Stock Analysis & Valuation Lets Holdings Group Co., Ltd. (002398.SZ)

• Previous Close: $5.88
• Sector Valuation Confidence Level: Moderate

Valuation method	Value, $	Upside, %
Artificial intelligence (AI)	26.19	345
Intrinsic value (DCF)	2.23	-62
Graham-Dodd Method	4.06	-31
Graham Formula		n/a

Strategic Investment Analysis

Company Overview

Lets Holdings Group Co., Ltd. (002398.SZ) is a prominent Chinese construction materials and engineering services company with a distinguished history dating back to 1980. Headquartered in Xiamen, the company operates across China and internationally, specializing in concrete manufacturing and comprehensive construction services for critical infrastructure projects including nuclear power plants, ports, bridges, tunnels, highways, high-speed rail, and subways. Beyond traditional materials supply, Lets Holdings has strategically diversified into high-value technical services encompassing surveying, design, testing, evaluation, and consulting throughout the entire engineering lifecycle. The company has embraced digital transformation, offering information and intelligent services for the construction industry, Internet-based supply chain big data solutions, and BIM-based building information systems. Formerly known as Xiamen Academy Of Building Research Group Co., Ltd., the company rebranded in 2019 to reflect its expanded vision and technological focus. As China continues its massive infrastructure development, Lets Holdings occupies a strategic position at the intersection of traditional construction materials and digital innovation, serving both public and private sector projects with integrated solutions.

Investment Summary

Lets Holdings presents a mixed investment profile with moderate appeal. The company's modest market capitalization of approximately CNY 3.59 billion and beta of 0.716 suggest lower volatility relative to the broader market. While revenue of CNY 2.62 billion is substantial, net income of CNY 49.26 million reflects thin margins of around 1.9%, indicating intense competition and pricing pressure in the construction materials sector. Positive operating cash flow of CNY 334 million and a reasonable dividend yield provide some stability, but high capital expenditures relative to net income suggest ongoing investment requirements. The company's strategic pivot toward digital construction services and technical consulting could drive future margin improvement, though execution risk remains. Investors should monitor the company's ability to leverage its technical heritage to capture higher-value service contracts while managing debt levels and maintaining cash flow stability.

Competitive Analysis

Lets Holdings operates in a highly fragmented and competitive Chinese construction materials market. The company's competitive positioning is bifurcated between its traditional construction materials business and its emerging technical services division. In the concrete and materials segment, Lets faces intense competition from large-scale commodity producers who compete primarily on price and scale. However, the company differentiates through its specialized expertise in high-specification projects like nuclear power and major infrastructure, where technical requirements create barriers to entry. The more promising aspect of Lets' competitive advantage lies in its technical services division, leveraging its origins as a research academy. This heritage provides credibility in engineering consulting, testing, and evaluation services that pure materials producers cannot easily replicate. The company's investments in BIM technology and construction industry digitalization represent a forward-looking strategy to create sticky customer relationships through integrated solutions. Nevertheless, Lets lacks the scale advantages of China's largest construction materials conglomerates and must compete against specialized engineering firms with deeper technical expertise in specific domains. The company's regional focus around Xiamen provides local market knowledge but may limit national expansion opportunities against competitors with broader geographic coverage. Success will depend on effectively cross-selling higher-margin technical services to its existing materials customer base while defending market share in commoditized product categories.

Major Competitors

• China State Construction Engineering Corporation (601668.SS): As China's largest construction and engineering firm, CSCEC possesses massive scale and resources that Lets cannot match. The company dominates public infrastructure projects nationwide through its state-owned enterprise status and political connections. However, CSCEC's bureaucracy and focus on mega-projects may create opportunities for Lets in specialized, technically complex mid-sized projects where agility and niche expertise provide competitive advantages.
• Anhui Conch Cement Company Limited (600585.SS): Anhui Conch is China's largest cement producer with superior economies of scale in basic materials manufacturing. The company's cost advantages in cement production create significant pricing pressure for Lets' concrete business. However, Anhui Conch focuses primarily on commodity cement rather than specialized concrete formulations or integrated engineering services, allowing Lets to differentiate through technical capabilities and project-specific solutions.
• Beijing New Building Materials PLC (000786.SZ): BNBM specializes in gypsum board and other building materials with strong brand recognition and distribution networks. The company's focus on light building materials for commercial and residential construction differs from Lets' infrastructure orientation. BNBM's strength in standardized building products contrasts with Lets' project-based business model, though both companies face similar challenges of raw material cost volatility and environmental regulations.
• Li Ning Company Limited (2331.HK): Note: This appears to be an incorrect competitor listing. The actual major competitor in technical construction services would be companies like China Railway Group (601390.SS) or China Communications Construction Company (601800.SS), which compete directly with Lets in infrastructure engineering and construction services with substantially greater resources and project experience.
• CMOC Group Limited (603993.SS): Note: This appears to be an incorrect competitor listing as CMOC is a mining company. A more relevant competitor would be Shanghai Construction Group (600170.SS) or other regional construction engineering firms that compete with Lets in technical services and specialized construction projects.