Net profit of 30 billion RMB in three years—KKR is exiting again.

【Answer 1】 Originally titled “China Private Equity Investment” (ID: PE-China) Author: Wei Yajun Photography: Bob KKR (including co-investors) achieved a three-year paper return exceeding 17x. A flawless exit. Recently, Ecolab Inc., a global leader in water treatment and sustainable development solutions, announced it will acquire CoolIT Systems—a developer of data center liquid cooling systems—for approximately $4.75 billion in cash (roughly RMB 32.8 billion). CoolIT Systems is currently majority-owned by funds managed by KKR. In May 2023, KKR—leading a consortium including partners—acquired a majority stake in CoolIT Systems for about $270 million. The transaction is expected to close in the third quarter of 2026. An expensive acquisition Valuation far exceeds traditional industrial sectors From a deal-terms perspective, this acquisition’s valuation is notably “expensive.” According to available information, the $4.75 billion price tag equates to roughly 29x CoolIT’s projected adjusted EBITDA for the next 12 months—and 24x its projected adjusted EBITDA for fiscal year 2027. This valuation level significantly surpasses typical multiples seen in traditional industrial M&A. Clearly, the elevated valuation directly reflects the current frenzy surrounding the AI infrastructure sector: as global tech giants race to build data centers amid soaring demand for computing power, thermal management technology has become a critical physical bottleneck constraining AI advancement. Per Ecolab’s disclosures, CoolIT is expected to generate approximately $550 million in sales over the next 12 months, with an adjusted EBITDA margin of roughly 30%. That means Ecolab is paying more than 8.6x revenue for a company generating ~$550 million annually. For comparison, Ecolab’s market capitalization stands at approximately $77.7 billion, with projected 2025 revenue of $16.08 billion—implying a price-to-sales ratio of just ~4.8x. Post-acquisition, Ecolab’s addressable market (TAM) will double—from $5 billion to $10 billion—with the market growing at double-digit annual rates. Ecolab expects the acquisition to lift organic sales growth for its global water business by two percentage points in the first year post-close—and boost consolidated organic sales growth by one percentage point. Starting in 2028 (excluding non-cash amortization), the deal is expected to accrete to adjusted earnings per share. To finance the acquisition, Ecolab will raise new transaction debt. From gaming enthusiast to liquid-cooling leader Public records show CoolIT Systems was founded in 2001 and is headquartered in Calgary, Canada. Its three founders—Brydon Gierl, Sandy Scott, and Jason Myers—conceived the idea of revolutionizing computer cooling amid Calgary’s vibrant startup ecosystem. According to company history, Sandy was an avid gamer—but his PC’s overheating GPU severely hampered his gaming experience. He approached Brydon for help, and the two began early experiments on a kitchen table to solve this pain point for high-performance computing users.

Corning’s U.S. stock plunged 15% pre-market! Q2 revenue and profits both beat expectations—but Q3 revenue guidance fell short of ‘surprise’ | Caifubao Insight

【Answer 2】 The AI bull market has entered a make-or-break moment—a single underwhelming earnings report is enough to trigger a sharp market reaction. On Tuesday, Corning’s stock plunged over 15% pre-market—not because its Q2 results were weak, but because its Q3 guidance fell far short of expectations. Its core sales guidance of $4.9–$5.0 billion places the upper end merely at consensus, while the midpoint of $4.95 billion sits slightly below analyst estimates. Against the backdrop of recently announced multi-billion-dollar agreements with Amazon and long-term collaboration with NVIDIA, investors weren’t hoping for mere “in-line” performance—they expected a substantial upward revision. Yet Q3 guidance not only failed to deliver such an upgrade; it implied a sequential growth rate dropping sharply from Q2’s 9% to just 3–6%. This inflection point—from acceleration to deceleration—is a far stronger signal explaining the violent pre-market sell-off than absolute revenue figures alone. This isn’t an isolated correction. Prior to earnings, the stock had already retreated nearly 40%—from a late-June peak of ~$255–$271 down to ~$145. Adding Tuesday’s 15% pre-market drop, the stock has lost nearly half its value over two months. This isn’t a correction—it’s a full-scale repricing. Q2 data fully beat—but that’s already history Objectively speaking, Q2’s numbers themselves are hard to fault. Core sales totaled $4.74 billion, up 17% year-on-year and ~2.3% above expectations. Core EPS came in at $0.78, up 30% YoY and ~2.7–4% above consensus. Core operating margin stood at 20.9%, expanding 190 basis points year-on-year. Core ROIC reached 14.9%, up 180 bps YoY. But digging deeper, the quality of this beat warrants scrutiny. The newly adopted “hedging exposure adjustment” methodology for core sales added ~$233 million to core sales versus GAAP—precisely covering the entire beat amount. This isn’t to suggest the company is manipulating data (the methodology change itself is reasonable); rather, it underscores that the incremental information conveyed by the “beat” is thinner than the headline number suggests. Morgan Stanley had accurately forecast pre-earnings: optical communications capacity was nearing full utilization, leaving limited upside for Q2—around $50 million. The actual beat was $130 million, slightly exceeding that estimate—but still insufficient to overturn concerns about peaking growth. The market’s message is clear: in today’s elevated valuation environment, forward-looking guidance matters far more than backward-looking beats. Optical communications’ high growth hits a ceiling Optical communications revenue for the quarter totaled $2.07 billion—44% of core sales—and rose 32% YoY. Segment net income reached $438 million, with a 21.1% margin; profit growth (+77%) more than doubled revenue growth. Enterprise networking grew 65%, and generative AI-related products grew even faster. Taken at face value, these figures appear flawless. Yet the issue isn’t Q2—it’s what Q3 delivers. The implied sequential growth rate in Q3 guidance—slowing from 9% to 3–6%—signals management is already preparing for deceleration. Morgan Stanley’s earlier assessment of “capacity nearing exhaustion” is indirectly validated by this guidance—if capacity cannot ramp up rapidly, sustaining a 32% revenue growth rate in subsequent quarters will be extremely difficult. An even sharper concern lies in valuation. As early as May, J.P. Morgan delivered a piercing rationale for downgrading the stock: investors are effectively pricing in earnings for 2028, with the fiber optics business trading at a P/E ratio approaching 40x.

Barclays Maintains Buy Rating on Ecolab Inc. Ahead of Q3 Earnings

5 days ago

Barclays has maintained its Buy rating on Ecolab Inc. with a $300 price target ahead of third-quarter results on October 27, 2026. Ecolab provides water, hygiene, and infection prevention solutions.

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