Machinery & Equipment Sector Weekly: Capitalizing on the "Space Compute" Paradigm and the Liquid Cooling/AI Hardware Supercycle

Date: January 11, 2026
Sector: Industrial Machinery & Equipment / Semiconductor Equipment / AI Infrastructure
Rating: Overweight (Maintained)
Analysts: Zhou Ershuang, Li Wenyi, Wei Yijie, Qian Yaotian, Huang Rui

Executive Summary

The global machinery and equipment sector is undergoing a structural transformation driven by two converging megatrends: the exponential growth of Artificial Intelligence (AI) infrastructure and the accelerating pace of domestic substitution in high-end manufacturing. This report synthesizes key developments across semiconductor equipment, AI thermal management (liquid cooling), optical module automation, photovoltaic (PV) technology for space applications, and traditional industrial machinery.

Our core investment thesis rests on three pillars:
1. AI Infrastructure as a Primary Growth Engine: The transition to NVIDIA’s Rubin architecture and the broader scale-out of AI compute clusters are creating unprecedented demand for liquid cooling systems and automated optical module assembly equipment. We identify a critical inflection point in 2026, where liquid cooling transitions from an optional feature to a mandatory standard, and automation becomes essential to meet volume and precision requirements.
2. New Frontiers in Energy & Compute: The emergence of "Space Compute"—orbital data centers powered by solar energy—presents a disruptive new paradigm. Heterojunction (HJT) silicon solar cells are identified as the optimal near-term power solution for low-earth orbit (LEO) satellites due to their flexibility, weight advantages, and cost-efficiency compared to traditional gallium arsenide cells. This creates a new addressable market for PV equipment manufacturers.
3. Cyclical Recovery & Geopolitical Resilience: The construction machinery sector is showing signs of a robust recovery, supported by improved domestic funding mechanisms and a favorable export environment driven by Fed rate cuts. Simultaneously, geopolitical tensions, particularly regarding export controls on Japanese semiconductor equipment, are accelerating the domestic substitution timeline for Chinese semiconductor fabs, benefiting local equipment leaders.

We maintain an Overweight rating on the sector. We recommend a barbell strategy: overweighting high-growth AI-enabling technologies (liquid cooling, optical module equipment, semiconductor equipment) while maintaining exposure to cyclical recovery plays (construction machinery, forklifts) with strong export capabilities.

Key Recommendations:
* Liquid Cooling: Hongsheng Shares, Envicool.
* Optical Module Equipment: Aotevic, Kaige Precision, Robotechnik.
* Semiconductor Equipment: NAURA Technology, AMEC, Piotech, Kingsemi.
* PV/Space Compute: HJT Whole-line Equipment Leader, High-tech Group (Gaoce).
* Construction Machinery: SANY Heavy Industry, Hengli Hydraulic.

Key Takeaways

1. Liquid Cooling: The CES Catalyst and the Rubin Architecture Shift

The recent Consumer Electronics Show (CES) served as a pivotal moment for the liquid cooling industry, with NVIDIA unveiling its Rubin architecture liquid cooling solutions. This announcement confirms the acceleration of the liquid cooling supply chain and validates our previous thesis that 2026 will be the "Year One" of mass adoption for advanced liquid cooling systems.

Technical Evolution: From GB200 to Rubin

NVIDIA’s Rubin architecture builds upon the foundation laid by the GB200 and GB300 series but introduces significant refinements aimed at higher power densities and simplified integration.
* Architecture Continuity: The liquid cooling system architecture largely follows the GB300 design. However, a key distinction is the approach to switch cooling. Similar to GB300, Rubin utilizes small cold plates to cover Switch ASIC chips, ensuring comprehensive thermal management across the entire rack.
* Temperature Parameters: The operational parameters indicate a shift towards more efficient heat rejection. The water inlet temperature within the cabinet can be as high as 45°C, with outlet temperatures reaching 60°C. This higher delta-T allows for the use of dry coolers (air-cooled heat exchangers) in many scenarios, reducing the complexity and water consumption associated with traditional cooling towers. This is a crucial development for data centers in water-scarce regions.
* 100% Liquid Cooling Mandate: A notable evolution in the Rubin platform is the move towards a 100% liquid-cooled design, eliminating fans entirely from the chassis. This represents a definitive break from hybrid air-liquid cooling models, signaling that air cooling is no longer viable for next-generation high-performance computing (HPC) clusters. The removal of traditional EPDM rubber hoses in favor of stainless steel bellows further enhances reliability and reduces maintenance risks.

Supply Chain Dynamics: The Rise of ODMs and Domestic Suppliers

The business model for liquid cooling integration is shifting. NVIDIA has expanded its supplier list, moving away from a single-source model (previously dominated by Vertiv for CDUs) to a multi-supplier ecosystem. This democratization allows Original Design Manufacturers (ODMs) and Original Equipment Manufacturers (OEMs) such as Delta Electronics, Quanta Computer, and Foxconn to take a more active role in selecting and integrating liquid cooling components.

• ODM/OEM Integration: Power supply manufacturers and ODMs are increasingly entering the liquid cooling赛道 (track). They are actively prototyping solutions for North American clients, integrating domestic Chinese suppliers into their supply chains. This trend lowers the barrier to entry for specialized component manufacturers.
• Component Outperformance: Companies specializing in specific liquid cooling components are seeing shipment volumes exceed expectations. For instance, Hongsheng Shares, a leader in plate-fin heat exchangers, is benefiting from this trend through its strategic joint venture with Hexin Precision, which provides access to Taiwanese ODM channels.
• Investment Implication: We recommend Hongsheng Shares and Envicool. Envicool, with its comprehensive "Coolinside" solution and entry into NVIDIA’s RVL (Reference Vendor List) for GB200/GB300, is well-positioned to capture share in both the domestic and North American markets. Other companies to watch include Lingyi iTech, Hongfuhan, Shenling Environment, Gaolan Shares, and Binglun Environment.

Market Sizing and Value Accretion

The value content of liquid cooling systems is increasing with each chip generation. As Thermal Design Power (TDP) rises, the complexity and cost of the cooling solution increase disproportionately.
* Value Increase: For the transition from GB200 to GB300, we estimate the rack-level liquid cooling module value increases by over 20%. With the upcoming Rubin Ultra architecture, where TDP could reach 4,000W per chip and rack power exceeding 600kW, the value accretion will be even more pronounced.
* Market Size: We project the global server liquid cooling market to reach RMB 80 billion by 2026. Specifically, the liquid cooling system market for ASICs is estimated at RMB 29.4–35.3 billion, while the market for NVIDIA-specific liquid cooling systems is projected at RMB 58.1–69.7 billion.

Table 1: Breakdown of Liquid Cooling System Value Chain

2. Optical Module Equipment: Automation as the Imperative for Scale-Out

As AI models grow in complexity, the need for "Scale-Out" architectures drives the demand for high-bandwidth interconnects. Optical modules are the core components enabling this connectivity. The evolution towards NVIDIA’s Rubin architecture imposes stricter requirements on signal transmission bandwidth, necessitating a fundamental shift in how optical modules are manufactured.

The Three Drivers of Automation

We identify three irreversible trends driving the adoption of automated equipment in the optical module industry:

1. Technological Upgrading & Precision Requirements:

   • Manual assembly and inspection can no longer meet the precision standards required for next-generation optical modules (e.g., 1.6T and beyond). The alignment tolerance for optical fibers and lenses is in the micron range, making human error unacceptable.
   • Automated Optical Inspection (AOI) and automated assembly lines are becoming the industry standard to ensure yield rates and performance consistency.

2. Explosive Demand Volume:

   • Our forecasts indicate that by 2026, the demand for optical modules will be revised upwards to the tens of millions of units annually.
   • The sheer volume required to support global AI cluster deployments makes manual expansion physically impossible. Automation is the only viable path to scale production capacity rapidly.

3. Overseas Capacity Expansion & Labor Constraints:

   • Chinese optical module manufacturers are aggressively expanding capacity in Southeast Asia (Thailand, Vietnam, Malaysia) to mitigate geopolitical risks and serve international customers.
   • However, the local labor force in these regions often lacks the specialized skills and stability required for high-precision optical assembly. This labor constraint accelerates the demand for automated equipment that can operate with minimal human intervention.

2026: The Inflection Year for Optical Module Equipment

We believe 2026 will mark the "volume release year" for optical module equipment. Early indicators are already visible:
* Aotevic (688516.SH): Has successfully secured orders for inspection equipment from a leading optical module manufacturer’s factory in Thailand. This validates the overseas automation narrative.
* Kaige Precision (301338.SZ): Has won orders for automated assembly lines from foreign-funded optical module customers and is actively engaging with domestic leaders. We expect further order conversions in the coming quarters.

Investment Opportunities

The equipment suppliers that provide end-to-end automation solutions—from die bonding and wire bonding to AOI and final testing—are best positioned to benefit.
* Recommended: Aotevic, Kaige Precision.
* Watch List: Robotechnik (known for its FA acquisition and integration capabilities), Tianzhun Technology, Quick Intelligent, Bozhong Precision, and JPT Opto-electronics.

3. Photovoltaic Equipment: The "Space Compute" Opportunity

The intersection of AI and energy is creating a novel application for photovoltaic technology: powering orbital data centers. The concept of "Space Compute" involves deploying high-compute satellites in Low Earth Orbit (LEO) or Medium Earth Orbit (MEO) to process data where energy is abundant and cooling is free (via radiation to deep space).

The Energy Bottleneck in AI

Global AI large language models are driving an unprecedented surge in electricity demand. Ground-based data centers face significant constraints related to power grid capacity, land availability, and cooling costs. Space-based data centers offer a disruptive alternative:
* Continuous Solar Energy: Satellites in Sun-Synchronous Orbit (SSO) can enjoy near-continuous sunlight, providing a stable and abundant power source.
* Efficient Cooling: The vacuum of space allows for highly efficient radiative cooling, eliminating the need for complex water-based cooling systems.
* Deployment Efficiency: Orbital platforms can be deployed rapidly compared to the multi-year construction timelines of terrestrial hyperscale data centers.

Why HJT is the Optimal Solution for Space PV

Traditionally, space satellites have relied on triple-junction Gallium Arsenide (GaAs) solar cells. However, GaAs cells face significant hurdles for GW-scale deployment:
* Cost & Capacity: GaAs is expensive and has limited manufacturing capacity.
* Raw Material Constraints: Supply chain bottlenecks for rare materials used in GaAs.

Heterojunction (HJT) Silicon Cells emerge as the superior short-to-medium-term alternative for several reasons:
1. Flexibility & Weight: HJT cells can be manufactured on thin, flexible substrates. This is critical for "roll-out" solar arrays, which are replacing traditional rigid Z-fold structures in LEO satellites to maximize power-to-weight ratios.
2. Low-Temperature Process: The HJT manufacturing process occurs at lower temperatures, which is compatible with flexible substrates and reduces thermal stress.
3. Cost Efficiency: Silicon-based HJT is significantly cheaper than GaAs and benefits from the massive scale of the terrestrial PV industry.
4. Future-Proofing: HJT serves as the ideal bottom cell for Perovskite-HJT tandem cells, offering a clear pathway to even higher efficiencies in the long term.

Market Structure: Motherships vs. Clusters

Orbital slots are a scarce resource. To achieve GW-scale compute power, two architectural paths are emerging:
1. Large-Scale "Motherships": Companies like Starcloud (backed by SpaceX, Google, NVIDIA) are designing massive platforms (e.g., 4km x 4km) that concentrate solar arrays and compute modules.
2. Satellite Clusters: Google’s "Suncatcher" plan involves deploying fleets of 81–324 satellites in formation. This distributed approach increases resilience and orbital density.

Our analysis suggests that 10GW of PV production capacity could support approximately 448 Google Suncatcher clusters or 2 Starcloud motherships. Given the exponential growth in satellite launches and the nascent stage of space compute, the demand for specialized PV equipment is poised for rapid growth.

Investment Implication

Equipment manufacturers that specialize in HJT technology are the primary beneficiaries.
* Top Pick: HJT Whole-line Equipment Leader (referenced in report as a key beneficiary with overseas customer base).
* Watch List: High-tech Group (Gaoce) (leader in 60μm ultra-thin wafer processing, critical for weight reduction), Jingsheng Electromechanical, Aotevic.

4. Semiconductor Equipment: Storage Boom & Accelerated Substitution

The semiconductor equipment sector is experiencing a dual tailwind: a cyclical upturn in memory demand and a structural acceleration in domestic substitution due to geopolitical pressures.

Memory Market: Price Hikes and Capacity Expansion

The memory market is witnessing a robust recovery, driven primarily by AI-related demand.
* Price Increases: On January 5, 2026, Samsung and SK Hynix announced a 60–70% price increase for Q1 2026 DRAM contracts (server, PC, and mobile) compared to Q4 2025.
* Supply-Demand Imbalance: The surge in demand for High Bandwidth Memory (HBM) for AI accelerators is cannibalizing production capacity for traditional DRAM. This has created a significant supply gap for standard memory chips, supporting price hikes.
* Capacity Expansion: We estimate that Yangtze Memory Technologies Corp (YMTC) and ChangXin Memory Technologies (CXMT) will add a combined 100,000–120,000 wafers per month in 2026, focusing on 3D NAND and HBM processes. Total investment is expected to reach $15.5–18 billion.

Geopolitics: The Catalyst for Domestic Substitution

Geopolitical tensions continue to shape the equipment landscape.
* Export Controls: On January 6, 2026, the Chinese Ministry of Commerce issued Announcement No. 1 of 2026, implementing export controls on dual-use items to Japan. This reflects heightened sensitivity in the supply chain.
* Dependency on Japan: In 2024, China imported RMB 39.17 billion worth of semiconductor equipment from Japan, accounting for 23% of total imports. This high dependency poses a risk.
* Acceleration of Substitution: To ensure supply chain security, domestic fabs are accelerating the qualification and adoption of local equipment vendors. This is particularly true for segments with low current localization rates.

Segment Analysis & Recommendations

• Platform Leaders: NAURA Technology and AMEC remain the core holdings. NAURA’s platform strategy covers etching, deposition, cleaning, and heat treatment, allowing it to capture a broad share of fab expansion budgets.
• Low Localization Rate Segments: Companies operating in areas with significant room for growth are highly attractive.
  • Coating/Developing (Track): Kingsemi (partially owned by NAURA) is the domestic leader.
  • Thin Film Deposition: Piotech and Micro-Nano New Energy.
  • Inspection/Metrology: Zhongke Feice and Jingce Electronic.
  • Back-end Testing: Huafeng Test & Control and Changchuan Technology.

Table 2: Semiconductor Equipment Competitive Landscape

5. Construction Machinery: Domestic Recovery & Export Resilience

The construction machinery sector is exhibiting signs of a sustainable recovery, characterized by a "tail-raising" trend in late 2025 and positive outlook for 2026.

Domestic Market: Funding Improvements Drive Sales

• December Sales Data: Domestic excavator sales reached 10,331 units in December 2025, a year-over-year increase of 10.9%. This late-year surge is attributed to improved fund availability for infrastructure projects.
• Policy Support: On December 31, 2025, the National Development and Reform Commission (NDRC) released the early batch of the "Two Major" (major national strategies and security capacity building) construction project list for 2026. The allocated funding doubled year-over-year to RMB 220 billion. This liquidity injection is expected to strongly support Q1 2026 activity.
• Cycle Characteristics: We anticipate a cycle with a lower slope but longer duration. While theoretical replacement demand suggests annual growth of >30%, actual sales are moderated by funding execution speeds. Small excavators are performing better due to central government bond funding, while medium/large excavators await local government debt resolution.

Export Market: Broad-Based Recovery

• December Export Data: Excavator exports reached 12,764 units in December, up 27% YoY.
• Regional Drivers: The outperformance in 2025 exports was driven by recovery in Europe and the US, as well as strong demand from mining sectors in Africa and Indonesia.
• Fed Rate Cut Impact: The Federal Reserve’s rate cut cycle is expected to stimulate overseas infrastructure and mining investment, leading to a new upward cycle in global demand in 2026. This creates a "resonance" effect between domestic and international markets.

Profitability Enhancement

Leading manufacturers are benefiting from operating leverage. As utilization rates rise from the cyclical trough (e.g., SANY’s excavator utilization rose from 42% in 2024), fixed costs are spread over higher volumes, boosting margins. Additionally, ongoing cost-reduction initiatives are enhancing net profit margins.

Recommendations: Focus on companies with strong export exposure and robust balance sheets. SANY Heavy Industry, XCMG, Zoomlion, Liugong, and Hengli Hydraulic are top picks.

Risks / Headwinds

While the outlook for the machinery and equipment sector is broadly positive, investors must consider the following risks:

1. Downstream Fixed Asset Investment Miss:

   • If the macroeconomic recovery in China is slower than anticipated, manufacturing and infrastructure fixed asset investments may fall short of expectations. This would directly impact the order books of general automation, construction machinery, and laser equipment providers.
   • Mitigation: Monitor monthly PMI data and government bond issuance rates.

2. Industry Cyclical Volatility:

   • The machinery sector is inherently cyclical. While we are in an upcycle, unexpected shifts in global economic conditions or commodity prices could shorten the cycle or reduce its amplitude.
   • Mitigation: Diversify across sub-sectors with different cycle drivers (e.g., AI-driven semi equipment vs. construction machinery).

3. Geopolitical and Exchange Rate Risks:

   • Export Controls: Escalating trade restrictions, particularly from the US, Japan, and Europe, could disrupt supply chains for semiconductor equipment and limit market access for Chinese machinery exporters.
   • Currency Fluctuations: A strengthening RMB could erode the profitability of export-oriented companies (e.g., construction machinery, hand tools, forklifts). Conversely, a weakening RMB might increase the cost of imported components.
   • Mitigation: Companies with global manufacturing footprints ("wandering factories") and hedging strategies are better positioned.

4. Technology Adoption Risks:

   • Liquid Cooling: If the penetration rate of liquid cooling in data centers is slower than expected due to cost concerns or technical hurdles, revenue projections for liquid cooling suppliers may need to be adjusted.
   • Space Compute: The development of orbital data centers is in its infancy. Regulatory hurdles, launch costs, or technical failures could delay commercialization.
   • Solid-State Batteries: Delays in the mass production of solid-state batteries could impact the demand for specialized dry-film electrode equipment.

5. Competition Intensity:

   • In sectors like lithium battery equipment and PV equipment, intense competition could lead to price wars, compressing gross margins despite volume growth.

Rating / Sector Outlook

Sector Rating: Overweight (Maintained)

We maintain an Overweight rating on the Machinery & Equipment sector. The convergence of AI-driven infrastructure spending, domestic substitution in semiconductors, and a cyclical recovery in traditional industries provides a robust foundation for earnings growth in 2026.

Sub-Sector Outlooks:

Investment View

1. Strategic Allocation: The "AI + Substitution" Barbell

Institutional investors should adopt a barbell strategy that balances high-growth, high-valuation AI-enabling technologies with undervalued, cyclical recovery plays.

Leg 1: High-Growth AI Enablers (Aggressive Growth)
* Logic: These companies are directly tied to the capital expenditure of global hyperscalers and AI chipmakers. The visibility of demand is high, and the technological barriers create moats.
* Focus: Liquid cooling components (CDUs, cold plates), optical module automation equipment, and advanced semiconductor process equipment (Etch, Deposition).
* Key Stocks: Envicool, Hongsheng Shares, Aotevic, NAURA Technology, AMEC.

Leg 2: Cyclical Recovery & Global Expansion (Value/Growth)
* Logic: These companies benefit from macroeconomic stabilization, policy stimulus in China, and global market share expansion. Valuations are generally more reasonable, offering a margin of safety.
* Focus: Construction machinery, electric forklifts, and hand tools with strong overseas brands and supply chains.
* Key Stocks: SANY Heavy Industry, Hangcha Group, Great Star Industrial, Hengli Hydraulic.

2. Deep Dive: Selected Company Analyses

A. NAURA Technology (002371.SZ): The Platform Leader

• Investment Thesis: NAURA is the undisputed leader in China’s semiconductor equipment industry. Its platform strategy allows it to offer a comprehensive suite of products, including etching, PVD, CVD, cleaning, and heat treatment.
• Financials & Valuation: We adjust our net profit estimates for 2025-2027 to RMB 5.85 billion / 7.78 billion / 10.24 billion, reflecting increased R&D investment. Current P/E ratios are 57x / 43x / 32x.
• Catalysts: Continued expansion of domestic wafer fab capacity (SMIC, YMTC, CXMT) and rising localization rates in film deposition and cleaning segments.
• Rating: Buy.

B. Envicool (002837.SZ): Liquid Cooling Pure Play

• Investment Thesis: Envicool is a leading thermal management provider with a complete liquid cooling solution portfolio (Cold plates, CDUs, Manifolds). It has entered NVIDIA’s supply chain for GB200/GB300 and is well-positioned to benefit from the Rubin architecture’s 100% liquid cooling requirement.
• Financials & Valuation: Estimated net profit for 2025-2027 is RMB 650 million / 1.0 billion / 1.42 billion. Current P/E ratios are 124x / 80x / 57x.
• Catalysts: Mass adoption of liquid cooling in AI data centers, expansion in North American market, and participation in ASIC server cooling.
• Rating: Buy (Initiation).

C. Hongsheng Shares (603090.SH): Hidden Gem in Liquid Cooling

• Investment Thesis: Traditionally a leader in plate-fin heat exchangers for engineering machinery and compressors, Hongsheng has successfully pivoted to data center liquid cooling via a joint venture with Hexin Precision. This partnership provides access to Taiwanese ODM channels, facilitating entry into the North American supply chain.
• Financials & Valuation: Estimated net profit for 2025-2027 is RMB 100 million / 200 million / 320 million. Current P/E ratios are 49x / 25x / 16x.
• Catalysts: Unexpectedly high shipment growth in liquid cooling components, valuation re-rating as a core AI infrastructure supplier.
• Rating: Outperform (Initiation).

D. SANY Heavy Industry (600031.SH): Cyclical Turnaround

• Investment Thesis: SANY is benefiting from the domestic recovery in excavator sales and strong export performance. The company’s digital transformation and cost-control measures are improving profit margins. The "Two Major" project funding boost for 2026 provides near-term visibility.
• Catalysts: Domestic sales growth, margin expansion due to higher capacity utilization, and steady export growth in Belt and Road countries.
• Rating: Buy.

E. Great Star Industrial (002444.SZ): Global Hand Tool Leader

• Investment Thesis: As the leading Chinese hand tool exporter, Great Star has successfully transitioned from OEM to OBM (Own Brand Manufacturing) through acquisitions. The company is well-positioned to benefit from the US housing market recovery and inventory restocking cycles. Its global "wandering factory" strategy mitigates tariff risks.
• Financials & Valuation: Estimated net profit for 2025-2027 is RMB 2.5 billion / 3.0 billion / 3.6 billion. Current P/E ratios are 16x / 14x / 11x.
• Catalysts: US interest rate cuts stimulating DIY demand, successful integration of acquired brands, and expansion in power tools.
• Rating: Buy (Initiation).

3. Thematic Opportunities

Theme 1: The "Space Compute" Supply Chain

The emergence of orbital data centers creates a new niche for PV equipment. Investors should monitor companies with expertise in HJT technology and ultra-thin wafer processing.
* Key Insight: HJT is not just a terrestrial PV technology; its flexibility and low-temperature processing make it the only viable silicon-based solution for space applications in the near term.
* Action: Accumulate positions in HJT Whole-line Equipment Leaders and Gaoce Shares as proof-of-concept missions launch and commercial contracts are signed.

Theme 2: Gas Turbines for AI Power

The power shortage for AI data centers is driving demand for gas turbines, which offer rapid deployment and reliability.
* Key Insight: There is a global supply-demand mismatch for gas turbines, with lead times extending to 3-5 years. Chinese manufacturers are filling the gap.
* Action: Recommend Jereh Group (secured $200M+ order from US AI firm), Yingliu Shares (high-barrier turbine blades), and Haomei Technology (cylinder blocks).

Theme 3: Solid-State Battery Equipment

As solid-state batteries move towards commercialization, dry-film electrode equipment is the key bottleneck and value driver.
* Key Insight: Dry processing eliminates solvents, reducing cost and environmental impact, but requires specialized mixing and rolling equipment.
* Action: Focus on Lead Intelligent (whole line), Lianying Laser (welding), and Hangke Technology (formation).

4. Conclusion

The machinery and equipment sector stands at the forefront of the global technological and industrial shift. The AI revolution is not just a software story; it is a hardware story that demands advanced cooling, precise optical interconnects, and massive power generation. Simultaneously, the push for supply chain autonomy in China is reshaping the semiconductor equipment landscape.

For institutional investors, the current market environment offers a compelling mix of growth and value. By focusing on companies with clear technological moats in AI infrastructure (liquid cooling, optical automation) and strong competitive advantages in cyclical recovery (construction machinery, tools), portfolios can be positioned to capture both the secular growth of AI and the cyclical upturn of the global economy.

We reiterate our Overweight rating and encourage investors to increase exposure to the recommended names, particularly those with imminent catalysts such as the Rubin architecture launch and the 2026 infrastructure funding rollout.

Appendix: Detailed Data & Forecasts

A. Financial Forecasts for Key Recommendations

Note: EPS estimates are based on current share capital. Target prices are not explicitly provided in the source text but ratings are maintained based on relative valuation and growth potential.

B. Industry Frequency Data Tracking (November-December 2025)

• Manufacturing PMI: 50.1% in December 2025, up 0.9 pct MoM. Indicates expansion in manufacturing activity.
• Fixed Asset Investment: Cumulative YoY growth of +1.9% in November 2025.
• Metal Cutting Machine Tools: Production of 71,000 units in November 2025, down 3% YoY.
• New Energy Vehicles: Sales of 1.32 million units in November 2025, up 4% YoY.
• Excavators: Total sales of 23,000 units in December 2025, up 19% YoY. Domestic sales +10.9%, Exports +27%.
• Power Battery Installations: 93.5 GWh in November 2025, up 39% YoY.
• Global Semiconductor Sales: $75.28 billion in November 2025, up 30% YoY.
• Industrial Robots: Production of 69,059 units in November 2025, up 21% YoY.
• Shipbuilding: New orders for bulk carriers +111%, oil tankers +436% YoY in November 2025.

C. Recommended Portfolio List

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Investment ratings are based on analysts' expectations of the relative return potential of the industry or company compared to the benchmark over the 6 to 12 months following the report's publication.
* Company Ratings:
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