China Stone Technology vs. Envicool: Competitive Landscape Analysis of the Liquid Cooling Track

Based on the collected data, I will provide a detailed analysis of China Stone Technology’s entry into the liquid cooling track’s competitive landscape.

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Indicator	China Stone Technology (300684.SZ)	Envicool (002837.SZ)	Comparative Analysis
Market Cap	15.3 billion USD	107.94 billion USD	Envicool is 7x that of China Stone Technology
P/E Ratio	47.75x	212.69x	Envicool’s valuation is significantly high
Net Profit Margin	18.19%	8.69%	China Stone Technology has stronger profitability
ROE	15.70%	16.34%	Both are similar
Q3 Revenue	547 million USD	1.45 billion USD	Envicool leads in scale
YTD Growth Rate	136.09%	277.05%	Envicool has a larger growth rate

• Focused on precision temperature control equipment, with years of deep cultivation in the data center liquid cooling field[0]
• Benefiting from the explosion of AI computing power demand, its stock price has risen by over 277% this year[0]
• However, its valuation level is extremely high (P/E ratio of 212x), with obvious bubble risk[0]
• Q3 2024 performance fell short of market expectations; both revenue and EPS missed targets[0]

• As a technology-based manufacturing enterprise, it has accumulated material science and thermal management technology
• Stronger profitability (net profit margin of 18.19%) and healthier financial structure
• Currently has a relatively reasonable valuation (P/E ratio of 47.75x) with a high margin of safety
• Although its annual growth rate is lower than Envicool’s, the valuation bubble is smaller

Regarding PUE 1.13 Technology:

• PUE (Power Usage Effectiveness) is a core indicator of data center energy efficiency; the industry average is about 1.3-1.5
• PUE 1.13 is a leading level, representing the efficient heat dissipation capability of liquid cooling technology
• If China Stone Technology can achieve this technical indicator, it will have a significant competitive advantage

1. Reasonable valuation with high margin of safety
2. Stronger profitability and better financial quality
3. As a new entrant in the liquid cooling field, it is expected to gain market share if it achieves technological breakthroughs

1. Liquid cooling business revenue contribution is still small; there is uncertainty in business transformation
2. Envicool has established strong customer relationships and brand awareness
3. Intensified industry competition may compress profit margins

If China Stone Technology can mass-produce its PUE 1.13 technology, it indeed has the technical foundation to challenge Envicool. However, from the current competitive landscape:

• Short-term
  : Envicool will maintain its leading position with first-mover advantage and scale effect
• Mid-term
  : China Stone Technology is expected to gain market recognition with its technical advantages and reasonable valuation
• Long-term
  : The liquid cooling market has broad space (driven by AI data center demand), and both companies have growth potential

: China Stone Technology has a relatively reasonable valuation and better financial quality, making it a value investment choice in the liquid cooling track; although Envicool is a leader, its valuation is too high, so it is necessary to wait for valuation regression before paying attention.

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[0] Jinling API Data - China Stone Technology (300684.SZ) and Envicool (002837.SZ) Company Overview and Financial Analysis