According to Zhitong Finance APP, Caitong Securities released a research report stating that as AI giants begin a data center expansion cycle, data centers are experiencing a simultaneous increase in both quantity and capacity. Under the assumptions of McKinsey, it is expected that from 2023 to 2030, the demand for data center capacity will grow at an annual rate of 22%, but electricity may become a bottleneck restricting the expansion of data centers. Currently, the overseas AIDC expansion demand is driving rapid growth in the gas turbine market, and there are optimistic opportunities for domestic component manufacturers to supply foreign leading companies, with a core focus on future order growth and market share expansion. Recommended stocks include YINGLIU (603308.SH), Allied Machinery (605060.SH), and HIMILE SCIENCE AND TECHNOLOGY (002595.SZ).

Key Points from Caitong Securities:

"Crown Jewel" of the Manufacturing Industry

Gas turbines are power machinery that drive the rotor to rotate at high speed through the combustion of fuel mixed with air. Gas turbines are known as the "crown jewel" of the equipment manufacturing industry, reflecting a country's industrial level. The main structures include compressors, combustion chambers, and turbines. The upstream of the industry chain mainly involves raw material research and production; the midstream consists of component manufacturers; and the downstream is primarily composed of complete machine manufacturers. According to GrandView Research, the global gas turbine market size is estimated to be USD 10.19 billion in 2023.

Overseas Leaders Monopoly Complete Machines, Domestic Enterprises Actively Participate in Component Segment

Overseas leaders monopolize the complete machine market: In 2023, Mitsubishi Heavy Industries, Siemens Energy, and GE together occupy about 76.3% of the global market share, with high industry barriers and few potential competitors. The localization of gas turbines is still underway: China's gas turbine industry started relatively late and has long been in a "bottleneck" situation. Currently, there is technology for manufacturing small gas turbines, but large gas turbines still rely on imports. The participation of domestic enterprises in the component segment is continuously increasing: since 2018, the number of procurement orders for gas turbine components has entered a rapid growth phase, with the number of procurement events increasing from 451 in 2018 to 3,852 in 2023, leading to rapid development in the gas turbine industry chain supply chain.

Riding the Growth Wave of Data Centers, Gas Turbine Demand Gains Another Driving Force

As AI giants begin a data center expansion cycle, data centers are experiencing a simultaneous increase in both quantity and capacity. Under the assumptions of McKinsey, it is expected that from 2023 to 2030, the demand for data center capacity will grow at an annual rate of 22%, but electricity may become a bottleneck restricting the expansion of data centers. The phenomenon of data center clusters is putting a heavy burden on the power grid, and gas turbines may become the best solution: U.S. gas power projects are quickly connected to the grid, and gas turbines have advantages such as easy deployment, energy saving, environmental protection, and convenient maintenance. Additionally, the cost of gas power in the U.S. is relatively low, only higher than that of nuclear power with a construction cycle of 5-6 years, making it a potential best choice for data centers.

Initial Signs of Industry Demand Increase

Gas turbine leader GE Vernova's total gas turbine orders for 2024 amount to 20.2 GW, a 112.6% increase from 9.5 GW in 2023. It is expected that by 2028, the installed demand catalyzed by U.S. data centers will account for 14% of industry demand Risk Warning

The risk of AIDC construction not meeting expectations; the risk of supply chain price fluctuations; the risk of domestic manufacturers' market share expansion not meeting expectations