Hong Kong stock concept tracking | AIDC construction scale expansion + increase in electricity demand Distribution system prosperity increase (with concept stocks)

According to the white paper on the evolution of the basic infrastructure of the Intelligent Computing Center by Weitai, the power consumption of domestic standalone racks is transitioning from 4-6kW in the traditional data center to 20-40kW in the Intelligent Computing Center (AIDC), with the potential to gradually increase to 40-120kW or even higher in the future. The racks in the Intelligent Computing Center show a trend of high power density. GF Securities released a research report stating that, according to calculations, the global AIDC will add 15/24/32GW of power from 2025 to 2027, with a year-on-year increase of 183%/53%/35%. Based on a detailed breakdown of the AIDC electrical equipment industry chain, the compound growth rates of each segment from 2024 to 2030 are ranked as HVDC>PSU>lead-acid battery>transformer, with corresponding compound growth rates of 97.8%/80.3%/51.0%/50.1%. The market space in 2025 is approximately 22.3/290.4/81.0/80.6 billion yuan. Currently, there is a severe shortage of diesel engines and it remains a seller's market. In order to secure a supply of goods quickly, downstream cloud vendors give OEM manufacturers in the middle a lot of pricing power. There is huge potential for price increases in the future, similar to the situation with 4G base stations around 2013 when the price of a single diesel engine rose to over 3 million. Tianfeng released a research report stating that global AI capital expenditure is rapidly increasing, the AI infrastructure wave is accelerating, and high-level IDCs require fault tolerance or redundancy, usually using dual utility power sources+UPS+diesel generators, with diesel engines expected to benefit. The diesel engine market driven by AIDC: the demand for diesel engines for computing power construction is expected to double, with tight supply from international leading suppliers and accelerated importation from domestic sources. It is recommended to focus on domestically produced original equipment/engines, domestic OEMs, and component parts with price increase capabilities. CITIC Securities stated in a research report that as the construction scale of AIDC expands and the corresponding power demand increases, the switchgear and low-voltage electrical markets in data center power distribution systems are expected to see significant expansion. CITIC Securities expects the domestic market size of these two segments in 2025 to exceed 5 billion yuan and 1-1.5 billion yuan, respectively. Looking to the future development of AIDC power distribution systems, CITIC Securities judges: 1) As domestic data centers enter the stage of intensive bidding, the demand for domestic production is expected to accelerate; 2) New technologies such as HVDC and solid-state switches become the core directions of upgrade, with a rise in the penetration rate of highly integrated and efficient products; 3) There is also the prospect of "borrowing boats to go to sea" to accelerate. Hong Kong-listed companies in the AIDC-related industry chain: CHONGQING M&E (02722): Benefiting from the continued high prosperity of domestic AIDC and data center construction, the demand for high-end diesel generators is increasing. The bank pointed out that with the outbreak of data center demand, overseas manufacturers such as Cummins have seen continued growth in revenue and profit margins from the power system business. It is worth noting that the cooperation between CHONGQING M&E and Cummins began in 1981. With the continuous deepening of the cooperation between the two parties, in October 1995, with each party investing 50%, the joint venture Chongqing Cummins Engine Co., Ltd. was established. Currently, Chongqing Cummins has become a leading manufacturer of large power engines in China. IMPRO PRECISION (01286): The demand for big power engines as key components of distributed generators continues to rise due to the fermentation of the AI-related big data center demand in Europe, America, and Asia including China. The increase in market share of big power engines in terminal markets has led to a significant 58.6% increase in sales for the terminal market, making it the third largest segment market within the group, accounting for 16.8% of total revenue. The company predicts a sales growth rate in 2025 in the mid-to-high single digits based on the progress of the group's outstanding unfilled orders and new project development. Weichai Power (02338): The leading OEM manufacturers of diesel generator sets in China are mainly Shanghai Cooltech Power, Weichai Heavy Machinery, Haitai Technology, and Sumec Corporation. Diesel engine manufacturers include Weichai Power and Yuchai International. The market prospects for large bore engines are broad with high added value, offering a new track for remanufactured engine companies. The global market capacity can reach $20 billion annually, with high added value. With the arrival of the AI era, the construction of big data centers for data storage will bring considerable market space for large bore engines. The companies point out that this is a new path for remanufacturing Weichai engines. In 2023, the M-Series large bore high power density engines sold over 8100 units, a 38% increase year-on-year, penetrating high-end markets such as global data centers and mining trucks. In the first three quarters of 2024, sales of M-series large bore high-speed engines reached nearly 6000 units, with a continuous optimization of product structure, and a significant increase in the proportion of high-end products represented by data centers.