China Galaxy Securities: The fundamentals of the mechanical equipment sector are generally stable. Key focus on AI infrastructure, future industries, and cyclical recovery.

China Galaxy Securities released a research report stating that in retrospect of 2025, the overall index of mechanical equipment outperformed the market, with technology growth-related sectors such as humanoid Siasun Robot & Automation, AI PCB equipment, and lithium battery equipment (solid-state battery equipment direction) leading the gains. The overall fundamentals are stable and growing, with the lithium battery equipment/machine tool sector experiencing fundamental improvement. Based on the overall stable fundamentals of mechanical equipment, some sub-sectors benefit from downstream or have high elasticity, and it is recommended to focus on sub-sectors (1) PCB equipment, gas turbines, and liquid cooling driven by AI infrastructure construction; (2) future industries such as humanoid Siasun Robot & Automation; (3) investment opportunities in cyclical recovery in engineering machinery, wind power equipment, and lithium battery equipment. Key points of China Galaxy Securities are as follows: In retrospect of 2025: The overall index of mechanical equipment outperformed the market, with humanoid Siasun Robot & Automation, AI PCB equipment, and lithium battery equipment (solid-state battery equipment direction) leading the gains. The overall fundamentals are stable and growing, with the lithium battery equipment/machine tool sector experiencing fundamental improvement. Investment keywords in 2026 for mechanical equipment: AI infrastructure, future industries, and cyclical recovery. Looking ahead to investment opportunities in the mechanical equipment sector in 2026, the firm believes that consideration can be made from three aspects: firstly, continue to grasp the main technological growth line related to AI, including AI PCB equipment, gas turbines, and liquid cooling; secondly, the Fifteenth Five-Year Plan emphasizes future industries and emerging industries, which are key to China's economic transformation and upgrade, including humanoid Siasun Robot & Automation, controllable nuclear fusion, low-altitude economy, deep-sea economy, commercial space industry, etc., which are expected to drive demand for related equipment; thirdly, select industry-leading stocks with upward beta based on the cyclical characteristics of various sub-industries, including engineering machinery, wind power equipment, lithium battery equipment, etc. Demand for computing power explodes with AI infrastructure leading the way: bullish on AI PCB equipment, AIDC equipment, liquid cooling equipment, etc. 1) AI PCB equipment: The AI computing revolution drives the growth of PCB demand. The AI servers not only bring growth in quantity but also a significant increase in the value of PCB per unit, and PCB equipment and materials are expected to benefit fully. 2) AIDC equipment: AI data center construction drives high demand for electric power equipment. Combining the diverse power supply needs of AIDC, diesel generators are most suitable as emergency backup power supplies, gas turbines serve as both primary and backup power sources, and nuclear power is the ideal baseload power source for ultra-large-scale parks, with each technology route having its advantages forming a complementary relationship. 3) Liquid cooling equipment: AI drives global computing power demand. Under high power conditions, traditional air cooling is approaching its cooling limit, and liquid cooling will gradually become the mainstream solution, with the liquid cooling market expected to experience explosive growth. Bullish on the performance release of core components and solutions for liquid cooling. The future industry and emerging industry have boundless prospects: 1) humanoid Siasun Robot & Automation: Pay attention to the release and mass production progress of Tesla's Gen3; rapid delivery of domestic components + IPO expectations, the domestic supply chain is expected to receive catalysis. 2) Controllable nuclear fusion: As domestic and international projects enter critical construction and bidding periods, it is recommended to focus on the equipment and materials targets of core projects from the perspectives of industrial development stage, high value, certainty, high elasticity, and AI empowerment. 3) Low-altitude economy: Expected to gradually enter commercial operation, low-altitude infrastructure urgently needs to be built, and potential investment opportunities in core low-altitude air traffic management systems are promising. 4) Deep-sea technology: Development enters a new stage, with ample room for domestic alternatives in deep-sea equipment and core components. 5) Commercial space industry: Policy sets new heights, with the potential to drive demand for related equipment. Industries with upward beta, expectations for good performance: 1) Engineering machinery: Steady growth in domestic demand, with significant room for improvement in market share of overseas brands. 2) Wind power equipment: Clear domestic wind power targets, rapid expansion of Chinese wind power overseas, and the industry welcomes a high cyclical beta. 3) Lithium battery equipment: The lithium battery industry is expected to usher in a new round of capacity expansion, with the trend of industrialization of solid-state batteries accelerating. Bullish on the lithium battery equipment beta under the new cycle and new technology. Risks arise from: risks of domestic macroeconomic performance falling below expectations, risks of industry policies falling below expectations, risks of mass production progress of humanoid Siasun Robot & Automation falling short of expectations, risks of new technology penetration falling below expectations, risks of intensified market competition, and risks of tariffs and export trade disputes.