LK(600388) Changjiang Securities·2024-10-21 04:38Investment Rating - The report maintains a "Buy" rating for Longking Environmental [9] Core Views - Longking Environmental's Q3 revenue decreased by 23.5% year-on-year to 1.982 billion yuan, while net profit increased by 1.1% year-on-year to 216 million yuan, indicating a focus on reducing low-quality contracts [5][6] - The company has a strong order backlog, with 12.84 billion yuan in hand orders for energy storage as of Q3 2024, and is expanding into mining equipment [6][7] - The company's profitability is improving, with gross and net profit margins increasing by 1.97 percentage points and 2.65 percentage points year-on-year, respectively [6][7] Financial Performance Summary - For the first three quarters of 2024, Longking Environmental reported a total revenue of 6.654 billion yuan, down 11.6% year-on-year, and a net profit of 647 million yuan, up 0.9% year-on-year [5] - The Q3 gross profit margin was 23.83%, higher than the previous year's 23.39%, indicating a shift towards higher quality contracts [6] - Operating cash flow for Q1-Q3 2024 was 1.164 billion yuan, a 101% increase year-on-year, reflecting effective cash collection efforts [6] Order and Business Development - As of Q3 2024, the company had 19.213 billion yuan in environmental engineering contracts, with new contracts added amounting to 7.544 billion yuan, a slight decrease of 4.8% year-on-year [7] - The company is actively engaged in over 2GW of mining green electricity projects, with significant progress in energy storage and green electricity projects contributing positively to profitability [7] - Longking Environmental's dual-driven strategy of "environmental protection + new energy" is expected to drive significant profit growth in the coming years, with projected net profits of 1.053 billion yuan, 1.405 billion yuan, and 1.705 billion yuan for 2024-2026 [7]