Incident 1: On August 5, 2024, the company issued a fixed announcement. The subsidiary Kaishan Yinlun recently signed a “Product Purchase and Sale Contract” with a data center overall solution service provider, which will provide customers with 108 sets of liquid cooling and cooling systems for BTB computing power centers.

Incident 2: On August 7, 2024, the company issued a fixed announcement. The wholly-owned subsidiary Yinlun TDI LLC received a letter of intent from an internationally renowned automobile manufacturer and obtained the customer's target for the NEV integrated module project.

It obtained a breakthrough in data center liquid cooling system orders and continued to expand the third growth curve. On August 5, 2024, the company was designated to provide customers with 108 sets of liquid cooling and cooling systems for BTB computing power centers, which will later be delivered on schedule according to customer requirements. With the rapid development of ASIC chip process technology, the significant increase in the computing power of mining machines places more stringent requirements on cooling systems. Traditional air cooling technology is difficult to meet current cooling requirements, and water cooling technology is an effective solution to meet these needs with advantages such as efficient heat dissipation, low noise, and enhanced equipment overclocking potential. By using water as the cooling medium, the liquid cooling system not only improves heat dissipation efficiency, but also helps reduce the overall energy consumption and environmental impact of data centers. The application prospects in the field of mining machinery are very broad. This target is an important breakthrough for the company in the field of data center thermal management. It lays a solid foundation for continuing to expand the data center thermal management market in the future, and is expected to continue to expand to become the company's third growth curve.

Acquired a target for an overseas NEV integrated module project to further advance the globalization process. On August 7, 2024, the company received a target from an internationally renowned automobile manufacturer for a new energy truck integrated module project, and mass supply is expected to begin in 2027. According to customer needs and forecasts, the company will add about 0.12 billion yuan in annual sales revenue after delivery. Since proposing an internationalization strategy in 2010, the company has insisted on deepening the “local manufacturing, global operation” business model. This targeted deepening of the company's international layout and development breakthroughs in the field of new energy, laying the foundation for further expanding overseas markets and increasing the market share of the commercial vehicle new energy business.

The commercial vehicle business resonated upward, and the profit inflection point in North America opened up space for the company's medium- to long-term growth. 1) Commercial vehicles:

In the upward cycle, the market share of the commercial vehicle business is expected to continue to increase. According to the Commercial Vehicle Corporation's forecast, the commercial vehicle market is conservatively estimated to achieve 8% year-on-year growth in 2024, which is expected to impact the 10-15% growth rate and begin a three-year upward cycle. 2) At the turning point of profit in North America, there is still room for growth for North American NEV companies: New model catalysts and phase III plants may have poor expectations, and the company is expected to benefit, and its share in key categories will increase rapidly; at the same time, the Mexican plant has achieved a break-even balance in 2023Q4. 3) Third growth curve for industrial and civil expansion: The company's industrial and civil products enter thermal management business in UHV transmission and cooling, engine heat transfer, power energy storage, data centers, etc., and the digital and thermal management market space is expected to expand from 60 billion to 600 billion yuan in 24-35. The three sectors resonate upward, and trade and share the same dance.

Profit forecast: The company is expected to achieve revenue of 13.059, 15.343, and 18.006 billion yuan in 2024-2026, up 18.52%, 17.49%, and 17.36% year-on-year. Net profit for 2024-2026 was 0.807, 1.069, and 1.254 billion yuan respectively, corresponding to PE of 16, 12, and 10 times, respectively, giving it a “Highly Recommended” rating.

Risk warning: Risk of technology application falling short of expectations, increased risk of industry competition, and risk of rising raw material prices.