Summary of Conference Call Notes Industry Overview - The gas turbine industry is experiencing a surge in demand driven by AIDC (Artificial Intelligence Data Center) and environmental policy relaxations, particularly in North America, which is the largest market for gas turbines [1][2][5][7]. - The gas turbine sector is expected to see new orders reach 100 GW in 2025, representing a year-on-year growth rate of approximately 75% [1][5]. Company Insights: GEV - GEV's revenue from gas turbines exceeds 100 billion RMB, but growth is limited, with a projected revenue increase of about 10% in 2025 compared to 2024 [3][9]. - GEV plans to increase its base load power installation from approximately 200 GW to 400 GW, which is expected to enhance long-term profitability from its service business [4][16]. - GEV's product line focuses on medium to large gas turbines, unlike competitors like Siemens, which cover a broader power range [4][19]. Key Drivers of Growth - The primary drivers for the gas turbine market include: - Increased electricity demand from AIGC/AIDC [5][6]. - A replacement cycle for aging equipment, with a significant peak in installations around 2020 [5]. - The need for traditional energy sources to support renewable energy fluctuations [5][6]. Order Backlog and Delivery Challenges - GEV's backlog has risen significantly to 83 GW, with about half of this backlog consisting of "slot reservation agreements" that require prepayments [7][8]. - The delivery cycle for gas turbine equipment is estimated to take approximately 5-6 years based on current backlog and delivery rates, with heavy-duty gas turbines experiencing longer delivery times due to increased demand [11][15]. Market Dynamics - North America is the largest demand region for gas turbines, followed by the Middle East and North Africa [7]. - The Chinese market is experiencing volatility, with a significant drop in orders expected in the first half of 2025 due to the dominance of joint ventures and domestic companies [7]. Competitive Landscape - GEV's heavy-duty gas turbines are favored in North American data centers due to their higher efficiency and lower lifecycle costs compared to other options [3][12]. - The company faces competition from Siemens and other manufacturers, with a notable difference in product offerings and market strategies [4][19]. Pricing and Cost Trends - Pricing for gas turbines has increased, with "slot reservation agreements" priced 10-20% higher than standard orders [18]. - The total cost of combined cycle gas power plants has risen from approximately $2,000 to $2,500 per kW, impacting the pricing of gas turbines [18]. Future Outlook - GEV aims to achieve a production capacity of 20 GW by Q3 2026 and 24 GW by 2028, indicating a significant expansion plan [16][17]. - The company is also exploring pathways to enhance production capacity, including restarting production lines in Europe and increasing workforce [17]. Conclusion - The gas turbine industry is poised for significant growth driven by technological advancements and increasing energy demands, particularly in data centers. GEV is strategically positioned to capitalize on these trends, although it faces challenges related to production capacity and market competition.

Group 1 - The core viewpoint is that the commercial operation cycle of modified aviation fuel engines is approximately 45 days, with a quick deployment process that allows for rapid start-up and operation, making it a favorable choice for data center power supply [1] - The demand for modified aviation fuel engines is increasing, with companies like Siemens and Baker Hughes significantly expanding production, and FTAI planning to convert CFM56 engines into 25MW turbines, aiming for an annual production of over 100 units starting in 2026 [1] - Aviation Power, as the only domestic engine manufacturer, can convert retired engines into 20-30MW modified engines, potentially generating over 10 billion in value if 100 engines are modified, benefiting not only Aviation Power but also the entire aviation industry chain [1] Group 2 - The combination of domestic computing power and modified aviation fuel engines exemplifies self-sufficiency, with a focus on exporting complete systems to regions like Southeast Asia and the Middle East, addressing global electricity shortages [2] - As of February 13, 2026, the CSI Defense Index has seen a 0.27% increase, with significant gains in stocks such as Aviation Power (10.01%) and Aviation Materials (7.92%), indicating strong market performance [2] - The CSI Defense Index reflects the overall performance of listed companies in the defense industry, including those providing equipment to the armed forces or having contracts with the military [2][3]

Core Insights - The development of AI data centers in the U.S. is driving an increase in electricity demand, leading to a surge in gas turbine demand due to power shortages [1][2] - The delivery time for newly ordered H-class gas turbines has significantly lengthened, with expected delivery now between 2028 and 2030 [1][2] - The commercial operation cycle for modified aircraft engines is much shorter than that of large gas turbines, making them an ideal transitional solution for data center construction [4] Group 1: AI Data Centers and Electricity Demand - The global electricity consumption of data centers is projected to grow from 49 GW in 2023 to 96 GW by 2026, with 90% of this growth driven by AI [2] - Aging power grid infrastructure in developed economies, with over 50% of equipment exceeding 20 years of use, is prompting a need for upgrades [2] Group 2: Gas Turbine Demand and Supply - The demand for gas turbines is increasing due to electricity shortages, resulting in a higher order-to-delivery ratio for turbine manufacturers [1][2] - The supply-demand mismatch is evident, with a significant backlog in orders for modified aircraft engines, as seen in recent contracts and deliveries [4] Group 3: Investment Opportunities - The current supply-demand mismatch in modified aircraft engines presents opportunities for companies with supporting technologies and capacities to secure long-term contracts [5] - Companies such as航亚科技, 振华股份, and others are highlighted as potential beneficiaries in the modified aircraft engine market [6]

Investment Rating - The industry investment rating is "Buy" [2] Core Insights - The aviation modified gas turbine is becoming one of the solutions to address the electricity gap [1] - The demand for aviation modified gas turbines is increasing due to the rapid growth of data centers and the need for reliable power supply [6][67] - The global market for aviation modified gas turbines is expected to reach $12.5 billion in sales over the next five years [75] Summary by Sections AIDC and Power Grid Renovation - The development of AI infrastructure and the renovation of power grids are driving strong demand for overseas power construction [14] - Global data center electricity consumption is projected to grow from 49 GW in 2023 to 96 GW in 2026, with 90% of this growth driven by AI [14] - The aging of power equipment in developed economies necessitates updates, with over 50% of grid infrastructure exceeding 20 years of use [16] Performance and Cost Efficiency of Aviation Modified Gas Turbines - Aviation modified gas turbines share core technologies with aircraft engines, making them efficient and cost-effective [55] - These turbines are increasingly being used in various applications, including emergency power and distributed energy systems [59] Flexibility and Rapid Installation of Aviation Modified Gas Turbines - Aviation modified gas turbines can be installed in as little as 1.5 months, making them ideal for data center power needs [65] - They offer quick start-up times and high efficiency, suitable for current trends in distributed and flexible power generation [63] Investment Recommendations - Companies such as Hangya Technology, Zhenhua Co., and others are expected to benefit from the growing demand for aviation modified gas turbines [6][67] - The report suggests focusing on companies that can enhance their market share in the aviation modified gas turbine sector due to the current supply-demand mismatch [6]

Investment Rating - The industry investment rating is "Buy" [2] Core Insights - The report highlights that aviation modified gas turbines are becoming one of the solutions to address the electricity gap, driven by the increasing demand for data centers and the need for efficient power generation [1][15][55] - The global power consumption of data centers is expected to grow significantly, from 49 GW in 2023 to 96 GW in 2026, with 90% of this growth driven by AI [15][20] - The aging infrastructure of power grids in developed economies necessitates upgrades and replacements, creating further demand for power generation solutions [17][25] Summary by Sections Section 1: AIDC and Power Grid Renovation - The development of AI infrastructure is driving a surge in electricity demand for data centers, which is expected to double global power consumption from 2022 levels by 2026 [15][20] - Over 50% of power grid infrastructure in developed economies is over 20 years old, leading to urgent maintenance and replacement needs [17][25] Section 2: Performance and Cost-Effectiveness of Aviation Modified Gas Turbines - Aviation modified gas turbines share core technologies with aircraft engines, making them efficient and cost-effective for various applications [55][59] - The report details several successful models derived from aircraft engines, such as the LM2500 series, which has become widely used due to its performance and reliability [56][61] Section 3: Flexibility and Rapid Installation of Aviation Modified Gas Turbines - Aviation modified gas turbines can be installed in as little as 1.5 months, making them ideal for rapidly expanding data centers [65][67] - These turbines offer quick start-up times and high efficiency, making them suitable for distributed energy and emergency power applications [63][66] Section 4: Investment Recommendations - The report suggests focusing on companies that supply components and technologies for aviation modified gas turbines, as they are likely to benefit from the growing demand in this sector [6][70] - Companies such as 航亚科技, 振华股份, and 航发科技 are highlighted as potential beneficiaries of this trend [6][7]