Investment Rating - The report rates the diesel generator industry positively, highlighting significant opportunities for domestic replacements due to supply-demand mismatches and increasing demand driven by AI computing needs [4]. Core Insights - The demand for diesel generators is expected to surge as AI computing power requirements explode, with predictions indicating a growth in China's intelligent computing scale to 725.3 EFLOPS in 2024, a 74.1% year-on-year increase, and doubling to 1,460.3 EFLOPS by 2026 [4][12]. - Major tech companies are significantly increasing their capital expenditures on AI infrastructure, which will accelerate the construction of AI data centers (AIDC) [4][24]. - The mandatory policy requiring A-grade data centers to have "2N redundancy" diesel generators emphasizes the essential role of diesel generators as backup power sources [4][12]. - The mismatch between strong demand and weak supply is expected to lead to a rise in both volume and price of diesel generators, creating a favorable environment for domestic manufacturers [4][40]. Summary by Sections 1. Demand Surge for Diesel Generators - The construction of data centers is driving a high increase in demand for diesel generators, with the AIDC market projected to reach 1,014 billion yuan by 2024, growing at a CAGR of 26.8% [12][24]. - Diesel generators are crucial for ensuring uninterrupted power supply in data centers, which are increasingly reliant on stable electricity for AI training and inference [12][17]. 2. Acceleration of Domestic Replacement - The current supply-demand mismatch, exacerbated by international capacity expansion lagging behind demand, presents a window for domestic manufacturers to capture market share [4][40]. - Domestic manufacturers are expected to see significant profit increases as the market enters a price-up cycle due to supply shortages [4][44]. 3. Opportunities in the Supply Chain - Key component suppliers with high domestic production rates are likely to benefit from the surge in diesel generator demand, with technological breakthroughs and domestic replacements opening new growth avenues [4][50]. - Companies like Tianrun Industrial, which have established strong ties with major manufacturers, are positioned to gain from the increased demand for core components [4][80]. 4. Investment Recommendations - The report suggests focusing on domestic replacement beneficiaries such as Weichai Heavy Machinery and Yuchai International, as well as component suppliers like Tianrun Industrial [4][24][80]. - The expected profit surge for domestic manufacturers is anticipated to materialize in the second half of 2025 and throughout 2026, driven by increased market share and pricing power [4][44].

Group 1 - The company does not currently engage in liquid cooling technology [2] - The core business of the company is generator products and services [2] - In data centers, the company's products primarily serve as backup power sources, supplying electricity to various loads during power outages [2]

Group 1 - The diesel generator concept has gained significant traction, with companies like Taihao Technology, Power New Science, and Weichai Heavy Machinery hitting their daily limit up, and the diesel generator concept index has increased by over 64% this year [1] - The demand for high-end diesel generators has surged due to the continuous growth of AI data centers (AIDC) and traditional data centers, with power requirements for AIDC cabinets increasing from 4-8 kW to 20-100 kW, necessitating more robust backup power configurations [2][3] - Major tech companies like Tencent, Alibaba, and ByteDance are expanding their data centers, which is expected to drive the demand for diesel generators, with the market size projected to reach 9.1 billion yuan by 2025, a year-on-year growth of over 50% [2] Group 2 - North American cloud service providers are increasing investments in AI infrastructure, leading to a supply-demand imbalance for diesel generators globally, with prices reaching over 2.8 million yuan earlier this year [3] - Domestic manufacturers are experiencing a production backlog extending to November 2025, and the price of domestic diesel generators is around 3 million yuan, while export prices are approximately 4 million yuan, indicating a rising profit margin [3] - The domestic supply-demand gap is expected to persist due to the difficulty and low willingness of international leaders to expand production, benefiting domestic manufacturers in the diesel generator market [3] Group 3 - KOTAI Power focuses on the development, design, production, and sales of generator sets, with stable business cooperation in backup power for data centers [4] - Weichai Heavy Machinery specializes in developing and manufacturing power generation equipment, which is used as backup power in data centers [4] - Huafeng Co. produces intelligent generator sets primarily for data centers and communication bases [4] - Shenli Co. provides diesel generator products applicable in industries requiring emergency power, including data centers [4] - Taihao Technology specializes in emergency equipment for military applications, with intelligent emergency power solutions for data centers [4] - Sumida has a long-standing presence in the generator market, providing reliable backup power solutions for data centers [4]