Longi Environmental Protection 2025 Annual Report Review

Source: Yiliu Investment Research Notes

Disclaimer: This article is for research and discussion only and does not constitute any investment advice. The stock market involves risks; decisions must be made through independent thinking. Build your own logic framework and risk-control framework, and never blindly follow the crowd.

Longjing Environmental Protection’s stock price trend has also been relatively stable in the past, but the future is unclear. Even in today’s market downturn, Longjing Environmental Protection is still closing in the green—perhaps this is also due to this annual report.

This annual report was also read using an agent platform; it’s fast and means I don’t have to read the financial statements manually. First, use Python to parse the PDF into a TXT file. Then, use deer-flow and the attached annual report commentary skills to get it done in five minutes. After that, I manually checked the data, adjusted the formatting, and refined some wording.

I. Financial Snapshot: Steady Performance Growth and Excellent Cash Flow Quality

In 2025, Longjing Environmental Protection achieved operating revenue of RMB 11.872 billion, up 18.49% year over year. Net profit attributable to shareholders of listed companies was RMB 1.112 billion, up 33.95% year over year significantly. Net profit excluding non-recurring gains and losses was RMB 1.045 billion, up 37.18% year over year. Profit scale continued to grow steadily, and overall profitability quality kept improving. Basic earnings per share were RMB 0.88, up 14.29%. The weighted average return on net assets was 10.58%, up 0.45 percentage points year over year. Profitability remained stable.

From the quarterly performance, the fourth quarter alone achieved revenue of RMB 4.014 billion and net profit attributable to the parent company of RMB 332 million. Net profit remained above RMB 300 million for three consecutive quarters. Full-year performance was released quarter by quarter, and growth momentum was strong. Net cash flow from operating activities was RMB 1.618 billion, which closely matched the scale of net profit. Cash flow was healthy and provided sufficient funding support for subsequent expansion of new-energy business and technological R&D. As of the end of 2025, the company’s asset-liability ratio was 60.65%, down 0.77 percentage points from the beginning of the period. The interest-bearing debt ratio was 16.68%, kept at a relatively low level long-term. The asset-liability structure continued to be optimized, and overall operations were steady.

II. Business Structure: Dual Engine Drive and Optimized Track Layout

The company has formed a “environmental protection + new energy” dual-engine business structure. The traditional environmental protection segment fully plays the role of a ballast, while the new energy segment has become a new engine for earnings growth.

In 2025, the environmental protection equipment manufacturing business achieved revenue of RMB 8.333 billion, accounting for 70.19% of total revenue. Gross margin was 28.05%, up 3.46 percentage points year over year, with profitability continuing to strengthen. Of this, revenue from dust collectors and supporting equipment was RMB 4.589 billion, with gross margin of 32.31%. Revenue from flue gas desulfurization and denitrification engineering projects was RMB 3.281 billion, with gross margin of 22.67%. The advantages of the traditional core business remained solid.

New energy business delivered leapfrog development. Full-year revenue was RMB 2.527 billion, up 488.16%, becoming the second growth curve. Among this, green power business revenue was RMB 600 million, with gross margin as high as 46.96%, making it the business segment with the strongest profitability. As of end-2025, the total commissioned green power installed capacity domestically and internationally was about 1.2GW. Projects such as the Bayan Nur Zijin 70MW wind power, Musonoi in the Republic of the Congo, and the Phase II project in Guyana were completed and commissioned, and overseas green power project clusters have taken shape in scale.

For the energy storage business, full-year revenue was RMB 1.927 billion, with gross margin of 9.25%. Cumulative delivery of energy storage cells was about 8GWh (95% or more for export sales), achieving profitability. After the third production line is put into operation in February 2026, total production capacity will increase to 13GWh, and orders are already scheduled through the end of 2026. The electric mining dump truck business achieved a breakthrough: the first LK220E pure electric mining dump truck was successfully rolled off and delivered. The company signed the first batch of purchase and sales contracts with Tibet JuLong Copper Industry, becoming a new strategic growth pole.

III. Order Situation: Sufficient Backlog and High Growth in New Orders

In 2025, the company added new environmental protection equipment engineering contracts of RMB 10.258 billion. Within this, the power industry accounted for 61.98%, and non-power industries accounted for 38.02%. The company seized opportunities in the market window for newly built coal-fired power and new units, as well as opportunities for ultra-low-emission retrofits in non-power industries. In the dust collector segment, it won multiple contracts for dust collection projects for 1000MW and 600MW-class coal-fired power generating units. In the flue gas desulfurization and denitrification segment, it dug deeper into the market for upgrading and retrofitting existing facilities. It also accelerated expansion in overseas markets, signing a number of key export projects, including in Russia, Kazakhstan, and Indonesia.

As of the end of the reporting period, the company had environmental protection equipment engineering contract orders in hand of RMB 18.890 billion. The order backlog was sufficient, providing solid protection for the environmental protection business performance over the next 2–3 years. The new energy segment had a full order pipeline. Energy storage business orders were scheduled through the end of 2026. Electric mining dump trucks have obtained multiple internal orders from Tibet JuLong Copper Industry, Zijinshan Jin’tong Mining, and others. With further reliance on Zijin Mining’s mine-scenario resources, the company is expected to quickly scale up. In the green power business, the Phase II “source-grid-load-storage” integrated energy station project combining a 420MWp photovoltaic plant plus 1650MWh energy storage at the Xizang Mamicao site, and the 140MW hydropower station project at Kéelandeng in the Republic of the Congo are being advanced as planned. After commissioning, they will further increase the scale of green power operating revenue.

IV. R&D Activities: Technology Iteration and Breakthroughs in Dual-Carbon Technologies

In 2025, the company’s R&D investment was RMB 464 million, accounting for 3.91% of operating revenue. The number of R&D personnel was 1,317, representing 19.34% of total employees. The R&D system covers three major areas: environmental protection, energy storage, and mining equipment. In terms of environmental protection technology, the AI smart high-voltage power supply passed high-standard validation and overall reached an internationally leading level. The AI smart environmental protection island technology iterated and upgraded; for the first time, it participated in the drafting of international standards for green and low-carbon technologies in the steel industry, consolidating its leading technical position in the field of air pollution control.

Major breakthroughs were made in new energy technology R&D: in the energy storage field, the company completed the development of 170Ah sodium-ion battery samples. All performance indicators meet national standards. Purchase contracts have already been signed with customers, and the company plans to complete delivery of related orders in 2026. The R&D of 587Ah large-capacity energy storage battery cells is being carried out in an orderly manner. In the electric mining dump truck field, the company successfully broke through the technology barriers for large-tonnage pure electric mining dump trucks. The LK220E electric mining dump truck was rolled off and delivered in just nine months. The payload coefficient reached 1.75, and core performance indicators are industry-leading. The R&D of the larger-tonnage LK350E electric mining dump truck and the autonomous driving LK110EI electric mining dump truck is ongoing. As of the end of 2025, the company had more than 1,800 effective authorized patents (including nearly 600 invention patents). It has cumulatively led or participated in the drafting or revision of more than 200 international, national, industry, and group standards. Its technology barriers are deep.

V. Core Competitiveness: Leading Advantages and Zijin Synergy Empowerment

The company is the world’s largest R&D and manufacturer of industrial flue gas environmental protection and treatment equipment. Its technical level, application fields, and number of performance projects are all among the industry leaders. In areas such as large equipment manufacturing, system integration, supply-chain management, and quality control, it has built a distinctive core system capability. Its leading market position in environmental protection business is solid. In October 2025, the company launched a private placement to acquire additional shares aimed at its controlling shareholder Zijin Mining. It will issue approximately 168 million shares and raise RMB 2.0 billion. After the issuance is completed, Zijin Mining and its wholly owned subsidiaries’ combined shareholding ratio will increase to 33.76%. The controlling shareholder’s role in strategic guidance and synergistic empowerment for the company will be further strengthened.

As a global mining industry leader (Zijin Mining is the controlling shareholder of Longjing Environmental Protection), Zijin Mining provides the company with abundant application scenarios and a large market space for the development of its new energy business: for the green power business, it gives priority to deploying supporting projects for Zijin Mining’s mines domestically and overseas. The self-generated and self-used model provides consumption assurance, and profitability is stable. For the electric mining dump truck products, they are first promoted and applied in mines under Zijin Mining, quickly realizing technology iteration and commercial rollout. For the energy storage products, they can be matched with Zijin Mining’s overseas mine microgrid projects, with broad demand space. Relying on Zijin Mining’s industrial resources and global layout, the development certainty of the company’s new energy business is significantly higher than that of other companies in the same industry.

VI. Operating Business: Stable Returns and Strong Anti-Cyclical Attributes

The company’s operating business includes two segments: environmental protection facility operations and new energy power station operations. These segments feature stable returns, strong cash flow, and strong anti-cyclical attributes. In environmental protection operations, the company currently operates multiple BOT/BOO projects in the field of industrial flue gas treatment, including Chaoyang Steel, Laiwu Steel, Biaoxin Steel, Hanbao Steel, and others. In 2025, revenue from environmental protection equipment operation projects was RMB 241 million, and gross margin was as high as 49.36%. The operating business profit margin level is significantly higher than that of traditional engineering businesses.

The green power operations segment has formed scale-based revenue contributions. Existing projects operate stably. In 2025, a batch of key projects were built and commissioned successively, including Bayan Nur Zijin, Musonoi in the Republic of the Congo, and Phase II in Guyana. The load of the Phase I project at Xizang Lagouco increased rapidly and maintained stable high-load operation. It was selected as a national green and low-carbon advanced technology demonstration project by the National Development and Reform Commission for 2025. The green power business gross margin is close to 50%, and electricity-fee recovery is secured. It can continuously contribute stable profits and cash flow, effectively smoothing performance risks caused by cycle fluctuations in the environmental protection engineering business and enhancing the company’s overall operational resilience.

VII. Dividend Situation: Stable Returns and Advantages in Dividend Yield

The company places high importance on shareholder returns. The 2025 profit distribution proposal is to distribute cash dividends of RMB 3.80 per 10 shares (including tax), with a total planned cash dividend amount of RMB 483 million. The cash dividend amount represents 43.39% of the net profit attributable to ordinary shareholders of the listed company in the consolidated financial statements. The payout ratio has remained stable. Based on the closing price at the end of 2025, the dividend yield is approximately 3.5%. Based on the current share price (RMB 18.02), the dividend yield is 2.11%.

At the same time, the company implemented the 2024 stock option incentive plan and the employee shareholding plan. It granted 32.40 million stock options to 457 core management personnel and technical backbones, with an exercise price of RMB 11.95 per share. The employee shareholding plan transfer price was RMB 8.56 per share. This aligns the core team’s interests with the company’s long-term interests, which is beneficial for stabilizing the talent team and ensuring the implementation of the company’s dual-engine “environmental protection + new energy” strategy.

VIII. Risk Warning: Slower Accounts Receivable Recovery and Less-Than-Expected Project Implementation

Accounts receivable recovery risk: As of the end of 2025, the company’s book balance of accounts receivable was RMB 4.967 billion, and its allowance for bad debts was RMB 937 million. If the operating conditions of downstream customers deteriorate, there may be risks of slower accounts receivable recovery or even bad debts, which would have an adverse impact on the company’s cash flow and profitability levels.

Risk of raw material price fluctuations: In the energy storage business, the price of the main raw material, lithium carbonate, faces the risk of wide fluctuations. If the lithium carbonate price rises significantly in the future, it will compress the profitability of the energy storage business. Fluctuations in raw material prices in the environmental protection business, such as steel, will also affect gross margin levels of engineering projects.

Risk of new energy project implementation: The rollout and expansion of the green power projects and electric mining dump truck business are affected by multiple factors, including policy approvals and mine construction progress. If the implementation progress falls short of expectations, it will affect the achievement of the new energy business growth targets.

Risk of intensifying industry competition: The air pollution control industry is highly competitive. If a price war intensifies in the future, it may lead to a decline in the gross margin of the environmental protection business. As new entrants in new tracks such as energy storage and electric mining dump trucks continue to increase, market competition may gradually heat up.

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