2025 results miss our expectations; 1Q26 results in line

2025 results: Revenue fell 4.3% YoY to Rmb8.38bn; Attributable net profit fell 11.1% YoY to Rmb1.14bn, missing our expectations, as: 1) cross-border logistics were affected by upstream mines; and 2) profit recognition of Mongolian coal supply chain was delayed.

1Q26 results: Revenue fell 15.8% YoY to Rmb1.93bn; Attributable net profit grew 25.2% YoY to Rmb328mn, in line with our expectations.

Trends to watch

In 2025, the Mongolian coal supply chain and cross-border logistics businesses were under pressure: 1) Revenue from the Mongolia coal supply chain fell 10.0% YoY to Rmb5.17bn, and gross profit fell 29.0% YoY to Rmb542mn. Lower-than-expected earnings were due to delayed recognition of Mongolian coal contract; 2) Cross-border logistics: Revenue fell 2.1% YoY to Rmb2.40bn; gross profit fell 14.4% YoY to Rmb641mn; business volume was under pressure due to the impact on production at some upstream mines. 3) Land port projects: Revenue rose 24.4% YoY to Rmb615mn; gross profit grew 28.8% YoY to Rmb366mn, in line with market expectations.

We are upbeat on the firm’s long-term growth drivers given its continued expansion in Africa in 2026. The firm

announced on February 24 that it had obtained the Toll Collection Permit for the 17.26km road and toll station between Ndola and Sakania in Zambia. On April 2, it announced that it would co-invest in the Tanzania-Zambia Railway Activation Project (investment of US$62.15mn, accounting for 5% of the total). Coupled with the construction of the Zambian Sakania Port and the potential Tunduma Port and Tanga Port, we believe that this is still the year for the firm to focus on Africa, where the logistics market is fragmented and efficiency needs to be improved. We believe the firm will enjoy substantial growthmomentum thanks to its logistics network.

Financials and valuation

Considering the pressure on cross-border logistics and structural changes in coal types in the Mongolian coal supply chain, we lower our 2026 earnings forecast 17.5% to Rmb1.30bn, and introduce our 2027 earnings forecast at Rmb1.51bn, with earnings growth of 14.6% and 16.0% YoY in 2026 and 2027. The stock is trading at 14.2x and 12.2x 2026e and 2027e P/E. Maintain OUTPERFORM. Considering the firm’s scarcity value as a target in the cross-border logistics market, especially in Africa, we keep our TP unchanged at Rmb14.8 (15.6x 2026e P/E and 13.4x 2027e P/E), offering 9.9% upside.

Risks

Slower-than-expected commissioning of African projects; rising oil prices weigh on production at mines.