Core Viewpoint - The stock price of Invec has surged nearly 300% since September 2024, with its market capitalization rising from under 20 billion to 63.6 billion yuan, driven by the booming demand for liquid cooling technology in the AI sector [1][2][3]. Company Performance - Invec's revenue for the first half of 2024 increased by 50.25% to 2.573 billion yuan, while net profit grew by 17.54% to 216 million yuan [3][11]. - The company's gross margin for the same period was 26.15%, down over 2 percentage points year-on-year, with inventory balance increasing by 40.1% to 1.239 billion yuan [3][11]. Market Dynamics - The liquid cooling technology is transitioning from an optional solution to a necessity, with global data center liquid cooling market expected to reach approximately 68.8 billion yuan by 2026, with the domestic market around 17.9 billion yuan [9][10]. - Major cloud service providers, including Google, Microsoft, and Alibaba, are adopting liquid cooling solutions, indicating a significant market opportunity for Invec [9][10]. Competitive Landscape - Domestic server manufacturers like Inspur and Huawei are developing their own liquid cooling technologies, increasing competition for Invec [13]. - International competitors such as Vertiv and CPC dominate the liquid cooling market, posing additional challenges [13]. Strategic Initiatives - Invec has launched the Coolinside full-chain liquid cooling solution and has secured partnerships with major clients like ByteDance and Tencent [10]. - The company plans to invest over 1 billion yuan in a new R&D and production base in Shenzhen to meet the growing demand for precision temperature control equipment [10]. Future Outlook - The company aims to leverage the increasing demand for high-density cooling solutions driven by information technology and energy storage needs [14]. - Invec's leadership expresses confidence in achieving a leading position in the global precision environment control sector by its 30th anniversary [15].

Group 1 - The report highlights that the current market rally is characterized by a disconnect between index performance and underlying earnings recovery, suggesting that the rally is more driven by liquidity and thematic trading rather than fundamental improvements [1][34]. - The report introduces the securitization rate (the ratio of total market capitalization to GDP) as a useful tool for identifying valuation peaks in index bull markets, indicating that a higher securitization rate typically reflects liquidity-driven market conditions [2][23]. - Historical data shows that during significant index bull markets, the securitization rate has risen above 1, with current levels at 0.83 suggesting potential for further valuation upside [2][26]. Group 2 - The report anticipates that the total market capitalization of the two exchanges will continue to expand, driven by expected recovery in producer price index (PPI) and supportive liquidity and policy expectations [3][35]. - The analysis indicates that the current market environment aligns with characteristics of an index bull market, despite concerns about the inability to surpass previous valuation peaks [33][34]. - The report emphasizes the importance of monitoring the securitization rate as it approaches 1, which could signal a critical valuation threshold for the market [3][35]. Group 3 - The investment strategy proposed includes a "4+1" sector allocation approach, focusing on technology, cyclical sectors benefiting from PPI recovery, and structural opportunities in overseas markets [4][39]. - Specific sectors highlighted for investment include technology and military industries, cyclical commodities, and companies with potential for valuation recovery [4][39]. - The report suggests maintaining a stable core allocation in dividend-paying stocks and gold, indicating a balanced approach to investment amidst market fluctuations [4][39].

Core Views - The market shows signs of internal divergence despite the strong performance of major indices, with the Shanghai Composite Index reaching a ten-year high [2][10] - The digital currency concept stocks are leading the market, while defensive sectors like banking and electricity are also gaining traction [10][12] - The overall market sentiment remains cautious, with a focus on the performance of the brokerage sector and trading volume as key indicators for future movements [3][11] A-Share Market Analysis - On Thursday, the three major indices opened higher, with the Shanghai Composite Index hitting a new ten-year high, but there was noticeable volatility and a late-session pullback [4][10] - The digital economy concept stocks, including cross-border payments and data rights, showed strong performance, while sectors like liquid cooling and robotics faced declines [5][7] - The trading volume remained high at 24.24 trillion yuan, indicating sustained market activity despite the mixed performance of individual stocks [6][10] Digital Economy Sector Insights - The digital economy sector is expected to continue its rapid growth, with the core industry value projected to account for 10% of GDP by 2025 [7][8] - Recent regulatory developments, such as the Ministry of Finance's guidelines on data resource accounting, are anticipated to enhance data management and promote the digital economy [7][9] - The digital economy's main themes include the digitization of traditional industries and the development of new technologies, which are expected to drive investment opportunities in the coming years [8][9] Natural Gas Hydrate Sector Developments - The hydrate concept stocks experienced significant gains following breakthroughs in methane conversion technology, which could enhance energy security and commercial viability [9] - The new catalytic system developed by Hainan University is expected to facilitate the efficient conversion of methane into methanol, presenting a promising opportunity for the clean energy sector [9]

Market Overview - The A-share market showed mixed performance with the Shanghai Composite Index reaching a 10-year high, closing up 0.13% at 3771 points [1] - The Shenzhen Component Index fell by 0.06%, while the ChiNext Index decreased by 0.47% [1] - Total trading volume for the day was 2.46 trillion yuan, an increase of 11.9 billion yuan compared to the previous trading day, with nearly 3100 stocks declining [1] Index Performance - Shanghai Composite Index: 3771.10 (+0.13%) [2] - Shenzhen Component Index: 11919.76 (-0.06%) [2] - ChiNext Index: 2595.47 (-0.47%) [2] - The total A-share market index (Wande All A): 5962.99 (-0.13%) [2] Sector Performance - The telecommunications sector led with a gain of 1.89% [2] - The multi-financial sector followed with a 1.67% increase [2] - The energy equipment sector rose by 1.40% [2] - Notable declines were seen in the generator concept, with Weichai Heavy Industry dropping to its limit down [3] - The liquid cooling concept experienced significant losses, with multiple stocks hitting their limit down [3] - The blade battery and Kirin battery sectors also faced declines, with Huaguang New Materials falling over 10% [3]

Market Overview - The A-share market showed mixed performance with the Shanghai Composite Index reaching a 10-year high, closing up 0.13% at 3771 points, while the Shenzhen Component Index fell 0.06% and the ChiNext Index dropped 0.47% [1] - The total trading volume for the day was 2.46 trillion yuan, an increase of 11.9 billion yuan compared to the previous trading day, with nearly 3100 stocks declining [1] Sector Performance - The cross-border payment sector experienced a surge, with stocks like Sanwei Xinan and Tianrongxin hitting the daily limit [1] - The combustible ice sector remained strong throughout the day, with ShenKai Co. also reaching the daily limit [1] - The digital currency sector saw gains, with Beixin Source rising by 20% to hit the daily limit [1] - Other sectors with notable gains included petrochemicals, titanium dioxide, electricity, and data security [1] - Conversely, the generator concept faced a downturn, with Weichai Heavy Industry hitting the daily limit down [1] - The liquid cooling concept saw significant declines, with stocks like Chuanrun Co., Feilong Co., and Jintian Co. all hitting the daily limit down [1] - The blade battery and Kirin battery sectors also fell, with Huaguang New Materials dropping over 10% [1] - Sectors with the largest declines included PEEK materials, PCB, and CPO concepts [1] Index Performance - Shanghai Composite Index: 3771.10 (+0.13%) [1] - Shenzhen Component Index: 11919.76 (-0.06%) [1] - ChiNext Index: 2595.47 (-0.47%) [1] - CSI 300 Index: 4288.07 (+0.39%) [1] - CSI 500 Index: 6704.17 (-0.36%) [1] - CSI 1000 Index: 7253.34 (-0.71%) [1] - CSI 2000 Index: 3104.53 (-0.74%) [1]

Group 1 - The A-share market experienced a collective pullback in liquid cooling concept stocks, with notable declines in several companies [1] - Feilong Co. and Jintian Co. hit the daily limit down, while Cambridge Technology, Hongfuhang, Tongfei Co., Kexin Innovation Source, and Debang Technology fell over 7% [1] - Other companies such as Fangsheng Co., Binglun Environment, Chuanrun Co., and Dingtong Technology dropped more than 6%, while Gaolan Co., Chuanhuan Technology, Shenling Environment, Liou Co., Yimikang, and Zhongshi Technology saw declines exceeding 5% [1]

Core Insights - The report from China International Capital Corporation (CICC) indicates that the demand for computing power is increasing due to the iterative updates of AI large models and their application deployment [1] - The report highlights that chip power consumption and computing power density are continuously rising, with liquid cooling technology accelerating its replacement of air cooling to become the mainstream solution [1] - CICC forecasts that the global AI liquid cooling market size is expected to reach $8.6 billion by 2026, indicating a rapid market growth [1] - Cold plate liquid cooling is anticipated to be the first to achieve large-scale implementation [1]

Robotics - Xince Standard: The joint venture Xince Standard (Suzhou) Robot Technology Co., Ltd. has not generated any business revenue [1] - High Measurement Co.: The composite tungsten wire tendon rope used in humanoid robots has formed small batch orders [1] - Hongqi Chain Store: The company's robot project is currently under development [1] - Shuangfei Group: The company will actively seek cooperation opportunities with humanoid robot clients [1] Liquid Cooling - Hu塑科技: The company has not yet cooperated with Vidi Technology to develop a dedicated BMU solution for liquid cooling systems [1] Other Developments - Aerospace Electric: The company's connectors, cables, and motors have been applied in supporting new energy vehicles [1] - Zhuoyi Information: The company's BIOS products have a layout in the Harmony ecosystem [1] - Fuxin Technology: The company has initiated the development of the Micro TEC project for 1.6T optical modules [1] - Qiaofeng Intelligent: The company's CNC machine tool products can be applied in the processing of folding screen structural components [1] - Airo Energy: The company's technology and products do not involve AIDC [1] - Sande Technology: There is strong demand, and the revenue growth of the company's unmanned intelligent equipment is sustainable [1] - Yingjie Electric: The demand for nuclear fusion-related power supplies may form an increment in the second half of this year and the first half of next year [1] - Tongguan Copper Foil: The company has sufficient orders for copper foil products, and prices will be adjusted according to market conditions [1]

Summary of Liquid Cooling Technology Conference Call Industry Overview - Liquid cooling technology has become essential for high-power equipment cooling, particularly in the server sector, where cabinets exceeding 20 kW must rely on liquid cooling to enhance data center signal transmission efficiency [1][2] - The liquid cooling market is expected to reach a trillion-level valuation in the future, driven by demand from companies like NVIDIA and major cloud service providers such as Google and Amazon [1][7] Key Points and Arguments - **Development Stages**: Liquid cooling technology has evolved from air cooling to plate-level liquid cooling and now to immersion cooling. The GV300 level plate cooling is currently a market hotspot, but its thermal management system is still in the early stages, with revenue realization expected to take time [1][5] - **Market Position**: China holds a significant advantage in the PCB sector, capturing 60% to 70% of global production capacity. However, it lacks a strong foundation in liquid thermal management systems, with Japan and Taiwan currently leading in this area [6] - **Market Potential**: The domestic liquid cooling market is valued at approximately 600 to 700 million yuan, with potential growth to 100 billion yuan when including external equipment and demand from major tech companies [7] - **Transition from PCB to Liquid Cooling**: As the PCB sector grows, liquid cooling is becoming a critical segment, particularly in the transition from chip-level to system-level cooling solutions [2] Challenges and Opportunities - The liquid cooling industry faces market divergence due to stock market adjustments, but it still holds significant long-term growth potential. The market is expected to expand rapidly, with domestic manufacturers moving from low-end components to high-end core components [8][9] - **Investment Timing**: Current market conditions present a favorable opportunity for investors, as the industry is still in its early stages, with the formation of Tier 1 and Tier 2 suppliers just beginning [18] Additional Insights - **Certification Requirements**: Liquid cooling modules must undergo NVIDIA certification for Tier 1 and Tier 2 suppliers, while some components can enter the system through indirect means, allowing for quicker market entry [10] - **Component Performance**: Cold plates are progressing rapidly in the market, while CDU and UQD components are lagging due to their complexity and the need for extensive certification [11] - **Future Trends**: The industry is moving towards improved cooling efficiency and stability, with new materials like graphene and liquid metals emerging as alternatives to traditional thermal grease [15][16] Conclusion - The liquid cooling industry is poised for significant growth, driven by increasing demand for high-performance computing and data center solutions. The transition from traditional cooling methods to liquid cooling systems is expected to accelerate, creating numerous investment opportunities in the coming years [19]

Summary of Liquid Cooling Industry Conference Call Industry Overview - The liquid cooling industry is evolving from air cooling to unidirectional cold plates, then to silent and bidirectional cold plates, with the latter competing with unidirectional silent systems [1][6][20] - NVIDIA is driving the development of bidirectional cold plates to meet the high power demands of AI servers and is exploring a bidirectional cold plate with a local silent solution to reduce costs and address high heat flux issues [1][10] Key Cooling Technologies - The main cooling methods in the liquid cooling industry include unidirectional cold plates, bidirectional cold plates, and silent liquid cooling [2][20] - Unidirectional cold plates are easy to retrofit onto existing air cooling systems, using water and ethylene glycol, but have leakage risks due to conductivity issues [2][4] - Silent liquid cooling operates within a power range of 44 kW to 100 kW, using mineral oil, silicone oil, or fluorinated liquids, with full fluorinated ethers being the best-performing but most expensive option [2][4][24] Market Dynamics - After 3M exited the market in 2022, domestic manufacturers like Noah, Yonghe, Yongtai, Sinochem Blue Sky, and Juhua are actively replacing them, with Noah excelling in the trifluorinated ether sector [1][21][22] - The market for semiconductor cooling liquids is competitive, with companies like New Doubao and Juhua making significant strides in mainstream wafer fabs [25][27] Cost and Investment Insights - Initial investment costs for unidirectional cold plate systems are low (<3% of total system cost), but long-term maintenance costs can rise to 7%-8% [1][14] - The cost structure varies significantly based on the cooling medium used, with mineral oil costing <10%, silicone oil >10%, and high-end incubation liquids reaching up to 40% of system costs [1][14][15] Competitive Landscape - Major players in the liquid cooling market include Noah, Yonghe, Yongtai, Sinochem Blue Sky, and Juhua, with Noah being the standout performer [22][23] - New Doubao's full fluorinated ether products are being used in large-scale applications, particularly with Samsung [27][28] Future Trends - The future of domestic alternatives depends on their ability to consistently meet the demands of large manufacturers, with the next one to two years being critical for market performance [28] - Innovations in cooling technologies, such as bidirectional cold plates and local silent solutions, are expected to enhance overall efficiency and reduce maintenance challenges [12][20] Conclusion - The liquid cooling industry is experiencing rapid growth driven by AI and cooling technology advancements, with significant interest from major tech companies [20] - The exit of 3M has opened opportunities for domestic players to fill the gap, leading to a competitive and evolving market landscape [21][22]