Introduction to this report:
The company's 2024H1 performance exceeded expectations. Computer room temperature control is growing rapidly, and electronic cooling is expected to accelerate. At the same time, AI applications are driving the accelerated growth of liquid cooling solutions, and performance is expected to grow rapidly.
Key points of investment:
Maintain an increase in holdings rating. The company is a leader in the domestic temperature control field. It maintains an EPS of 0.68/0.90/1.16 yuan in 2024-26, maintains a target price of 28.57 yuan, and increases its holding rating.
Performance exceeded expectations: The company announced the 2024 semi-annual results forecast. It is expected that 2024H1 will achieve net profit of 0.165-0.193 billion yuan (increase of 80%-110% year on year), net profit of 0.153-0.181 billion yuan after deducting net profit from non-return mother of 0.153-0.181 billion yuan (increase of 91.02%-125.39% year on year); 2024Q2 will achieve net profit due to mother of 0.103-0.131 billion yuan (year-on-year increase of 54.85%-96.12%), net profit from non-return mother 0.099- 0.127 billion yuan (year-on-year increase of 64.67%-110.55%). The main reasons are: 1) The business has grown in all business segments, with computer room temperature control and energy-saving products growing rapidly; 2) the company continues to increase technology and product development efforts, optimize product design, and optimize material procurement strategies to keep the adverse effects of rising raw material prices within a small range; 3) equity incentive costs have decreased year-on-year.
Computer room temperature control is growing rapidly, and electronic cooling is expected to accelerate. The company has provided a large number of high-efficiency and energy-saving refrigeration products and systems for large-scale data centers of users such as Tencent, Alibaba, Qinhuai Data, China Mobile, China Telecom, China Unicom, etc. Customers in the field of computer room temperature control have remarkable advantages and maintained rapid growth. Some of the products in the company's Coolinside liquid cooling full-chain liquid cooling solutions have been recognized by some mainstream computing power chip manufacturers and leading computing power equipment manufacturers and obtained large-scale procurement applications. Liquid-cooled electronic cooling chain products, such as cold plates for computing power equipment, have begun to be shipped in batches, and have begun to contribute significantly to the company's business revenue.
AI applications are growing rapidly, and demand for liquid cooling is increasing. Driven by AI computing power equipment and the high thermal density trend and energy-efficient cooling requirements of data center computer rooms, the introduction of liquid cooling technology has accelerated. The company has launched Coolinside liquid cooling cabinets and full-chain liquid cooling solutions for computing power equipment and data centers. Related products include cooling sources, pipeline connections, CDU distribution, quick-change joints, Manifold, cold plates, long-term liquid cooling materials, liquid leak detection, etc. The “end-to-end, full-chain” platform-based layout has become an important core competitive advantage of the company in the field of liquid cooling business.
Risk warning: downstream demand falls short of expectations; liquid cooling promotion progress falls short of expectations.