Investment Highlights - The SW Auto Parts Index increased by 1.69% this week, ranking 3rd among SW Auto sectors, with a year-to-date increase of 4.94% [3][12] - The latest PE (TTM) for SW Auto Parts is at the 85.68% historical percentile, while the PB (LF) is at the 79.62% historical percentile [3][35] - The trading activity in the auto parts sector has shown a gradual increase since February [3][30] Robotics Sector Review - The Wande Robotics Index rose by 2.27% this week, with a year-to-date increase of 2.54%, outperforming the SW Auto Parts sector by 0.58% [4][12] - The latest PE (TTM) for the robotics sector is at the 73.90% percentile for the past year, and the PB (LF) is at the 78.31% percentile [4][46] - The trading heat in the robotics sector is at a low point since 2025 [4][40] Key Company Developments - Sensible Group will establish a joint venture in North America with Green Harmony for robotic joint modules [5] - Top Group forecasts 2025 revenue between 28.75 billion to 30.35 billion yuan, with a net profit of 2.6 billion to 2.9 billion yuan [5] - Feilong Co. increased its investment in Longtai Company by 732 million yuan [5] - New Spring established a wholly-owned subsidiary in Shanghai [5] Top Performers of the Week - The top five gainers this week include: - Precision Forging Technology +28.98% - Sensible Group +17.05% - Naisite +16.22% - Yinlun Co. +7.73% - Changhua Group +7.34% [6][54] Major Events - The release of the world's first warehouse robot Gino 1 by Jizhi Jia [8] - Xiaomi open-sourced its first-generation robot VLA large model [8] - UBTECH and the humanoid robot innovation center launched the full-size research humanoid robot "Tiangong Walker DEX" [8] Investment Recommendations - For auto parts, focus on structural opportunities by selecting product-oriented companies and those entering high-value sectors to increase ASP, with a priority on companies expanding capacity in Europe, North America, and Southeast Asia [9] - For robotics, look for certainty in opportunities, especially with the anticipated release of Optimus V3 in Q1 2026, and monitor the order timeline and application deployment by domestic companies like Xiaopeng, Yuzhu, and Zhiyuan [9] - Recommended stocks based on EPS include: Fuyao Glass, Xingyu Co., Sensible Group, Junsheng Electronics, and Xingyuan Zhuomei, with New Spring as a focus [9] - Recommended stocks based on PE include: Top Group, Junsheng Electronics, Shuanghuan Transmission, Sensible Group, Yinlun Co., and Feilong Co., with a focus on Yapu Co. and Daimai Co. [9]

Company and Industry Summary Company: Silver Wheel Co., Ltd. (银轮股份) Key Points - **Order Growth**: Vertiv reported Q4 2025 orders of approximately $8.2 billion, significantly exceeding market expectations of $3.4 billion, representing a year-over-year increase of 252% and a quarter-over-quarter increase of 117% [1][2] - **Backlog Increase**: Orders for 2025 increased by 81% year-over-year, with backlog orders growing by 109%, reaching $15 billion [1][2] - **Demand Surge**: The demand for liquid cooling products from North American data center clients has surged, leading to a significant increase in company demand [2][3] - **Competitive Advantage**: The company emphasizes its competitive edge in liquid cooling CDU and heat exchanger products, with costs lower than foreign suppliers. The North American factory has achieved profitability [3] - **Future Growth**: The liquid cooling business segment is expected to maintain rapid growth over the next 2-3 years, with anticipated breakthroughs in 2026 for North American data center clients [3] - **Revenue and Profit Forecast**: The company maintains a revenue forecast of $18 billion and a profit of $1.2 billion for 2026, with a target market value of $60-70 billion, considering the growth potential of gas generators and liquid cooling [3][4] Industry: Electronics and PCB Key Points - **Price Increases**: There is a notable price increase in overseas electronic fabrics, with key players like Taiyo Yuden halting production of E-glass to focus on low Dk electronic fabrics [4] - **Supply Shortages**: The supply-demand gap for second-generation fabrics is projected to exceed 10%, while the gap for Q fabrics may reach over 15%, indicating a strong basis for price increases [5] - **High Inflation Impact**: The high inflation in AI hardware segments, including storage, electronic fabrics, and optical chips, is emphasized as a critical factor in the current market dynamics [5] - **Demand for High-End Chips**: The increasing demand for high-end chips, particularly from companies like NVIDIA and Google, is expected to further widen the supply-demand gap in critical segments such as CCL, fiberglass, and copper foil, leading to upward price pressures across the industry [5]

Company and Industry Summary Company: 银轮股份 (Yinlun Co., Ltd.) Key Points - **Focus on CDU Heat Exchangers**: The company is primarily targeting CDU heat exchangers and is fully engaging with North American and Taiwanese clients, with significant progress noted in securing orders from North American clients [2][4]. - **Upcoming Testing and Production Ramp-Up**: Testing and related work will commence after the holiday, with two Taiwanese client orders already secured. The company anticipates a production ramp-up by August 2026, projecting an annual revenue increase of 1 billion yuan [3][5]. - **Acquisition of Deep Blue**: The acquisition of Deep Blue is seen as a critical step in enhancing the company's electric control capabilities and overall machine performance. This acquisition complements the company's existing strengths in manufacturing stainless steel heat exchangers for automotive applications [5]. - **Strong Manufacturing and Control Synergy**: The combination of manufacturing and control technologies is expected to significantly enhance Yinlun's competitiveness in the market. The company has a long history in automotive thermal management, having entered the field in 1980 and accumulated extensive know-how in stainless steel plate heat exchangers [5]. - **Globalization Strategy**: Yinlun is committed to a global strategy, with Mexico serving as a core location for its North American and global production capacity. The company currently operates four factories in Mexico [5]. - **New Mexico Base**: The establishment of a new base in Mexico is expected to effectively match the mass production needs of overseas clients, greatly improving the company's order acquisition capabilities and efficiency [6]. - **Investment Recommendation**: The company is viewed as reaching an important inflection point by entering the supply chains of four major North American AI clients. The liquid cooling business is expected to enter a phase of order acquisition, leading to an upward revision of the target market value from 50 billion yuan to 100 billion yuan [7]. Additional Important Content - **Historical Context**: The company has a long-standing presence in the automotive thermal management sector, which provides a solid foundation for its current and future operations [5]. - **Technological Advancements**: The integration of advanced control solutions from Deep Blue is highlighted as a key factor in enhancing product offerings and market competitiveness [5]. - **Market Positioning**: The focus on North American and Taiwanese markets indicates a strategic alignment with regions that are likely to drive future growth in the automotive and AI sectors [2][4].

Core Insights - The report identifies liquid cooling as a strategic investment opportunity, potentially replicating the success of optical modules and PCBs, with strong growth prospects driven by AI computing needs and stringent energy efficiency standards [2][3] - Liquid cooling is characterized by three main features: strong growth, complete narrative, and favorable odds, indicating a favorable market environment for investment [2] - The industry is transitioning from speculative hype to a high-growth phase with confirmed orders, as evidenced by significant order increases from key suppliers like Vidi Technology [3] Industry Trends - The liquid cooling industry is entering a high-growth phase with a 252% year-over-year increase in organic orders reported by Vidi Technology, highlighting strong market demand [3] - Major tech companies like NVIDIA and Google are adopting liquid cooling as a mandatory standard for their next-generation platforms, indicating a shift from optional to essential technology in AI computing [3] - The industry is witnessing a wave of mergers and acquisitions, with companies like Liying Intelligent Manufacturing acquiring liquid cooling suppliers to secure positions in the AI server supply chain [3] Liquid Cooling Industry Chain - The liquid cooling industry chain consists of three main segments: upstream components, midstream system integration and manufacturing, and downstream applications [4] - Upstream includes key technologies and components such as cooling fluids and CDU, which have high technical barriers and value [4] - Midstream integrates upstream components to provide complete liquid cooling server solutions, with technical integration capabilities as a core barrier [4] - Downstream focuses on high-performance data center operators and industry users driving the large-scale adoption of liquid cooling [4]

Core Viewpoint - The battery sector continues to show strong performance, driven by a combination of robust demand, capacity utilization, and profitability recovery, alongside advancements in solid-state battery technology [2][3]. Group 1: Demand Dynamics - Downstream demand has exceeded expectations, with the global electric vehicle (EV) sales projected to reach 23.54 million units by 2025, marking a year-on-year growth of 29.1%, with China accounting for over 70% of this market [4]. - The energy storage sector is expected to see explosive growth, with global energy storage battery shipments projected to reach 640 GWh by 2025, representing a staggering year-on-year increase of 82.9% [4]. - Major Chinese battery manufacturers reported a production increase of over 45% year-on-year in January and February, significantly surpassing previous forecasts of less than 30% growth for the year [4]. Group 2: Supply and Pricing Dynamics - The supply-demand landscape in the lithium battery industry has fundamentally shifted, moving from a phase of oversupply and profit decline to one of recovery and price increases starting June 2025 [5]. - The price of lithium hexafluorophosphate and lithium carbonate has risen since September, driven by strong demand from downstream battery cell manufacturers and improved capacity utilization in the materials sector [5]. - Recent earnings forecasts from several lithium material companies indicate substantial growth in Q4 2025, confirming the industry's transition from a "cyclical bottom" to an "upward performance phase" [5]. Group 3: Technological Advancements - The solid-state battery sector is experiencing accelerated industrialization, with significant developments such as the mass production of dry electrode technology and the first international output of domestic dry process technology [6]. - The battery ETF (561910) closely tracks the battery theme index, which is strategically positioned to benefit from the current industrial cycle, with 56% exposure to energy storage and over 45% to solid-state battery concepts [6]. - The top ten weighted stocks in the index include leading companies across various segments of the battery supply chain, indicating a strong focus on industry leaders [6].

Investment Rating - The report maintains a "Buy" rating for the company with a target price of 55.87 CNY, based on a comparable company PE average valuation of 37 times for 2026 [3][6]. Core Insights - The company is expected to benefit from the long-term growth elasticity brought by gas generator-related supporting products, particularly in the context of increasing demand for gas turbines and generators due to the expansion of AI data centers in the U.S. [2][10]. - The company is positioned to enter the exhaust treatment product supply chain for gas generators, which is anticipated to contribute significantly to its profitability in the medium to long term [10]. Financial Forecasts - The projected earnings per share (EPS) for 2025, 2026, and 2027 are 1.14 CNY, 1.51 CNY, and 1.93 CNY respectively [3]. - Revenue is expected to grow from 11,018 million CNY in 2023 to 21,502 million CNY in 2027, reflecting a compound annual growth rate (CAGR) of approximately 18.5% [5][11]. - Operating profit is forecasted to increase from 816 million CNY in 2023 to 2,107 million CNY in 2027, with a notable growth rate of 67.7% in 2023 [5][11]. - The net profit attributable to the parent company is projected to rise from 612 million CNY in 2023 to 1,631 million CNY in 2027, indicating a strong growth trajectory [5][11]. Key Financial Ratios - The gross margin is expected to stabilize around 20.2% to 21.7% from 2025 to 2027, while the net margin is projected to improve from 6.3% in 2025 to 7.6% in 2027 [5][11]. - The return on equity (ROE) is anticipated to increase from 14.1% in 2025 to 17.7% in 2027, reflecting improved profitability and efficiency [5][11].

Summary of Silver Wheel Co., Ltd. Conference Call Company Overview - **Company**: Silver Wheel Co., Ltd. (银轮股份) - **Key Clients**: Caterpillar, Tesla, Google, MV - **Market Focus**: North America, particularly in gas engine and data center power solutions Core Insights and Arguments - **Caterpillar Partnership**: - Collaboration with Caterpillar in the gas engine sector is expected to yield orders worth 6-7 billion, contributing over twice the profit of the main business starting from the second half of 2026 [2][3] - Silver Wheel is projected to supply 2,000-3,000 cooling modules in 2026, with annual growth expected to double, reaching around 8,000 units by 2028, priced at approximately $20,000 each [6] - **Data Center Power Demand**: - The surge in AI demand and aging power grids in the U.S. have created a mismatch, making data center power generation a hot topic [4] - The U.S. is expected to face a power shortfall of 140 GW due to data centers over the next five years, with significant demand for gas engines and solid oxide fuel cells (SOFC) [5] - **Market Potential for Medium-Speed Engines**: - The medium-speed engine market is projected to have a demand of 5,000-7,000 units annually, with a power output of 2-3 MW per unit [5] - **Natural Gas Power Equipment Demand**: - The demand for natural gas power equipment is expected to explode, with Caterpillar's shipments projected to increase from a few hundred units in 2025 to around 6,000 units in 2026 [8] - Silver Wheel's components for these systems are valued at approximately $15,000 per set, contributing over 6 billion in revenue and nearly 2 billion in profit from 2026 to 2027 [8] Additional Important Insights - **Liquid Cooling Business**: - Silver Wheel has entered the liquid cooling market, collaborating with North American clients and Taiwanese manufacturers, with expected profits exceeding 1 billion RMB from new orders [9] - Google has invited Silver Wheel to replace its previous supplier, indicating strong growth potential in this segment [9] - **Overall Performance Outlook**: - Historical revenue growth from 2019 to 2024 has averaged 16%, with expectations of over 20% growth in the coming years due to balanced business segments and broad regional distribution [10] - The overall market capitalization is projected to exceed 100 billion RMB, driven by various business segments including automotive, robotics, liquid cooling, and natural gas power equipment [11] - **Emerging Business Growth and Revenue Realization**: - Caterpillar's delivery of around 1,000 natural gas power units this year is expected to contribute to profits, while liquid cooling orders are set to ramp up in the second half of the year [12] - Long-term revenue projections indicate a high certainty of reaching at least 10 billion RMB in income from emerging businesses [12]

Investment Rating - The report maintains a "Buy" rating for the company with a target price of 55.87 CNY, based on a comparable company PE average valuation of 37 times for 2026 [3][6]. Core Insights - The company is expected to benefit from the long-term growth elasticity brought by gas generator-related supporting products, which will contribute to profitability [2][10]. - The company is positioned to enter the exhaust treatment product supply chain for gas generators, anticipating a significant increase in profitability as overseas clients expand their gas and diesel generator production [10]. Financial Forecasts - The projected earnings per share (EPS) for 2025-2027 are 1.14 CNY, 1.51 CNY, and 1.93 CNY respectively [3]. - Revenue is expected to grow from 11,018 million CNY in 2023 to 21,502 million CNY in 2027, with a compound annual growth rate (CAGR) of approximately 18.5% [5][11]. - Operating profit is forecasted to increase from 816 million CNY in 2023 to 2,107 million CNY in 2027, reflecting a strong growth trajectory [5][11]. Key Financial Metrics - The company’s gross margin is projected to improve from 20.5% in 2023 to 21.7% in 2027, while net profit margin is expected to rise from 5.6% to 7.6% over the same period [5][11]. - The return on equity (ROE) is anticipated to increase from 12.1% in 2023 to 17.7% in 2027, indicating enhanced profitability and efficiency [5][11].

Core Viewpoint - The internationalization strategy is a significant initiative for the long-term development goals of the company, which has been in progress since 2010 and has evolved through various stages of overseas expansion and operational improvement [1] Group 1: Internationalization Strategy - The internationalization strategy has been developed over 16 years, involving the establishment of overseas offices, warehousing services, international trade companies, and acquisitions of technology-driven overseas firms [1] - The company has transitioned from significant losses in its overseas subsidiaries to gradually achieving profitability, demonstrating the effectiveness of its long-term overseas efforts [1] Group 2: Strategic Partnerships and Growth - The company has built strong strategic partnerships with leading global clients in various industries, including commercial vehicles, off-road vehicles, passenger cars, power equipment, AI liquid cooling, and embodied intelligence [1] - The strategic value of the company's overseas layout has become evident, with all business lines entering a phase of accelerated growth in capacity expansion, customer development, and order acquisition [1] Group 3: Sustainable Growth - The company has established a development pattern that combines growth potential with stability, laying a solid foundation for long-term sustainable growth through its robust overseas layout and clear business growth trajectories [1]

Core Viewpoint - The company is committed to strengthening its global strategic layout and enhancing its core competitiveness in overseas markets, with confidence in achieving breakthroughs in key areas such as top liquid cooling clients, top power energy clients, and top embodied intelligence clients [1] Group 1 - The company aims to continuously solidify its global strategy [1] - The company expects significant enhancement in growth momentum and performance elasticity as new businesses accelerate and scale gradually release [1]