Bece Legend Group Co.Ltd(000803) (000803)
1. Bece Legend Group Co.Ltd(000803) : seize global carbon reduction opportunities according to high-quality core assets
Since the listed company completed major asset restructuring in 2020, its performance has improved rapidly. At present, the company focuses on Shifang environmental energy, a wholly-owned subsidiary, and Xincheng thermal, a holding subsidiary, and carries out two main businesses: harmless treatment and resource utilization of kitchen waste and urban clean heating. The company is the only listed company focusing on the resource utilization of kitchen waste in China and a leading enterprise in the subdivided field of investment and operation of organic solid waste in China. The company’s main business is expected to enter a period of rapid development as the world moves towards the era of “carbon neutrality”.
2. Kitchen waste oil business: few A-share companies have opened up the kitchen waste oil industry chain, and they want to become a global leader in UCO industry after 10 years of cultivation
Currently, it is mainly operated by Shifang Huanneng, a wholly-owned subsidiary, The main product is biodiesel feedstock UCO (waste edible oil). There is a clear gap between the market situation of biodiesel in China and abroad. As of 2021, USDA predicts that the total output of biodiesel in China will be about 1.6 million tons, of which: 1) about 1.2 million tons will be exported. In recent years, the energy use structure of many countries around the world has changed quietly, and the demand for biofuels has increased. Among them, the EU is the main consumption area, and UCO is its second largest producer The consumption of raw materials is increasing year by year due to many factors. Since 2021, China’s export of UCO has reached 900000 tons, with a year-on-year growth rate of about 30%, and the export price once exceeded 8000 yuan / ton; 2) Only about 400000 tons are for self use. The development of China’s industry is mainly restricted by the difficulty of upstream raw material collection and the lack of downstream promotion. With the advent of the “double carbon” era, China’s biodiesel supply to the Chinese market is expected to benefit from the change of two tracks in the field of vehicle fuel and environmental protection materials, or re-enter the high growth track.
We believe that China’s demand for biodiesel should have at least 10 million tons of space to be supplemented. If the raw material structure is the same as that at present, and 1.1 unit of UCO produces 1 unit of biodiesel, the use of UCO will also increase significantly. Since 2021, the company has signed a 10000 ton UCO sales order with Luke, an international crude oil giant; Obtain UCO’s “pass” ISCC for sale to the EU; And still improving production capacity.
3. Urban clean heating business: sign a heating contract with Beijing Tongzhou government to share the dividend of the rapid development of the urban sub center
Xincheng thermal power, a holding subsidiary, is mainly responsible for. The company’s management area is about 7 million square meters, all located in the sub central area of Beijing, involving more than 70 communities and more than 50000 resident households and non resident units. The company expects to exceed 10 million square meters in the next three years, and the planned total heating area in the region is about 35 million square meters. Relying on the rapid development of Beijing Sub Center, the heating area will have great growth potential in the future.
4. Profit forecast & investment suggestion: we expect that from 2021 to 2023, the company will realize a revenue of 630 / 955 / 1606 million yuan, and a net profit attributable to the parent company of 83 / 200 / 415 million yuan, corresponding to eps0.1 million yuan 34 / 0.82/1.71 yuan / share. We are optimistic that the company will benefit from the increased demand for renewable energy in the “double carbon” era, the continuous expansion of the company’s production capacity, enter the global leader in kitchen waste oil, give the company 36 times PE in 2022, the target price is 29.52 yuan, and give a “buy” rating for the first time. Risk warning: the progress of kitchen project is not as expected; Risks of changes in environmental protection industrial policies and local subsidies; Risk of changes in heating charge price and heat source price; Risk of adjustment or termination of heating operation right; Capacity expansion is less than expected; Goodwill impairment risk; Share price change risk.
