This week, A-shares entered the Year of the Snake trading time, and the broad market index continued to fluctuate, but the main force of the market attacked technology stocks under the influence of DeepSeek, and the technology style obviously attracted attention. Some analysts have pointed out that DeepSeek has triggered changes in the AI industry, the capital market has moved, and the technology camp has repeatedly strengthened and continued to create money-making effects. Behind the market turmoil, investors can continue to pay attention to the two main lines of data centers and semiconductors, which are currently the hottest.

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Data Centers

The boom continues

In today's digital economy, data centers are the core elements that promote the development of the digital economy. The increase in the number of users and the resulting increase in user traffic is driving the growth of data volumes, which in turn is driving the need for data centers. At the same time, some analysts pointed out that with the widespread commercialization of emerging technologies such as 5G, the Internet of Things, and virtual reality, data structures will become more complex, data processing will be more frequent, and unstructured data will increase dramatically, which will put forward new and higher requirements for the scale, storage capacity, computing power and refinement of data centers. In this era and technological background, the data center industry chain is booming. From the perspective of the industrial chain, we are optimistic about AI servers, power supplies, liquid cooling and other subdivisions.

It can be seen that in the past two years, the world has been in the explosive stage of AIGC, and the construction of ultra-large data centers to provide high-capacity and high-performance data storage and processing services has accelerated, driving the steady development of the industry. Driven by the sharp rise in demand for AI servers, the global server industry has expanded rapidly, and the proportion of AI server revenue has also continued to increase. Gao Feng, an analyst at China Galaxy Securities, pointed out that China's AI server industry will also usher in rapid development in 2024, with shipments expected to increase by 18.92% year-on-year to 421,000 units, and the market size will increase by 14.29% year-on-year to 56 billion yuan.

Mo Wenyu, an analyst at Cinda Securities, also said that under the impact of factors such as the global macroeconomic downturn and the sharp reduction in IT demand, the server industry will begin to decline rapidly in 2023. However, after large models occupy the mainstream development direction of AI, the demand for computing power has surged. Although short-term AI servers have further squeezed the space for general-purpose servers, they are still an important development opportunity for the industry chain. After experiencing structural differentiation in 2023, the industry will usher in a comprehensive rebound in 2024, and the economy will rise simultaneously. At present, the server industry is showing a scene of "the demand for traditional general-purpose servers is picking up, and the demand for AI servers is increasing". It is recommended to pay attention to high-quality manufacturers such as Industrial Fortune Union, Shanghai Electric Co., Ltd., Shenghong Technology, and Shennan Circuit.

With the development of AI technology, the power performance of AI servers has improved in many aspects, and the market demand has risen rapidly. Compared with ordinary server power supplies, the AI server power architecture not only increases the power several times, but also further improves the performance in other aspects, including a significant increase in power density, an increase in conversion efficiency, the development of redundant systems, and the emergence of liquid cooling systems. Ma Xiaoming, an analyst at Nomura Orient International Securities, said that he is optimistic that under the logic of rising volume and price, the AI server power supply industry will usher in rapid growth in demand. At the same time, related companies are expected to enjoy the excess profit of products brought by high prosperity dividends. Optimistic about the industrial breakthrough of local enterprises in the future, it is recommended to pay attention to Megmit, Continental Pass, Cooltech Power, etc.

With the continuous improvement of the power of AI chips and the power density of cabinets around the world, liquid cooling has become a must in the future. Wang Zijing, an analyst at Soochow Securities, pointed out that with the increase in overseas GB200 and GB300 shipments, domestic 910C is about to be shipped on a large scale, and cold plate liquid cooling is about to usher in a large volume. At the same time, NVIDIA's next-generation chip Rubin is expected to use immersion liquid cooling, and domestic manufacturers have also begun to test immersion liquid cooling, and the immersion liquid cooling market is about to open. It is recommended to pay attention to Invic, Shenling Environment, and Gaolan shares in the field of cold plate liquid cooling. In the field of immersion liquid cooling, 800 million space-time, Runhe Materials, Juhua Co., Ltd., Capchem, etc.

A selection of potential stocks

Fortune Federation of Industry (601138).

More shares are expected

The company is deeply involved in NVIDIA's AI industry chain and is expected to gain more share in the changes in the division of labor in the industrial chain. As an important joint R&D partner of NVIDIA and a core supplier of cloud vendors, the company occupied a place in the supply of AI servers in the early days of the AI outbreak, and its business involved GPU modules, boards, and servers. In the GB200 cabinet-level product series, the company is deeply involved in the production and manufacturing of cabinet-level products from boards to computing trays, exchange trays to complete machines, and the value of single machines and cabinet shipments are expected to achieve substantial growth with the mass production of GB200 chips, driving the high growth of cloud computing business revenue and overall performance. Northeast Securities pointed out that the capital expenditure of cloud vendors is expected to continue to increase, the AI computing power space is huge, and the AI server market as a whole still has great growth potential. The company is a core supplier of NVIDIA and will become a beneficiary of the rapid growth of AI capital expenditure and the continuous increase in computing power investment.

Shanghai Electric Co., Ltd. (002463).

High growth in full-year results

The company expects to achieve operating income of 13.342 billion yuan in 2024, a year-on-year increase of 49.26%; It is estimated that the net profit attributable to the parent company will be 2.587 billion yuan, a year-on-year increase of 71.05%; It is estimated that the net profit attributable to the parent company after deducting non-profits will be 2.546 billion yuan, a year-on-year increase of 80.80%. Great Wall Securities pointed out that benefiting from the structural demand for PCBs in emerging computing scenarios such as high-speed computing servers and artificial intelligence, relying on a balanced product layout and long-term high-end products and mass production technologies that have been cultivated for many years, the company's PCB business will achieve operating income of about 12.839 billion yuan in 2024, a year-on-year increase of about 49.78%. At the same time, with the further optimization of the product structure of the company's PCB business, the gross profit margin of the company's PCB business increased to about 35.85%, an increase of about 3.39% year-on-year. As the company continues to promote product research and development, the construction of overseas production capacity is accelerated, and the company is optimistic about the future performance development.

Megmit (002851).

Benefit from the growth of downstream demand

Through continuous and high-intensity R&D investment in the network power supply business, the company has obtained a number of project needs and orders from leading customers in the industry at home and abroad in recent years, and the company has become one of the few comprehensive power supply suppliers with high-power and high-efficiency server power supply technology and overseas full-process production and supply capacity. As one of more than 40 data center component suppliers designated by NVIDIA, the company combines the latest technological breakthroughs in innovative power solutions with the NVIDIA MGX platform and GB200 system to accelerate the development and cooperation process of AI server high-power power product projects. Haitong Securities pointed out that the company has built a cross-extended core technology platform, continuously supports and helps the growth and implementation of new technologies and new products, integrates upstream and downstream new businesses, and combines endogenous growth with extension expansion. The matrix operation model of "business unit + resource platform" is adopted to help the company achieve the goal of "the company is horizontally bigger, and the business department is vertically stronger". In the future, it is expected to fully benefit from the growth in demand for AI server power supplies.

Invic (002837).

The performance continued to grow steadily

The company is a leading provider of precision temperature control and energy-saving solutions and products, and its main business focuses on equipment heat dissipation and environmental control, of which computer room temperature control and cabinet temperature control are the company's main businesses. From 2018 to 2023, the company's operating income increased from 1.070 billion yuan to 3.529 billion yuan, with a compound growth rate of 26.96%, of which the compound growth rates of computer room temperature control and cabinet temperature control were 25.46% and 43.63%, respectively. Caitong Securities pointed out that the company launched the Coolinside full-chain liquid cooling solution and the BattCool energy storage full-chain liquid-cooling solution to reduce costs and increase profits through vertical integration. The company entered the NVIDIA supply chain and maintained a long-term cooperative relationship with CATL, the largest customer of energy storage batteries, which is conducive to stable market share and continuous revenue growth. The company provides liquid-cooled full-chain solutions, superimposed on its own R&D advantages and customer resources at home and abroad, and is expected to fully benefit from the rapid growth dividend of data center rack scale and new energy storage installed capacity.

Shenling Environment (301018).

The main business is growing rapidly

The company is the world's leading data center temperature control and cooling solution service provider and professional special air conditioning system solution service provider, with layout in data centers, special industries and other fields. In the future, with the expansion of the company's overseas business and the rapid growth of the data center business, the scale of revenue and profit is expected to further increase, and the overall development situation is improving. Huajin Securities pointed out that the company has launched a wind-liquid homologous large liquid cooling system based on the development needs of various data centers such as intelligent computing and supercomputing. The company's data service segment mainly provides temperature control solutions for cloud data centers, computing power centers, communication infrastructure and other fields, including precision air conditioners, liquid cooling systems, evaporative cooling units, etc. At present, with the rapid growth of the data center business, the revenue proportion of the data service sector has increased to about 50% in the first three quarters of 2024. The company is an industry leader in the field of temperature control solutions, and at the same time has achieved customer breakthroughs in many fields, and will maintain stable growth for a long time in the future.

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Semiconductors

The follow-up market is optimistic

In the new round of bull market, technology stocks are expected to become the main line of investment, and we continue to be optimistic about the follow-up market of the semiconductor sector.

After nearly five years of development, the revenue and net profit attributable to the parent company of domestic semiconductor equipment listed companies have been growing, but they are still small compared with overseas semiconductor equipment companies and have huge room for growth. In the face of the construction needs of domestic downstream wafer fabs, excellent domestic semiconductor equipment companies must not only continue to meet the personalized needs of customers, but also need more innovative technological development; At the same time, if we can complete more product lines with the help of investment and acquisitions, and provide customers with more complete terminal process application solutions, I believe that we will see excellent local semiconductor equipment companies go through the cycle and continue to grow into "China's AMAT" and "China's KLA".

At present, the global semiconductor capital expenditure is picking up, the downstream demand is increasing, and the overall demand and performance of the semiconductor industry are improving. Yang Zhong, an analyst at Huafu Securities, pointed out that in the process of localization, the autonomy rate of China's semiconductor industry has increased year by year, from 14% in 2012 to 18% in 2022, and is expected to reach 26.6% in 2027. Benefiting from the above-mentioned trends such as the rise of the semiconductor boom, the iterative upgrading of manufacturing technology and the accelerated evolution of the localization rate, domestic semiconductor equipment manufacturers are expected to continue to benefit from the expansion of the semiconductor market scale and the deepening of the localization rate by relying on their own product competitiveness and category expansion capabilities, and the growth rate and space may be very significant. It is recommended to pay attention to North Huachuang, China Micro Corporation, Tuojing Technology, Xinlai Materials, Changhong Technology, Zhengfan Technology, MayAir Technology, Yingjie Electric, Tengjing Technology, Jingzhida, Jiaocheng Ultrasound, etc.

In the semiconductor industry chain, semiconductor materials are located in the upstream link and are the core foundation of the semiconductor manufacturing process. At present, the localization rate of semiconductor materials in China is low, especially in the high-end field of silicon materials, photoresists and other products. The localization rate of key areas of the semiconductor materials industry still needs to be broken through, and epitaxial mergers and acquisitions are conducive to building platform enterprises to achieve leapfrog development together, and there are many subdivisions of semiconductor materials, and epitaxial mergers and acquisitions to broaden the business scope is also a reasonable path for enterprises to become bigger. In terms of industry cycles, the total capital expenditure of semiconductors in 2024 will be about US$166 billion, a decrease of 2% compared with 2023; Capital spending is expected to grow 11% in 2025 to $185 billion, surpassing the all-time high of $182 billion set in 2022. In the future, the recovery of overall capital expenditure growth will be conducive to the increase in the use of semiconductor materials under the expansion of production capacity, driving the industry to gradually rise.

As the semiconductor industry continues to recover and the demand for semiconductor materials grows, segment leaders are expected to be the first to benefit. Some industry analysts said that benefiting from the recovery of consumer electronics and the high demand for AIGC computing power, the demand for logic has accelerated, the inventory of memory chips has been removed, the price has risen, and the growth rate of the market scale has rebounded. It is expected that in the future, with the continuous recovery of end market demand, the further destocking of inventory, the demand for AI computing power will remain high, the release of new demand such as HBM will be accelerated, and the localization rate of semiconductor materials such as advanced packaging materials, photoresists, and high-end electronic chemicals will continue to advance, and the upward cycle of the industry is expected to begin. In the context of the continuous recovery of market demand and the steady progress of localization, it is recommended to pay attention to Qingyi Optoelectronics in the field of reticle; Dinglong Co., Ltd., Anji Technology, etc. in the field of CMP polishing materials; Huate Gases in the field of specialty gases; Tongcheng New Materials in the field of photoresist, Chinachem Technology, etc.

A selection of potential stocks

North Huachuang (002371).

Full of orders in hand

The company expects the net profit attributable to shareholders of listed companies in 2024 to be 51700000 yuan to 5950000 yuan, a year-on-year increase of 32.6% to 52.6%. Pacific Securities pointed out that the company has studied customer needs, enriched the product matrix, broadened the process coverage, and the main business continued to maintain a good development trend, and the market share has steadily increased. In addition, with the continuous expansion of the company's revenue scale, the advantages of the platform have gradually emerged, the operating efficiency has continued to improve, and the cost and expense ratio has steadily decreased. In 2023, more than 30 billion yuan of new orders will be signed, providing an effective guarantee for the company to achieve rapid growth in 2024. As of the end of the third quarter of 2024, the company's contractual liabilities reached 7.783 billion yuan, maintaining a high level. In terms of inventory, the company's inventory amount increased from 16.992 billion yuan at the end of 2023 to 23.229 billion yuan at the end of the third quarter of 2024, and the company's orders in hand were relatively full.

AMEC (688012).

Increased profitability

In the first three quarters of 2024, the company signed new orders of 7.64 billion yuan, a year-on-year increase of 52%, including new orders of 6.25 billion yuan for etching equipment, a year-on-year increase of 54.7%, and new orders for new products LPCVD of 300 million yuan. In the third quarter of 2024, new orders were signed at 2.938 billion yuan, including about 2.31 billion yuan for etching equipment and about 132 million yuan for LPCVD. In 2024, the company expects that the cumulative new orders for the whole year are expected to reach 11 billion yuan to 13 billion yuan. Guosen Securities pointed out that the company's CCP equipment delivered more than 1,000 reactors in the first three quarters, advanced storage ultra-high aspect ratio etching, and advanced logic mid-section key etching process to achieve mass production. Among the ICP equipment, the shipment of high-end ICP equipment has increased significantly. In terms of thin film equipment, the company has obtained 300 million yuan of new orders for LPCVD in the first three quarters, and tungsten series products can meet the process needs of key customers. In addition, the company's EPI equipment has successfully entered the mass production verification of the client and has been highly recognized by customers.

Changhong Technology (300151).

Semiconductor vehicles have made a successful breakthrough

The FOUP (wafer carrier for 12-inch wafer fab) produced by the company's subsidiary has obtained a purchase order from a domestic mainstream wafer manufacturer, which is the company's first mass production in the field of wafer carriers, and it is expected that it will continue to obtain customer orders in the future, which is expected to continue to inject performance momentum into the company. At the same time, the company's mask carrier for lithography machines has been successfully developed, and the customer verification process is progressing in an orderly manner. Huafu Securities pointed out that the acceleration of population aging has led to the continuous expansion of the medical device market, and the localization of overseas medical supply chain is an inevitable choice for overseas enterprises to save costs. Under this trend, the company seized the opportunity and deepened cooperation with its one-stop solution and strong technical strength, bringing continuous and strong performance momentum. On the whole, the company's wafer carriers in the semiconductor field have obtained mass production orders for the first time, the new product mask carrier is accelerating the verification, and the company's medical business segment is also accelerating its expansion, and has reached framework agreements with many well-known customers in the industry, and the growth is promising.

Anji Technology (688019).

The performance maintained a high growth trend

The company continued to deepen market demand, accelerated the introduction of customers and improved the layout of various products, continuously increased its market share, and maintained rapid growth in performance. The company maintains a high level of R&D investment, continues to improve the platform layout of wet electronic chemicals, electroplating solutions and additives, and key raw materials, and is expected to maintain a high level of performance and profitability with the successive increase of new products in the future. Hua Chuang Securities pointed out that the semiconductor industry cycle is picking up, and the utilization rate of downstream wafer factories is expected to continue to repair, driving the demand for CMP polishing slurry to increase. In addition, changes in the trade situation have accelerated the localization process of semiconductor materials, and the company, as a leading manufacturer of CMP polishing slurry in China, is expected to continue to benefit from the development of the industry. On the whole, the semiconductor materials industry has high technical barriers, and the company has maintained a high level of R&D investment since its establishment to form its core competitiveness. In the future, with the continuous enrichment of the company's product categories, the results of the platform-based layout of semiconductor materials will continue to appear.

Tongcheng New Materials (603650).

Electronic materials continue to make breakthroughs

The company's KrF photoresist and I-line photoresist revenue have grown rapidly, of which ArF photoresist has begun to form sales, and medium and high-end IC photoresist products have become the core strength of the company's products and the amount continues to rise. At present, a variety of high-resolution KrF, ArF photoresist and BARC bottom anti-reflective coating and other products have been verified on the client side, and have successively passed the customer product certification, and the EBRG5 grade of photoresist supporting reagent has been mass-produced and shipped, which is the only self-produced and self-sold in China. In terms of CMP polishing pads, the subsidiary Tongcheng Electronics has invested in the construction of a semiconductor chip polishing pad production base, which can achieve an annual output of 250,000 pieces after the project is successfully completed, and is expected to sell about 800 million yuan annually after full production. Founder Securities pointed out that the company has consolidated its traditional business advantages, continuously deepened the layout of electronic materials, smoothly introduced and increased the volume of semiconductor photoresist, ranked first in the market share of panel photoresist, and expanded the polishing pad business, optimistic about the steady development of the company's traditional business, and achieved continuous breakthroughs in the electronic materials business.