(Yicai) Aug. 13 -- Shares of Zhongding Sealing Parts rose by the exchange-imposed daily trading limit for a second trading day in a row after the Chinese supplier of auto seals and cooling systems confirmed a potential data center liquid cooling technology and artificial intelligence factory alliance with the cloud computing arm of internet giant Tencent Holdings.

Zhongding [SHE: 000887] closed 10 percent higher at CNY23.69 (USD3.51) a share in Shenzhen today. The stock also ended up 10 percent yesterday after Tencent announced the potential partnership late on Aug. 11.

The agreement with Tencent is only a framework one that indicates the intention of the two parties to cooperate, with no substantive alliance yet, Zhongding announced late yesterday. This means that the deal does not meet the stock exchange's mandatory requirement for information disclosure, and so it was not announced earlier, it added.

One of the cooperation projects with Tencent Cloud is about computing centers' liquid cooling, Ningguo-based Zhongding noted.

A key cooperation project between Tencent Cloud and Zhongding is on new AI infrastructure, the former said on Aug. 11. The pair intends to leverage Zhongding's computing infrastructure resources, liquid cooling tech, and industry scenarios, as well as Tencent Cloud's technological capabilities and building experience, to jointly explore the investment, construction, and operation of AI computing hubs, it added.

Developing AI infrastructure was the main investment direction of Tencent's capital expenditure in the second quarter of this year. The alliance between Zhongding and Tencent Cloud provides investors with an idea about the potential future performance growth of Zhongding.

In a second-quarter earnings report released yesterday, Tencent said that capital expenditures topped CNY52.8 billion (USD7.8 billion), up 176 percent from a year ago and up 65 percent from the previous quarter, due to significant spending on AI infrastructure. "We are building a new, AI‑empowered Tencent," founder Pony Ma stressed.

Zhongding will also receive basic cloud services such as cloud computing, storage, and databases from Tencent Cloud on demand, while also obtaining its technical support and service guarantees, it said. In addition, it intends to use Tencent's AI model Hunyuan, AI agents, and other AI products and capabilities to build its AI factory in the future, it pointed out.

Zhongding has been expanding its business into humanoid robot parts, thermal management components for AI data centers and low-altitude aircraft, and other emerging areas in recent years.

Editor: Martin Kadiev