Huayuan Securities: Global AIDC electricity demand is increasing, domestic diesel engine suppliers' prices and profits are expected to increase.

Huayuan Securities released a research report stating that with the expansion of global AI capital spending and continuous investment in AI infrastructure, diesel engines are expected to directly benefit from the increasing demand for global AIDC construction. In the overall data center construction cost, the cost of diesel generators accounts for about 6%-7%. According to NERC's prediction, as AIDC power demand increases, the power load of US data centers will reach 70GW by 2030, with an average peak power shortfall of over 20GW between 2027-2030. Diesel engines, as critical backup power sources for data centers, may continue to have high demand. On the supply side, the current tight overseas supply chain situation has emerged, and domestic suppliers are expected to gradually increase their global market share with price and lead time advantages. Key points from Huayuan Securities: Diesel generators are one of the key power sources for data centers. Data center power supply systems typically consist of "grid + UPS + diesel generators," with diesel engines used as backup power sources. Diesel generators provide backup power to lower voltage equipment in case of power failure, enabling data centers to operate normally for a longer period. Diesel generators consist of a diesel engine, generator, and auxiliary systems (such as cooling systems, control systems, etc.), with the diesel engine being the core component, accounting for about 60-70% of the total cost. Demand: Higher overseas than domestic, with large room for growth in domestic market. With the expansion of global AI capital spending and continuous investment in AI infrastructure, diesel engines are expected to directly benefit from the increasing demand for global AIDC construction. In the overall data center construction cost, the cost of diesel generators accounts for about 6%-7%. The global diesel generator market is expected to reach about $22.6 billion by 2026, with $19.6 billion overseas and $3 billion domestically. The corresponding global demand for diesel generators is estimated to be about 42,000 units, with 35,600 units overseas and 6,600 units domestically. Focus on core demand-side increments. 1) Power shortage in North America: According to NERC's prediction, with the increasing power demand for AIDC, the power load of US data centers will reach 70GW by 2030, and the average peak power shortfall between 2027-2030 will be over 20GW, indicating a potential continuous high demand for diesel generators as critical backup power sources. 2) Construction of AIDC in China: Starting in Q4 2025, the bidding for large-scale AIDC projects in China has picked up, and by 2026, with the continuous iteration of large-scale models and rising token consumption, as well as the optimistic future AI capital spending guidance for large-scale enterprises, the high demand for domestic AIDC construction is likely to continue, driving the demand for diesel generators. Supply: Accelerated domestic replacement, price and profitability are expected to increase. Global data center diesel generator market is mainly dominated by foreign companies such as Cummins Inc., MTU, and Caterpillar Inc. Foreign companies have long and cautious expansion cycles, and the current tight overseas supply chain situation has emerged. Domestic suppliers are expected to gradually increase their global market share with price and lead time advantages. In addition, the average price of a single unit domestically is close to 3 million yuan, and since 2024, the price of diesel generators has been continuously rising, with a price increase of about 20% for units using overseas engines. The price of pure foreign original units has exceeded 3 million yuan per unit. Therefore, in the context of existing supply shortages, domestic diesel generator suppliers have room for improvement in delivery prices and profitability. Stocks to watch: Recommendation to focus on: 1) OEMs: Weichai Heavy Machinery (000880.SZ), Sumec Corporation (600710.SH), Shanghai Cooltech Power (300153.SZ), Tellhow Sci-Tech (600590.SH), etc.; 2) Engines: Weichai Power (000338.SZ, 02338), China Yuchai International Limited (CYD.US), Shanghai New Power Automotive Technology (600841.SH), etc.; 3) Core components: Zhejiang Yinlun Machinery (002126.SZ), Tianrun Industry Technology (002283.SZ), Xiangyang Changyuandonggu Industry (603950.SH), ZYNP Corporation (002448.SZ), Weifu High-Technology Group (000581.SZ), Bohai Automotive Systems (600960.SH), Wuhu Sanlian Forging (001282.SZ), Actblue Co., Ltd. (300816.SZ), etc. Risk factors: 1) Progress in the AI industry is lower than expected; 2) Risks of technological iteration; 3) Intensified industry competition; 4) Risks of deviation in market demand estimates, etc.