19 November 2025 | 8:04AM EST Equity Research Americas Industrials & Materials: SuperCompute 2025 Trip — Key Takeaways We visited a number of company showcases at SC25 in St. Louis on 11/18, including: nVent Electric, Vertiv, Accelsius (JCI recent investment), Eaton Corp, Jabil, Motivair (owned by Schneider Electric), Modine, and Dover. Our key overall takeaways include: 1) Demand is strong - Companies cited good backlog coverage, and bookings for delivery that can extend into 2027 and in some cases even 20 ...

Summary of Shenzhen Envicool Technology Co., Ltd Conference Call Company Overview - **Company**: Shenzhen Envicool Technology Co., Ltd - **Industry**: Data Center Liquid Cooling - **Market Cap**: Rmb74.1 billion / US$10.4 billion [6] Key Points Industry Growth and Market Potential - The global rack-level liquid cooling market is projected to grow from US$2-3 billion in 2024 to US$13 billion by 2028, representing a **51% CAGR** [2][23] - The total addressable market (TAM) for liquid cooling in China is expected to be **10 times** that of the global market [2][25] - The increasing power density of AI racks is driving the demand for liquid cooling solutions [1][15] Company Performance and Projections - Envicool's price target has been raised from Rmb30.15 to Rmb100.00, reflecting its potential for overseas expansion and solidifying its leadership in China [1] - The company's market share in China is expected to increase from **20%+ in 2024 to 30%+ by 2028** due to higher adoption of liquid cooling technologies [3] - Envicool's gross margin for data center cooling is anticipated to rise from **27% in 2024 to 34% by 2028** [2] Competitive Landscape - Intense competition exists in the Chinese market, but leading firms like Envicool are expected to capture more market share due to higher technology entry barriers [3] - The launch of high-density products by competitors such as Huawei and Alibaba indicates a growing necessity for liquid cooling solutions [3][16] Financial Projections - Envicool's net profit is projected to grow at a **65% CAGR from 2025 to 2028**, normalizing at over **40% CAGR from 2028 to 2031** [4] - The price target is based on a **40x P/E ratio for 2028**, higher than the historical average of **30x**, reflecting expected higher earnings growth [4][13] Strategic Opportunities - 2026 is identified as a "golden window" for new entrants in the liquid cooling market due to a higher mix of AI ASIC shipments [1][30] - Envicool is well-positioned to expand into the overseas market, with expectations of capturing **4-5% of the global wallet share by 2028** [2] Risks and Challenges - A **4% reduction** in 2025 net profit estimates was noted due to project delays in China [4] - The market has priced in a larger TAM but remains skeptical about the sustainability of Envicool's market share gains and margin expansion [13] Conclusion - Envicool is poised for significant growth in the liquid cooling market, driven by increasing demand from AI applications and a strategic focus on both domestic and international markets. The company's strong R&D capabilities and established relationships with leading tech firms position it favorably for future opportunities [11][35]

Acquisition - Eaton 同意以 95 亿美元收购液冷专家 Boyd Thermal [1] Market Trend - 该收购旨在利用与 AI 数据中心相关的巨大需求 [1]

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Summary of Shenzhen Envicool Technology Co., Ltd Conference Call Company Overview - **Company**: Shenzhen Envicool Technology Co., Ltd - **Industry**: Data Center Liquid Cooling Solutions - **Current Price Target**: Increased from Rmb30.15 to Rmb100.00 based on overseas expansion potential and leadership in China [2][5] Key Industry Insights - **Market Growth**: The global rack-level liquid cooling market is projected to grow from US$2-3 billion in 2024 to US$13 billion by 2028, representing a 51% CAGR [3][12] - **AI ASIC Impact**: A significant increase in AI ASIC shipments is expected from 2026, creating opportunities for new entrants in the liquid cooling market [2][3] - **Liquid Cooling Necessity**: As AI rack power densities increase, liquid cooling is becoming a mandatory requirement, especially for racks exceeding 40kW [13][15] Company Performance and Projections - **Market Share**: Envicool's market share in liquid cooling is expected to rise from over 20% in 2024 to over 30% by 2028 [4][42] - **Revenue Growth**: Projected rapid growth in net profit at a CAGR of 65% from 2025 to 2028, normalizing at over 40% CAGR from 2028 to 2031 [5][55] - **Gross Margin Improvement**: Anticipated increase in gross margin from 27% in 2024 to 34% by 2028, driven by higher overseas revenue exposure [3][55] Competitive Landscape - **Intense Competition**: The liquid cooling market in China is competitive, but leading firms like Envicool are expected to gain market share due to higher technology entry barriers [4][42] - **Technological Validation**: Envicool's products are verified by major tech firms, enhancing its credibility and market position [11][30] Financial Metrics - **Revenue Forecast**: Expected revenues to grow from Rmb2.92 billion in 2022 to Rmb18.94 billion by 2029 [6] - **Earnings Per Share (EPS)**: Projected EPS growth from Rmb0.29 in 2022 to Rmb4.18 by 2029 [6][8] - **Valuation**: Price target based on a 40x P/E ratio for 2028E earnings, reflecting higher growth expectations compared to historical averages [5][53] Strategic Opportunities - **Global Expansion**: Envicool is positioned to expand into the global market, potentially unlocking a 10x larger total addressable market (TAM) compared to China [2][35] - **Partnerships and Customer Validation**: Potential catalysts for growth include securing more customer verifications, order wins, and strategic partnerships with original design manufacturers (ODMs) [5][6] Conclusion - **Investment Recommendation**: Maintain a Buy rating on Envicool, as the company is expected to benefit from the growing demand for liquid cooling solutions and its strategic positioning in both domestic and international markets [2][11]

Investment Rating - The report initiates coverage of Jentech with a Buy rating and sets a target price of TWD3,186. It also reiterates Buy ratings for AVC and Auras with target prices of TWD1,700 and TWD1,160 respectively [15][16][44]. Core Insights - The rapid development of AI performance upgrades is expected to revolutionize the liquid cooling industry, particularly with the introduction of microchannel lid (MCL) technology and potential new thermal interface materials (TIM) from late 2026 to 2028 [3][6]. - The thermal design power (TDP) of mainstream AI chips is projected to increase to approximately 2,000W by mid-2026, with expectations that chips will exceed 3,000W by 2027 [6][19]. - MCL is anticipated to be the most practical solution for cooling chips with TDPs over 3,000W, as it integrates a heat spreader with a cold plate to minimize thermal resistance [7][27]. - Current thermal component makers are expected to experience significant growth opportunities in the next two to three years, driven by the increasing adoption of liquid cooling solutions across various AI systems [14][39]. Summary by Sections Liquid Cooling Technology - Liquid cooling technology is evolving rapidly, with strong total addressable market (TAM) growth expected to benefit both existing and new players [6][19]. - The transition from air cooling to liquid cooling is becoming mainstream, particularly for AI GPUs, with full liquid cooling solutions anticipated to dominate by 2025 [6][19]. Microchannel Lid (MCL) Technology - MCL is viewed as a critical advancement for next-gen AI server architecture, offering compatibility with existing single-phase liquid cooling systems and a lower Z-height for higher-density designs [7][27]. - The adoption of MCL may face challenges, including design and manufacturing complexities, but its potential for earlier adoption compared to two-phase cooling solutions is noted [8][28]. Thermal Interface Materials (TIM) - The report discusses the potential shift to indium metal TIMs for high-performance chips, particularly as TDP levels rise and current graphite film TIMs face limitations [10][38]. - Optimized lids with highly thermal-conductive TIMs are expected to remain favored solutions for upcoming AI chips, with ongoing research into new materials like silicon carbide (SiC) [9][37]. Company Coverage - Jentech is positioned as a leading beneficiary of MCL technology due to its strong relationships with foundries and experience in heat spreader manufacturing [16][42]. - AVC and Auras are also highlighted for their potential growth as liquid cooling solutions become more prevalent in AI systems, with both companies maintaining Buy ratings [15][44].

Summary of Key Points from the Conference Call on Liquid Cooling Market Industry Overview - The discussion focused on the **liquid cooling industry**, particularly in the context of **AI technology** and its applications in data centers and computing power management [1][3]. Core Insights - **Full Liquid Cooling Adoption**: The trend towards full liquid cooling systems is increasing, with NVIDIA's GB300 model fully adopting this technology, while previous models like GB200 still partially relied on air cooling [3]. - **Cloud Service Providers (CSPs)**: Major CSPs such as Google, Amazon AWS, and Meta are considering full liquid cooling solutions due to the rising computational demands of ASICs. Full liquid cooling systems are noted for their long lifecycles in AI data centers [3]. - **Technological Innovations**: - NVIDIA's Microchannel Liquid Cooling Plate (MLCP) and Microsoft's in-chip Microfluidic cooling system are highlighted as significant advancements in cooling technology [1][2]. - MLCP utilizes micro channels for liquid coolant flow, directly attached to computing chips, presenting high entry barriers due to the complexity of smaller channel sizes [3]. - The Microfluidic solution is more advanced, requiring IC-level production processes, which necessitates collaboration with leading foundries [3]. - **Market Dynamics**: The expert indicated that MLCP may see earlier adoption compared to the Microfluidic solution due to existing technological challenges [2][3]. Additional Important Points - **Installation and Maintenance**: The modularized Coolant Distribution Unit (CDU) is easier to install and maintain, which is a significant advantage for CSPs [3]. - **Competitive Landscape**: The competitive dynamics in the liquid cooling market are evolving as more companies adopt these advanced cooling solutions to meet the demands of high-performance computing [1][3]. This summary encapsulates the key takeaways from the conference call regarding the liquid cooling market and its implications for the technology and AI sectors.

Market Overview - On September 11, major indices including the Shanghai Composite Index, Shenzhen Component Index, ChiNext Index, and STAR Market Index experienced a rebound, with the ChiNext Index and STAR Market Index rising over 5% [2] - The Shanghai Composite Index closed at 3875.31 points, up 1.65%, with a trading volume of 10,168 billion yuan; the Shenzhen Component Index closed at 12,979.89 points, up 3.36%, with a trading volume of 14,209.25 billion yuan; the ChiNext Index closed at 3053.75 points, up 5.15%, with a trading volume of 7,042.61 billion yuan; the STAR Market Index closed at 1326.03 points, up 5.32%, with a trading volume of 1,060 billion yuan [2] Sector Performance - The market saw more sectors rising than falling, with notable gains in electronics, securities, telecommunications, computers, agriculture, insurance, power equipment, machinery, and non-ferrous metals [4] - Concepts such as CPO, PCB, copper cable high-speed connections, optical communication modules, laser radar, NVIDIA, liquid cooling, storage chips, computing power, and synchronous reluctance motors showed active performance [4] - Only a few sectors, including precious metals, jewelry, and tourism, experienced declines [4] Fund Flow Analysis - The net inflow of main funds in the Shanghai and Shenzhen markets was 103.09 billion yuan, with the ChiNext seeing a net inflow of 104.83 billion yuan [5][6] - Among the 31 primary industries, 9 sectors had net inflows, with the electronics sector leading at 108.17 billion yuan, followed by telecommunications, computers, and non-bank financials [6] - The pharmaceutical and biological sector had the highest net outflow at 35.68 billion yuan, with other sectors like media, automotive, and non-ferrous metals also seeing significant outflows [6] Individual Stock Performance - A total of 1,903 stocks saw net inflows, with 131 stocks receiving over 1 billion yuan in net inflows, led by Luxshare Precision with 24.76 billion yuan [8] - Conversely, 3,243 stocks experienced net outflows, with 85 stocks seeing over 1 billion yuan in net outflows, the highest being 263 with 7.52 billion yuan [10] Institutional Activity - According to the post-market data, institutional investors had a net sell of approximately 6.66 billion yuan, with 12 stocks seeing net purchases, the highest being Dongshan Precision at about 2.38 billion yuan [11]

Market Performance - Major A-share indices collectively surged, with the Shenzhen Component Index and ChiNext Index reaching new highs for the phase [1] - As of the close, the Shanghai Composite Index rose by 1.65% to 3875 points, the Shenzhen Component Index increased by 3.36% to a new high since July 2022, and the ChiNext Index climbed 5.15%, marking its highest since January 2022 [1] - The STAR 50 Index also saw a significant increase of 5.32% [1] Trading Volume - The total trading volume for the day was 2.46 trillion yuan, an increase of 460.6 billion yuan compared to the previous trading day, with over 4200 stocks rising across the market [1] Sector Performance - The CPO concept stocks experienced a resurgence, with companies like Zhongji Xuchuang, Tianfu Communication, and Xinyi Sheng seeing gains of over 10% [1] - The PCB and electronic components sectors witnessed a surge, with stocks such as Jinxin Nuo, Hudian Shares, and Dazhu Laser hitting the daily limit [1] - The semiconductor sector strengthened, with stocks like Haiguang Information and Zhaoyi Innovation also reaching the daily limit [1] - The LiDAR sector saw a significant rise, with Tengjing Technology hitting a 20% limit up [1] - Other notable sectors with strong performance included F5G concept, copper cable high-speed connection, AIPC, and liquid cooling concepts [1] Declining Sectors - Conversely, the precious metals and jewelry sectors declined, with Western Gold leading the drop [1] - The mining sector weakened, with stocks like Tongyuan Petroleum falling over 3% [1] - Reports indicated that Trump is considering strict restrictions on pharmaceuticals from China, leading to a decline in the CRO sector, with stocks like Nuo Si Ge and Tiger Medical leading the losses [1] - The tourism, hotel, outdoor camping, and snow economy sectors also experienced significant declines [1] Stock Performance Rankings - The top-performing sectors included communication equipment (+6.87%), electronic components (+6.50%), and semiconductor (+5.30%) [2] - The brokerage and software sectors also showed positive performance, with increases of +3.15% and +2.859% respectively [2]

Summary of Tuopu's 2Q25 Earnings Call Company Overview - **Company**: Ningbo Tuopu Group Co., Ltd. - **Industry**: Autos & Auto Parts - **Ticker**: 601689 CH - **Market Cap**: RMB105.6 billion ($14.8 billion) [8] Key Financial Results - **2Q25 Revenue**: RMB7.2 billion, up 10% YoY [1][2] - **2Q25 Earnings**: RMB729 million, down 10% YoY [1][2] - **Gross Profit Margin (GPM)**: 19.3%, down 0.6/1.1 percentage points QoQ/YoY [1][2] - **D&A Cost to Revenue Ratio**: Estimated to have risen to approximately 7% in 1H25, up 1 percentage point YoY [2] Management Outlook - **Revenue Growth Target**: Aiming for 20% YoY revenue growth in 2026 [1][2] - **Long-term Growth Expectation**: Management expects double-digit growth from 3Q25 through 2030, supported by contributions from major clients like Xiaomi, Seres, and Geely [2] - **2025 Revenue Target**: RMB30 billion [2] Business Expansion - **Overseas Markets**: Focus on Europe and the US as key growth drivers, with major customers including Ford, GM, Stellantis, Volkswagen, BMW, and Mercedes [3] - **Production Capacity**: Plans for a second phase at the Poland factory due to increased demand from Mercedes and BMW; Thailand plant aimed at humanoid robots and supporting local Chinese OEMs like BYD and Chery [3] Humanoid Robots Development - **Current Production Challenges**: Inefficiencies in producing humanoid robot actuators due to a wide variety of specifications (48 in total) and lack of full automation [4] - **Future Orders**: Expected to start receiving orders for the next-generation Optimus in 1Q26 [4] - **R&D Investment**: Annual investment of approximately RMB100 million with a robotics team of 138 members [4] Liquid Cooling Business - **Market Potential**: Strong potential identified in transitioning from automotive thermal management to liquid cooling solutions for AI data centers [5] - **Core Products**: Cooling plates and CDU components [5] - **Order Backlog**: Liquid cooling order backlog has reached RMB1.7 billion [5] Valuation and Price Target - **Price Target**: RMB72.5 based on a 35x 2026E P/E [6][14] - **Current Price**: RMB62.61, representing a potential upside of 16% [8] Financial Estimates - **Revenue Estimates**: - 2025: RMB29.04 billion - 2026: RMB33.18 billion - 2027: RMB39.85 billion [7] - **Net Profit Estimates**: - 2025: RMB3.06 billion - 2026: RMB3.49 billion - 2027: RMB4.25 billion [7] Risks - **Potential Risks**: Lower-than-expected NEV sales and slower development of humanoid robots [24] Sustainability Goals - **Carbon Neutrality Targets**: Aiming to achieve carbon peak by 2030 and carbon neutrality by 2060 in line with China's decarbonization goals [17] Conclusion - **Investment Recommendation**: Maintain Buy rating with a focus on growth opportunities in both the automotive and emerging technology sectors, particularly humanoid robots and liquid cooling solutions [6][11]