Envicool(SZ:002837)2025-11-13 02:48Summary of Shenzhen Envicool Technology Co., Ltd Conference Call Company Overview - Company: Shenzhen Envicool Technology Co., Ltd - Industry: Data Center Liquid Cooling - Market Cap: Rmb74.1 billion / US$10.4 billion [6] Key Points Industry Growth and Market Potential - The global rack-level liquid cooling market is projected to grow from US$2-3 billion in 2024 to US$13 billion by 2028, representing a 51% CAGR [2][23] - The total addressable market (TAM) for liquid cooling in China is expected to be 10 times that of the global market [2][25] - The increasing power density of AI racks is driving the demand for liquid cooling solutions [1][15] Company Performance and Projections - Envicool's price target has been raised from Rmb30.15 to Rmb100.00, reflecting its potential for overseas expansion and solidifying its leadership in China [1] - The company's market share in China is expected to increase from 20%+ in 2024 to 30%+ by 2028 due to higher adoption of liquid cooling technologies [3] - Envicool's gross margin for data center cooling is anticipated to rise from 27% in 2024 to 34% by 2028 [2] Competitive Landscape - Intense competition exists in the Chinese market, but leading firms like Envicool are expected to capture more market share due to higher technology entry barriers [3] - The launch of high-density products by competitors such as Huawei and Alibaba indicates a growing necessity for liquid cooling solutions [3][16] Financial Projections - Envicool's net profit is projected to grow at a 65% CAGR from 2025 to 2028, normalizing at over 40% CAGR from 2028 to 2031 [4] - The price target is based on a 40x P/E ratio for 2028, higher than the historical average of 30x, reflecting expected higher earnings growth [4][13] Strategic Opportunities - 2026 is identified as a "golden window" for new entrants in the liquid cooling market due to a higher mix of AI ASIC shipments [1][30] - Envicool is well-positioned to expand into the overseas market, with expectations of capturing 4-5% of the global wallet share by 2028 [2] Risks and Challenges - A 4% reduction in 2025 net profit estimates was noted due to project delays in China [4] - The market has priced in a larger TAM but remains skeptical about the sustainability of Envicool's market share gains and margin expansion [13] Conclusion - Envicool is poised for significant growth in the liquid cooling market, driven by increasing demand from AI applications and a strategic focus on both domestic and international markets. The company's strong R&D capabilities and established relationships with leading tech firms position it favorably for future opportunities [11][35]