LK(SH:600388) GUOTAI HAITONG SECURITIES·2026-03-23 06:22Investment Rating - The report maintains a "Buy" rating for Longking Environmental (龙净环保) with a target price of 24.00 CNY [6][12]. Core Insights - Longking Environmental achieved steady growth in 2025, with high order levels in its core environmental business, significant profit contributions from green electricity, profitable energy storage cells, and breakthroughs in mining vehicles, marking a phase of accelerated profit realization in the new energy sector [2][12]. - The company reported a total revenue of 11.87 billion CNY in 2025, representing an 18% year-on-year increase, and a net profit attributable to shareholders of 1.11 billion CNY, up 34% year-on-year [12]. - The new energy business is becoming a core growth engine, with green electricity projects contributing significant profits and energy storage cells achieving profitability [12]. Financial Summary - Total revenue projections for 2024A to 2028E are as follows: 10.02 billion CNY (2024A), 11.87 billion CNY (2025A), 14.36 billion CNY (2026E), 17.16 billion CNY (2027E), and 19.00 billion CNY (2028E) [5][13]. - Net profit attributable to shareholders is projected to grow from 830 million CNY in 2024A to 2.04 billion CNY in 2028E, with corresponding EPS increasing from 0.65 CNY to 1.61 CNY [5][13]. - The company’s return on equity (ROE) is expected to improve from 8.2% in 2024A to 14.6% in 2028E [5][13]. Business Performance - In 2025, Longking Environmental secured new environmental equipment engineering contracts worth 10.26 billion CNY, with a backlog of contracts totaling 18.89 billion CNY at year-end [12]. - The environmental equipment manufacturing revenue was 8.33 billion CNY, with a gross margin improvement to 28.05% [12]. - The green electricity segment has begun to contribute significantly to profits, with operational capacity reaching approximately 1.2 GW from various projects [12]. New Energy Sector Developments - The energy storage cell business has achieved profitability, with approximately 8 GWh delivered in 2025 and plans for increased production capacity [12]. - The company has successfully launched its first electric mining vehicle and is advancing the development of larger and autonomous models [12]. Conclusion - Longking Environmental is transitioning into a dual-driven growth model, combining its established environmental leadership with new energy expansion, positioning itself for continued profitability and market competitiveness [12].