China Securities Co., Ltd.: The rise of AI in the power industry chain and the sail of departure.

China Securities Co., Ltd. released a research report stating that the core of overseas investment in the power industry is focused on incremental changes and investments in new technologies. In the field of computing power, the power density of power supplies has significantly increased with the increase in single-chip power consumption. After using cabinet solutions, the power supply power has increased significantly, and domestically controllable power supplies have the logic of increasing both quantity and price, as well as improving profit margins. The power industry chain (domestic power supplies, transformers, switch cabinets) is expected to see valuation and performance improvements driven by significant growth in downstream data center markets in 2025-2026. At the same time, the demand for intelligent computing will drive the need for new data centers, with power equipment and temperature control equipment being two key aspects in the construction of IDC data centers. The main points of China Securities Co., Ltd. are as follows: Exchanging electricity for computing power, focusing on investment opportunities in AI server power supplies at home and abroad. Looking ahead to 2025, investments in the field of computing power can be divided into two categories: overseas investment driven by market trends and domestic self-controllable investment. Both power supplies and cooling systems will benefit from industry trends at home and abroad. First, the core of overseas investment is focused on incremental changes and investments in new technologies: copper connections, liquid cooling, and power supply changes are the most significant, with a significant increase in power supply power density. For example, the TDP of NVIDIA's H100 chip is up to 700W, and the TDP of the B200 chip is up to 1200W, with a significant increase in single-chip power consumption. After implementing cabinet solutions, power supply power has increased significantly. In order to handle training models with larger parameter quantities, the number of cards in cabinet solutions will continue to increase, leading to new requirements for power supplies and power distribution facilities in the future. Second, domestically controllable power supplies are also essential, with a focus on increasing both quantity and price and improving profit margins, indicating a direction with inflation logic. Emerging growth points in downstream domestic power supplies, transformers, and switch cabinets. The distribution system is a significant cost in computing construction, including power supplies, transformers (distribution), switch cabinets, UPS, diesel generators, and other important technologies trends including BBU and super capacitors. These power equipment companies are expected to see valuation and performance improvements driven by significant growth in downstream data centers, especially in the domestic market in 2025-2026. Domestic computing demand drives accelerated construction of AIDCs. Since 2020, the domestic IDC industry has been in a state of oversupply for a long time, but there has been a noticeable change recently. The demand for intelligent computing places higher demands on IDC data centers, which existing data centers may not be able to meet, leading to an increase in the demand for new data centers. Power equipment and temperature control equipment are two key aspects in the construction of IDC data centers. Investment advice Exchange electricity for computing power and focus on investment opportunities in domestic AI server power supplies. Looking ahead to 2025, investments in the field of computing power can be divided into two categories: overseas investment driven by market trends and domestic self-controllable investment, with power supplies and cooling systems benefiting from industry trends at home and abroad. Key targets: Shenzhen Megmeet Electrical (002851.SZ), Shenzhen Honor Electronic (300870.SZ), etc. Emerging growth points in downstream domestic power supplies, transformers, and switch cabinets. The distribution system is a significant cost in computing construction, including power supplies, transformers (distribution), switch cabinets, UPS, diesel generators, and other important technologies trends including BBU and super capacitors. Key targets: Hainan Jinpan Smart Technology (688676.SH), Shanghai Liangxin Electrical (002706.SZ), Shenzhen Kstar Science & Technology (002518.SZ), Kehua Data Co., Ltd. (002335.SZ), etc. Domestic computing demand drives accelerating AIDC construction. Power equipment and temperature control equipment are two key aspects in the construction of IDC data centers. Key targets: Range Intelligent Computing Technology Group (300442.SZ), Shenzhen Envicool Technology (002837.SZ), Shenzhen Kstar Science & Technology (002518.SZ), Kehua Data Co., Ltd. (002335.SZ), etc.