Longyan Zhuoyue New Energy Co.Ltd(688196) (688196)
Event: the company announced that it has signed a project investment agreement with Xinluo District People’s government. The company plans to invest 1.05 billion yuan to build a 200000 ton biodiesel and bio based plasticizer construction project. It is expected that the project will be fully completed and put into operation within 24 months after the project obtains the construction license.
Increase the production capacity planning of biodiesel and bio based plasticizer and build a “biomass energy integration” layout: according to the announcement, at present, the company has an annual output of 380000 tons of biodiesel and 90000 tons of bio based materials. The production capacity of biodiesel is expected to reach 480000 tons in 2022, and 100000 tons of hydrocarbon based biodiesel project will be built in the long term. According to the announcement, the ” Longyan Zhuoyue New Energy Co.Ltd(688196) biodiesel and bio based plasticizer construction project” plans to invest a total of 1.05 billion yuan to achieve an annual output of 200000 tons of biodiesel and bio based plasticizer, which is expected to increase sales revenue by 1.5 billion yuan and profit and tax by 260 million yuan. The project implementation still needs to go through the land, project approval, environmental assessment and other pre procedures, and the construction period is 2 years. Bio based plasticizer is one of the new bio based green materials for deep processing of biodiesel. It is degradable and non-toxic. It is mainly used in plastic products, plastic runway and other fields. At present, the company’s capacity utilization is at full capacity. The new capacity will make full use of the comprehensive advantages of the company’s Meishan biodiesel production base, rapidly expand the capacity scale and strengthen the company’s “biomass energy integration” layout.
The adjustment and implementation of global carbon emission regulations are conducive to the demand for “zero carbon fuel” biodiesel, and the trend of supply exceeding demand is obvious: according to the announcement, the revised Red II legislation will be officially implemented in 2021. At the same time, according to the latest proposal of the European Commission in July 2021, The new proposal proposes that the EU’s overall share of renewable energy in total final energy consumption will increase from 32% to 40% by 2030, and the share of renewable fuels in final energy consumption in the transport sector will increase from 14% to 26%. The new proposal also proposes to adjust the biofuel policy and significantly limit the upper limit of biofuels using food crops as raw materials. In particular, the proportion of palm oil raw materials will be gradually reduced to 0% from 2023 to 2030, which will bring long-term benefits to the biodiesel produced from waste resources. According to the data of the General Administration of customs, the export volume of biodiesel in China reached 1123000 tons in the first 11 months of 2021, with a year-on-year increase of 39.4%. The export price rose rapidly. It exceeded 10000 yuan / ton in November 2021, an increase of nearly 50% compared with the beginning of 2021. The trend of supply exceeding demand is obvious.
Investment suggestion: it is estimated that the net profit of the company from 2021 to 2023 will be RMB 280 million, RMB 400 million and RMB 550 million respectively, corresponding to 27, 19 and 14 times of PE, maintaining the Buy-A rating.
Risk warning: raw material price fluctuation, production capacity construction progress is less than expected, etc
