AI Power Supplies Enter a Volume Ramp-up Cycle, Diversified Businesses Support High Growth for Megmeet

Overview

Megmeet is a leading platform-based power electronics company in China, with businesses covering power supplies, industrial automation, new energy transportation, intelligent equipment, smart home appliances, and precision connectivity and magnetic components. The report believes that AI server and AI data center power supplies will become the core future growth drivers, while the diversified customer structure, pricing power, and cost control of traditional businesses will support revenue and margins. Nomura expects the company’s revenue in 2026 to 2028 to be CNY13,318mn, CNY17,428mn, and CNY22,405mn, respectively, and net profit attributable to shareholders to be CNY937mn, CNY1,616mn, and CNY2,644mn, respectively.

Core views

First, AI computing infrastructure construction is driving rapid expansion in demand for high-power power supplies; the company has broad product coverage and has entered the NVIDIA ecosystem, positioning it to benefit from the industry upcycle. Second, businesses such as smart home appliances, new energy transportation, and industrial automation diversify the risk of demand volatility from a single end market. Third, raw material price increases create short-term cost pressure, but customized products, a high-quality customer structure, cost pass-through, and internal cost reductions are expected to drive margin recovery. Fourth, net profit CAGR from 2025 to 2028 is expected to reach 57%, significantly above the peer average, therefore supporting a target valuation higher than peers.

Analysis framework

The report adopts a bottom-up segment-by-segment forecasting approach, focusing on assessing market demand, product validation, and capacity ramp-up pace for AI server and AI data center power supplies, while incorporating price increases in the smart home appliance business, raw material cost pass-through, product mix upgrades, internal cost reductions, capital expenditures, and R&D tax incentives to forecast revenue, margins, and EPS; for valuation, it uses 2027E P/E and conducts a horizontal comparison with comparable companies related to data center power supplies.

Methodology notes

• Valuation methodsP/E Valuation Method

  Target P/E multiplied by forward EPS

  Multiplying 2027E EPS of CNY2.76 by a 50x target P/E yields a target price of CNY138. The 50x valuation is higher than the comparable companies’ average 2027E P/E of about 29x; the premium is based on the company’s forecast net profit CAGR of 57% from 2025 to 2028, above the peer average of 32%.

• Earnings ForecastSegment Revenue and Margin Forecast

  Forecast operating performance separately based on business volume ramp-up, product mix, and cost pass-through

  The forecasts for 2026 to 2028 revenue and margins incorporate the ramp-up of AI power supply shipments, upgrades of traditional industrial and commercial power supply products, price increases for smart home appliances, raw material substitution, and internal cost control.

• Relative ValuationComparable Company Analysis

  Compare with companies expanding from traditional power supplies into data center power supplies

  Kehua Data (002335 CH), AOHAI Technology (002993 CH), and Zhongheng Electric (002364 CH) are selected as comparable companies, and the target valuation premium is assessed based on differences in earnings growth.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Shenzhen Megmeet Electrical (002851.SZ)

  Core recommended target

  Strengths

  AI power supply products cover the path from grid input to GPU endpoint and have been recognized by the NVIDIA ecosystem; six major business segments and a high-quality customer structure enhance operating resilience; customized products have certain cost pass-through capability.

  Weaknesses

  AI power supplies are still in the validation and commercialization ramp-up stage, recent raw material price increases are pressuring margins in traditional businesses, and the current valuation is above the peer average.

  Comparison

  The company’s forecast net profit CAGR from 2025 to 2028 is 57%, higher than the peer average of 32%; the 50x target P/E is also higher than the comparable companies’ average 2027E P/E of about 29x.

  Risks

  AI power supply volume ramp-up slower than expected, escalation of international trade frictions, intensified industry competition, and downstream pricing pressure.

• NVIDIA (NVDA US)

  Ecosystem cooperation and demand transmission related party

  Strengths

  Megmeet’s AI server power supplies have been recognized by NVIDIA and included on its recommendation list for downstream customers, which helps product validation and customer expansion.

  Weaknesses

  The report does not assign a rating to NVIDIA, and multiple series of Megmeet’s related products remain in the development, validation, and commercialization stages.

  Comparison

  NVIDIA is not a valuation comparable company in this report, but is an important ecosystem-related party for Megmeet’s AI server power supply business.

  Risks

  Downstream AI server rack shipment plans, changes in technology roadmaps, or extended certification cycles may affect the pace at which Megmeet realizes revenue.

• Kehua Data (002335 CH), AOHAI Technology (002993 CH), Zhongheng Electric (002364 CH)

  Valuation comparable companies

  Strengths

  All have expanded from traditional power supply products into data center power supply applications, making their business directions comparable.

  Weaknesses

  The report expects their average earnings growth to be lower than Megmeet’s.

  Comparison

  Comparable companies’ average 2027E P/E is about 29x and average net profit CAGR is about 32%, below Megmeet’s 50x target P/E and 57% forecast net profit CAGR.

  Risks

  If the industry valuation center moves downward or Megmeet’s growth advantage fails to materialize, its relative valuation premium may narrow.

Key data

• Target PriceCNY138.00Based on 50x 2027E P/E.
• Closing PriceCNY119.00As of August 11, 2026.
• Potential Upside16.0%Implied upside of the target price versus the closing price.
• AI Server Power Supply Market SizeUSD6.5bn to USD60.8bnExpected to grow from 2025 to 2031, corresponding to a 45% CAGR.
• Power Supply Business Revenue ForecastCNY5,360mn/CNY8,040mn/CNY11,256mnCorresponding to 2026, 2027, and 2028 forecasts, with a CAGR of about 61%.
• Total Revenue ForecastCNY13,318mn/CNY17,428mn/CNY22,405mnCorresponding to 2026, 2027, and 2028 forecasts.
• Net Profit Attributable to Shareholders ForecastCNY937mn/CNY1,616mn/CNY2,644mnCorresponding to 2026, 2027, and 2028 forecasts.
• EPS ForecastCNY1.60/CNY2.76/CNY4.52Corresponding to 2026, 2027, and 2028 forecasts.
• Revenue and Net Profit CAGR29%/57%The forecast period is 2025 to 2028.
• Consolidated Gross Margin Forecast26.7%/28.9%/31.7%Corresponding to 2026, 2027, and 2028 forecasts; the main text also forecasts power supply business gross margins of 32%/34%/36% over the same period.
• Power Supply Business Revenue Contribution29% rising to 50%Expected to rise from 29% in 2025 to 50% in 2028.
• Capital Expenditure ForecastCNY1,073mn/CNY1,049mn/CNY654mnCorresponding to 2026, 2027, and 2028, mainly for capacity expansion in businesses such as AI server and AI data center power supplies.

Impact & implications

If AI power supply product validation, customer onboarding, and capacity ramp-up proceed as planned, the company’s revenue structure will shift markedly toward the high-growth, high-value power supply business, driving improvements in consolidated gross margin, net margin, and shareholder returns. Price increases and cost reductions in traditional businesses can further enhance the certainty of earnings recovery. The current valuation already reflects certain growth expectations, but the report believes faster earnings growth is sufficient to support a valuation premium relative to peers; conversely, delays in AI data center construction or slower-than-expected product commercialization would simultaneously weigh on earnings forecasts and valuation multiples.

Risks

• Product certification, commercialization, or capacity ramp-up for AI server and AI data center power supplies may be slower than expected, delaying earnings realization and suppressing valuation.
• Escalation of international trade frictions, tariffs, export controls, or sanctions may affect customer procurement, supply chains, and overseas revenue growth; overseas markets accounted for about 30% of the company’s revenue in 2025.
• Intensified competition in home appliances, new energy vehicles, and power supply markets may lead to greater annual price reduction pressure, lower ASPs, and longer accounts receivable cycles.
• Prices of raw materials such as copper and power semiconductors may continue to rise, while price increases, alternative materials, or internal cost reductions may fail to fully offset cost pressure.
• Rapid evolution of AI power supply technology may affect the lifecycle, demand pace, and medium- to long-term gross margins of high-value products.

What to watch

• Whether power supply product revenue and gross margin in 1H26 exceed expectations.
• Whether key overseas customers raise guidance for 2027 shipment volumes.
• Validation progress, commercial orders, and new capacity ramp-up for AI server and AI data center power supply products.
• Whether the power supply business’s revenue contribution and gross margin can continue to improve as forecast.
• Implementation of price increases, raw material substitution, and internal cost reductions in the smart home appliance business.
• Whether global AI data center construction plans experience further delays.
• Changes in international tariffs, export controls, and the geopolitical environment.