Summary of Key Points from the Conference Call Company and Industry Overview - The conference call discusses HeXin Instruments and its acquisition of Liangxi Technology, aimed at enhancing its R&D capabilities and leveraging Liangxi's advantages in quantum computing [2][4][5] - The Chinese scientific instrument industry is undergoing a transformation, benefiting from policy support and domestic substitution demand, with a focus on high-end equipment localization and mergers and acquisitions as key strategies [2][6][7] Core Insights and Arguments - Liangxi Technology reported a profit of approximately 30 million yuan in the first half of 2025, with an expected annual profit exceeding 50 million yuan, indicating a positive outlook for HeXin Instruments post-acquisition [2][3][5] - HeXin Instruments has faced cumulative losses exceeding 200 million yuan over the past three years, which is nearly equivalent to its annual sales, but the acquisition is expected to help turn around its financial performance by 2025 [3][5] - The acquisition of Liangxi Technology is strategic due to its consistent profitability and 20 years of industry experience, which provides HeXin with a stable revenue stream and enhances its competitive position [4][5] Market Dynamics and Trends - The quantum computing industry is expected to see enterprise-level bulk purchases of quantum computers around 2030, with specialized quantum computers already in use for specific applications [11] - The Chinese scientific instrument industry is experiencing a bull market, particularly following China Telecom's acquisition of GuoDun Quantum, which has increased industry attention and support [10] - The liquid cooling segment has made significant progress in reducing power consumption, with domestic companies successfully entering overseas supply chains [12][19] Additional Important Insights - The customer base for Liangxi's products is diverse, primarily serving the domestic market while also exporting some products, which provides stability for the company [8] - The technological landscape includes advancements in liquid cooling and fiber optics, with Chinese companies making significant strides in the fiber optics market, particularly in data centers [15][16] - The overall outlook for the Chinese scientific instrument industry is optimistic, with expectations of policy support and increased investment opportunities as companies focus on innovation and market expansion [6][7]

Summary of Key Points from Conference Call Records Industry Overview - The global AI sector is experiencing significant growth, particularly in areas such as optical modules, silicon photonics, liquid cooling, and data center interconnect (DCI) [1][2] - Companies in the AI supply chain are reporting strong financial results, leading to increased capital expenditures and upward revisions of performance guidance [2] Company Insights: Celestica - Celestica raised its 2025 revenue guidance from $10.85 billion to $11.55 billion, with an adjusted operating margin increase from 7.2% to 7.4% [1][5] - The company serves major clients like Google, Meta, and Amazon, indicating strong demand for their ASIC switch products [5] - In Q2, Celestica reported revenue of $2.89 billion, a 21% year-over-year increase, exceeding the company's expectations [5] - The CCS business (including networking, servers, and storage) generated $2.07 billion in revenue, up 28% year-over-year, accounting for 72% of total revenue [5] - The demand for high-speed optical modules (800G and 1.6T) and silicon photonics is expected to grow significantly due to the high ratio of ASIC chips to optical modules (1:8 or higher) [1][5] Google Financial Performance - Google reported Q2 2025 revenue of $96.4 billion, a 13.8% year-over-year increase, with operating profit rising 31.7% [10] - The company’s cloud backlog reached $106 billion, a 38% year-over-year increase, indicating strong demand for cloud services [10] - Google’s capital expenditures for Q2 reached $22.446 billion, a 70% increase year-over-year, primarily for technology infrastructure [14] Liquid Cooling Technology - The demand for liquid cooling solutions is expected to rise significantly, driven by the increasing power density of GPUs and ASICs [15] - AWS has adopted liquid cooling solutions in its GB200 cabinets, which will accelerate the adoption of liquid cooling in switch modules [15] - The ETIC ramp-up is anticipated to boost the overall penetration of liquid cooling technology in the market [4][6] Investment Recommendations - Optimistic outlook on several segments including high-speed optical modules, silicon photonics, liquid cooling systems, and DCI [7] - Recommended stocks include: - Optical Modules: Zhongji Xuchuang - Optical Chips: Yuanjie Technology, Changguang Huaxin - Liquid Cooling Systems: Invec - AI Data Centers: Xinyi Network Group [8] Emerging Trends in Optical Communication - The optical communication sector is witnessing heightened investment interest, particularly in the context of increased demand for computing power [16] - Leading companies like Xuchuang and Xinyi Sheng are expected to gain market share due to rising demand for related equipment [16] - Attention should also be given to emerging technologies such as silicon photonics and CPO/OIO, which are likely to enhance market focus [16]

Summary of Key Points from the Conference Call Industry Overview - The AI computing power infrastructure is becoming a new investment driver, with large internet companies actively promoting it, while the industry cycle is still in its early stages [2][3][5] - The 5G industry has entered a mature phase, with capital expenditures stabilizing and declining, leading to limited short-term opportunities [2][3] Core Insights and Arguments - The AI investment boom was ignited by ChatGPT in early 2023, leading to a comprehensive rotation in the tech sector, with optical modules and other segments performing notably well [2][5] - The AI sector and satellite internet themes are showing potential opportunities during the A-share bear market from 2023 to 2024 [2][6] - The AI computing semiconductor industry is expected to experience a global surge in 2024, with significant improvements in performance and orders for the optical module industry, benefiting companies like Huadian [2][7] - The demand for 800G optical modules is expected to increase significantly, with shipments projected to reach 9 million units in 2024 and 35 million units by 2026, with Xuchuang holding about 40% of the global market share [4][18] Market Dynamics - The AI computing sector is currently undergoing a significant transformation, with a notable increase in demand for computing power driven by large model training and inference processes [5][14] - The market is expected to transition from a bear market to a bull market by late 2024 to early 2025, despite facing several negative factors [10][11] - The introduction of new technologies, such as CPO (Co-Packaged Optics), may disrupt traditional optical module forms, but its short-term impact is limited due to slow ramp-up and yield issues [9][22] Financial Performance and Projections - Companies like Shenghong Technology have exceeded expectations since late April 2025, driven by increased orders and Nvidia's financial performance [4][11] - The average price of 800G optical modules is around $500, with a projected decline of 8% to 10% by 2026, despite a significant increase in demand [18] Challenges and Opportunities - The AI industry is still in its early stages, with significant growth in computing power demand, particularly for high-performance computing cards [12][14] - Domestic companies face challenges related to yield and capacity, while international markets are impacted by trade restrictions [13][32] - The liquid cooling technology is expected to become a crucial direction for data centers in the next 5 to 10 years due to increasing power consumption and cooling requirements [28][31] Future Trends - The future of the AI computing power sector appears strong, with ongoing demand for high-performance computing cards and the gradual release of new products like Nvidia's GP300 [12][11] - The optical module industry is expected to see continued growth, driven by demand from major clients like Google and Nvidia [16][18] - New technological directions in the optical module field focus on lower power consumption, higher bandwidth rates, and miniaturization, which will shape future developments [22][17] Conclusion - The AI computing power industry is poised for significant growth, driven by technological advancements and increasing demand from major tech companies, despite facing challenges in supply and market dynamics [32][34]

Summary of Conference Call on Liquid Cooling Technology Industry Overview - The liquid cooling technology industry is currently in its early stages of implementation, with significant potential for growth as it expands beyond CPU cooling to include GPUs, switches, and other devices, potentially reaching a market size of hundreds of billions [1][4] Key Points and Arguments - **Mainstream Chip Delays**: The adoption of liquid cooling technology is hindered by delays in mainstream high-performance chips, such as the NVL72 and GD200 series, both domestically and internationally. The year 2025 is anticipated to mark the beginning of large-scale liquid cooling implementation with the DB200 shipment [1][2] - **Market Expectations vs. Reality**: Despite high expectations for explosive growth in liquid cooling technology since the AI boom in 2023, the actual pace of implementation has been steady and slow due to chip delays. The industry is expected to see significant changes starting in 2025 [2] - **Investment Opportunities**: Companies with system design and integration capabilities, such as Invec and High Cloud, are favored over smaller manufacturers. Invec's strong performance in Q2 and positive outlook for the second half of the year make it a top investment choice [3][10] - **Future Applications**: Liquid cooling technology is expected to expand its applications to include switches, optical modules, and power supplies as system complexity and power consumption increase. This expansion is seen as a matter of time [4] - **High Barriers to Entry**: The liquid cooling industry has high entry barriers, requiring specialized knowledge and experience. Despite concerns about price wars following the CPC conference in 2024, few new entrants have emerged, indicating the complexity of operating large-scale liquid cooling systems [5][6][7] - **Competitive Landscape**: The data center cooling market is dominated by established players like Invec, High Cloud, and Shuguang Digital Innovation, with market shares primarily exchanged among them. New entrants face significant challenges [6] Additional Important Insights - **System Integration Challenges**: The barriers to liquid cooling technology are more pronounced in design and system integration rather than just manufacturing. Successful implementation requires collaboration with specialized liquid cooling manufacturers [7] - **Market Validation**: The increasing number of companies investing in liquid cooling technology indicates that the trend has been validated, moving beyond initial skepticism about the viability of the sector [8] - **Strategic Investment Focus**: Investors are encouraged to prioritize companies with strong system integration capabilities, as they hold more influence over design solutions and pricing strategies [9]

Summary of Liquid Cooling Industry Conference Call Industry Overview - The liquid cooling industry is experiencing steady acceptance despite delays in chip shipments, particularly with Huawei's 910C and NV72 cabinet shipments slowing down, raising concerns about liquid cooling progress [1][4] - Major players like NVIDIA and ASIC manufacturers are leading the development of liquid cooling technology, with NVIDIA's GB200 NVR72 cabinet explicitly adopting liquid cooling, and future products expected to follow suit [1][6][7] - Large data center infrastructure upgrades are supporting the adoption of liquid cooling, with companies like Microsoft announcing that all their data centers will support liquid cooling, indicating readiness for infrastructure changes [1][8] Key Trends and Drivers - The core supporting factors for the liquid cooling industry's trend include increased power consumption, the demand for Power Usage Effectiveness (PUE), and IDC manufacturers' pursuit of total lifecycle cost efficiency [3] - The liquid cooling sector is currently in an accelerated development phase, with significant opportunities for investment as the penetration rate is expected to rise rapidly next year [1][9] Market Dynamics - Domestic liquid cooling companies have advantages in performance realization, particularly in the CDU and manifold segments, which are primarily led by domestic manufacturers like Invec and Shining [1][12] - The overseas market presents challenges, but lower expansion willingness from European and American manufacturers provides opportunities for domestic companies [2][12][17] Competitive Landscape - In the liquid cooling market, the liquid cooling plate holds a crucial position, with increasing design requirements due to rising chip power consumption and a stable five-year server replacement cycle [11] - Invec's competitive advantage lies in its full-chain layout, including self-developed liquid cooling plates, CDU, manifold, and quick connectors, which is rare globally and positions it well for breakthroughs in overseas markets [18] Investment Opportunities - The next one to two years are critical for breakthroughs in the liquid cooling sector, and investors should focus on companies with strong domestic performance and potential for overseas success, such as Invec [19][20] - Current market conditions suggest that now is an important time to recognize and seize investment opportunities in the liquid cooling sector [9] Recommendations for Companies - Potential overseas companies should be given some performance tolerance and focus on those capable of achieving both domestic and overseas performance breakthroughs [20] - Domestic chain companies are expected to see clear performance realization within the year, making them attractive for investment [20]

Group 1 - The report highlights a significant market correction in A-shares due to various underwhelming factors, with major indices experiencing declines: Shanghai Composite Index down 0.94%, Shenzhen Component down 1.58%, ChiNext down 0.74%, and STAR 50 down 1.65% during the week of July 28 to August 1, 2025 [1][9] - The macroeconomic drivers include the extension of the US-China tariff suspension for 90 days, alleviating short-term trade friction concerns, and the emphasis on "macro policy continuing to exert force and timely reinforcement" during the July Politburo meeting, which shifted focus to "implementing existing policies" [1][10] - The report notes a divergence in market performance, with technology sectors showing strength while cyclical sectors weakened, influenced by the tariff extension and domestic policy adjustments [1][9] Group 2 - The report recommends focusing on the banking sector, which has shown a divergence from the Shanghai Composite Index since July 11, 2025, suggesting that banks may become a choice for hedging against volatility as the market enters August [5][21] - The liquid cooling sector is highlighted due to the explosive growth in AI computing demand, projected to reach 725.3 EFLOPS by 2024, a year-on-year increase of 74.1%. The market for liquid cooling technology is expected to grow from 11.01 billion yuan in 2024 to 31.55 billion yuan by 2027, with a CAGR exceeding 40% [5][21] - The report emphasizes the challenges in implementing liquid cooling solutions, including system design complexity, construction risks, and high costs, which need to be addressed through comprehensive service models [5][21]

Core Viewpoint - The A-share market experienced a significant adjustment, with all three major indices closing down over 1%, attributed to various factors including the Federal Reserve's stance on interest rates and economic indicators [1][2]. Market Performance - The A-share market saw the Shanghai Composite Index drop by 1.18%, the Shenzhen Component Index by 1.73%, and the ChiNext Index by 1.66%. The total trading volume in the Shanghai and Shenzhen markets reached 1.962 trillion yuan, an increase of 90.84 billion yuan from the previous day [10]. - Over 4,200 stocks declined, while 51 stocks hit the daily limit up, with the strongest performers in the liquid cooling server sector, including a 20% increase in Sisen New Materials [10]. Sector Highlights - The liquid cooling sector showed strong performance, with significant revenue growth reported by VIT, which achieved a net sales figure of $2.638 billion, a year-on-year increase of 35%, and raised its revenue forecast for 2025 [10]. - The assisted reproductive sector also performed well, with stocks like Gongtong Pharmaceutical and Anke Bio hitting the daily limit up, supported by new government policies aimed at enhancing reproductive support [10]. Economic Indicators - The July PMI data indicated a decline, with the official manufacturing PMI at 49.3, down 0.4 percentage points from the previous month. The non-manufacturing PMI was at 50.1, also down 0.4 percentage points [8]. - The price indices for major raw materials showed an increase, with the purchasing price index rising to 51.5%, marking the first time it exceeded the critical point since March [8]. Investment Trends - The AI hardware sector saw positive movement, particularly in liquid cooling technologies, despite some downward pressure from regulatory news affecting Nvidia's supply chain [5]. - Major companies like Meta and Microsoft reported better-than-expected earnings, with Meta projecting total expenditures between $66 billion and $72 billion for 2025, and Microsoft reporting a 27% increase in capital expenditures to $24.2 billion [6]. Fund Flow Dynamics - There was a net outflow of 77.283 billion yuan from major funds, with the largest outflow occurring in the non-ferrous metals sector [16]. - Northbound trading totaled 256.7 billion yuan, with significant transactions in stocks like Heng Rui Pharmaceutical and Guizhou Moutai [20].

Market Overview - The three major A-share indices collectively declined, with the Shanghai Composite Index falling by 1.18% to 3573 points, the Shenzhen Component Index down by 1.73%, and the ChiNext Index decreasing by 1.66% [1][2] - The total trading volume for the day reached 1.96 trillion yuan, an increase of 90.9 billion yuan compared to the previous trading day, with nearly 4300 stocks declining across the market [1] Index Performance - Shanghai Composite Index: 3573.21, down 42.51 points (-1.18%) [2] - Shenzhen Component Index: 11009.77, down 193.26 points (-1.73%) [2] - ChiNext Index: 2328.31, down 39.37 points (-1.66%) [2] - Other indices such as the CSI 300 and CSI 500 also experienced declines of 1.82% and 1.40% respectively [2] Sector Performance - The steel sector saw significant declines, with Baogang Co. (600010) dropping nearly 8% [3] - Coal stocks also fell, with Antai Group declining nearly 7% [3] - The aquaculture sector weakened, led by Zhongshui Fishery (000798) [3] - Lithium mining concepts experienced fluctuations, with companies like Shengxin Lithium Energy and CATL (300750) dropping nearly 5% [3] - Other sectors such as titanium dioxide, photovoltaic equipment, shipbuilding, and small metals also reported notable declines [3] Notable Gainers - The liquid cooling concept saw gains, with companies like Cambridge Technology, Chunz中科技 (603516), and Ice Wheel Environment (000811) hitting the daily limit [3] - The assisted reproductive technology sector surged after being included in medical insurance, with companies like Anke Biotechnology (300009) and Hanshang Group (600774) also reaching the daily limit [3] - The composite fluid sector was active, with Nord Shares (600110) hitting the daily limit [3] - Other sectors such as gene sequencing, AI, and state-owned cloud concepts showed positive performance [3]

Market Overview - On the last trading day of July, all three major A-share indices fell collectively, with the Shanghai Composite Index down 1.18% to 3573 points, the Shenzhen Component Index down 1.73%, and the ChiNext Index down 1.66% [1] - The total trading volume for the day was 1.96 trillion yuan, an increase of 90.9 billion yuan compared to the previous trading day, with nearly 4300 stocks declining across the market [1] Sector Performance - The steel sector declined, with Baogang Co. falling nearly 8% [1] - Coal stocks experienced widespread declines, with Antai Group down nearly 7% [1] - The aquaculture sector weakened, led by Zhongshui Fisheries [1] - Lithium mining concepts showed volatility, with companies like Shengxin Lithium Energy and CATL down nearly 5% [1] - Other sectors with significant declines included titanium dioxide, photovoltaic equipment, shipbuilding, minor metals, and duty-free concepts [1] Positive Movements - The liquid cooling concept rose against the trend, with stocks like Cambridge Technology, Chunz中科技, and Ice轮环境 hitting the daily limit [1] - The inclusion of assisted reproductive technology in medical insurance across 31 provinces boosted the assisted reproduction sector, with stocks like Anke Bio and Hanshang Group hitting the daily limit [1] - The composite fluid sector was active, with Nord Shares reaching the daily limit [1] - Other sectors with notable gains included gene sequencing, AI, and state-owned cloud concepts [1] Index Performance - Shanghai Composite Index: 3573.21, down 42.51 points (-1.18%) [1] - Shenzhen Component Index: 11009.77, down 193.26 points (-1.73%) [1] - ChiNext Index: 2328.31, down 39.37 points (-1.66%) [1] - Other indices such as the Sci-Tech 50 and CSI 300 also showed declines [1]

Investment Rating - The industry investment rating is "Overweight" [1][11] Core Views - The report highlights the strong performance of companies in the liquid cooling sector, driven by increasing demand due to the rise of AI technologies [4][5][6] - The report emphasizes that liquid cooling is transitioning from an optional solution to a necessary one in the AI era, due to factors such as increasing power consumption of mainstream computing chips and the need for high-density data centers [6] Summary by Sections Company Performance - Vertiv reported Q2 2025 revenue of $2.638 billion, exceeding the previous guidance of $2.35 billion, with a year-on-year growth of 35% and a quarter-on-quarter growth of 30% [4] - Celestica achieved Q2 2025 revenue of $2.89 billion, a 21% year-on-year increase, and raised its full-year revenue guidance to $11.55 billion from $10.85 billion [5] Market Trends - The report notes that the demand for liquid cooling solutions is expected to rise significantly, driven by the AI boom and the increasing power density of AI clusters [6] - The report recommends several companies as key players in the liquid cooling market, including Yingwei, Shunling Environment, and Yinhong Shares, among others [6]