Shenzhen Envicool Technology Co., Ltd: Await more visibility on industry landscape

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Shenzhen Envicool Technology Co., Ltd: Await more visibility on industry landscape

Shenzhen Envicool Technology Co., Ltd UBS Research

UBS Research THESIS MAP Thesisa guideMapto our thinking and what´s where in this report

Pivotal Questions Q: Can global AIDC build-outs drive a US$17bn liquid cooling market by 2028E?

Yes. We base our forecasts on Taiwan team's bottom-up model and also have built a top-down data

center liquid cooling industry model to cross-check. We estimate global liquid cooling TAM to grow

by 51% 2025-30E CAGR, reaching US$31bn by 2030E. We estimate room side components, such as

CDU and ring main, to represent 45-50% of total value, while rack-level components, including cold

plate, quick disconnect, and manifold, to represent the remaining 50% value.

Q: Will Envicool gain liquid cooling market share amid global AI capex boom?

Yes. With efficient cost control and fast product iteration leveraging its full value chain capability, we

think Envicool should be well positioned to penetrate higher-margin overseas market. We believe

Envicool's near-term opportunities lie in room-level cooling solutions directly procured by hyperscale

customers, such as CDU, while in-rack components, such as cold plates and micro-channel lid (MCL),

are likely to be dominated by Taiwanese suppliers given a mature ODM ecosystem (there could be

opportunities if Envicool can partner up with a ODM to penetrate the in-rack market). We estimate

Envicool's international gross margin at 1.5-2x the gross margin of its China business. AIDC capex

boom and liquid cooling adoption offers an opportunity for Envicool to gain share in the global

supply chain, in our view.

UBS VIEW Producing data center cooling equipment is not the most challenging part but effectively addressing