Core Insights - The report from Guosen Securities highlights the increasing power of data centers and the role of liquid cooling solutions in addressing high energy consumption and heat dissipation challenges [1][2] Group 1: Industry Overview - The liquid cooling sector is in its early development stage, with various solutions having distinct advantages and disadvantages, and no established optimal solution yet [1] - According to SemiAnalysis, the global installed capacity of AI data centers is expected to reach 59 GW by 2028, potentially generating a demand for approximately 89,000 tons of cooling liquid [1] - Traditional server installations are projected to contribute an additional demand of 19,000 tons of cooling liquid [1] Group 2: Energy Consumption and Efficiency - By 2024, the total electricity consumption of computing centers in China is expected to reach 166 billion kWh, accounting for 1.68% of the total electricity consumption in society [2] - The average Power Usage Effectiveness (PUE) for ultra-large data centers in China is currently 1.46, while for large data centers, it is 1.55 [2] - New standards set by the Ministry of Finance, Ministry of Ecology and Environment, and Ministry of Industry and Information Technology require that the energy ratio of data centers not exceed 1.4 starting June 2023, and 1.3 by 2025 [2] Group 3: Liquid Cooling Technologies - The main liquid cooling technologies include cold plate and immersion cooling, with cold plate cooling being the most widely used due to its mature technology [3] - Liquid cooling offers multiple advantages such as high heat exchange efficiency, energy savings, and reduced noise [3] - Cold plate cooling is categorized into indirect and direct cooling, with indirect cooling typically being cold plate and direct cooling including immersion and spray cooling [3] Group 4: Cooling Liquid Types and Applications - Different types of cooling liquids are suited for various applications, with water-based cooling liquids used in single-phase cold plate cooling and refrigerants used in dual-phase systems [3] - Oil-based and fluorinated cooling liquids can be used in both single-phase and multi-phase immersion cooling [3] - Water-based cooling liquids are cost-effective but may promote algae and bacteria growth, while oil-based liquids have good insulation but higher viscosity [3] - Fluorinated cooling liquids, including perfluoropolyether and perfluoroamines, offer good flow properties and low toxicity but are relatively expensive [3]

Core Viewpoint - The company reported a revenue of 700 million yuan for 1H25, reflecting a year-on-year increase of 6.3%, and a net profit attributable to shareholders of 104 million yuan, corresponding to an earnings per share of 0.99 yuan, which is a year-on-year increase of 10.76% [1] Financial Performance - In 2Q25, the company achieved a revenue of 349 million yuan, a decrease of 4.29% year-on-year, with a net profit of 51 million yuan, an increase of 0.68% year-on-year, primarily due to factory relocation impacting overall performance [1][3] - The gross margin for 2Q25 was approximately 27.5%, an increase of 5.9 percentage points year-on-year and 1.7 percentage points quarter-on-quarter, attributed to an improved product mix and higher margins in the heat pump and automotive businesses [3] Business Segments - The automotive business continued to grow significantly, while the HVAC (heating, ventilation, and air conditioning) business experienced a slight decline. For 1H25, the revenue from HVAC and automotive segments was 422 million yuan and 260 million yuan, respectively, with year-on-year changes of -3.98% and +28.18% [2] - The HVAC segment faced challenges due to a slowdown in overall terminal demand, but the heat pump business showed sustained high growth. The company is also expanding into energy-saving solutions for data centers [2] - The automotive segment is enhancing its product offerings and has completed the construction of a new production base for electric vehicle electronics and smart manufacturing, expected to drive continued revenue growth [2] Future Outlook - The company anticipates a return to growth following the completion of the factory relocation, with expectations of sequential improvement in performance [3] - Due to the impact of the factory relocation on 2Q25, the net profit forecast for 2025 has been adjusted down by 12% to 207 million yuan, while the 2026 net profit forecast has been raised by 14% to 324 million yuan, reflecting positive contributions from the data center and automotive businesses [4] - The current stock price corresponds to a price-to-earnings ratio of 42.4x for 2025 and 27.1x for 2026, with a target price increase of 25% to 100 yuan, indicating a potential upside of 7.5% compared to the current stock price [4]

Core Insights - The rapid growth in AI computing power is driving the demand for advanced cooling solutions, with liquid cooling becoming a necessary standard due to the limitations of traditional air cooling systems [1][14] - The period from 2025 to 2027 is identified as a critical window for technology penetration and performance realization in the liquid cooling market [1][14] Group 1: Cooling Demand and Technology Trends - The demand for cooling solutions is increasing due to the exponential growth in computing power driven by AI technologies, leading to significant rises in chip thermal design power [2][11] - Traditional air cooling is inadequate for high-power density data centers, with liquid cooling expected to see increased penetration as a result of its superior thermal management capabilities [5][12] - The cooling methods for data centers vary based on power density, with air cooling suitable for low-density centers and liquid cooling becoming essential for high-density environments [6] Group 2: Market Growth and Projections - The global data center capacity using liquid cooling is projected to increase significantly, with net additions expected to reach 2.82 GW by 2025 and 9.10 GW by 2028, reflecting a compound annual growth rate (CAGR) of 47.78% [11] - The liquid cooling market in China is forecasted to grow from 149.8 billion yuan to 347.4 billion yuan between 2025 and 2027, with an overall CAGR of 52.3% [12][14] - The market for newly constructed liquid cooling systems is expected to grow from 11.69 billion yuan in 2025 to 30.51 billion yuan by 2027, with a CAGR of 61.6% [12] Group 3: Industry Ecosystem - The liquid cooling industry ecosystem includes upstream component suppliers, midstream IT equipment manufacturers, and downstream users such as telecom operators and third-party IDC service providers [8] - Key components in the liquid cooling supply chain include quick disconnects, cooling distribution units, and various cooling liquids and systems [8] Group 4: Investment Opportunities - Companies such as Inspur (曙光数创), High Cloud (高澜股份), and others are positioned to benefit from the growth in the liquid cooling market, driven by the increasing demand for efficient cooling solutions in data centers [14]

Summary of Key Points Core Viewpoint The company, Shenzhen Kexin Communication Technology Co., Ltd., is changing the use of part of the funds raised from a specific stock issuance due to significant market changes affecting its original project, the "Energy Storage Lithium Battery System R&D and Industrialization Project." The funds will now be redirected to a new project focused on "Data Center Green Low-Carbon Technology Renovation" to enhance operational efficiency and align with market demands [1][6][9]. Group 1: Fundraising and Financial Overview - The total net amount raised from the stock issuance was approximately RMB 516.19 million after deducting issuance costs [2]. - The original project, "Energy Storage Lithium Battery System R&D and Industrialization Project," had a planned investment of RMB 54 million, with an adjusted investment amount of RMB 36.13 million [3][4]. - The new project, "Data Center Green Low-Carbon Technology Renovation," has a total investment of RMB 41.40 million, with RMB 36.59 million allocated from the raised funds [4][10]. Group 2: Project Change Reasons - The original project aimed to expand production capacity in the energy storage sector but faced significant market changes, including increased competition and price volatility [7][9]. - The company decided to shift its focus to the new project to improve fund utilization efficiency and adapt to the evolving market landscape [8][9]. Group 3: New Project Details - The "Data Center Green Low-Carbon Technology Renovation" project aims to enhance energy efficiency in data centers through advanced energy management systems and equipment standardization [10][12]. - The project targets small to medium-sized data centers, with initial implementation focused on regions like Guangdong and Sichuan [11][13]. - The expected annual revenue from the new project is estimated at approximately RMB 162.94 million, with a projected net profit of around RMB 16.29 million [14]. Group 4: Approval and Compliance - The change in fundraising use has been approved by the company's board and will be submitted for shareholder approval [15]. - The sponsor, Guosen Securities, has confirmed that the change complies with relevant regulations and guidelines [16].

Group 1 - The European Union's energy commissioner plans to propose an energy-saving scheme for data centers [1]