Investment Rating - The report assigns an "Accumulate" rating to the company with a target price of 41.50 CNY, while the current price is 35.51 CNY [5]. Core Insights - The company focuses on the research, production, and application of organic silicon new materials and textile chemicals, with continuous upgrades in product structure [2]. - The company plans to raise 400 million CNY through convertible bonds to fund the construction of a high-end organic silicon new materials project at its Zhuhai base, which includes products like immersion cooling liquids and modified silicone oils [32][35]. - The company has a diversified product range, including textile printing and dyeing auxiliaries, agricultural additives, electronic chemicals, release agents, and cosmetic silicone oils, with textile printing and dyeing auxiliaries accounting for the largest revenue share [12][25]. Financial Summary - The company’s total revenue is projected to grow from 1,135 million CNY in 2023 to 2,185 million CNY by 2027, reflecting a compound annual growth rate (CAGR) of approximately 25.8% [4]. - Net profit attributable to the parent company is expected to increase from 82 million CNY in 2023 to 191 million CNY in 2027, with a CAGR of 27.3% [4]. - Earnings per share (EPS) are forecasted to rise from 0.46 CNY in 2023 to 1.06 CNY in 2027, with growth rates of 25.7%, 24.0%, and 27.3% for the respective years [12][42]. Business Segments - The company operates in six main segments, with textile printing and dyeing auxiliaries generating 5.06 billion CNY in revenue in 2024, accounting for 35.92% of total revenue [12][25]. - Other segments include agricultural additives (9.34%), electronic chemicals (8.13%), release agents (4.74%), and cosmetic silicone oils (3.77%) [12][25]. Market Position and Strategy - The company is enhancing resource integration across its three major production bases in Ninghai, Deqing, and Jiujiang, while also focusing on the development of new products aligned with green and low-carbon initiatives [32]. - The introduction of a three-in-one immersion cooling solution aims to address challenges in data center cooling, significantly reducing energy consumption and operational costs [35].

Core Viewpoint - Runhe Materials continues to demonstrate steady growth in its operational performance, with significant increases in net profit and a strong response to raw material cost fluctuations through optimized management strategies [1][2]. Financial Performance - In the first three quarters of 2025, the company achieved operating revenue of 1.029 billion yuan, a year-on-year increase of 3.56% [1]. - Net profit reached 95 million yuan, reflecting a year-on-year growth of 36.34%, while the non-recurring net profit was 91.76 million yuan, up 45.27% [1]. - The overall gross profit margin has improved, indicating enhanced profitability [1]. Industry Context - The organic silicon sector is expected to benefit from the demand driven by emerging industries such as new energy vehicles, photovoltaics, and electronics [2][3]. - The industry is experiencing a tightening supply situation, with strong price support and an expectation of price increases in the short term [2]. - China's organic silicon market is characterized by significant growth opportunities, although it faces intense international competition and technological gaps [3]. Strategic Initiatives - Runhe Materials plans to issue 400 million yuan in convertible bonds to fund high-end organic silicon projects, which include products like immersion cooling liquids and modified silicone oils [2]. - The completion of high-end organic silicon projects is anticipated to alleviate production capacity bottlenecks and enhance the company's competitive edge in the market [3]. Management and Incentives - The company has a strong technical reserve and management experience, with a core team experienced in the organic silicon industry [4]. - An incentive plan has been implemented, granting 4.185 million restricted shares to 91 eligible individuals at a price of 14.00 yuan per share, aligning management interests with those of shareholders [4].

Investment Rating - The report maintains an "Outperform" rating for the industry [1] Core Insights - The rapid growth of data centers and the increasing power demands necessitate efficient cooling technologies, with liquid cooling addressing high energy consumption and heat generation issues. By 2024, China's computing centers are expected to consume 166 billion kWh, accounting for 1.68% of the total electricity consumption [2][2] - The main liquid cooling technologies are cold plate and immersion cooling, with cold plate cooling being the most widely used due to its mature technology. Liquid cooling offers multiple advantages, including high heat exchange efficiency, energy savings, and reduced noise [2][2] - The market for cooling liquids is projected to grow significantly, with an estimated demand of approximately 89,000 tons for AI data centers by 2028 and an additional 19,000 tons from traditional server installations [2][2] Summary by Sections 1. Main Cooling Pathways - Liquid cooling technology is categorized into indirect cooling (mainly cold plate) and direct cooling (including immersion and spray cooling). Cold plate cooling is the most common, while immersion cooling offers higher heat dissipation capabilities but at a higher operational cost [2][2][2] 2. Water-Based Cooling Liquids - Water-based cooling liquids are primarily used in single-phase cold plate cooling, offering good thermal conductivity and low cost. However, they may pose risks of algae and bacteria growth [48][50] 3. Oil-Based Cooling Liquids - Oil-based cooling liquids, including mineral oil and synthetic oil, are mainly used in single-phase immersion cooling. They are cost-effective and environmentally friendly but have lower thermal conductivity compared to other options [53][56] 4. Market Space Estimation - The liquid cooling market in China is expected to exceed 100 billion yuan by 2027, with a compound annual growth rate of 51.4% from 2019 to 2027 [17][17] 5. Commercialization of Liquid Cooling Technology - The commercialization of liquid cooling technology is increasing, with major IT companies like Alibaba, Baidu, and Tencent implementing successful liquid cooling applications [27][27]