To The Moon

Sanhe Tongfei Refrigeration Co., Ltd. (300990.SZ) has published its semi-annual report for fiscal 2026. During the first half of 2026, the company achieved total operating revenue of RMB 1.608 billion, representing a year-on-year increase of 27.27%. Net profit attributable to shareholders reached RMB 128 million, up 2.45% year-on-year, while non-GAAP net profit stood at RMB 125 million, rising 2.74% from the prior year.

For the second quarter alone, revenue hit RMB 909 million, a robust 31.82% year-on-year gain and a sequential improvement of 30.16%. Attributable net profit for Q2 came in at RMB 68 million, up 8.25% year-on-year and 14.07% quarter-on-quarter. Excluding non-recurring items, quarterly net profit totaled RMB 66 million, climbing 7.38% from a year earlier and 11.75% sequentially.

Energy storage thermal management continued its upward trajectory, while overseas revenue posted a notable surge. Breaking down by downstream applications, the company's power electronics thermal management products generated RMB 1.063 billion in H1 2026, up 29.81% year-on-year, with a gross margin of 18.12%, a decline of 1.89 percentage points. CNC equipment temperature control solutions contributed RMB 474 million, a 21.78% increase, maintaining a gross margin of 28.75% year-on-year. Specifically, storage thermal management revenue approximated RMB 925 million for the period, jumping roughly 36% annually, sustaining the sector's high prosperity. Overseas revenue amounted to RMB 352 million, a striking surge of 344.51%, with a gross margin of 28.42%. The slower profit growth compared to revenue in H1 was primarily driven by exchange losses totaling RMB 12.8976 million plus an additional RMB 31.4146 million in period expenses.

With a comprehensive liquid cooling portfolio, data center operations are poised to create a second growth curve. The firm has launched complete solutions for both cold plate and immersion liquid cooling in data centers, encompassing liquid distribution units (CDUs), manifolds, prefabricated piping, outdoor dry coolers, integrated cooling stations, and immersion cooling tanks (TANKs). This broad product suite is designed to satisfy escalating market demand for liquid cooling solutions. The company has successfully onboarded premium clients from home and abroad, including Kehua Data, ZTE Corporation, and Taisol Electronics. As data center liquid cooling transitions into mass deployment, this second growth engine is expected to gain significant traction.

The company's technological expertise is further showcased in semiconductor equipment thermal management. Leveraging years of industrial thermal control experience, its products address rigorous temperature management scenarios across semiconductor manufacturing processes, including refrigeration units using fluorinated fluid as a medium, high-precision chillers maintaining ±0.02°C temperature control, and efficient heat exchangers enduring up to 800°C. Bolstered by a solid industry reputation and multiple proprietary intellectual property rights, the firm has progressively expanded its clientele to include major players such as NAURA Technology Group, AMEC, Chengdu Chiplet Microelectronics, Shanghai Micro Electronics Equipment, Zhejiang Jingsheng Mechanical & Electrical, Hwatsing Technology, the 48th Research Institute of CETC, and Beijing CEC Electronic Equipment.

Looking ahead, our investment recommendation remains positive. We project revenues for 2026-2028 to reach RMB 4.553 billion, RMB 6.351 billion, and RMB 8.593 billion, translating to growth rates of 58.8%, 39.5%, and 35.3%, respectively. Net profit attributable to shareholders is forecast at RMB 356 million, RMB 571 million, and RMB 812 million, with growth of 40.8%, 60.4%, and 42.3%. Earnings per share are estimated at RMB 2.08, RMB 3.33, and RMB 4.75 for the same years. Based on the closing price on August 28, the corresponding P/E multiples are 43X, 27X, and 19X. Given the sustained high demand for storage thermal management, the emerging second growth curve in data center liquid cooling, and the rapid expansion in overseas markets, we maintain a "Buy" recommendation.

Key risks include the potential slower-than-expected adoption of data center liquid cooling products, weaker storage demand, and significant fluctuations in raw material prices.

This research report, issued on August 31, 2026, concludes with detailed financial forecasts and key metrics for Sanhe Tongfei Refrigeration Co., Ltd. (300990.SZ).