PFlops. About one-third of these projects are planned to have a computing power greater than 500 PFlops, mainly funded by government or telecom operators [3]. Group 2: Power Supply - AI servers utilize three power supply methods: external cabinets, racks, and trays. The power supply unit (PSU) converts high-voltage AC from the grid to 48V DC, which is then further converted to 12V for CPUs and 0.8V for GPUs [15]. - The GB200 NVL72 cabinet is equipped with 48 5.5kW PSUs, providing a total power of 132kW. The increasing power demand in AI servers is expected to expand the AI power supply market [16][21]. Group 3: Cooling - The power consumption of single cabinets has increased from 4-6 kW in traditional computing centers to 20-40 kW or higher in intelligent computing centers. Liquid cooling technology is becoming the preferred choice due to its efficiency and low energy consumption [27]. - The market size for liquid cooling data centers in China was 8.63 billion yuan in 2023, with a growth rate of 26.2%, expected to reach 18.01 billion yuan by 2026 [29]. Group 4: Connectivity - Backplane connectors are crucial for high-performance servers and communication devices, supporting high-speed data transmission and ensuring signal integrity [38]. - The Chinese communication connector market is projected to grow at a compound annual growth rate of 30%-35%, with expectations to exceed 60 billion yuan by 2025, where AI-related connectors will account for over 70% of the market [40].

Core Viewpoint - The launch of a new generation of immersion liquid cooling products by Miaosuan Technology and Hengtong Group aims to provide sustainable solutions for digital infrastructure development, emphasizing collaboration among industry partners [1] Group 1: Product Features and Innovations - The new product features a single-layer immersion liquid cooling architecture, capable of deploying six 5U immersion liquid cooling servers within four hours, catering to the needs of small and medium-sized enterprises for edge computing services [3] - The modular server design integrates computing, networking, storage, and management into a single unit, achieving over 30% energy consumption reduction, high-density deployment (100kW per square meter), ultra-quiet operation (40dB), and extended hardware lifespan by approximately 30% [3][4] - The innovative cooling system can achieve a Power Usage Effectiveness (PUE) as low as 1.15, with specific areas reaching 1.09, and enhances the utilization rate of data center space by nearly 90% [4] Group 2: Operational and Maintenance Support - Miaosuan Technology provides a comprehensive lifecycle service for liquid cooling technology, including cleaning agents and maintenance vehicles, ensuring ease of operation and maintenance [3][4] - The company aims to lower the entry barriers for liquid cooling technology, making initial investments comparable to air cooling, ultimately achieving parity in costs between liquid and air cooling solutions [4] Group 3: Strategic Collaborations and Industry Impact - A strategic cooperation agreement was signed between Miaosuan Technology and Atec Innovations Sdn Bhd to deepen collaboration in innovative liquid cooling technology development and ecosystem integration [7] - The event included a roundtable discussion on the liquid cooling industry's future, focusing on the synergy between computing power demands, technological advancements, and energy management [7] - The new generation of intelligent computing industry parks, exemplified by the Tujing Technology project, aims to support large-scale AI model training and inference with efficient cooling solutions [7]

Core Insights - The China Petroleum Artificial Intelligence Computing Center, constructed by Zhongke Shuguang, has been successfully delivered and accepted, marking a significant milestone in the oil and gas industry as the first domestic liquid-cooled AI infrastructure project [1] - The center has been included in the National Development and Reform Commission's list of AI demonstration projects, highlighting its importance in the advancement of AI technology in China [1] Technology and Infrastructure - The center is based on the "Super Intelligence Fusion" technology system, which incorporates self-developed cold plate liquid cooling modules, an independent computing network architecture, and a cluster management system [1] - It integrates high-level security mechanisms embedded in domestic chips and supports national cryptographic algorithms, ensuring comprehensive data lifecycle protection [1] Applications and Impact - The AI computing center is designed to enhance various applications, including seismic data processing, reservoir development optimization, chemical product research and development, and customer service model development [1] - It provides robust computational support for complex numerical simulations, geological data analysis, and production optimization decision-making, thereby significantly advancing AI applications in the industry [1]

Group 1: Company Risk Management - The company is addressing risks in overseas markets, such as trade barriers and exchange rate fluctuations, by closely monitoring foreign exchange market trends and adjusting market strategies accordingly [2][3] - An international political dynamics monitoring mechanism will be established to enhance the company's resilience against geopolitical risks and trade protection measures [3] Group 2: Dividend Plans - For the 2024 fiscal year, the company plans to distribute a cash dividend of 3.00 CNY per 10 shares, totaling 40,920,000.00 CNY, based on a total share capital of 136,400,000 shares [4] Group 3: Financial Performance - In 2024, the company reported a total revenue of 1.289 billion CNY, a year-on-year increase of 40.64%, and a net profit attributable to shareholders of 91.22 million CNY, up 47.31% [5] - The revenue growth was primarily driven by data center cabinets and structured cabling products, with data center cabinet revenue at 448 million CNY (34.75% of total revenue) and structured cabling revenue at 643 million CNY (49.89% of total revenue) [5] Group 4: Future Growth Drivers - Future profit growth is expected from the data center business, driven by cloud computing and AI, as well as from the new energy storage and renewable energy sectors [6] - The company aims to meet the increasing demand for prefabricated modules in data centers, targeting an annual production capacity of 11,000 units through its subsidiary [5][6] Group 5: Industry Outlook - The data center industry is projected to grow significantly, supported by advancements in cloud computing and AI technologies, as well as increasing demand for liquid cooling solutions [6] - The company recognizes the need to innovate and adapt to emerging trends in modular and prefabricated products to maintain competitive advantages [6]

Investment Rating - The report assigns a "Buy" rating for the company [3] Core Insights - The company has been a leader in the thermal management industry for over 40 years, with a compound annual growth rate (CAGR) of 19% in revenue from 2005 to 2024 [1][10] - The company is diversifying its product offerings and expanding into the liquid cooling sector, which is expected to see significant growth driven by data centers, energy storage, and ultra-fast charging applications [1][2][3] - The liquid cooling market is projected to reach a scale of 140 billion yuan by 2025 for data centers, 121.5 billion yuan for energy storage, and 31.7 billion yuan for ultra-fast charging [2][3][72][74] Summary by Sections 1. Deepening in Thermal Management Industry and Product Diversification - The company has established itself as a leader in the thermal management industry, originally founded in 1958, and has successfully transitioned from commercial vehicles to passenger vehicles and industrial heat exchange [9][10] - Revenue has shown steady growth, with a total revenue of 127.02 billion yuan in 2024, reflecting a year-on-year increase of 15.28% [14][19] - The company has a diversified product matrix and is expanding into new areas such as digital energy, including energy storage and data center liquid cooling products [1][3] 2. Liquid Cooling Industry: Multiple Growth Points - The liquid cooling market is expected to grow significantly, with the penetration rate in energy storage projected to reach 35% by 2025, and the market size estimated at 121.5 billion yuan [2][71] - Data center liquid cooling is driven by increasing power consumption and regulatory policies, with a market size expected to reach 140 billion yuan by 2025 [2][64] - Ultra-fast charging applications are also expected to grow, with a market size projected at 31.7 billion yuan by 2025, as traditional cooling methods cannot meet the rising thermal demands [2][74] 3. Company Transition from Automotive Thermal Management Leader to Liquid Cooling Leader - The company is leveraging its automotive-grade technology to expand into energy storage and data center liquid cooling, positioning itself advantageously in the emerging liquid cooling market [3][43] - The company has a robust order book in its digital energy business, which is expected to contribute significantly to revenue growth [3][14] - The company forecasts revenues of 156 billion yuan, 186 billion yuan, and 219 billion yuan for 2025, 2026, and 2027 respectively, with corresponding net profits of 11.0 billion yuan, 13.5 billion yuan, and 16.3 billion yuan [3][14]

Group 1: Business Performance and Financials - The company reported a significant increase in revenue and net profit for Q1 2025, attributed to a substantial growth in orders for new energy vehicles from Zhongzhi Yike, with revenue exceeding 700 million and net profit over 10 million compared to the previous year [14] - The company’s main business is primarily focused on the domestic market, with export business accounting for approximately 5% to 10% of total revenue, making the impact of US-China trade tensions manageable [6] - The company maintains a healthy financial position with a debt-to-asset ratio around 40% and sufficient cash flow, ensuring that the bankruptcy proceedings of its major shareholder do not adversely affect its operations [7][8] Group 2: Liquid Cooling Business Development - The liquid cooling segment is actively developing, with small batch orders and pilot projects showing good compatibility and stability [4] - The company has secured a 220 million yuan order for buses from Zhongzhi Yike, with revenue recognition expected as production progresses [2] - Collaboration with the Ningxia Zhongwei government on liquid cooling technology is ongoing, but no significant breakthroughs have been achieved yet [9][10] Group 3: Shareholder and Corporate Governance - As of May 9, 2025, the company has 80,870 shareholders [13] - The company’s major shareholder is undergoing bankruptcy proceedings, but this is not expected to hinder the transfer of control or impact major asset restructuring [7] - The company emphasizes maintaining independence in operations and governance despite the challenges faced by its major shareholder [7] Group 4: Future Outlook and Risks - The company has not provided specific earnings forecasts for 2025, adhering to disclosure regulations [11] - The management is focused on enhancing core competitiveness and transparency to improve stock performance, which is influenced by various external factors [6] - Investors are advised to remain cautious regarding investment risks associated with market fluctuations and the ongoing legal proceedings involving the major shareholder [8]