Key takeaway: The company mainly engages in EMI shielding, thermal management, base station antennas, and lightweight functional components. Its products are widely used incommunications, data centers, consumer electronics, new energy, and artificial intelligence, and it possesses a full product portfolio, deep technological barriers, and high-qualitycustomer resources, with prominent competitive advantages. The company has established a full-chain R&D system from materials to systems, mastered multiple core processes, andowns nearly900 patents while participating in the formulation of national industry standards. It can provide one-stop solutions and relies on a global service network to cooperatedeeply with leading enterprises at home and abroad, with strong customer stickiness and brand strength. Currently, downstream industries are trending upward overall, and the heatdissipation and EMI shielding markets are expanding rapidly. Demand in consumer electronics, communications, and new energy continues to rise. AI chips and advanced packagingtechnologies are driving a sharp increase in device power consumption. Liquid cooling is gradually becoming the mainstream solution in computing power scenarios. The three majorheat dissipation segments of smartphones, PC, and computing chips are entering a period of rapid development.

n The company possesses a full product portfolio, strong technological barriers, and high-quality customer resources, with prominent competitive advantages. The company focuses onfour core businesses: EMI shielding, thermal management, base station antennas, and lightweight functional components. Its products are widely used in communications, data centers, consumerelectronics, new energy vehicles, photovoltaic energy storage, and artificial intelligence. The company has established a full-chain R&D system from materials and components to systems. It hasmastered core production processes such as heat pipes, VC, liquid cooling plates, and CDU. It has accumulated nearly 900 patents and has also led and participated in the formulation of multiplenational industry standards. With a comprehensive product matrix, the company can provide one-stop integrated solutions and has established a global delivery and service network. It cooperatesdeeply with leading enterprises at home and abroad such as Huawei, Dell, Inspur, and CATL. This results in high customer stickiness and strong brand influence, forming deep technological andcustomer barriers.

n Demand across multiple downstream industries is improving across the board, and the thermal management and EMI shielding markets are entering a phase of rapid capacityexpansion. Consumer electronics are upgrading toward premiumization and AI-driven development, while AIPC is driving a recovery in the PC market, and the thermal management value perdevice at the terminal level continues to increase; 5G, 5G-A and optical network construction are progressing steadily, supporting stable demand growth in the communications sector; the rapiddevelopment of new energy vehicles, photovoltaics, and energy storage continues to drive demand for thermal management products. AI chips and advanced packaging technologies are drivinga sharp increase in equipment power consumption, and liquid cooling is gradually replacing traditional air cooling to become the mainstream solution in computing power scenarios. The proposalof the Tau Scaling Law is expected to enable continuous iteration of domestic chips, which will in turn significantly increase demand for thermal management. Mobile phones,PC, and computingchips—the three major thermal management markets—are all set to achieve high growth, with the adoption of liquid cooling serving as the core growth driver for the industry.

n Earnings forecast and rating:The company’s thermal management materials and components are the largest growth segment, with revenue growth leading all business lines. EMI shieldingmaterials, as the core business foundation, maintain stable growth, while lightweight components and base station antenna businesses are also expanding steadily. As high value-added productsgradually scale up in volume, the company’s overall profitability is expected to continue improving. Considering industry trends and the company’s business progress, we expect the company’soperating revenue to reach RMB8.97bn/RMB13.16bn/RMB17.94bn in 2026–2028, and net profit attributable to the parent company to reach RMB641mn/RMB1.22bn/RMB1.77bn. This correspondsto EPS of RMB1.10/RMB2.09/RMB3.05 and PE of 37.77x/19.93x/13.67x, respectively. Considering the company’s advantages in technology, products, and customer resources, together with itsstrong earnings growth potential, we initiate coverage and assign the company a “Buy” investment rating.

Risk of intensified market competition:In recent years, driven by strong market demand, the market size and demand in China’s EMI shielding and thermal conductivitysectors have gradually expanded, and the number of manufacturers has increased rapidly. This has led to declining product prices, shrinking profit margins, andprogressively intensified market competition. In particular, as more manufacturers enter the thermal management market, there may be risks of declining market share andgross margin. If market competition adversely affects the company, under our neutral-case assumption, revenue growth of the company’s thermal management businesswould slow to 38.0%/78.0%/48.0% in 2026–2028, with gross margin declining to 21.8%/24.8%/24.9%. Overall operating revenue would be 0.6%/1.2%/2.0% lower than ourearnings forecast, while net profit attributable to the parent company would be 1.9%/2.7%/3.2% lower than our forecast. Under our bear-case assumption, revenue growth ofthe thermal management business would slow to 35.0%/75.0%/45.0%, with gross margin declining to 21.5%/24.5%/24.6%. Overall operating revenue would be 1.4%/3.0%/5.1%lower than our earnings forecast, while net profit attributable to the parent companywould be 4.7%/6.9%/9.0% lower than our forecast.

Risk of technology leakage and loss of key technical personnel: The retention and continuous innovation of proprietary technologies depend to a large extent on keytechnical personnel. If the company experiences leakage of core technologies or a significant loss of key technical personnel, it may adversely affect product development,design, and production.

Exchange rate fluctuation risk: The company’s export business is mainly settled in USD, and fluctuations in the RMB/USD exchange rate will have a certain impact onoperating performance. If the RMB/USD exchange rate shows sharp and significant adverse fluctuations in the future, it may adversely affect the company’s sales and netprofit.

Raw material supply and price fluctuation:The raw materials used in production mainly include metals such as copper and aluminum, as well as silicone, adhesive tape,foam, conductive fabric, and plastics. Raw material costs account for a relatively high proportion of production costs, and price fluctuations have a significant impact onproduct gross margin and profitability. If market prices of raw materials experience sustained and large fluctuations in the future, production costs may rise further, whichmaymaterially and adversely affect the company’s operations.

International trade friction risk: In recent years, global tariff policies have changed frequently, and unilateralism and trade protectionism have risen. If international tradefrictions continue to intensify, they will bring uncertainty to the returns of export products.