Investment Rating - Investment recommendation: Outperform the market (maintained) [7] Core Insights - The further popularization of AI applications is driving a new wave of data center construction. The domestic data center construction demand is categorized into six major areas: internet, operators, IDC manufacturers, finance, government, and others. It is estimated that from 2024 to 2027, the three-year CAGR for newly added data center power in China will be 37.0%, creating investment opportunities in supporting equipment such as liquid cooling, HVDC, and server power supplies [4][8]. Summary by Sections 1. AI Driving a New Wave of Data Center Construction - The overall scale of data centers in China continues to grow, with the number of standard racks exceeding 9 million by 2024, a year-on-year increase of over 11%. The PUE value has been decreasing, reaching approximately 1.48 in 2023 [17][19]. - The AI data center constitutes a significant portion of the growth, with an expected addition of 3.6GW in 2025, representing a year-on-year increase of 220%, and 9.9GW in 2027 [8][75]. 2. Multi-Industry Demand Resonance Enhancing Computing Infrastructure Space - Internet capital expenditure is on the rise, with Alibaba and Tencent's combined capital expenditure reaching approximately 52.1 billion yuan in Q1 2025, a year-on-year increase of about 112% [10][51]. - The three major telecom operators are increasing their computing-related investments, with a total of approximately 85.9 billion yuan in 2024, a year-on-year growth of 25% [11][54]. - IDC manufacturers are ramping up project construction and resource reserves, with five key companies' capital expenditures totaling approximately 17.2 billion yuan in 2024, a year-on-year increase of 17.8% [12][63]. 3. Investment Recommendations: Focus on Leading Companies in Each Segment - As the shipment of next-generation high-performance computing chips accelerates, the penetration rate of AI data centers is expected to rise rapidly, leading to increased demand and technological iterations in multiple areas such as liquid cooling and HVDC [13][78].

Summary of Conference Call Records Industry Overview - The records focus on the inverter, photovoltaic, and electrical equipment industries, specifically discussing export data and market trends for June 2025 and projections for the third quarter of 2025 [1][2][3]. Key Points and Arguments Inverter Exports - In June 2025, inverter exports reached $920 million, showing a year-on-year increase of 7% and a quarter-on-quarter growth of 10% [2]. - The total inverter export amount for Q2 2025 was approximately $2.6 billion, reflecting a 50% quarter-on-quarter increase [2]. - Optimism for Q3 2025 is based on a low comparison base from the previous year, suggesting potential growth in exports [3]. Regional Market Performance - **Asia**: Emerging markets in Asia showed strong demand for solar storage systems, with June exports increasing by 8% year-on-year and 18% quarter-on-quarter, totaling $370 million [4]. - **Australia**: Benefiting from a 30% subsidy policy for household storage, exports surged by 90% in June, reaching $30 million [5]. - **Europe**: The European market faced challenges, with exports declining year-on-year but slightly increasing quarter-on-quarter, totaling $340 million. Demand in Germany and Italy slowed, although new policies may mitigate some declines [6]. - **Pakistan**: Exports dropped significantly from $65 million in June 2024 to $33 million in June 2025 due to inventory management issues, but the market has returned to normal supply levels [7][8]. - **Saudi Arabia**: Exports reached $60 million, primarily driven by large-scale deliveries of centralized inverters [10]. Electrical Equipment Exports - The electrical equipment sector, including transformers, high-voltage switches, and meters, showed varied performance: - **Transformers**: The most robust segment, with exports growing by 37% year-on-year in the first half of 2025, totaling 27 billion yuan [16]. - **High-Voltage Switches**: Exports increased by 32.5% year-on-year, with significant demand from Asia, Africa, and Europe [18][19]. - **Electric Meters**: Exports saw a slight increase of 2.8% year-on-year, but June exports fell by 21.7% due to high base effects from the previous year [20]. Future Outlook - The outlook for transformer exports remains positive, particularly in North America, with expectations of continued growth due to strong demand and favorable tariff conditions [17]. - The high-voltage switch market is also expected to maintain strong demand, driven by urgent local grid construction needs [19]. - The electric meter segment requires close monitoring to determine if the recent declines are indicative of broader industry issues or simply fluctuations in order timing [20]. Investment Recommendations - Investment focus should prioritize high-demand segments such as transformers and high-voltage switches, with companies like Siyi Electric and Mianyang Electric showing strong performance [21]. - Companies benefiting from robust demand in Asia, Africa, and Europe, such as Sanxin Medical and Haixing Electric, are also recommended for consideration [21]. Additional Important Insights - The overall performance of the photovoltaic and electrical equipment sectors indicates a mixed recovery, with certain regions and segments showing strong growth while others face challenges [1][6][21]. - The ongoing transition towards solar storage systems and the impact of government policies in various regions are critical factors influencing market dynamics [4][5][6].

Summary of Conference Call for Zhongheng Electric Industry and Company Overview - The conference call focuses on Zhongheng Electric, a company specializing in HVDC (High Voltage Direct Current) technology and power electronics, particularly in the context of data centers and cloud computing [2][3][5]. Key Points and Arguments HVDC Technology and Market Position - Zhongheng Electric has a significant advantage in the HVDC sector, especially in replacing UPS systems, with promising prospects for its 800V products due to increasing power supply requirements [2][5]. - The penetration rate of the 240V HVDC products has increased significantly, with major clients like Alibaba, Tencent, and ByteDance validating the technology [2][5]. - The company is expected to achieve revenues of 200 million in 2025, maintaining a PE ratio of around 40 times, driven by strong market expectations for HRDC (High Reliability Direct Current) growth [2][9]. Cloud Capital Expenditure (CAPEX) Recovery - The anticipated recovery of cloud CAPEX is favorable for Zhongheng, with Alibaba's capital expenditure expected to exceed 100 billion this year, leading to significant orders for B30 and B40 products [2][8]. - The company is positioned to benefit from large-scale procurement as major clients restore their KPIs, with expectations of high order and revenue growth in the data center business [11][12]. Software and Digitalization - Zhongheng Electric has been developing its software capabilities since 2015, focusing on digitalization and cloud platform solutions, which, while not rapidly growing, enhance the company's overall software capabilities [3][6]. Competitive Landscape and Innovation - The company has a strong patent portfolio and is a key player in establishing HVDC standards in China, providing it with a competitive edge [3][15][21]. - Zhongheng's product range covers various sectors, including energy storage and smart grid solutions, leveraging its expertise in power electronics and digital energy platforms [15][16]. Financial Performance and Projections - The company reported a doubling of order revenue in Q1, although Q2 may show some pressure due to high non-financial income in the previous year [10]. - The overall revenue growth is projected to exceed 30-35% over the next few years, with expectations of reaching 500 million by the third year [27]. Customer Base and Market Trends - The demand for data centers is expanding, particularly among internet companies, with Zhongheng being a core beneficiary due to its partnerships with major clients like Alibaba, Tencent, and ByteDance [19]. - The company is also well-positioned to meet the increasing demand from telecom operators and financial institutions for data center solutions [19]. Management and Corporate Structure - The company has a stable ownership structure, with significant shares held by the controlling shareholder and their spouse, while new management focuses on expanding overseas markets [14]. - The establishment of a subsidiary in Singapore is crucial for expanding into Southeast Asia and global markets [14][22]. Challenges and Risks - Despite the positive outlook, there are concerns regarding potential price reductions in large-scale procurement, which could impact margins [12]. - The company faces geopolitical risks and tariff disruptions in overseas markets, although its domestic production mitigates these impacts [22][23]. Additional Important Insights - Zhongheng Electric's strong relationships with major clients and its ability to provide customized solutions enhance its market position and customer loyalty [21]. - The company is actively expanding its presence in the digital grid sector, providing software services for power grid companies and generation groups [24]. - The communication power supply segment remains a core product area, with ongoing demand from both domestic and international markets, particularly in the context of 5G infrastructure [25][26].

Summary of Conference Call Notes Industry or Company Involved - The discussion revolves around the AIDC (Artificial Intelligence Data Center) sector and specific companies within this industry Core Points and Arguments 1. **Revenue Growth**: The combined revenue of three companies in the AIDC sector for the fiscal year ending in Q2 2025 is reported at 2.39 billion, reflecting a year-on-year growth rate of 17% to 18%. The revenue growth rate for Q4 2024 is noted to be 8.6%, indicating a significant increase compared to previous periods [1] 2. **Contract Liabilities**: The total contract liabilities for the three companies amount to 850 million, which is a substantial increase from 540 million in the previous year, indicating nearly a threefold growth [1] 3. **Inventory Levels**: The inventory level stands at 3.76 billion, showing a year-on-year increase of 21.5%, which is higher than the revenue growth rate. This suggests a potential for increased product delivery in Q2 [2] 4. **Profitability Indicators**: The improvement in contract liabilities and inventory levels is expected to lead to high revenue growth and an increase in profit margins for the companies involved [4] 5. **Market Sentiment**: The sentiment in the domestic market is influenced by concerns over global tax center construction slowdowns, but major companies like Amazon, Microsoft, and Meta are maintaining high capital expenditure growth [5][6] 6. **Infrastructure Investment**: There is a strong emphasis on continued investment in infrastructure projects, with government support for foundational and industrial data infrastructure projects [6] 7. **Tendering Process**: The tendering process for major companies like Alibaba has been slower than anticipated, but there is optimism regarding upcoming tenders from Tencent and others [9][10] 8. **OEM Environment**: The OEM (Original Equipment Manufacturer) environment is highlighted as currently the most profitable segment, with strong pricing power [11] 9. **Market Opportunities**: The current market conditions present a good opportunity for investment, especially as the sector has seen a price correction of 10% to 20% [8] 10. **Performance Expectations**: There is an expectation that the performance of the AIDC companies will exceed conservative market expectations in Q2 and Q3, with potential profit catalysts emerging [15] Other Important but Possibly Overlooked Content 1. **Price Trends**: The price of scattered orders has reportedly exceeded 3.5 million, indicating a shift in pricing dynamics within the industry [13] 2. **AI Development Impact**: The ongoing development of AI is noted as a significant factor influencing industry trends and sentiment [14] 3. **Company-Specific Performance**: Companies like KOTAI and Taihao are mentioned as having strong positions within the industry, with expectations for their performance to be closely monitored [12]

Summary of IDC Industry Conference Call Industry Overview - The conference call focuses on the IDC (Internet Data Center) industry, discussing the performance and outlook of various companies within this sector [1][2][3]. Key Points and Arguments 1. **Market Correction**: Following Tencent's earnings report on March 18, the IDC sector experienced a significant market correction, with domestic stocks declining by 20% to 30% and U.S. stocks showing even larger adjustments, returning to early-year levels [1]. 2. **Earnings Pressure**: The overall profit and earnings outlook for the IDC industry is expected to be under pressure throughout 2023, particularly in the first and second quarters. However, 2024 is anticipated to be a year of significant bidding activity for the industry [2][3]. 3. **Bidding and Delivery Cycle**: The bidding process in 2024 is expected to see a notable increase compared to previous years. However, the transition from bidding to delivery and revenue realization involves a lengthy preparation period, often taking six months or longer [2]. 4. **Revenue Recognition**: Revenue realization is expected to be concentrated in the second half of 2023, with profitability requiring utilization rates to reach approximately 50% to 60% [3]. 5. **Impact of Capital Expenditure (CapEx)**: Concerns regarding a potential decline in overseas capital expenditures, particularly from major companies like Microsoft, have contributed to market volatility. However, recent reports indicate that major firms are maintaining their CapEx plans [3][4]. 6. **Microsoft's CapEx Stability**: Microsoft clarified that the cancellation of certain data center leases was a normal adjustment based on project selection and delivery conditions, rather than a sign of reduced capital spending [4]. 7. **H20 Procurement Impact**: The procurement plans of major internet companies may face slight impacts due to recent developments regarding H20, but overall, the previous year's bidding volumes are expected to remain unaffected [5][6]. 8. **Domestic Chip Acceptance**: There is an increasing acceptance of domestic chips among major internet companies, which is a positive development for the industry [6]. 9. **Positive Market Sentiment**: Recent media reports suggest potential new chip releases tailored for the Chinese market, which could positively influence market sentiment [7]. 10. **Valuation Recovery**: The IDC sector has seen significant valuation adjustments, with some companies trading at around 20 times EV/EBITDA. The potential for a rebound in the sector is viewed favorably, especially following recent market corrections [8][9]. Additional Important Content - The call highlighted the strong performance of IDC companies during periods of increased demand, such as during the pandemic, where valuations reached as high as 45 times EV/EBITDA [9]. - The overall sentiment towards the IDC sector is cautiously optimistic, with expectations for a rebound in stock prices as the market stabilizes [10].

Core Insights - Google (GOOG.O) plans to invest $25 billion in building data centers in Pennsylvania and neighboring states [1] Group 1 - The investment aims to enhance Google's infrastructure and support its growing cloud services [1] - This initiative is part of a broader strategy to expand data center capacity across the United States [1] - The investment is expected to create thousands of jobs in the region [1]

Core Viewpoint - The announcement details the progress of the "China Mobile (Ningxia Zhongwei) Data Center B Zone B01 and B02 Room EPC General Contracting" project, highlighting the signing of an internal agreement among the consortium members, which includes Shanghai Chengdi Xiangjiang Data Technology Co., Ltd.'s wholly-owned subsidiary, Xiangjiang System Engineering Co., Ltd. [2][3] Project Overview - The project is led by China State Construction Engineering Corporation (CSCEC) with a planned start date of April 30, 2025, and an expected completion date of July 30, 2025, totaling 92 calendar days for the construction period [2][3]. - The internal agreement specifies the roles and responsibilities of the consortium members, including CSCEC, Xiangjiang System, and Huaxin Consulting Design Research Institute [2][3]. Financial Details - The total project cost is approximately RMB 1.631 billion, which includes design fees of RMB 6.48 million, construction and installation fees of RMB 338.76 million, electromechanical construction fees of RMB 385.99 million, and equipment procurement fees of RMB 906.34 million [4]. Responsibilities and Work Breakdown - CSCEC is responsible for overall project management, including investment, quality, progress, and safety control, as well as coordinating with relevant parties [5][6]. - Xiangjiang System is tasked with the electromechanical aspects, including procurement, installation, and testing, ensuring compliance with data center construction standards [7][8]. - Huaxin Consulting is responsible for the design work, including planning and construction design for the data center buildings [9][10]. Impact on Company - The signing of the internal agreement is expected to have a positive impact on the company's future revenue, although the exact financial implications will be determined by actual audit results [11][12].

Group 1: Photovoltaic Silicon Material Industry - The photovoltaic silicon material industry is expected to accelerate capacity consolidation, with the Ministry of Industry and Information Technology emphasizing the need for high-quality development in the solar industry [1] - By 2027, the industry is projected to enter a stable development phase, with significant advantages in the silicon material segment due to differences in capacity costs and financial strength among companies [1] - Key companies to watch include GCL-Poly Energy, Xinte Energy, Tongwei Co., and TBEA [1] Group 2: Solid-State Battery Industry - The solid-state battery industry is witnessing continuous advancements, with equipment from Winbond Technology successfully delivered to major domestic clients [2] - Material production is ramping up, with significant capacity in oxide electrolytes and expectations for sulfide electrolytes to achieve ton-level shipments by 2025 [2] - Companies of interest in this sector include Xiamen Tungsten, Tianqi Lithium, and others involved in the solid-state battery supply chain [2] Group 3: Offshore Wind Power Development - The central government is promoting the orderly development of offshore wind power, with a focus on enhancing the marine economy and encouraging private investment [3] - Goldwind Technology has secured over 7.7GW of international orders for 2024, with significant revenue growth reported for its international subsidiary [3] - Key players in the wind power sector include Goldwind Technology, Oriental Cable, and Dajin Heavy Industry [3] Group 4: Data Center Investment - Global data center investments are accelerating, with Amazon planning to invest AUD 20 billion (approximately USD 13.1 billion) in Australia and SK Telecom collaborating with Amazon Web Services for a significant data center project in South Korea [4] - The deployment of NVIDIA's GB300 AI systems is underway, indicating a growing demand for AI computing resources [4] - Companies to monitor in the AIDC power equipment sector include Jinpan Technology, Xinte Electric, and others [4] Group 5: Key Company Earnings Forecasts - The report provides earnings forecasts and investment ratings for several companies, with Goldwind Technology rated "Outperform" and projected to have an EPS of 1.28 in 2025 [5] - Jinpan Technology and other companies also received "Outperform" ratings, indicating positive market sentiment [5] Group 6: Industry Performance Overview - The electric power equipment sector outperformed the market in June, with a 6.68% increase compared to a 2.5% rise in the CSI 300 index [13] - The sector's PE ratio at the end of June was 30.3, reflecting a slight recovery in valuations [13] - The report highlights that the electric power equipment industry has shown strong performance across various sub-sectors, including lithium battery materials and wind power [23]

1. Report Industry Investment Rating No information provided in the content. 2. Core Viewpoints of the Report - The domestic sales growth of traditional household refrigeration equipment is expected to shift from high - speed to a relatively moderate range, and attention should be paid to factors such as policy impact, raw material costs, and market competition [4][49]. - The overseas expansion potential of domestic household refrigeration equipment enterprises is promising, and emerging markets have broad development prospects [49]. - In the field of dedicated refrigeration equipment, with the development of downstream industries such as data centers, there is a higher demand for the efficiency of refrigeration equipment, and enterprises need to provide comprehensive solutions [41][49]. - Suggest paying attention to industry leaders in the household refrigeration equipment field and domestic companies with rich reserves in data - center refrigeration solutions in the dedicated refrigeration equipment field [49]. 3. Summary According to Relevant Catalogs 3.1 Traditional Household Refrigeration Equipment - **Air Conditioner**: In 2025, the domestic sales of air conditioners maintained a strong trend in the first half of the year, with accelerated shipment growth in the second quarter due to a low base last year and promotional activities. The "trade - in" policy was optimized, with an increased subsidy limit. However, considering the "low - before - high" shipment pattern in 2024, the marginal pulling effect of the "trade - in" policy on short - term shipments may slow down. Attention should be paid to raw material cost changes, and online channels may intensify price competition in segmented markets [4][5]. - **Refrigerator and Freezer**: After relatively rapid growth in 2023 - 2024, the production growth rate of refrigerators and freezers slowed down in 2025. In May 2025, refrigerator production increased by 2.0% year - on - year, with domestic sales increasing by 13.7% and exports decreasing by 6.4%. Freezer production increased by 7.5% year - on - year, with domestic sales and exports increasing by 2.5% and 3.1% respectively. North American exports declined significantly, while African exports grew rapidly. Future production schedules are expected to be adjusted according to market demand and policy changes [23]. 3.2 Comprehensive Leaders and Dedicated Refrigeration Equipment - **Samsung Electronics**: In May 2025, Samsung Electronics acquired the German heating, ventilation, and air - conditioning solutions provider FläktGroup for 1.5 billion euros to strengthen its investment in the HVACR field and enter the data - center refrigeration market [29]. - **Daikin**: In 2023, Daikin acquired the American custom air - handling equipment manufacturer Alliance Air Products to meet the growing demand for data - center cooling solutions. In the fiscal year 2024, Daikin achieved both revenue and profit growth and expects stable profit growth in the fiscal year 2025 [34]. - **Trane Technologies**: The organic revenue of Trane Technologies has been growing for multiple quarters. In the first quarter of the fiscal year 2025, the company's overall organic revenue increased by 11% year - on - year, and the adjusted earnings per share increased by 26% year - on - year. Its commercial HVAC orders in the Americas reached a record high [35]. - **Data Center Refrigeration**: The development of AI and other industries is expected to drive the construction of data centers. By 2025, new and renovated large - scale and super - large - scale data centers are required to reduce their power usage effectiveness (PUE). Efficient refrigeration solutions have become an important R & D direction for relevant enterprises. Different cooling technologies have their own characteristics, and appropriate solutions should be selected according to specific scenarios [41][43]. 3.3 Summary and Investment Suggestions - **Summary**: The traditional household refrigeration equipment industry is facing challenges such as policy changes, cost fluctuations, and market competition, while the dedicated refrigeration equipment industry has opportunities due to the development of downstream industries [49]. - **Investment Suggestions**: In the household refrigeration equipment field, pay attention to industry leaders such as Midea Group, Gree Electric Appliances, and Haier Smart Home, as well as upstream component companies. In the dedicated refrigeration equipment field, focus on domestic companies with rich reserves in data - center refrigeration solutions, such as Invicom and Shenling Environment [49].

Group 1: Electricity Consumption Trends - In May, total electricity consumption reached 809.6 billion kWh, with a year-on-year growth of 4.4%, indicating a moderate overall increase but significant structural differentiation [3] - The primary industry saw an 8.4% increase in electricity consumption, reflecting accelerated agricultural modernization and rural infrastructure development, particularly in livestock and smart agriculture [3] - The secondary industry experienced a slower growth of 2.1%, likely due to structural adjustments in the industrial sector, with high-energy-consuming industries being regulated while high-tech manufacturing, such as automotive and general equipment manufacturing, showed strong performance with growth rates of 8.4% and 6.1% respectively [3] Group 2: Sector-Specific Insights - The tertiary industry and residential electricity consumption grew by 9.4% and 9.6% respectively, indicating a recovery in the service sector, particularly in charging and swapping services for electric vehicles, which is directly related to the proliferation of new energy vehicles and the expansion of the digital economy [3][4] - The rapid growth of the charging and swapping service industry suggests significant market potential for supporting infrastructure for new energy vehicles [4] - Internet and related services saw a remarkable 29.8% increase in electricity consumption, highlighting the emergence of AI and cloud computing as major electricity consumers, which may present investment opportunities in computing infrastructure and data center construction [4] Group 3: Investment Opportunities - The growth in high-tech and equipment manufacturing, particularly in the new energy vehicle supply chain, is noteworthy, with BYD's battery installation volume reaching nearly 28.5 GWh in May, a year-on-year increase of over 50%, indicating a boom in the new energy vehicle sector [3] - The implementation of green electricity direct connection policies is significant, as it encourages companies to enhance energy efficiency and opens new opportunities in distributed photovoltaics and energy storage [5] - Long-term investment focus should be on leading companies in high-tech manufacturing, especially in the new energy vehicle and high-end equipment sectors, as well as in the new energy generation and storage industries, which are expected to see stable growth due to advancing green electricity policies [5]