Rating: Neutral | Target Price: RMB 77-106 (base-case fair value range) | Current Price: RMB 105.80 (2026-09-30 close, valuation anchor for this report) | Margin of Safety: -27.2% (base-case fair value floor of RMB 77 vs. current price) | Time Horizon: 12 months
One-line conclusion: The quality transition is genuinely happening, but the price has fully priced in the base case — a good company at a rich price; wait for validation.
QiangRui Technology is in the middle of a transition from "Huawei/Apple supply chain test fixture and automation equipment supplier" to an "AI server liquid cooling equipment + thermal components platform": 2026H1 revenue was RMB 1.374 billion (+63.7%), with thermal components jumping to the largest category (RMB 462 million, +245.8%); AI server and network communications revenue reached RMB 427 million, 1.8x the full-year 2025 figure in just six months. However, three constraints are equally clear. First, the quality of growth attributable to shareholders is diluted by structure — minority interest income accounts for 37.8% of net profit (Lvbao Technology consolidated with only 35% equity ownership), operating cash flow is -RMB 127 million, and interest-bearing debt grew 84.5% in six months to RMB 818 million. Second, the full-year revenue guidance of RMB 3.5-4.5 billion implies H2 YoY growth of +117% to +219%; both pillars — Apple orders "concentrated in Q3 recognition" and Rubin rack volume shipments — are back-loaded and based on management expectations. Third, the current price of RMB 105.80, back-solved at a reasonable 35x P/E, implies approximately RMB 440 million in 2027 net profit attributable to parent (a 2025-2027 CAGR of about 76%), already above the only in-depth sell-side forecast (RMB 395 million) and between it and the equity incentive target (RMB 500 million) — the market has fully priced the base case and prepaid for part of the optimistic scenario. Three-scenario fair values: RMB 42-58 / 77-106 / 117-155 (probabilities 30%/45%/25%), with a probability-weighted fair value of RMB 90.18, corresponding to expected return of about -14.8% and a margin of safety of -27% (base-case floor of RMB 77 vs. current price). The decisive event is the Q3 report due end of October 2026: Q3 standalone revenue ≥RMB 1.3 billion points to the optimistic scenario; below RMB 900 million, the full-year guidance is falsified.
Key evidence
The demand-side inflection is real: chip TDP has risen from 700W (H100) to 2300W (VR200), fully breaching air-cooling limits (700-800W); liquid cooling has shifted from optional to mandatory, with per-rack liquid cooling value rising with each generation (GB200→GB300 about +20%; Rubin adds manifold as a standard component). But two definitional caveats: first, the company itself acknowledges that its +160% AI-segment revenue growth "benefited from consolidating Lvbao," with organic growth excluding consolidation not separately disclosed; second, thermal components (by product: RMB 462 million) and AI server and network communications (by application: RMB 427 million) are two different cut lines and cannot corroborate each other. On profit attribution: of Lvbao Technology's H1 2026 net profit of RMB 43.38 million, 65% goes to minority shareholders (the company holds only 35% equity, controlling 51% in aggregate via voting rights delegation) — a substantial portion of the profit increment from the AI narrative does not accrue to listed company shareholders. Observable validation points: full-year 2026 thermal components revenue growth; wording shifts in Rubin-related orders from "rapid growth" to "bulk delivery."
Key evidence
H1 2026 revenue of RMB 1.374 billion is only 39% of the guidance floor; H2 requires RMB 2.13-3.13 billion (+117% to +219% YoY). Even if Q3 hits the validation line, the guidance midpoint of RMB 4.0 billion requires a Q4 standalone of about RMB 1.53 billion, roughly +241% versus the 2025Q4 base of RMB 447 million — the back-loaded pressure actually extends into Q4. Offsets exist: domestic liquid cooling test equipment orders surged YoY, and assembly line delivery plans are clear (10-13 lines for the full year; 2 delivered by end-June, 3 by mid-August), so H2 visibility is not zero. But the only in-depth sell-side revenue forecast is significantly below the guidance floor — the market does not buy the guidance itself. Validation line: Q3 standalone revenue ≥RMB 1.3 billion points above guidance midpoint; below RMB 900 million falsifies the full-year guidance, with attributable net profit potentially falling below the incentive assessment floor of RMB 200 million.
Key evidence
Net margin attributable to parent is only 6.27%, far below the sell-side implied 11.5% — the sell-side figure would require an H2 net margin of about 16.6%, an aggressive repair requirement. To be fair, H2 repair has mechanical support: share-based payments of RMB 25.34 million in six months and a conservative inventory impairment policy (large Q1 provision on shipped goods) are both front-loaded items; excluding share-based payments, H1 net profit was RMB 107 million, +95.5% YoY. But minority interest leakage is structural (65% of Lvbao equity sits with minority shareholders, with no performance commitment arrangement), and the expansion loop depends on the RMB 1.05 billion placement completing on schedule (including RMB 285 million for working capital).
Key evidence
A definitional note: cross-verified against the shareholder register, the controlling shareholder's net selling over 9-12 months was about 4.5% (not the 8% circulating in the market); however, its pattern of "selling at highs — pushing a placement two months later," three consecutive years of large cash dividends (FY2023 92.8%, FY2025 58.4%) alongside dilutive refinancing, and the controlling shareholder entity's three relocations and renamings in four years constitute persistent governance signals capping the valuation ceiling. Offsets: no lockup expirations in 2026, low pledge ratio.
Key evidence
The current price is above the level supported by the only sell-side consensus (RMB 395 million × 35x ≈ RMB 98, about -7% vs. current); there is room to the incentive target basis (RMB 500 million), but that is the optimistic scenario. Three-scenario fair values RMB 42-58 / 77-106 / 117-155 (30%/45%/25%), probability-weighted fair value RMB 90.18 — the current price is +15.6% above the base-case midpoint, corresponding to an expected return of about -14.8%, with downside to the bear-case midpoint of -52.7% and upside to the bull-case midpoint of +28.5%; margin of safety -27% (on the base-case floor of RMB 77). The one-sided market structure (6 buy ratings, 0 hold, 0 sell; only one in-depth sell-side; no consensus target price) means that if Q3 disappoints, there is no neutral positioning to cushion the fall.
| Metric | FY2023 | FY2024 | FY2025 | 2026H1 (latest period) |
|---|---|---|---|---|
| Operating revenue (RMB 100M) | 6.74 (+47.7%) | 11.27 (+67.1%) | 18.19 (+61.5%) | 13.74 (+63.7%) |
| Net profit attributable to parent (RMB 100M) | 0.56 (+45.1%) | 0.98 (+75.0%) | 1.42 (+45.2%) | 0.86 (+56.8%) |
| Non-GAAP attributable net profit (RMB 100M) | 0.38 (+72.5%) | 0.92 (+142.9%) | 1.35 (+46.1%) | 0.79 (+52.8%) |
| Blended gross margin | 31.25% | 30.31% | 25.63% | 29.38% |
| Attributable net margin | 8.27% | 8.66% | 7.79% | 6.27% |
| Operating cash flow (RMB 100M) | 0.11 | 0.47 | 1.33 | -1.27 |
| Free cash flow (RMB 100M) | — | -0.21 | 0.15 | -2.67 |
| Cash + cash-like assets (RMB 100M, period-end) | 4.15 | 3.62 | 3.50 | 2.76 (2026-06-30) |
| Interest-bearing debt (RMB 100M, period-end) | 0.49 | 1.29 | 4.44 | 8.18 (2026-06-30) |
| Debt-to-asset ratio (period-end) | 26.4% | 41.4% | 50.8% | 58.4% |
| Contract liabilities (RMB 100M, period-end) | 0.16 | 0.77 | 0.97 | 0.56 |
Note: 2026Q1 standalone revenue was RMB 516 million (+62.9%) and attributable net profit RMB 14.7 million (+22.8%) — high revenue growth with profit up only about twenty percent, mainly due to minority interest income reaching 54.9% of net profit that quarter and large Q1 provisions on shipped goods price declines. Free cash flow = operating cash flow - capital expenditure on fixed assets, etc.
Reasons for metric changes (company explanations attached for those with YoY ≥±20%): ① 2026H1 operating cash flow -247% — company explains as "increases in procurement, payroll, and expense outlays exceeding the increase in sales collections" (receivables + inventory up RMB 662 million in six months); ② interest-bearing debt +84.5% in six months — mainly borrowings brought in by Lvbao consolidation and new bank borrowings from expansion; finance costs +589% YoY; ③ thermal components revenue +245.8% — Lvbao consolidation plus growth in liquid cooling test equipment/assembly line orders delivered to leading domestic and North American AI server makers; ④ fixture revenue -16.3% — Apple order peak about 2 months later than prior years, delayed orders concentrated in Q3 recognition; ⑤ smart vehicle segment revenue -35% — phase reduction in customer order demand; ⑥ FY2025 equipment revenue +175.2% — Apple assembler added nearly RMB 200 million of equipment/module orders plus large deliveries of headlight assembly test lines; ⑦ FY2025 gross margin -4.68pp — management explains that amid order surges, "part of the non-core processes were outsourced, sacrificing some gross margin," compounded by liquid cooling R&D investment (the 2025Q3 formulation was "appropriately lowering gross margin to grab share"; the two periods' formulations are not fully consistent).
2026H1 revenue was RMB 1.374 billion (+63.7%), attributable net profit RMB 86 million (+56.8%), non-GAAP RMB 79 million (+52.8%) — revenue and profit growth are matched, but structural details matter more than the totals:
Against management guidance and sell-side expectations: H1 completed 39% of the guidance floor; SID Securities forecasts full-year attributable net profit of RMB 322 million (implying H2 attributable of ~RMB 236 million and net margin of ~16.6%). Whether the market has priced this in is hard to assert (no consensus target price), but the implied net margin is far above H1's 6.27% — Q3 standalone gross margin and impairment pace are the key correction variables.
Business model: Customized precision manufacturing — jigs/automation equipment are designed and delivered on order, with revenue recognized upon acceptance (contracted but unfulfilled backlog revenue disclosed as 0 at period end; no recurring revenue contracts); thermal components/motors are product-type businesses. Moderately asset-heavy, with expansion via "M&A to broaden product lines + leased facilities to grab capacity" (right-of-use assets of RMB 117 million). Weak bargaining power over large downstream customers (top five customers at 67.4%, annual price-cut conventions), relatively strong bargaining power over upstream materials suppliers.
Cash content of earnings (OCF/net profit attributable to parent): 0.19 (FY2023) → 0.49 (FY2024) → 0.94 (FY2025) → -1.47 (2026H1, seasonally negative plus expansion funding). FCF/net profit: -0.21 (FY2024) → 0.11 (FY2025) → -3.10 (2026H1). In 2026H1, receivables + inventory increased by RMB 662 million, 1.24x the revenue increment — every RMB 1 of incremental revenue required over RMB 1.2 of working capital. This is typical of an order-driven expansion phase, but continued deterioration would convert into impairments (RMB 50.37 million already provisioned in H1). Net debt/EBITDA swung from a net cash position in FY2023 to approximately 1.4x (our estimate; net debt of RMB 542 million at 2026H1).
Recurring earnings test: FY2025 non-GAAP adjusted net profit of RMB 135 million vs. RMB 142 million attributable to parent (non-recurring items ~5%, clean); however, the "adjusted" figures for 2026H1 warrant the opposite caution — adding back share-based compensation of RMB 25.34 million (a recurring expense) would effectively treat real costs equal to ~29% of attributable net profit as if they did not exist.
Capital returns and maintenance CapEx: FY2025 ROIC approximately 11.5% (below weighted ROE of 15.0%, a leverage contribution); CapEx/depreciation of 1.26 (FY2024) → 1.70 (FY2025) → 2.23 (2026H1 annualized) — expansionary spending far exceeds depreciation, a characteristic of a growth investment phase rather than a cash cow; it is premature to classify this as a moat (ROIC>15%).
Red flag list: ① Receivables + inventory at 55% of total assets; interest-bearing debt +84.5% in six months; ② minority shareholders absorbed 37.8% of H1 net profit; ③ M&A goodwill of RMB 180 million (Xuyida's buffer only 8.2%); ④ top five customer concentration at 67.4%, unchanged for years. In sum: conversion of book profit into free cash flow is currently negative, and realization of earnings quality hinges heavily on H2 collections and the private placement — this is the core reason this report discounts the "good company" narrative.
Consistency between words and actions: partially delivered, with a preference for setting aggressive targets. Commitments vs. delivery: ① The 2022 equity incentive's three tranches (2022-2024 net profit growth of 25%/60%/100% vs. 2021) — all three vesting periods missed; ~1.86 million restricted shares forfeited; ② IPO-funded projects originally slated for production by December 2022 — delayed twice to 2026; the R&D center project was shelved and closed, with RMB 48.71 million of surplus redirected to the Longhua headquarters; ③ 2026 revenue guidance of RMB 3.5-4.5 billion — H1 achieved 39%, pending verification (implying H2 growth of +117% to +219%, the most aggressive since listing); ④ June roadshow statement of "10-13 assembly lines delivered for the full year" — only 2 delivered by end-June and 3 by mid-August, with deliveries back-loaded. Offsetting factors: the 2025 new incentive plan (7.5 million options at an exercise price of RMB 109.85, targets of ≥RMB 200/500/800 million attributable net profit for 2026-2028) provides verifiable hard benchmarks, with the exercise price 3.8% above the current price — genuine alignment between management and shareholder interests.
Shareholder friendliness: generous dividends coexist with dilution; overall neutral, tilting toward a "financing-and-expansion" type. Cash dividend payout ratio: FY2022 96.2%, FY2023 92.8%, FY2024 45.4%, FY2025 58.4% (two consecutive years of 10-for-4 bonus share distributions); however, after raising RMB 551 million in the 2021 IPO, another RMB 1.05 billion private placement is proposed for 2026 (approximately 109% of attributable net assets at end-2026H1), with no buyback record.
Risk signals: ① The controlling shareholder's holding entity changed registered address and name three times in four years (Shenzhen → Xinyu → Ningyang → Ganzhou); stake fell from 38.50% to 31.55%, with 10.038 million shares pledged; ② rapid escalation of related-party transactions — FY2025 sales to Sanwei Jidian of RMB 240 million (71.09% of same category); 2026H1 new sales of RMB 165 million to Bluebird, a related party of Lvbao's minority shareholder (52.45% of same category); ③ Director/Deputy GM/CFO You Xiangyang acquired 0.63% equity in consolidated subsidiary Lvbao (related-party transaction); ④ Q1 2026 report was corrected two days after release, without explanation.
2026H1 (latest period)
| Segment | Revenue share | YoY | Gross margin (YoY) | Business logic in one line |
|---|---|---|---|---|
| Thermal components | 33.6% | +245.8% | 25.59% (+4.38pp) | Lvbao consolidation + manifold/structural parts ramp; main AI liquid-cooling battleground |
| Equipment | 24.8% | +5.8% | 27.78% (+12.09pp) | Liquid-cooling assembly/test lines driving gross margin recovery |
| Jigs | 17.8% | -16.3% | 27.06% (+1.55pp) | Traditional core business; Apple order delays caused decline |
| Components and others | 14.4% | +314.1% | 32.67% (-10.62pp) | Semiconductor precision parts ramp diluting gross margin |
| Motors | 9.3% | +197.8% | 46.67% (-1.05pp) | Brushless motors for robot vacuums/robots (Xuyida), high margin |
FY2025: Jigs RMB 688 million / 37.8% / gross margin 27.19% (-2.96pp, largest gross profit contributor at RMB 187 million); equipment RMB 579 million / 31.8% / 18.88% (-11.49pp, outsourced processes a drag); heatsinks RMB 284 million / 15.6% / 20.44% (-5.79pp); components RMB 166 million / 9.1% / 40.30% (+5.95pp, deliberate contraction); motors RMB 103 million / 5.6% / 43.78% (Xuyida consolidated March 2025).
Profit drivers and trends: FY2025's gross profit driver remains jigs (RMB 187 million), but in 2026H1 thermal components' gross profit of ~RMB 118 million has pulled ahead of equipment (RMB 95 million) and jigs (RMB 66 million) — the profit engine has switched. The gross margin band spans from 18.88% (equipment) to 46.67% (motors), roughly 28pp apart, reflecting the difference in bargaining power between "non-standard custom equipment" and "standardized precision components." The equipment gross margin recovery (+12.09pp) is the most important quality signal of H1; its sustainability depends on the liquid-cooling line mix. By application: FY2025 mobile intelligent terminals RMB 836 million (of which Apple chain RMB 578 million) → 2026H1 AI servers and network communications RMB 427 million became the largest segment — the two classifications (by product / by application) must not be mixed; the company itself describes its revenue classification as "approximate statistics."
Accounting red flags: ① Rising related-party sales share (heatsinks: related parties at 71.09% of same category; Bluebird channel RMB 165 million / 52.45%, with a temporary quota of RMB 360 million) — medium severity; nearly half of the thermal business flows through related parties; watch for exchange inquiries and pricing fairness; ② consolidation via low equity stake plus voting rights proxy (35% equity controlling 51% voting rights) + executives acquiring equity in targets — medium severity; ③ change in inventory write-down provisioning method from October 2025 (extra RMB 9.39 million provisioned, reducing net profit by RMB 7.98 million) — direction is conservative but timing is sensitive, low; ④ large impairments year after year (FY2023-FY2025 averaging RMB 24-35 million annually; RMB 50.37 million in H1 2026 alone), with the company claiming "no sustainability" despite recurrence — medium; ⑤ Q1 report corrected two days after release without explanation — low.
Inter-period consistency: ① OCF/net profit 0.19→0.49→0.94→-1.47; company's explanations consistent across periods (expansion funding); ② gross margin 31.25%→30.31%→25.63%→29.38%; company's explanations are inconsistent (Q3: "sacrificing gross margin for share" vs. annual report: "outsourced processes sacrificing gross margin") — the drift itself is a signal; ③ contract liabilities 0.16→0.77→0.97→0.56 (RMB 100 million units); the H1 plunge of 42.4% contradicts "strong orders," and the company has not explained it — flagged in this report as a key monitoring item; ④ minority interest/net profit 18%→17%→54.9% (Q1)→37.8%, attributable to consolidation structure; explanations consistent; ⑤ controlling shareholder's three address/name changes + declining stake + rising pledges — company has not explained.
Current market data (close of 2026-09-30): Share price RMB 105.80, market cap RMB 15.322 billion, total shares 148.22 million (after the May 2026 10-for-4 bonus issue). PE(TTM) 88.6x (TTM attributable net profit RMB 173 million) — note the company is in a high-growth investment phase (SBC + front-loaded impairments + minority interest leakage depress attributable profit), and with less than 5 years since listing, historical percentiles are distorted — use percentiles as reference only, not as headline; PB 15.96x (83rd percentile over the past 3 years, vs. peer median of ~4.2x); PS(TTM) 6.51x; forward: 2026E PE 47.6x (SDIC) / 58.1x (consensus, RMB 264 million basis), 2027E PE 38.8x (SDIC RMB 395 million) / 30.6x (incentive target RMB 500 million basis), PEG 0.35-0.58. 52-week range RMB 56.34-191.80; current price ~44% below the high, +48% YTD.
Peer comparison (calculated as of 2026-10-05)
| Company | Market cap (RMB 100M) | PE(TTM) | PB | Growth profile | Difference vs. Qiangrui |
|---|---|---|---|---|---|
| Bozhon Precision | 184.3 | 26.8x | 3.6x | 2026H1 revenue +72.4% | 3C automation leader, full-line model, lower gross margin |
| Keli Technology | 148.2 | 47.6x | 4.5x | 2026Q1 net profit +56.9% | Most similar transformation comparable (placement betting on AI precision manufacturing) |
| Feirongda | 204.6 | 45.4x | 4.7x | 2026H1 attributable +52.1% | Direct thermal peer; gross margin 21.7%, below Qiangrui |
| Yinlun Machinery | 287.5 | 29.7x | 3.9x | 2025 revenue +23.4% | Mature thermal management leader moving into liquid cooling; low-valuation anchor |
| Scansha | 147.4 | 27.1x | 4.2x | 2025 revenue -16.5% | Consumer electronics downturn reference |
| Quick Intelligent | 137.8 | 87.8x | 9.4x | 2025 revenue up, profit down | High PE driven by falling profits; different quality |
| Qiangrui Technology | 153.2 | 88.6x | 16.0x | 2026H1 attributable +56.8% | Higher growth but attributable profit siphoned by minorities |
What the market has already priced in: Back-solving from a 35x reasonable exit multiple, the current price implies 2027 attributable net profit of ~RMB 438 million — a two-year CAGR of ~75.8% vs. RMB 142 million in 2025, about 11% above the only sell-side consensus (RMB 395 million, implying a two-year CAGR of 67%) and about 12% below the incentive target (RMB 500 million). In one sentence: the current price requires the company to land "between full sell-side delivery and management's incentive targets," while 2026H1's annualized attributable profit is only ~RMB 170-200 million — the delivery path is bet almost entirely on Rubin volume ramp and Apple's Q3/H2 revenue recognition. Two-sided test of demand math: support — 2026E capex of the four major North American hyperscalers ~USD 715 billion (+74%), liquid-cooling penetration 33%→53%→60%, per-rack liquid-cooling value +20% per generation, manifold as a new standard component in the Rubin architecture (company estimate: RMB 10-20 billion/year market), with the company's dual "equipment + components" positioning and 2026H1 AI revenue annualizing to ~RMB 1 billion validating 0-to-1; constraints — the company holds only ~0.1% of the global liquid-cooling market, manifold has competitors that entered earlier, and annual price cuts and deferral risks have been flagged by management three times. Conclusion: the implied growth falls in the upper half of the derivable demand range (2027 revenue RMB 4.5-5.5 billion) — directionally defensible, but with thin margin of safety.
Three-tier value (EPV): Asset value (floor) ~RMB 5.38/share (attributable net assets ex-goodwill; with elevated receivables + inventory, liquidation-basis further discounted to ~RMB 4-4.5); zero-growth EPV ~RMB 12.73/share (normalized EPS RMB 1.40 ÷ WACC 11% — the normalized base uses H1 non-GAAP profit of RMB 79 million, seasonally annualized to ~RMB 200 million attributable, impairments not added back, sitting between H1 simple annualization of RMB 159 million and the incentive floor of RMB 200 million); the growth option accounts for ~88% of the current price — the price is almost entirely supported by the AI liquid-cooling ramp option, with the EPV floor providing only ~12% downside protection (reality at 15.96x PB). This is not the template scenario of "the market paying only for zero growth" — growth itself has value; the issue is the odds in point 5.
Three scenarios and odds (12-month horizon)
| Scenario | Probability | 2026 revenue/attributable | 2027 revenue/attributable | Exit multiple | Fair range | vs. current price |
|---|---|---|---|---|---|---|
| Bear | 30% | RMB 2.9-3.1B / 190-230M | RMB 3.2-3.8B / 240-300M | 25-28x | RMB 42-58 | -53% (to midpoint RMB 50) |
| Base | 45% | RMB 3.3-3.7B / 260-310M | RMB 4.4-5.0B / 370-440M | 30-35x | RMB 77-106 | -13.5% (to mid RMB 91.5) |
| Bull | 25% | RMB 4.0-4.5B / 330-380M | RMB 5.2-6.0B / 500-560M | 34-40x | RMB 117-155 | +28.5% (to midpoint RMB 136) |
Exit multiple anchors (independent of the company's current price): base 30-35x represents a ~25-35% discount to the current trading multiples of comparable "inflection-point-validated" companies (Keli 47.6x, Feirongda 45.4x TTM), reflecting a steady-state discount as liquid-cooling penetration approaches 60% in 2027, plus three Qiangrui-specific discounts (minority interest leakage / customer concentration / placement dilution); bull 34-40x does not exceed Keli's current TTM; bear 25-28x converges toward the mature equipment-maker central range of Bozhon/Scansha/Yinlun (27-30x). This calculation is consistent with the scenario table: the base ramp calculation (2027 attributable profit RMB 370-440 million × 30-35x = market cap RMB 11.1-15.4 billion) is itself the RMB 77-106 range. Ramp math: base case 2026-2027 revenue CAGR ~+37% (AI revenue ramping from ~RMB 1 billion annualized to RMB 2.5 billion+, consumer electronics stabilizing), net margin recovering from 6.3% to 8.5-9% (SBC/front-loaded impairments + concentrated recognition of high-margin Apple revenue, though minority interest leakage is rigid). The RMB 1.05 billion placement, if issued at the current price, dilutes ~6.4-7.9%; RMB 430 million of proceeds go to liquid-cooling capacity and RMB 285 million to working capital — roughly neutral-to-negative per share (cash yield below core-business returns), already embedded in the exit multiple discount and not double-counted.
Reconciliation of the bear case with market bearish anchors: The most pessimistic credible published earnings forecasts are consensus 2026E attributable net profit of RMB 264 million (tushare, n=1) and SDIC's RMB 322 million (a base-case forecast under a "Buy" rating, not a bearish tier). Our bear case of 2026 attributable profit of RMB 190-230 million is below both published anchors; at a 25-28x exit multiple this corresponds to RMB 42-58 — if 2026 attributable profit actually reaches RMB 264/322 million, it would not be a bear-case world. The bear case also covers a "further downgrade into 2027" combination (Rubin Ultra delay + weak handsets, corresponding to 2027 attributable profit of RMB 200-250 million × 30-40x as a deep-stress scenario).
Conclusion: valuation is full to slightly rich (mildly overvalued). The current price is +15.6% above the base-case fair midpoint; probability-weighted fair value is RMB 90.18, implying an expected return of approximately -14.8%, with a margin of safety of -27% (using the base-case fair floor of RMB 77). Score quality and price separately: quality (genuine pivot, unique positioning, four consecutive years of rising ROE) is genuinely good; price is at the upper edge of the base range, with odds skewed negative. Actionable implication: do not chase; wait for two validation points — Q3 revenue ≥ RMB 1.3 billion (bull-case signal), or a pullback below RMB 77 into the base-case range (odds repair).
1. Industry Size and Demand Inflection Chain. Qiangtek spans two tracks. ① Consumer electronics testing fixtures and non-standard automation equipment: China's 3C automation equipment market was approximately RMB 234.9 billion in 2022 and RMB 308.5 billion in 2023 (Huaan Securities/Zhiyan Consulting estimates); fixtures are a highly customized, fragmented niche segment worth tens of billions of RMB with no authoritative single estimate; 2026 brings headwinds to this track—memory price increases squeeze phone BOM costs, IDC forecasts 2026 global smartphone shipments of -16.7% (the largest decline on record, with H2 at -27.2%), Counterpoint forecasts -9% to -13.9%, and 3C equipment capex is contracting. ② AI server liquid cooling (the company's main battleground): the global data center liquid cooling market was approximately USD 3.0 billion in 2025 (Dell'Oro, roughly doubling from 2024) with a 2025-2029 CAGR of about 23%; China's intelligent computing center liquid cooling market reached RMB 18.4 billion in 2024 (+66.1%), with CAICT forecasting approximately RMB 130 billion by 2029, a five-year CAGR of about 48%. The quantified demand inflection chain (this is the demand-side foundation of this report's valuation): driving variable = North American Big Four cloud providers' capex of USD 410 billion in 2025 → approximately USD 715 billion in 2026E (+74%, sum of company guidance; Moody's raised its 2026E estimate for six hyperscalers to USD 785 billion); unit content surge = chip TDP breaking air-cooling limits (GB300 at 1,400W, VR200 at 2,300W, VR300 at 3,600W), liquid cooling value per rack from approximately USD 79,100 for GB200 NVL72 → approximately USD 95,000 for GB300 (+20%, Dongguan Securities teardown), cold plates per chip from 36→108, quick connectors from 150→270 pairs, and the Rubin platform's 100% full liquid cooling adding manifold standard components (approximately USD 12,000 per rack); penetration ramp = AI chip liquid cooling penetration from 33% in 2025 → 53% in 2026E → about 60% in 2027E (TrendForce); China's intelligent computing center liquid cooling penetration from about 20% in 2025 → about 37% in 2026E; company share = a challenger starting from about 0.1%, with 2026H1 AI server and network communications revenue of RMB 427 million (annualized approximately RMB 1.0 billion) + manifold passing North American customer technical validation with small-batch shipments + 10-13 assembly lines + indirect stiffener supply—multi-point positioning. Policy resonance: four ministries including the NDRC require new large data centers completed by end-2025 to have PUE ≤1.25, Beijing imposes differential electricity pricing on PUE >1.35, and Shanghai requires liquid-cooled racks to exceed 50% of intelligent computing centers—liquid cooling shifts from a commercial choice to a compliance mandate.
2. Industry Chain and Value Distribution. Upstream: aluminum/copper materials and composites, brazed heat exchangers, circulation pumps (about 30% of CDU cost), quick connectors/hoses (40-50% gross margin), CNC machining—fully competitive, with equipment makers holding strong bargaining power over upstream. Midstream (where the company operates): liquid cooling value chain gross margin tiers: CDU 40-60% (highest barriers) > quick connectors 40-50% > manifold 30-35% > cold plates 20-30% (GB300-dedicated cold plates 40-60%)—Qiangtek is positioned in the mid-to-high margin segments of manifold + assembly lines + testing equipment, but has not yet entered the highest-margin CDU main battleground; GB300 rack value share: cold plates 41%, CDU 32%, UQD 14%, manifold 13%. Downstream: brand ODMs (Foxconn/Luxshare/BYD Electronics), server ODMs (starting with GB300, NVIDIA delegates liquid cooling procurement decisions to ODMs—a historic window for mainland players to enter the global chain), cloud providers (Google TPU direct procurement of tier-1 supplier model), and Huawei-affiliated automakers. Bargaining structure: strong vs. upstream, weak vs. downstream (customization + annual price reductions + customer concentration).
3. Supply-Demand and Competitive Landscape. Fixtures/3C non-standard automation: thousands of players, CR3 below 5% (Bozhon RMB 6.57 billion + Seizet RMB 3.39 billion + Keri RMB 2.45 billion vs. an approximately RMB 300 billion market), highly fragmented; the real barriers lie in customer certification cycles and rapid response, not capacity. Liquid cooling components: global cold plates are dominated by Taiwanese AVC/AVC/AVC (AVC/Auras/Cooler Master) and Western CoolIT/Boyd; domestically, Envicool holds roughly 30%+ share in complete liquid cooling systems (industry estimate pending verification), Sugon DataEnergy holds 58.8% in immersion cooling (CCID, 2023, immersion cooling niche); mainland followers are expanding capacity concentrated in 2025-2026 (Qiangtek's private placement of RMB 430 million into liquid cooling, Keri's placement of RMB 752 million into AI precision manufacturing), and signs of intensifying competition have emerged in the standardized cold plate segment with 20-30% gross margins (industry reports: cold plate unit prices fell 20% in 3 months starting 2026Q2, gross margin from 30% to 15-20%, pending verification). Layered entry barriers: cold plates medium (precision brazing + reliability validation), CDU/quick connectors high, manifold medium-high (custom design deeply coupled with rack architecture); entering the North American chain also requires indirect technical validation from end-market leaders—Qiangtek has passed North American customer manifold technical certification, its most valuable entry asset.
4. Cycles and Regulation. Dual-cycle divergence: consumer electronics equipment is in a downcycle (double-digit phone declines + 2025Q4 inventory pull-forward), while AI compute equipment and liquid cooling are in an accelerating upcycle (global server market +52% YoY in 2026Q2, no signs of peaking). Leading indicators: ① cloud providers' quarterly capex guidance; ② NVIDIA GB/VR rack shipment pace (doubling in 2026, +30%+ in 2027, TrendForce); ③ memory prices (determining phone shipments and fixture demand inflection); ④ company order language (domestic liquid cooling testing equipment wins, assembly line delivery counts, manifold batch language). Regulation: PUE hard constraints favor liquid cooling (see above); negatives include geopolitical transmission via the Huawei chain (the company's largest historical customer, once 82.65% of revenue during the IPO reporting period, now hedged through diversification across Huawei + Apple + North American AI + BYD) and Apple chain tariff disruptions.
5. Company Industry Positioning. First tier in the Huawei chain for fixtures/testing equipment (certification stickiness + small-batch multi-SKU rapid response + CNC precision machining platform); Apple chain 2025 revenue of RMB 578 million (69% of mobile terminals); a challenger in AI liquid cooling thermal components (global share about 0.1%, scale far smaller than Envicool/Feirongda/Taiwanese players), but its three-line combination of "testing equipment (domestic leading server maker wins ramping) + assembly lines (indirect supply to North American AI leader) + thermal components (manifold validated with small-batch shipments, high stiffener share)" is unique among A-share peers. Share trend: AI segment revenue grew 1.8x in six months, market share rising; on manifold, competitors "entered somewhat earlier" (management's words), share battle unresolved. Caveat: no third-party authoritative share data exists for the company's liquid cooling market position; "first tier" and "challenger" are inferred respectively from IPO prospectus customer structure and 2026H1 revenue scale.
Fixtures/equipment is an order-driven business that should be monitored via the four essentials of "backlog, book-to-bill, acceptance recognition pace, and receivables cycle," but the company does not disclose backlog (revenue from signed but unfulfilled contracts at period-end disclosed as RMB 0), so investors can only assemble a picture from proxy indicators:
Conclusion: the company's order visibility is significantly lower than military/engineering equipment makers, and H2 guidance can only be validated ex post via financials—this amplifies C2 execution risk and is an industry-level reason for applying a valuation discount.
Conclusion: Neutral (12 months). Quality judgment—genuine track transition rather than pure narrative: AI liquid cooling revenue verified by the semi-annual report, demand side mathematically supported by capex and penetration rates, unique dual positioning in equipment + components, and management bound via at-the-money exercise price (RMB 109.85). Price judgment—the current price of RMB 105.80 (2026-09-30 close) is +15.6% vs. the base-case fair midpoint of RMB 91.5; probability-weighted fair value is RMB 90.18 with expected return of approximately -14.8% and a margin of safety of -27%: the market has fully priced the base case and partially prepaid the optimistic scenario. Action: do not chase at current levels; two re-evaluation triggers—fundamentals (Q3 quarterly revenue ≥ RMB 1.3 billion upgrades to bull case / < RMB 0.9 billion downgrades to bear case) and price (a pullback below RMB 77 enters the lower half of the base-case range, flipping odds positive). Key risks: Apple Q3 recognition below expectations, Rubin mass-production delays and liquid cooling annual price reductions (raised by management three times), funding-chain pressure if the private placement is delayed, and controlling shareholder selldown and dilution.
Monitoring Checklist (invalidation and catalyst conditions detailed in the accompanying monitoring table): ① Q3 quarterly revenue, gross margin, OCF, contract liabilities, and impairments—five items from the Q3 report; ② cumulative North American assembly line deliveries and manifold order language; ③ private placement filing/registration progress; ④ controlling shareholder selldown pre-disclosure; ⑤ 2026 annual report incentive targets (net profit attributable ≥ RMB 200 million) fulfillment.
Report data as of 2026-09-30 close (price anchor); financials as of 2026H1 (disclosed 2026-08-12). Valuation in this report is based on public information; sell-side consensus coverage is thin (n=1-2), and conclusions are sensitive to this sample.