Track Hyper | The Momentum of Megmeet

Megmeet is the only A-share listed company in China to enter the power supply chain of NVIDIA's AI accelerator card GB200 NVL72 server.

On October 15, 2024, NVIDIA disclosed in its announcement of the GB200 NVL72 rack product design and project progress that Megmeet is one of its three power supply vendors (three suppliers); on October 18 of the same year, Megmeet announced its participation in the innovative design and collaborative construction of NVIDIA's Blackwell GB200 system.

Recently, there have been "rumors" that the first batch of power supply orders under NVIDIA's NVL72 server includes over 2,000 cabinets, and Megmeet has received orders for over 3,000 PowerShelf units in this batch, accounting for about 20% of the total orders.

On January 3, Megmeet responded, stating, "If there is any information and business progress that meets the disclosure standards and does not involve commercial confidentiality, the company will disclose it in the form of regular reports or temporary announcements in accordance with relevant regulations."

This statement has been interpreted by the market as a tacit acknowledgment of the rumors by Megmeet.

Recently, there have been reports in the market that Megmeet will replace the original second supplier, Lite-On Power (a subsidiary of Lite-On Electronics from Taiwan), becoming the second power supplier for NVIDIA's NVL72 server PowerShelf, following Delta Electronics from Taiwan (the first supplier).

More importantly, in December 2024, there were reports that Megmeet is sending samples of power supplies for ByteDance's IDC AI servers, but neither party has made any statements regarding this. Supply chain insiders told Wall Street Journal, "Such matters are usually covered by confidentiality agreements, and they certainly won't come out and say anything."

The AI server power supply chain typically ships in the form of PowerShelf, where the power supply module (PSU) is the main value component.

PowerShelf is a power component in AI server infrastructure, primarily responsible for providing stable and efficient power support for servers.

This is mainly used in data centers (IDC), 5G base stations in the telecommunications industry, core machine rooms of operators, industrial automation fields such as automotive manufacturing production lines and mining processing plants, as well as AI servers.

The main characteristic of these scenarios is the need for stable and efficient power.

PSU, or power supply unit, is a power converter that converts mains electricity into the direct current required by computers or other electronic devices, providing power for CPUs, GPUs, signal modules, and other expansion modules.

Currently, there is no concrete evidence indicating the cost proportion of PSU in the PowerShelf component. In ordinary server power supplies, the cost of the PSU part accounts for about 40% of the total power supply cost. Given that AI servers have higher requirements for efficient and stable power, it can be speculated that the cost proportion of PSU should be higher, approximately 40%-60%.

According to a report from Tianfeng Securities, Megmeet's AI server power supply gross margin is expected to reach 60%+; additionally, some institutions speculate that the company's net profit margin for AI server power supply business in 2025 will be 20%-30%.

Due to the lack of official financial data from Megmeet regarding AI server power supplies, the market data on this segment is largely speculative Megmeet's product system covers a wide range, including smart home appliance control, power products, industrial automation, new energy & rail transportation, intelligent equipment, and precision connections.

According to Megmeet's 2024 semi-annual report, the revenue proportion of industrial power supplies is 27.36%; the 2023 financial report shows that the sales revenue of power products accounts for 31.42% of the company's operating income.

Being able to enter NVIDIA's AI server power supply chain indicates that Megmeet is not the kind of company that typically "hitches a ride on hot concepts" in the A-share market.

This company is willing to spend money on research and development: the R&D expense ratios for 2022 and 2023 were 11.6% and 11.41%, respectively; over the past five years, Megmeet's R&D investment compound annual growth rate has approached 21%.

Looking at its competitor Delta Power, its R&D expenses are about 8%-9%.

Megmeet's server power supply system adopts a modular design, demonstrating excellent performance in efficiency and heat dissipation, with energy efficiency improved by 15% compared to existing technologies, which not only effectively reduces operating costs but also extends the lifespan of the equipment.

Previously, Megmeet has provided stable supply for Ericsson and Nokia for three years