Core Viewpoint - Linyu Intelligent Manufacturing, a key supplier for Apple, has made headlines by announcing the acquisition of a 35% stake in liquid cooling company Limin Da for 875 million yuan, reflecting a staggering premium of over 34 times its valuation, which has raised questions about the strategic logic behind this move [9][10][11]. Company Background - Founded in 2006 by Zeng Fangqin, Linyu Intelligent Manufacturing initially focused on precision parts for Nokia and later became a significant player in Apple's supply chain [3][6]. - The company has grown to become the largest manufacturer in its field, expanding its operations to include various high-tech sectors such as automotive and medical devices [6][8]. Recent Acquisition - The acquisition of Limin Da is part of Linyu's strategy to diversify its business and strengthen its position in the AI and server cooling market, particularly in collaboration with NVIDIA [9][11]. - Limin Da, despite its smaller size, has a strong relationship with NVIDIA, providing critical cooling components for high-performance servers, which justifies the high acquisition premium [10][11]. Strategic Shift - Linyu has been actively restructuring its business by divesting non-core operations while investing in high-growth sectors, such as AI and clean energy [8][12]. - The company aims to transition from being a mere parts supplier to a comprehensive solutions provider, aligning with industry trends towards integrated technology solutions [11][13]. Financial Performance - Linyu's revenue has shown significant growth, with projections indicating an increase from 225 billion yuan in 2018 to 442.11 billion yuan in 2024 [7]. - The company's net profit margins, however, remain relatively low, highlighting the competitive pressures within the industry [12].

Group 1 - The company has confirmed that it possesses a comprehensive product matrix covering liquid cooling, air cooling, and other thermal management solutions, indicating its capability as a "full-stack cooling expert" [2] - The company has developed and produced a range of products including CDU, liquid cooling modules, liquid cooling plates, air cooling modules, heat pipes, heat spreaders, and graphite sheets, showcasing its systemic thermal solution capabilities [2] - The company has already begun bulk shipments of cooling modules and other products to international clients such as AMD, highlighting its presence in the global market [2]

Group 1: Financial Performance - In the first half of 2025, the company achieved operating revenue of 168,217.87 million yuan, a year-on-year increase of 28.95% [1] - The net profit attributable to shareholders was 15,041.42 million yuan, reflecting a year-on-year growth of 35.95% [1] Group 2: Gross Margin Insights - The increase in gross margin in Q2 was primarily due to the improvement in the data service segment [2] - Data center gross margins are lower than industrial special products due to project-based contracts with more customization [2] - Despite lower gross margins, net profits are not necessarily lower due to lower sales and after-sales costs in the data center business [2] Group 3: Order Growth and Market Trends - Orders for the data center business doubled year-on-year in the first eight months, indicating strong growth potential [2] - Liquid cooling technology is gaining attention, with a higher proportion of liquid cooling orders in overseas markets compared to domestic [3] - The company reported approximately 120 million yuan in orders from the U.S. and about 130 million yuan from Southeast Asia, both markets showing significant growth potential [3] Group 4: AI and Future Projections - The rapid growth of AI investments in China is expected to further expand business demand [3] - The increase in chip heat density is anticipated to boost the demand for liquid cooling solutions [3] - The company is optimistic about future growth, particularly in the liquid cooling segment, as manufacturing efficiency and material supply scales improve [3] Group 5: Revenue Structure and Other Applications - The public construction segment contributes minimally, while the industrial and special segments together account for approximately 40% of revenue [3] - Growth in the energy storage business is driven by developments in pumped storage and advancements in large customer electrochemical storage cooling solutions [3]

Summary of the Conference Call for 英维克 Company Overview - 英维克 is a company that specializes in thermal management solutions, particularly in data centers and high-performance computing environments. The company has expanded its business into various sectors, including new energy buses, rail transit, and energy storage. Key Industry Insights - **Increased Demand for Liquid Cooling**: Major tech companies like Google, Meta, and Amazon are driving demand for self-developed Ethernet switches and servers, which are increasingly adopting liquid cooling technology. This trend is accelerating faster than expected, providing significant growth opportunities for 英维克 [2][4]. - **Rapid Penetration of Liquid Cooling Technology**: The penetration rate of liquid cooling technology is rising quickly in overseas markets, particularly due to the demand from major players. In the domestic market, high-power chips from Huawei and Alibaba are also accelerating the adoption of liquid cooling [2][5]. Financial Performance - **Revenue Growth**: In 2024, 英维克's room temperature control business achieved revenue of 2.441 billion RMB, a year-on-year increase of 48%. The cumulative delivery of liquid cooling equipment reached 1.2 GW by March 2025 [15]. - **Impact of Accounting Changes**: The company's gross margin experienced fluctuations due to changes in accounting policies, which reclassified after-sales service fees into product costs, resulting in a gross margin decline of approximately 2.36% [15]. Product Insights - **Value of Liquid Cooling Products**: The value of liquid cooling products is substantial, with an ML72 cabinet valued at approximately 600,000 RMB and an ASIC cabinet valued at 200,000-300,000 RMB. This provides a basis for estimating future market space, potentially reaching 30 billion RMB if 50,000 cabinets are exported [6]. - **Full Chain Solutions**: 英维克's competitive advantage lies in its full-chain solution capabilities, covering everything from connectors to CDU (Central Processing Unit). This positions the company favorably against competitors who focus on single products [7][13]. Research and Development - **Investment in R&D**: 英维克 is committed to R&D, with a doubling of PhD personnel planned for 2024. The company has a strong focus on self-developed products, which enhances its market coverage [8][9]. - **Expansion of R&D Personnel**: By the end of 2024, the company saw a net increase of 36.51% in R&D personnel, indicating a strong commitment to innovation and product development [16]. Competitive Position - **Leading Position in Liquid Cooling Market**: 英维克 holds a leading position in the domestic liquid cooling market and is the only Chinese company to enter the North American supply chain. The company is well-positioned to benefit from the growing necessity of liquid cooling due to advancements in AI technology [4][5]. - **Management Expertise**: The management team has extensive experience, with many executives coming from renowned companies like Huawei and Emerson, which aids in understanding market dynamics and making informed decisions [12]. Future Outlook - **Growth Potential**: The company is expected to benefit from increasing chip demands in both the GPU and self-developed ASIC markets. The launch of domestic chips will further drive growth [17][18]. - **Market Expansion**: 英维克 is actively expanding into overseas markets and enhancing its service and supply chain platforms, which will support its growth trajectory [16]. Additional Insights - **Performance of Air Cooling Products**: 英维克's air cooling products have shown excellent performance, with a high market share and significant growth expected from projects involving major clients like ByteDance and Alibaba [10]. - **Achievements in Liquid Cooling Management**: The company has made significant strides in liquid cooling management solutions, continuously improving its offerings since 2018 [14].

Core Viewpoint - The company is focused on providing system solutions in the industrial temperature control sector, aligning with national strategies for intelligent manufacturing and energy conservation, indicating a positive growth outlook for the industry [2][3]. Industry Overview - The company's products are utilized in various fields including CNC equipment, power electronics, energy storage, semiconductors, data centers, hydrogen energy, new energy vehicles, and medical devices, ensuring the safety and reliability of equipment operation [3][5]. - The industrial temperature control industry is experiencing a long-term prosperous development phase, driven by technological advancements and increasing demand for product upgrades and energy efficiency [3][5]. Financial Performance - In 2024, the company achieved a revenue of 2.16 billion yuan, representing a year-on-year growth of 17.07%. However, the net profit attributable to shareholders decreased by 15.87% to 153.43 million yuan, primarily due to intensified competition in the power electronics temperature control product market [7][9]. - The company's comprehensive gross margin declined by 4.27 percentage points compared to the previous year, reflecting the competitive pressures in the market [9]. Dividend Policy - For the fiscal year 2024, the total cash dividend amounted to 84.7 million yuan, accounting for 55.20% of the net profit attributable to shareholders. The company plans to maintain a strong cash dividend policy to enhance investor confidence [4]. Market Position and Strategy - The company is committed to technological research and innovation in industrial temperature control, with a strong technical team and sufficient reserves, which enhances its competitive advantage [5]. - The company is actively expanding its presence in the data center market, focusing on liquid cooling solutions that offer significant energy efficiency benefits [6]. Recent Developments - As of the first quarter of 2025, the company reported a revenue of 574 million yuan, a year-on-year increase of 109.02%, and a net profit of 61.91 million yuan, up 1104.89% [10].