Recently, Caitong Securities released a research report expressing optimism about the long-term development of Luen Mei Quantum as an integrated energy enterprise and issued an initial “Overweight” rating.

According to the report, Luen Mei Quantum has maintained a solid presence in the heating market, with stable service areas and a well-established planning framework. The company currently operates nine centralized heating and combined heat and power generation plants in Shenyang, covering a planned heating area of 150 million square meters. Its service areas include seven administrative districts, such as Hunnan and Huanggu, and it has partnered with nearly 600 residential projects developed by well-known brands such as Gemdale, Evergrande, Country Garden, and Wanda on access to the heating supply network to provide heating services to over 700,000 households.

Caitong Securities highlighted that Luen Mei Quantum is the largest private professional heating company in Shenyang, with its heating area increasing by an average of 3.252 million square meters annually over the past five years. By the end of 2022, the company’s heating coverage had expanded to 72.26 million square meters. The report noted that the gross profit margin of the company’s heating business significantly exceeds that of its competitors and attributed this to Luen Mei’s superior cost control capabilities, a competitive edge that the company will continue to maintain in the future.

The report further noted, “Luen Mei Quantum is poised to leverage its leadership to drive revenue growth. Over the next 3-5 years, the tight supply-demand situation for coal is unlikely to see a dramatic shift. To mitigate the risks associated with persistently high coal prices, Luen Mei has established long-term cooperative relationships with coal mining enterprises, secured long-term fixed pricing agreements, increased off-season coal purchases, and adopted refined management practices to optimize production efficiency.”

Caitong Securities concluded that as Luen Mei Quantum continues to expand its heating coverage, the company is expected to further scale its business and enhance its financial performance, capitalizing on its industry-leading position.