Introduction to this report:

The company's 2024 three-quarter report is in line with expectations. AI technology is developing rapidly, liquid cooling solutions have become a future trend, and the company's leading domestic liquid cooling technology is expected to accelerate deployment.

Key points of investment:

Maintain an increase in holdings rating. The company is a leader in the domestic temperature control field. It maintained the company's 2024-26 EPS of 0.68/0.90/1.16 yuan, referred to the industry's valuation of 42.16 times in 2025, and gave the company 43 times PE in 2025, raised the target price to 38.7 yuan, and increased its holdings rating.

The company released its 2024 three-quarter report. In the first three quarters of 2024, the company achieved revenue of 2.872 billion yuan (YoY +38.61%), net profit of 0.353 billion yuan (YoY +67.79%), net profit of 0.334 billion yuan (YoY +78.46%); 2024Q3 achieved revenue of 1.159 billion yuan (YoY +39.16%), net profit of 1.69 yuan (YoY +43.06%), net profit of non-return to mother of 0.163 billion yuan (YoY + 52.19%), and the results were in line with expectations.

AI technology is developing rapidly, and the data center liquid cooling business is expected to accelerate. With the rapid development of AI technology, the computing power density has increased dramatically, and the thermal density of computing power equipment and data center cabinets has increased significantly. Nvidia launched the GB200 NVL72 server, which mainly uses liquid cooling solutions. The company has launched Coolinside liquid cooling cabinets and full-chain liquid cooling solutions for computing power equipment and data centers. 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. Nvidia announced the development results of the Blackwell GB200 system. More than 40 infrastructure (DCI) providers around the world, including Invek, built and innovated on the Blackwell platform, and the company's data center liquid cooling business is expected to accelerate development.

The cost control effect is remarkable, and profitability has been improved. The company actively promoted positive changes in the product sales portfolio and effective cost reduction measures, mitigating the adverse effects of rising commodity prices. The gross margin was relatively stable. The gross margin for the first three quarters was 31.73% (-0.9 pct year on year). At the same time, the company continued to control cost reduction and efficiency. The sales rate, management rate, and financial rate for the first three quarters were 6.57% (+2.06pct), 4.4% (-0.49pct), and 0.03% (y-0.04pct), and the net interest rate was 12.25% (+2.37pct year-on-year), improving profitability.

Risk warning: downstream demand falls short of expectations; liquid cooling technology research and development falls short of expectations.