China Securities Co., Ltd: Firmly optimistic about the engine industry chain, the domestic and international sales of construction machinery remain strong.

China Securities Co., Ltd. released a research report stating that Tesla, Inc. (TSLA.US) OptimusV3 is expected to start mass production in Q3, and the product plan is close to mass production before being made public. The industry focuses on high-quality sectors. In terms of AIDC power generation equipment, the price increase in the industry chain continues to land, and the trend of domestic whole machine going global is clear. The firm is optimistic about the engine industry chain. While exchange rate fluctuations may affect Q1 performance in construction machinery, both domestic and international sales operations remain strong. Semiconductor equipment Shenghe Jingwei (688820.SH) goes public, focusing on advanced packaging equipment. The firm indicates that the Lithium-ion battery market continues to be bullish, and equipment performance is expected to continue to meet expectations. Key points from China Securities Co., Ltd.: Humanoid Siasun Robot & Automation: Tesla, Inc. OptimusV3 is expected to begin mass production in Q3, with the product plan close to mass production before being made public. In Q3, Tesla, Inc. OptimusV3 is expected to start mass production, with a plan for formal production at the Fremont factory in late July to early August; the construction of the second Transformers factory at the Texas Gigafactory is expected to be completed by next summer. The Optimus project by Tesla is progressing, with the industry in a crucial period of verification before mass production. In the 2026Siasun Robot & Automation half marathon, there has been a significant improvement in overall performance and completion; the ratio of self-navigating teams has increased significantly, reflecting the integration of intelligent "perception-decision-control" loop by Siasun Robot & Automation, helping to adapt to more applications in the future. The current Optimus V3 is in continuous preheating, and subsequent product launch and mass production progress are worth paying attention to. Domestic Siasun Robot & Automation companies like Yushu Technology have continued to advance their IPOs, with high intrinsic product value and proximity to end customers, significant position in the industry chain, and strong brand recognition. Domestic OEMs are expected to have their valuations reassessed, so it is recommended to pay attention to related domestic supply chains. AIDC power generation equipment: GEVQ1 performance exceeds expectations, optimistic about the engine industry chain. In Q1, revenue reached 9.34 billion US dollars, a year-on-year increase of 16%; adjusted EBITDA was 896 million US dollars, a year-on-year increase of 96%. Based on the Q1 performance, the company raised its 2026 full-year revenue guidance to 44.5-45.5 billion US dollars, an increase of 5 billion US dollars; the adjusted EBITDA profit margin was revised to 12%-14%. In the Q1 power sector, the new sign for gas turbines was 21GW, and the total contract capacity increased significantly from 83GW to 100GW, with a year-end target of at least 110GW. It is expected to reach an annual production capacity of 20GW by Q3 2026, and increase to 24GW by 2028. The current delivery cycle is about 3 years, and there is still about 10GW of available production capacity by 2029-2030, which is expected to further increase. The price increase in the industry chain continues to be implemented, and the trend of domestic whole machines going global is clear. Recently, there have been frequent overseas orders for domestic engines, represented by companies like Dongfang Electric Corporation and AECC Aviation Power. The price increase in the industry chain has also been continuously implemented; in March, GEV's engine prices increased, and after Yantai Jereh Oilfield Services Group received orders totaling 200 million US dollars in November and December of 2025 and 1.06, 1.82, and 3.4 billion US dollars in January, February, and March of 2026, respectively, the company received a sixth order worth 3.01 billion US dollars, still for AIDC orders, to be delivered by the end of 2027, with accumulated orders of 9.29 billion US dollars for the current year, and there are still many pending orders. Due to tight supply and demand relations, after the engine price increase in March by companies like GEV, Jereh's orders in the past few days have continued to increase, and profitability is expected to further improve. Power shortage remains the main theme for the year, and the engine industry chain continues to be optimistic. According to the firm's calculation, the North American artificial intelligence will drive power demand over 100GW by 2028, considering other areas, stable demand for engines around 50GW, while global engine supply is expected to be less than 100GW by then, creating a huge gap. The engine industry chain's schedule towards 2030 and beyond, as well as price increases, are inevitable, and the overflow demand also needs to be taken seriously. Construction machinery: Currency exchange may affect Q1 performance, but domestic and international sales operations remain strong. In March 2026, sales of various excavators totaled 37,402 units, a year-on-year increase of 26.4%. Among them: domestic sales were 24,101 units, a year-on-year increase of 23.5%; exports were 13,301 units, a year-on-year increase of 32%. Domestic sales have returned to positive growth, mainly due to the easing of industry price wars, the dissipation of customer wait-and-see sentiments, and the recovery of purchases. Exports maintained high growth. The firm predicts that the domestic market is expected to achieve a growth of over 10% in 2026, while exports are expected to grow by over 15%, with continued resonance in domestic and international demand. Key recommendations: Sany Heavy Industry, XCMG Construction Machinery, ZOOMLION, Guangxi Liugong Machinery, Shantui Construction Machinery, Jiangsu Hengli Hydraulic, etc. Semiconductor equipment: Shenghe Jingwei goes public, focusing on advanced packaging equipment. Shenghe Jingwei went public this week, as a leading domestic integrated circuit wafer-level advanced packaging and testing enterprise. The proceeds from the IPO will focus on expanding 2.5D/3D packaging, and it is expected that domestic advanced packaging capacity will increase, benefiting related equipment. Bulk bidding for storage has begun, and the "de-Japaneseization" logic will continue to be implemented. The US has reintroduced the MATCH Act, and the firm remains optimistic about autonomous controllable technology. In the past, the US has strictly controlled the export of semiconductor equipment at advanced process nodes to China. While Japan and the Netherlands have introduced related plans, they are not as strict as the US. In the past, emphasis was on "de-Americanization," and today it should be focused on "de-Japaneseization." In the future, complete autonomy and control over semiconductor equipment is an inevitable trend, and lithography machines will be a key focus in the future. Overall, in terms of downstream expansion, it is expected that capital expenditure for fab plants will continue to rise in 2026, with storage having the strongest certainty and advanced logic is expected to maintain a strong performance. In terms of localization, downstream industries are generally accelerating the introduction of domestic equipment, and the localization of components, especially module components, is expected to accelerate. The sector's fundamentals are generally positive, and there should be more emphasis on "de-Japaneseization" in this round. Lithium battery equipment: The high prosperity of lithium batteries continues, and equipment performance is expected to continue to meet expectations. According to data from the China Automotive Association, in March 2026, the Shanxi Guoxin Energy Corporation automotive market sold 1.252 million vehicles, up 63.7% month-on-month and 1.2% year-on-year, with a penetration rate reaching 43.2%, maintaining a relatively high level. Meanwhile, in March, China's total sales of power and energy storage batteries reached 175.1GWh, a year-on-year increase of 51.6%, including energy storage battery sales of 60.4GWh, a substantial increase of 115.9%, with exports of 13.8GWh, a year-on-year increase of 52.4%. Domestic and international demand is clearly established, supporting upstream equipment and materials companies to maintain high production levels. Leading equipment companies' new orders in the first quarter are expected to grow by 60% year-on-year, reaching a historical high, with a domestic target gross margin of 40% and an overseas margin of 45-50%. The proportion of energy storage orders is rapidly increasing, providing solid support for the "strong order recovery - delivery climb - profit margin recovery." Second and third-tier equipment companies have also reported a general year-on-year growth of 30% to 40% in new orders in the first quarter, with most companies having completed 30%-40% of their annual target. The current demand driving logic in the sector is clear, with high oil prices resonating with downstream high prosperity. The firm continues to be bullish on the equipment sector and solid-state battery segment's configuration value. Key recommendations for machinery sector: Jiangsu Hengli Hydraulic, AO Zhengguang, China Shipbuilding Industry Group Power, Sany Heavy Industry, Advanced Micro-Fabrication Equipment Inc. China, Wuxi Lead Intelligent Equipment, Bozhon Precision Industry Technology, XCMG Construction Machinery, Yantai Jereh Oilfield Services Group, Naipu Mining Machinery, ZOOMLION, Anhui Heli Co., Ltd., Hangcha Group, Centre Testing International Group, SHOUCHENG, HAITIAN INT'L, Yizumi Holdings, 3S Industry Group INC., Suzhou Maxwell Technologies. Risk Analysis: Risks of fluctuations in the domestic macroeconomic environment, overseas market fluctuations, and risks of lower-than-expected downstream expansion.