2026 January 7 – WUXI HONGSHENG (603090) Faces a Turning Point Amidst an AI‑Driven Liquid‑Cooling Boom
WUXI HONGSHENG, a Shanghai‑listed maker of aluminum brazed heat exchangers, has entered a critical juncture as the company announces a shareholder reduction plan and the market pivots toward AI‑centric liquid‑cooling solutions. The firm’s stock closed at 58.63 CNY on January 6, 2026—well below its 52‑week high of 63.3 CNY and still trailing the sector’s broader gains. Yet the backdrop of NVIDIA’s Vera Rubin platform, slated for full‑scale production, injects fresh demand prospects for high‑efficiency heat exchangers that could tilt the valuation narrative.
1. Immediate Shareholder Dynamics
- Shareholder reduction plan: The board has approved a reduction of up to 1,859,400 shares, representing 1.8594 % of the outstanding capital. The sole reducing party is the investment vehicle Changzhou Zhongke Jiangnan Equity Investment Center (有限合伙), a former IPO shareholder.
- Rationale: The plan cites “funds needs” as the reason for divestiture.
- Timing: The reduction will occur within three months following a 15‑day notice, using both consolidated auction and block trading mechanisms.
- Compliance: The plan aligns with Shanghai Stock Exchange regulations for venture‑capital investors holding 48–60 month commitments.
Although the outflow is modest relative to total shares, it signals a willingness among early investors to monetize their positions amid a bullish industrial environment. This liquidity injection may also provide the company with capital to accelerate R&D or expand its manufacturing footprint.
2. Market Context: The Liquid‑Cooling Surge
The January 7th Shanghai Stock Exchange close reflected a broader trend: the liquid‑cooling segment has become the hottest concept among industrial stocks. Analysts note that:
- Demand drivers: AI data centers, new‑energy storage, and electric vehicles are the primary beneficiaries of liquid‑cooling systems, which outperform conventional air‑cooling in high‑density environments.
- Capital outlays: Global cloud providers are increasing capex, with a projected 59 % CAGR in data‑center liquid‑cooling demand between 2025–2026.
- Key metrics: NVIDIA’s Rubin platform—an all‑liquid‑cooled, 100 % cable‑free architecture—has been unveiled, promising unprecedented thermal management efficiency. The platform’s flagship NVL72 chassis is already slated for worldwide delivery in Q3 2026.
For a heat‑exchanger producer, this translates directly into a potential surge in orders for high‑performance, precision‑engineered units capable of handling 2.3 kW modules and beyond. WUXI HONGSHENG’s specialization in aluminum brazed heat exchangers positions it favorably to supply the liquid‑cooling ecosystem, especially given the increasing demand for lightweight, corrosion‑resistant components.
3. Financial Snapshot & Valuation Concerns
| Item | Value |
|---|---|
| Market Cap | 5,870,000,000 CNY |
| P/E Ratio | 89.76 |
| 52‑week High | 63.30 CNY |
| 52‑week Low | 16.37 CNY |
| Recent Close (Jan 6) | 58.63 CNY |
| Shareholder Count | 13,822 (as of Dec 31 2025) |
The company’s lofty price‑to‑earnings multiple—nearly 90×—is stark when juxtaposed against the average industrial sector multiple of 15–20×. This suggests that the market is pricing in aggressive growth expectations, likely driven by the impending AI data‑center boom.
However, the valuation is fragile. A modest decline in orders or a delay in NVIDIA’s rollout could erode the premium. Conversely, the firm’s current position as a niche manufacturer of aluminum brazed heat exchangers—a component of the new liquid‑cooling supply chain—offers a tangible upside if the broader industry gains momentum.
4. Strategic Implications for Investors
- Opportunity vs. Risk: The company’s high P/E ratio demands disciplined evaluation of whether the expected liquid‑cooling demand will materialize in the short to medium term.
- Liquidity Considerations: The announced share sale may inject some liquidity into the market but is unlikely to alter the long‑term supply‑demand dynamics.
- Competitive Landscape: WUXI HONGSHENG must differentiate itself through precision engineering, scalability, and compliance with emerging AI data‑center standards to capture market share from established heat‑exchange suppliers.
5. Conclusion
WUXI HONGSHENG’s shareholder reduction plan and the surging interest in liquid‑cooling technologies create a double‑edged sword. On one side, the company stands on the cusp of a potentially lucrative market expansion driven by AI data‑center demands. On the other, its valuation reflects significant upside expectations that could prove overstated if supply chain dynamics falter. Investors must weigh the high growth prospects against the inherent valuation risk, remaining attentive to forthcoming order flows and NVIDIA’s platform rollout milestones.
