Investment Rating - The report maintains an "Outperform" rating for the fluorochemical industry [6][9]. Core Insights - The fluorochemical industry is experiencing a positive trend with the production of air conditioners showing a year-on-year increase starting from April 2026, supported by a recovery in domestic demand and installation needs driven by housing projects [3][5]. - Prices of fluorinated polymers are on the rise due to cost support and supply-demand improvements, with notable increases in PTFE and PVDF prices [4][5]. - The report highlights the ongoing demand for refrigerants, particularly R32, R134a, and R125, which are expected to maintain a tight supply-demand balance, leading to potential price increases [5][6]. Summary by Sections 1. Industry Performance - As of February 27, 2026, the fluorochemical index rose by 4.35% compared to January, outperforming the Shanghai Composite Index by 3.26% [1][16]. - The National Chemical Fluorochemical Price Index reported a slight increase of 0.21% for fluorochemicals [18]. 2. Refrigerant Market Review - The prices of major refrigerants have increased, with R32 rising to 61,500-62,500 CNY/ton and R134a to 58,000 CNY/ton [2][23]. - The report notes a significant increase in the long-term contract prices for R32 and R410A, indicating a bullish market outlook [22]. 3. Demand from Liquid Cooling - The report emphasizes the growing demand for fluorinated liquids and refrigerants driven by the shift towards liquid cooling technologies in data centers, which are expected to see substantial market growth [56][67]. - The liquid cooling market in China is projected to exceed 100 billion CNY by 2027, with a compound annual growth rate of 51.4% [63]. 4. Refrigerant Quota for 2026 - The Ministry of Ecology and Environment has announced the refrigerant quotas for 2026, indicating a slight increase in production quotas for R32, R125, and R134a, while maintaining strict controls on HCFCs [69][70]. - The report anticipates that the tightening of refrigerant quotas will support long-term price stability and profitability for leading companies in the sector [5][69]. 5. Air Conditioning Production Data - Air conditioning production is expected to see a year-on-year increase starting in April 2026, with a recovery in domestic demand and installation needs [3][81]. - The report notes that the overall production of air conditioners in March 2026 showed a decline of 6.1% year-on-year, but is projected to recover in the following months [81].

Investment Rating - The report maintains an "Outperform" rating for the fluorochemical industry [6][9]. Core Views - The fluorochemical industry is experiencing a positive trend with the production of air conditioners showing a year-on-year increase starting from April 2026, supported by a recovery in domestic demand and installation needs driven by housing projects [3][5]. - Prices of fluorinated polymers are on the rise due to cost support and supply-demand improvements, with notable increases in PTFE and PVDF prices [4][5]. - The report highlights the ongoing demand for refrigerants, particularly R32, R134a, and R125, which are expected to maintain a tight supply-demand balance, leading to potential price increases [5][6]. Summary by Sections 1. Industry Performance - As of February 27, 2026, the fluorochemical index rose by 4.35% compared to the end of January, outperforming the Shanghai Composite Index and the CSI 300 Index [1][16]. 2. Refrigerant Market Review - The prices of major refrigerants have increased, with R32 rising to 61,500-62,500 CNY/ton and R125 to 51,000-56,000 CNY/ton as of February 28, 2026 [2][23]. 3. Liquid Cooling Demand - The report emphasizes the growing need for liquid cooling solutions in data centers, which is expected to drive demand for fluorinated liquids and refrigerants [56][67]. 4. Refrigerant Quota Announcement - The 2026 refrigerant quota has been announced, with a slight increase in production quotas for R32, R125, and R134a, indicating a sustained positive outlook for refrigerant products [68][70]. 5. Air Conditioner Production Data - Air conditioner production is projected to show a year-on-year increase starting in April 2026, with March production figures indicating a decline of 1.5% year-on-year [3][81]. 6. Fluorinated Polymer Prices - Prices for fluorinated polymers such as PTFE and PVDF are expected to recover, driven by low inventory levels and supply constraints [4][5]. 7. Key Company Performance Predictions - Companies like Juhua Co., Dongyue Group, and Sanmei Co. are highlighted as key players with strong earnings growth potential, maintaining an "Outperform" rating [9].

Group 1 - Dongyue Group (00189) saw a nearly 6% increase in stock price, currently at HKD 14.09 with a trading volume of HKD 302 million [1] - Market liquidity is expected to gradually return next week as companies resume operations after the Spring Festival, with demand anticipated to be released after March [1] - The refrigerant market is supported by low inventory levels and bullish expectations, maintaining high price consolidation [1] Group 2 - Export market orders are continuing to progress, and the upcoming refrigeration exhibition in April may bring new opportunities for the refrigerant market [1] - Guosen Securities indicated that the tightening of refrigerant quotas is a long-term trend, with a positive outlook for mainstream refrigerants like R32, R134a, and R125, which are expected to have significant price upside [1] - The liquid cooling industry is expected to increase demand for fluorinated liquids and refrigerants, with a recommendation to pay attention to the price recovery of fluoropolymer products like PVDF and PTFE [1]

Group 1 - Dongyue Group (00189) saw a nearly 6% increase in stock price, currently at 14.09 HKD with a trading volume of 302 million HKD [1] - Market liquidity is expected to gradually return next week as companies resume operations after the Spring Festival, with spring demand anticipated to be released after March [1] - The current prices are supported by low inventory levels and bullish expectations, maintaining a high level of consolidation [1] Group 2 - Export market orders are continuing to progress, and the upcoming refrigeration exhibition in April may bring new opportunities for the refrigerant market, with some varieties potentially experiencing new price support [1] - Guosen Securities indicated that the tightening of refrigerant quotas is a long-term trend, which is expected to sustain the market for mainstream refrigerants like R32, R134a, and R125, with significant long-term price upside potential [1] - The demand for fluorinated liquids and refrigerants is expected to increase due to the liquid cooling industry, and attention is recommended for the price recovery of fluoropolymer products such as PVDF and PTFE [1]

Core Viewpoint - Dongyue Group (00189) has seen a nearly 6% increase in stock price, currently trading at 14.09 HKD with a transaction volume of 302 million HKD, driven by market expectations of recovering liquidity and demand post-Chinese New Year [1] Group 1: Market Dynamics - As companies resume production after the Chinese New Year, market liquidity is expected to gradually return next week, with spring demand anticipated to be released starting in March [1] - Current prices are supported by low inventory levels and bullish expectations, maintaining a high level of consolidation [1] Group 2: Future Outlook - Export market orders are continuing to progress, and with the upcoming refrigeration exhibition in April, multiple favorable factors may bring new opportunities for the refrigerant market, potentially leading to a new round of price support for certain products [1] - Guosen Securities previously indicated that the tightening of refrigerant quotas is a long-term trend, which supports the continued prosperity of mainstream refrigerants like R32, R134a, and R125, suggesting significant long-term price upside [1] Group 3: Industry Demand - The demand for fluorinated liquids and refrigerants is expected to increase due to the growth of the liquid cooling industry [1] - There is a recommendation to pay attention to the price recovery of fluoropolymer products such as PVDF and PTFE [1]

Investment Rating - The report maintains an "Outperform" rating for the fluorochemical industry [5][10]. Core Insights - The fluorochemical industry is experiencing rapid growth, with prices of fluorinated polymers continuing to rise. The performance of fluorochemical companies is strong, supported by stable demand and supply dynamics [1][4]. - The long-term outlook for mainstream refrigerants such as R32, R134a, and R125 remains positive due to tightening quota constraints, which are expected to sustain price increases [5][9]. Summary by Sections 1. Industry Performance - As of January 30, 2026, the fluorochemical index stood at 2155.24 points, up 6.77% from the end of December 2025. The index underperformed the Shenwan Chemical Index by 5.95 percentage points but outperformed the CSI 300 and Shanghai Composite indices by 5.12 and 3.01 percentage points, respectively [1][17]. 2. Refrigerant Market Review - In the first quarter of 2026, long-term contract prices for mainstream refrigerants are on the rise. R32 is expected to be priced at 61,200 CNY/ton, a 1.66% increase from the previous quarter, while R410A is projected at 55,100 CNY/ton, up 3.57% [2][22]. - The domestic prices for R22, R134a, R125, and R32 have shown increases, with R22 reaching 17,000 CNY/ton, R125 at 48,500 CNY/ton, and R134a maintaining at 58,000 CNY/ton [24][23]. 3. Supply and Demand Dynamics - The supply side of the fluorochemical industry is characterized by tight overall supply and low inventory levels among companies, which supports price increases. The demand side shows continued interest in stockpiling ahead of the holiday season [4][9]. - The production quotas for refrigerants in 2026 indicate a slight increase in the production capacity for R32, R125, and R134a, while R143a and R152a quotas have been reduced [4][79]. 4. Liquid Cooling Demand - The rapid growth of data centers is driving the demand for fluorinated liquids and refrigerants, as traditional air cooling methods are becoming insufficient. The market for liquid cooling solutions is expected to grow significantly, with projections indicating a market size exceeding 100 billion CNY by 2027 [64][70]. - Companies involved in the production of fluorinated liquids, such as Juhua Co., Dongyue Group, and others, are well-positioned to benefit from this trend [73][74]. 5. Key Company Profit Forecasts - Juhua Co. is expected to achieve a net profit of 3.54-3.94 billion CNY in 2025, representing a year-on-year growth of 80%-101%. Dongyue Group and Sanmei Co. are also projected to see significant profit increases [4][10].

Investment Rating - The report maintains an "Outperform" rating for the fluorochemical industry [5][10]. Core Insights - The fluorochemical industry is experiencing rapid growth, with prices of fluoropolymers continuing to rise. The industry index has shown a performance that outpaces the Shanghai Composite Index and the CSI 300 Index [1][5]. - The first quarter of 2026 is expected to see stable execution of long-term contracts for refrigerants, with significant price increases noted for R32 and R410A [2][5]. - The demand for fluorinated liquids and refrigerants is anticipated to increase due to the growth of liquid cooling technologies in data centers, driven by the need for efficient cooling solutions [3][9]. Summary by Sections 1. Industry Performance - As of January 30, 2026, the fluorochemical index reached 2155.24 points, up 6.77% from the end of December 2025, while the chemical index rose by 12.72% [1][17]. - The Guosen Chemical Fluorochemical Price Index reported a 2.95% increase, indicating a positive trend in pricing for fluorochemical products [1][18]. 2. Refrigerant Market Review - Long-term contract prices for refrigerants are on the rise, with R32 priced at 61,200 CNY/ton and R410A at 55,100 CNY/ton, reflecting increases of 1.66% and 3.57% respectively from the previous quarter [2][22]. - The domestic prices for R22, R125, and R134a have also seen upward adjustments, with R22 now at 17,000 CNY/ton, up 1,000 CNY/ton from the previous month [2][24]. 3. Liquid Cooling Demand - The report highlights the urgent need for efficient cooling technologies in data centers, with liquid cooling solutions becoming increasingly favored over traditional air cooling due to their superior efficiency [3][64]. - The market for liquid cooling in data centers is projected to grow significantly, with a compound annual growth rate of 51.4% expected from 2019 to 2027 [3][70]. 4. Refrigerant Quota Announcements - The Ministry of Ecology and Environment has announced the refrigerant quotas for 2026, indicating a slight increase in production quotas for R32, R125, and R134a, while R141b's quota has been eliminated [4][79]. - The report suggests that the tightening of refrigerant quotas will support long-term price stability and growth in the industry [4][74]. 5. Company Profit Forecasts - Major companies in the fluorochemical sector, such as Juhua Co., Dongyue Group, and Sanmei Co., are expected to see significant profit growth in 2025, with Juhua's net profit projected to increase by 80%-101% [4][10].

Summary of Liquid Cooling Industry Update - Liminda Company Overview - Liminda is currently a certified supplier for NVIDIA, providing liquid cooling solutions [1] Core Insights and Arguments - The primary products supplied to NVIDIA include QD, followed by Manifold and cold plates [1] - The net profit margin for products supplied to NVIDIA is gradually increasing, currently reaching approximately 18%, with expectations to exceed 20% in the future [1] - Market expectations forecast revenue of 800 million by 2025; however, revenue already surpassed 150 million in January of this year, indicating a growing value in NVIDIA's liquid cooling products [1] Additional Important Information - The increasing net profit margin and early revenue achievements suggest a strong market position and potential for future growth in the liquid cooling industry [1]

Group 1 - The core viewpoint of the report is that 德昌电机 (Dachang Electric) is expected to maintain stable operations in the first three quarters of the 2025-2026 fiscal year, with future growth driven by developments in robotics and liquid cooling industries, maintaining a "Buy" rating [1] - The company has reported total revenue of $2.73 billion for the first three quarters of the 2025-2026 fiscal year, showing no year-on-year change; automotive product revenue decreased by 2%, primarily due to a 6% decline in the Asia-Pacific region, while industrial and commercial product revenue increased by 1%, mainly driven by a 6% rise in the EMEA region [1] - The company forecasts EPS of $0.28, $0.33, and $0.36 for the fiscal years 2025-2026, 2026-2027, and 2027-2028 respectively, and sets a target price of HKD 52.80 based on a PE ratio of 24 times for the fiscal year 2025-2026 [1] Group 2 - Uncertainties among automotive clients in the China region have negatively impacted the revenue trend for the automotive sector in the Asia-Pacific region; however, the company's efforts to enhance automation and vertical integration are expected to mitigate these negative effects [2] - The company aims to leverage its deep technical expertise and production experience in motors to expand its product offerings into humanoid robot actuators and joint modules, positioning itself for long-term leadership in the robotics sector [2] - With the booming AI industry requiring infrastructure support such as liquid cooling, the company, as a liquid cooling solution provider, is expected to capture a significant market share through its core liquid cooling components [2]

Group 1 - The AI hardware sector has seen a resurgence due to two main factors: Goldman Sachs' strategy meeting indicating a demand of 25 million units for 1.6T optical modules and 70 million units for 800G optical modules by 2026, and TSMC's fourth-quarter earnings report showing a 35% year-over-year profit increase, exceeding expectations and marking the eighth consecutive quarter of profit growth [1][2]. - TSMC's projected capital expenditure for 2026 is between $52 billion and $56 billion, following a total capital expenditure of $40.9 billion in 2025 [1]. - Macquarie's report highlights a constraint in the DRAM industry, stating that new capacity in the next two years can only support approximately 15GW of AI data center construction, which may lead to delays and reshuffling in global AI expansion plans [2]. Group 2 - Major companies provide core suppliers with demand and share guidance for the following year in November-December, allowing suppliers to prepare inventory. Optical modules are essential components for AI computing servers, and changes in their demand can reflect the overall demand for data centers [4]. - The anticipated demand for 800G and 1.6T optical modules is expected to remain strong, particularly for overseas computing needs, which serves as a response to Macquarie's report [4]. - Concerns regarding overseas computing demand for 2026-2027 have been alleviated by recent events, potentially leading to upward revisions in order expectations for liquid cooling manufacturers [5]. Group 3 - Updates in the liquid cooling industry include NV utilizing microchannel cold plate technology, with samples sent to a leading company [7]. - Google is expected to place orders exceeding $1 billion with a mainland liquid cooling leader in 2026, significantly higher than the previous expectation of $500-600 million [13]. - A whitelist for NV liquid cooling-cold plates may include names of certain mainland listed companies by March [13].