Target price HK$44! CITIC Securities: First Global “AI Biosynthesis+CCUS First Stock” Shougang Langze (02553) “Buy” Rating
The Zhitong Finance App learned that CITIC Securities released a research report stating that it covered Shougang Langze (02553) for the first time and gave it a “buy” rating. The target price was as high as HK$44. Compared with HK$26.38 at the time of publication of the research report, there is still room for 66.79% increase. As new projects are gradually put into operation, the company's revenue for 2026-2028 is expected to be 6.57/8.60/1,546 billion yuan, respectively. As an AI synthetic biotechnology CCUS specialist and new leader, the company is pressured by gas sources and ethanol prices in the short term; however, as the product matures and the production capacity of the four major bases continues to be restored, the company relied on park gas supply projects to ease gas source restrictions, open up incremental technology licensing models, and superimpose generation 1 and 2 core technology updates and iterations and policy dividends. Many new business pipelines such as SAF, green polyethylene, and bioactive peptides are progressing simultaneously, and there is plenty of room for development in the medium to long term.
CITIC Securities's main views are as follows:
“The first carbon capture stock” landed in Hong Kong stocks, and profits are still in the recovery window
Shougang Langze is a high-tech enterprise owned by Shougang Group and some of the technologies licensed by Langze Technology Hong Kong. Its main business is to convert industrial exhaust gas from steel and ferroalloy into two major products: ethanol and microbial protein through gas fermentation technology. As the first company in the world to commercialize synthetic biological CCUS technology, the company was awarded the “Little Giant” with national expertise and new focus, and its low carbon practice was selected as a model case at the International Climate Conference. At this stage, the company is in a business development period, and financial performance is under pressure in stages. Losses continued in 2025 due to the ethanol price war and gas source fluctuations, but in 2026Q1, the average price of ethanol rebounded month-on-month and capacity utilization recovered to 54.8%; microbial protein continued to have positive gross profit, and operating quality improved marginally. As irrational competition in the industry ends and production capacity is implemented, the company's potential to reverse losses is expected to be realized.
Synthetic biological CCUS 10 billion blue ocean opens, policy and market are driven by two wheels, fuel ethanol and microbial protein markets are booming
Driven by the dual carbon target, the CCUS industry is upgrading from single capture to high-value utilization, and synthetic biotechnology has become the key to breaking the game. According to the company's prospectus, Shougang Langze, as the global leader in synthetic biological CCUS, has a first-mover advantage. In the field of fuel ethanol, industry pricing order has been restored, green application scenarios have been extended to sustainable aviation fuels, etc., and the exhaust ethanol route has increased growth certainty as a non-food technology route with cost advantages and policy incentives. Microbial protein meets the immediate needs of food security and the reduction of feed soybean meal. With the advantages of high protein and low cost, the cost performance ratio of imported fishmeal is outstanding, and there is broad market replacement space. As a pioneer in technology commercialization, the company is expected to continue to consolidate its leading position in industry expansion and competitive landscape optimization.
Take more measures to optimize pain points at the production end, and open up profit margins with light assets, technological innovation, and carbon premiums
According to the company's prospectus, in terms of raw materials, in order to solve the problem of unstable gas sources, the company systematically broke the gas supply bottleneck through unified gas supply support and purification technology reform in Pingluo Park in Ningxia. In terms of business models, although domestic green fuel projects have broad prospects, the asset-heavy model of large-scale self-built projects faces greater financial and operational pressure, and the company is also actively exploring asset-light models with technical licensing. The gross margin of about 87% of the Mingtuo project in 2024 verified the high profitability advantages of this model; currently, relevant reserve customers and framework agreements are progressing in an orderly manner. In terms of green premiums, the company innovated and invested in the construction of carbon-negative second-generation technology, directly fixed 0.5 tons of CO 2 per ton of ethanol production, and accelerated the promotion of green certification. The CCER methodology is being submitted to the Ministry of Ecology and Environment for approval. According to the bank's estimates, the green license revenue for a single ton of ethanol from Generation 1 Technology can reach about 392.4 yuan, and green revenue is expected to become a new profit growth point for the company.
Lay out SAF and diversified high value-added products, and multi-dimensional growth is fueling future profit release
The company has a forward-looking layout of the sustainable aviation fuel (SAF) business. Looking at the industry outlook, according to Frost & Sullivan's (quoted from the company's prospectus), the domestic SAF market is expected to explode to 17.5 billion yuan at a CAGR of 87% in 2025-2030, and the global SAF market is expected to directly point to the 200 billion dollar market size. Relying on the low-cost raw material endowment of industrial exhaust to ethanol, the company is preparing to build the first 50,000 ton ethanol SAF facility in China (scheduled to be put into operation in 2027). According to the bank's estimates, the cost per ton is about 10,500-13,700 yuan, which is comparable to the cost competitiveness of mainstream HEFA routes; it is also simultaneously promoting many collaborations in production capacity, technology, and standard systems to seize development opportunities. In addition, the company's long-term layout of high-growth, high-value-added product systems such as green polyethylene and bioactive peptides have also been steadily cultivated, and multi-dimensional profit growth is taking shape.
risk factors
Gas source dependency risk; risk of product price fluctuation; risk of customer and supplier concentration, etc.