Investment Rating - The report does not explicitly state an investment rating for the industry or companies discussed Core Insights - China's economy appears stable with a focus on boosting demand and improving consumer sentiment, despite challenges in the property market [1][4] - The property market remains fragile but stable, with government policies aimed at stimulating demand rather than supply [5][10] - Exporters are shifting production to Southeast Asia and Mexico due to high costs in the US, leading to potential price increases for Chinese products [1][5] - Industrial technology is advancing, with Chinese companies catching up to Western suppliers in automation and AI [1][28] - Datacenter construction is expected to significantly increase in 2025 due to AI adoption, with a potential doubling in compute buildout [1][6] Summary by Sections Economic Overview - The macroeconomic environment in China is stable, with minimal panic regarding tariffs and a notable focus on demand-side stimulus [4][8] - Consumer sentiment is increasingly important, with government efforts to boost consumption following trade negotiations [4][10] Property Market - The property market is stabilized by demand-side policies, but improvement is fading, and the government is focused on fixing this part of the economy [5][11] - Transaction volumes in the secondary housing market are performing better than new housing, with a notable divergence between luxury and ordinary homes [7][10] Export and Production Shifts - Exporters are moving production to existing hubs in Southeast Asia and Mexico, avoiding the US due to high costs [5][18] - Chinese appliance companies are successfully penetrating overseas markets, particularly in the EU and North America [13][19] Industrial Technology - The discrete automation market is showing signs of recovery, with Chinese companies developing competitive technologies in software and AI [28][39] - Shenzhen Inovance is gaining market share in industrial automation, focusing on customized solutions and responsiveness to customer demands [30][32] Datacenter and AI Adoption - AI adoption is accelerating, with significant investments expected in datacenter infrastructure by 2025 [6][39] - Companies are taking a pragmatic approach to AI integration, looking for validated use cases before large-scale implementation [6][39] Company-Specific Insights - Midea's domestic sales are expected to see single-digit growth, driven by a replacement cycle rather than new demand [13][21] - Haier is experiencing growth in overseas markets, particularly in Southeast Asia, while maintaining a focus on the US and EU [19][24] - Hisense is benefiting from subsidy policies, leading to revenue growth in both domestic and international markets [24][25]

Investment Rating - The report rates NARI Technology as a "Buy" with a 12-month target price of Rmb31.8, implying a 39% upside based on an unchanged 25X 2026E P/E [1][12][15]. Core Insights - NARI Technology is expected to achieve a revenue growth of 13% year-on-year (yoy) in 2025E, surpassing its target of 12% yoy growth, supported by a backlog of Rmb50.7 billion and a strong order intake of over 50% yoy in 1Q25 [1][2][15]. - The company anticipates that its Ultra-High Voltage (UHV) revenue will double in 2025E, driven by significant project execution and new contracts [1][4][7]. - NARI Technology is positioned to benefit from China's structural smart grid needs, with a focus on overseas markets and new growth drivers such as AI integration and market-based electricity price reform [1][5][10][15]. Summary by Sections Revenue and Growth - The company targets Rmb64,500 million in revenue for 2025E, indicating a 12% yoy increase, marking a shift in guidance to a more conservative growth outlook after eight years [2][15]. - The 1Q25 revenue growth was reported at 16% yoy, with power grid automation growing by 25% yoy, primarily due to UHV revenue recognition [1][4]. Segment Performance - **Grid Automation**: Revenue in this segment was Rmb28.5 billion in 2024, with a growth expectation of over 10% yoy in 2025E, driven by UHV revenue [4]. - **Grid Digitalization**: This segment recorded Rmb12.4 billion in revenue in 2024, with a projected growth of close to 10% in 2025E, supported by national policies promoting AI integration and virtual power plants [5]. - **Power Generation**: Revenue reached Rmb12.2 billion in 2024, with a growth expectation of 14% yoy in 2025E, despite a moderation in installation growth [8]. - **Industrial Internet**: The segment faced a decline of 24% yoy in 2024 but is expected to return to growth in 2025E [9]. Overseas Business - NARI Technology's overseas revenue reached Rmb3.28 billion in 2024, a 135% yoy increase, contributing 6% to total revenue, with expectations for continued growth in 2025E [10][15]. Expense Management - The company guided an expense of Rmb7,741 million for 2025E, indicating a 19.6% yoy increase, primarily due to increased R&D investments [11][15]. Valuation and Financial Metrics - The report maintains earnings forecasts unchanged, with a focus on a stable margin profile supported by necessary investments in R&D and a reclassification of interest income [12][15].

Investment Rating - The investment rating for Sineng Electric is maintained at BUY with a target price of RMB 34.00 [1][4][8] Core Views - Sineng Electric's revenue for 2024 is projected at RMB 4,773 million, with an attributable net profit of RMB 419 million, reflecting a year-on-year decline in revenue of 3.2% but a significant increase in net profit of 46.5% [1] - The company is experiencing intensified competition in the energy storage market, particularly in the Middle East, which has affected pricing and shipment volumes [4] - The report anticipates that the company's expansion in overseas markets, particularly in Asia, Africa, Latin America, and Europe, will drive incremental growth [1][4] Financial Performance - For 2024, the revenue from the PV inverter business is expected to be RMB 2.75 billion, down 4% year-on-year, while the gross profit margin (GPM) improved by 2.3 percentage points to 22.6% [2] - Energy storage revenue is projected to be RMB 1.93 billion, largely flat year-on-year, with a GPM increase of 5.8 percentage points to 22.0% [3] - The estimated attributable net profit for 2025 and 2026 is revised down to RMB 610 million and RMB 751 million, respectively, due to lower shipment volume assumptions [4] Market Outlook - The report highlights a robust growth in demand for solar-plus-storage systems both domestically and internationally, which is expected to benefit Sineng Electric's business [4] - The estimated average selling price (ASP) for PV inverters in 2024 is projected to be RMB 0.11/Wh, reflecting an 11% decline year-on-year [2] - The company is expected to maintain a steady ASP for energy storage systems at approximately RMB 0.16/W in 2024 [3]

Group 1 - In 2024, the overall performance of the ChiNext board companies showed steady recovery, with a total revenue of 4.03 trillion yuan and an average revenue of 2.93 billion yuan per company [1][2] - The total net profit attributable to shareholders reached 207.46 billion yuan, with over 70% of companies profitable and nearly 50% experiencing year-on-year net profit growth [2][3] - The top 100 companies by market capitalization contributed nearly 50% of total revenue and over 80% of net profit, with significant growth from leading firms like CATL and Sungrow [2][3] Group 2 - The average revenue per ChiNext company was 2.93 billion yuan, with a gross margin increase of 0.23 percentage points to 23.39% [2] - R&D investment reached 203.68 billion yuan, with a research intensity of 5.05%, and 294 companies exceeding 10% in R&D intensity [2][3] - 925 companies implemented cash dividends totaling 143.5 billion yuan, a 25% increase year-on-year, with a coverage rate of 67% [3] Group 3 - The digital economy sector saw revenue growth of 6.9%, with infrastructure industries experiencing revenue and net profit growth of 19.59% and 39.03%, respectively [4] - The green and low-carbon sector generated 997.37 billion yuan in revenue, with net profits of 65.26 billion yuan, while the advanced manufacturing sector reported revenue of 878.74 billion yuan [4] - Consumer sectors, including automotive and home appliances, benefited from policy measures, leading to over 1.3 trillion yuan in sales [4] Group 4 - ChiNext companies accelerated their internationalization, with overseas business revenue reaching 957.83 billion yuan, a 10.05% increase [5] - The electronics and communications sectors saw significant growth in overseas sales, with increases of 24.94% and 63.82%, respectively [5] - In Q1 2025, ChiNext companies continued to perform well, with total revenue of 952.62 billion yuan and a net profit of 71.43 billion yuan, reflecting an 18.24% year-on-year increase [5][6]

Market Overview - The Shanghai Composite Index rose by 0.56% to close at 3295.06 points, with a weekly high of 3313.51 points [1] - The Shenzhen Component Index increased by 1.38% to 9917.06 points, reaching a peak of 9990.03 points [1] - The ChiNext Index saw a 1.74% rise, closing at 1947.19 points, with a maximum of 1962.68 points [1] - Global markets also experienced gains, with the Nasdaq Composite up by 6.73%, the Dow Jones Industrial Average up by 2.48%, and the S&P 500 up by 4.59% [1] - In the Asia-Pacific region, the Hang Seng Index rose by 2.74% and the Nikkei 225 Index increased by 2.81% [1] New Stock Subscription - No new stock issuances occurred last week [2] Margin Financing and Securities Lending - The total margin financing and securities lending balance in the Shanghai and Shenzhen markets was 1.797371 trillion yuan, with a financing balance of 1.786215 trillion yuan and a securities lending balance of 11.156 billion yuan [2] - The total margin financing and securities lending balance decreased by 1.192 billion yuan compared to the previous week [2] - The Shanghai market's margin balance was 917.657 billion yuan, down by 3.729 billion yuan, while the Shenzhen market's balance was 879.714 billion yuan, up by 2.538 billion yuan [2] - A total of 3428 stocks had financing funds buying in, with 35 stocks having buy amounts exceeding 1 billion yuan, led by Shenghong Technology, Xinyi Sheng, and Dongfang Fortune [2] Fund Issuance - Fourteen new funds were issued last week, including various types such as mixed funds and ETFs [3][4] Company Buyback Amounts - A total of 21 companies announced share buybacks last week, with the highest amounts executed by Ningde Times, Lishi Group, and Huagong Technology [5] - The highest buyback amounts were in the electric equipment, machinery, and food and beverage industries [5][6]

Summary of Conference Call Notes Industry Overview - The conference call primarily discusses the **data center industry** and its dynamics, particularly focusing on the demand for AI computing power and related infrastructure developments. Key Points and Arguments Data Center Demand and Pricing - The demand for data centers has expanded beyond major companies (BBAT) to various industries due to the introduction of **DeepSeek**, which has increased training and inference needs across sectors [1][2] - There is a strong belief that data center prices will rise by the end of Q2, driven by supply-demand dynamics and new applications [2][3] - The supply of data centers, especially in regions like North China and East China, is tight, with no available stock for large-scale data centers (over 30 MW) [1] Long-term Contracts and Pricing Strategies - Major companies are signing long-term contracts (up to 10 years) with data center providers to lock in prices at the current low levels, indicating a strategic move to mitigate future price increases [3] - The contracts often include penalties for early termination, ensuring a minimum commitment period [3] AI Computing Power Trends - The demand for domestic AI computing power remains strong, with significant advancements in model development and applications since March [4][5] - Recent updates in AI models, such as **Dipstick v3** and **GDP 4.0**, have led to increased interest and usage in image generation and other applications [6][7] Agent Development and Its Impact - The evolution of AI agents is expected to drive a surge in computing power demand due to their complexity and the need for extensive model calls [9][10] - The agent's ability to handle complex tasks will significantly increase the computational requirements compared to traditional chatbots [9] Supply Chain and Infrastructure Developments - The construction of computing centers in China continues unabated, with over 800 projects reported, indicating robust demand from major companies [11][12] - The capital expenditure (KPEX) in the industry is accelerating, with a notable increase in spending on power and cooling systems, which constitute a significant portion of data center costs [26][27] Market Outlook and Investment Recommendations - Companies involved in power equipment and data center infrastructure are expected to perform well, with specific recommendations for firms like **麦克尼特** and **旺电器** due to their strong earnings potential [15][20] - The overall market for energy storage is projected to grow significantly, with estimates suggesting a demand of 300 GWh by 2024, driven by advancements in green energy solutions [24][25] Technological Innovations and Future Directions - The introduction of **green electricity direct connection** projects is anticipated to enhance the efficiency of data centers and related power systems [22][23] - The potential for long-duration energy storage solutions is being explored, which could reshape the energy supply landscape for data centers [23] Additional Important Insights - The pricing of critical components like **柴发** (diesel generators) and cooling systems is on the rise due to increased demand and supply constraints [26][27] - The market for AI computing power and related infrastructure is expected to see continued growth, with companies adapting to meet the evolving technological landscape [19][20] This summary encapsulates the key insights and developments discussed during the conference call, highlighting the current state and future prospects of the data center industry and AI computing power demand.

- ■■- 核心摘要 2022年12月ChatGPT发布，引发全球市场对于AI发展的关注。伴随美国头部云厂商不断提升资本开 支，AI基建领域产生众多投资机会。涉及产品包括变压器、UPS（不间断电源）、服务器电源、液 冷；甚至由于AIDC（AI数据中心）建设的火爆，导致电网接入点稀缺，核电成为AIDC的优质电 源，包括核电公司以及可控核聚变公司均受到关注。 我们复盘ChatGPT发布后，海外AIDC基建类产业链股价走势，可以发现各区间段收益率靠前的细分 赛道，基本对应当时AI产业演进中的核心矛盾或进展。从规律来看，大致可以分为四个阶段：1） ChatGPT出现带来算力需求高增，期间服务器电源关注度攀升；2）算力高增推动芯片技术迭代，相 应导致功耗提升，服务器电源、液冷需求提升；3）AIDC进入实际建设阶段，AI基建（备用电源、 变压器需求增加）；4）AIDC建设导致电网接入点难寻，燃气轮机、核电相应概念热度提升。 综合以上分析，对于中国AIDC各细分产业链，我们观点如下： 传统备用电源有望享受量价齐升红利。 海外头部企业整体指引2025年营业利润率有望提升。我们认 为主要原因有（1）需求量端，AI数据中心建设浪 ...

Summary of Key Points from the Conference Call Industry Overview - The power equipment industry is viewed positively due to strong US transformer demand and increasing backlog from global suppliers, with order visibility extending to 2027 [1][22] - Taiwan's government anticipates AI power demand to reach 2GW by 2028, an increase of 8 times compared to 2023 [1][46] Company Insights Fortune Electric (1519.TW) - Recognized as a leading transformer manufacturer in the US market for nearly 30 years, with a competitive edge in high-voltage transformers [2] - Expected to benefit from the US transformer shortage, with a projected net income growth of over 40% in 2025 [19] - Revenue is anticipated to grow by approximately 25-30% year-over-year in 2025 [21] - Export revenue contribution is expected to exceed 50% in 2025 [15] - Concerns regarding potential impacts of US tariffs on profitability, although the company may transfer some costs to US clients [12][11] Chung Hsin Electric (1513.TW) - Key beneficiary of Taipower's power grid investment, holding over 50% market share in Taipower's procurement [3] - Revenue growth is expected to be milder in the first half of 2025, with a stronger second half [44] - Risks associated with potential delays in Taipower's projects, but orders are unlikely to be canceled due to government support for power grid investments [44] Hon Chuan (9939.TW) - Strong growth in the ASEAN market with stable dividend yield of approximately 4% [3] - Concerns about the impact of a rights issue and convertible bond issuance on EPS growth, with expected dilution of 2.5% and 7.4% respectively [49] - Anticipated revenue contribution from new capacity in China, expected to reach around NT$1.5 billion in 2025 [49] Financial Metrics - Fortune Electric's market cap is approximately USD 5.57 billion, with a projected PER of 30.0x for 2025 [6] - Chung Hsin's projected PER is 19.0x for 2025, with a revenue growth forecast of 12% [68] - Hon Chuan's revenue CAGR is expected to be 14% from 2024 to 2026 [52] Market Performance - In 2024, share price performance for Fortune Electric increased by 82%, while Hon Chuan saw a 25% increase [7] - Year-to-date performance in 2025 shows a 12% increase for Fortune Electric [8] Risks and Considerations - Potential risks include slower capacity expansion due to labor constraints and operational accidents affecting utilization rates [75] - The impact of US tariffs and changes in renewable energy subsidies could affect profitability for companies in the sector [12][11] Conclusion - The power equipment industry, particularly in Taiwan, is positioned for growth driven by strong demand and government support for infrastructure projects. Companies like Fortune Electric, Chung Hsin, and Hon Chuan are well-placed to capitalize on these trends, although they face risks related to tariffs, project delays, and market dynamics.