Summary of Wuxi Zhenhua Conference Call Industry and Company Overview - **Company**: Wuxi Zhenhua - **Industry**: Automotive components, specifically focusing on high-pressure fuel injectors, power semiconductor liquid cooling components, and thermal substrates. Key Points and Arguments 1. **Strong Profitability in Chrome Plating Business**: Wuxi Zhenhua's chrome plating business for high-pressure fuel injectors is highly profitable, with projected revenue of 180 million yuan in 2024, a gross margin of 81%, and a net profit exceeding 60% [2][4]. 2. **Development of Power Semiconductor Liquid Cooling Components**: The company is advancing in the power semiconductor liquid cooling component sector, focusing on high voltage and high power applications. Direct liquid cooling technology is gaining attention due to its superior heat dissipation efficiency [2][6]. 3. **Market Demand for Thermal Substrates**: The global demand for automotive-grade thermal substrates is significant, with approximately 19 million units required in 2023, translating to a market size of several billion yuan. Wuxi Zhenhua's collaboration with SAIC and Infineon provides a competitive edge in copper substrate processing and plating [2][7]. 4. **Integrated Processing Capabilities**: Wuxi Zhenhua's ability to perform both substrate processing and plating enhances its comprehensive processing capabilities, allowing it to capture greater value and improve profitability compared to traditional manufacturers that only offer substrate processing [2][8]. 5. **Growth in Power Module Market**: The automotive-grade power module market is expected to grow from 6.6 billion yuan in 2024 to 30 billion yuan by 2031, indicating nearly a fivefold increase. The penetration of high-voltage architectures and the application of third-generation silicon carbide power semiconductors will drive this growth [5][12]. 6. **Strategic Partnership with Infineon**: Infineon's investment of 1.55 billion yuan to introduce third-generation power semiconductor production lines in Wuxi presents significant growth opportunities for Wuxi Zhenhua, which has already received certification and is gradually ramping up production [5][13]. 7. **Future Performance Expectations**: Wuxi Zhenhua anticipates achieving over 500 million yuan in revenue in 2025, a 35% year-on-year increase, and over 600 million yuan in 2026, a 25% increase. The company's valuation is projected to be around 13 times earnings in 2026, indicating a substantial safety margin given its growth rate [14]. Other Important Insights - **Role of Wuxi Kaixiang**: Wuxi Kaixiang plays a crucial role in the supply chain for global leading electronic fuel injection system supplier, providing copper substrate processing and plating services, with an expansion of 2 million component capacity planned for 2024 [9]. - **Market Trends in Cooling Technologies**: The transition from air cooling to direct liquid cooling technologies is expected to gain momentum, driven by increasing thermal management requirements in automotive applications [10][11]. - **Valuation Potential**: Currently valued at around 8 billion yuan, Wuxi Zhenhua has the potential to reach 12-13 billion yuan or higher, considering its future growth prospects and market positioning [14].