\u3000\u3000 Longyan Zhuoyue New Energy Co.Ltd(688196) (688196)
China’s largest biodiesel enterprise, with continuous layout of new production capacity and new varieties and rapid growth: according to the announcement, the company is currently the biodiesel manufacturer with the largest production and marketing scale, the longest continuous operation time and the largest export volume in China. Through continuous independent R & D and innovation, the conversion rate and utilization rate of raw materials and waste oil are high, and the products meet the requirements of the EU market and are exported to it in large quantities. In the past five years, the compound annual growth rates of the company’s revenue and net profit have reached 36% and 48% respectively. At present, four biodiesel production bases have been built, with a total capacity of 380000 tons. It is expected that the capacity will reach 480000 tons in 2022. In the long term, 100000 tons of hydrocarbon based biodiesel project will be built. It is planned to complete the annual capacity of 750000 tons of biodiesel in three to five years The annual production capacity of bio based material products (industrial glycerol, bio ester plasticizer, environment-friendly alkyd resin, natural fatty alcohol, propylene glycol, etc.) reaches 200000 tons. It is estimated that the company’s net profit per ton of biodiesel in 2020 will reach 814 yuan / ton, and Q3 in 2021 will be higher, far exceeding other comparable companies in China.
Under the global carbon emission reduction target, Europe is expected to increase the import of gutter oil biodiesel and benefit China’s leading enterprises: according to the renewable energy directive (Red II) revised in Europe in 2018, by 2030, the total target share of renewable energy in the total final energy consumption of the EU will reach 32%, and the share of renewable fuels in the field of transportation will reach 14%, The new proposal of the European Commission in 2021 shows that this proportion is expected to further increase. At the same time, strict restrictions are imposed on bioenergy products with food crops as raw materials, which will bring long-term benefits to biodiesel produced from waste resources. Since the end of 2020, the trading price of EU emission quota (EUA) has risen rapidly, and the trading volume of certified emission reduction has been reduced to a low level, which has further driven the demand for “zero carbon fuel” biodiesel. Europe is the largest consumer of biodiesel. According to the OECD, the supply and demand gap of biodiesel in Europe is expected to exceed 3 million tons in the future. According to usdafas and the General Administration of customs, the output of biodiesel in China will be about 1.1 million tons in 2020, and the export volume will exceed 900000 tons. The export price will rise rapidly in 2021, with an increase of 45%, and the trend of supply exceeding demand is obvious. For every 10000 tons of waste oil and biodiesel produced in China, the tax can be reduced or exempted, that is, 10000 tons of waste diesel oil can be produced every year.
Neste, the largest renewable biodiesel enterprise, is expected to build a renewable platform: according to Neste’s announcement, Neste is the world’s largest renewable diesel enterprise, with a renewable product capacity of 3.2 million tons and an income of more than 30 billion yuan in 2020. Neste’s renewable biodiesel is a more advanced hydrocarbon based biodiesel than traditional biodiesel, with a gross profit of US $703 per ton. Neste can treat more than 10 kinds of raw materials, more than 80% of which are waste and residues, mainly including gutter oil, animal fat in food industrial waste, etc. Longyan Zhuoyue New Energy Co.Ltd(688196) also has the purification and processing technology for poor quality waste oil.
Neste has built a renewable industry platform by taking advantage of the industry’s first mover advantage, and the company has also continuously expanded the biodiesel industry chain. The strategy is to become an “integrated biomass energy” enterprise, which is expected to catch up with the pace of Neste and can develop in the future.
Investment suggestion: it is estimated that the net profit of the company from 2021 to 2023 will be 350 million yuan, 410 million yuan and 550 million yuan respectively, corresponding to PE 24, 20 and 15 times, maintaining the Buy-A rating.
Risk warning: raw material price fluctuation, production capacity construction progress is less than expected, etc.
