LK(600388) Changjiang Securities·2025-04-14 15:22Investment Rating - The investment rating for the company is "Buy" and is maintained [6]. Core Views - In Q1 2025, the company reported a revenue of 1.966 billion yuan, a year-on-year decrease of 13.69%, and a net profit attributable to shareholders of 185 million yuan, down 6.95% year-on-year. The decrease in revenue and profit is attributed to the timing of order settlements, but the net profit margin improved by 0.74 percentage points, indicating ongoing improvement in profitability [2][4][10]. - The company is focusing on enhancing the quality and efficiency of its operations, with a steady increase in overall gross margin and good cash flow. The interest-bearing debt ratio has decreased, and the company is optimistic about its long-term development due to continued support from major shareholders [2][10]. Summary by Sections Financial Performance - For Q1 2025, the company achieved a gross margin of 25.5%, an increase of 3.22 percentage points year-on-year. The net profit margin for Q1 2025 was 9.39%, up from 8.65% in Q1 2024. The company has maintained a good cash flow position, with a cash balance of 2.203 billion yuan at the end of Q1 2025 [10][2]. - The company’s operating cash flow for Q1 2025 was -137 million yuan, which is considered normal, with a cash collection ratio of 77% [10]. Business Development - The company has established a 1GW green power project and is making progress in the mining equipment sector. The energy storage business is also developing positively, with contracts worth 1.361 billion yuan in hand by the end of Q1 2025 [10]. - The environmental protection business saw new orders of 2.625 billion yuan in Q1 2025, a year-on-year increase of 13.59%, with a total backlog of 19.421 billion yuan, up 5.81% year-on-year [10]. Profit Forecast and Valuation - The company has a dual-driven strategy of "environmental protection + new energy," with strong order acquisition capabilities in its main business. The expected net profits for 2025-2027 are projected to be 1.211 billion yuan, 1.574 billion yuan, and 1.898 billion yuan, representing year-on-year growth of 45.8%, 30.0%, and 20.6%, respectively [10].