Recycled plastics are expected to replicate the dividend period of Biodiesel: after Europe increased the blending ratio and allowed 20% or 30% biodiesel to be added to fossil diesel since 2015, Chinese biodiesel enterprises began to enjoy the dividend period, Longyan Zhuoyue New Energy Co.Ltd(688196) and Zhejiang Jiaao Enprotech Stock Co.Ltd(603822) began to export to Europe in 16 and 17 years respectively, and then made considerable profits. The policy of recycled plastics in Europe lags behind that of biodiesel for about 5 years. The 21 year EU sup plastic ban Directive requires that “the proportion of recycled plastics in disposable beverage containers with pet as the main component shall not be less than 25% by 2025 and 30% by 2030”. We believe that the recycled plastics industry is also expected to enjoy a period of policy dividend in Europe. In addition, the recent rapid rise in oil prices is expected to accelerate the replacement process of raw firewood for fossil diesel, stimulate the demand for raw firewood, and the price of raw firewood has also risen to 10430 yuan / ton. The rise in oil prices also led to the rise in the price of primary PET bottles and chips, which also led to the price of recycled PET bottles and chips. The price of recycled PET bottles and chips in Europe rose to 1690 euros / ton, a record high.
In the formal recycling system, recycled plastics are more mature: from the raw material side, the raw materials of biodiesel and recycled plastics are waste, which depends on the establishment of waste recycling system. Biodiesel: due to the existence of the policy of “not competing with people for food”, the raw material of biodiesel in China mainly uses gutter oil. However, the formal waste oil recovery system needs to be improved. According to statistics, in 2018, the total consumption of edible oil in China was 34.4 million tons, and the recovered waste oil was about 4.1 million tons, with a recovery rate of only 11.9%. Most areas rely on self-employed households for door-to-door recovery. Recycled plastics: the raw materials of recycled plastics are their corresponding primary waste plastics. Although the overall recovery rate of waste plastics in China is not high, only 30% in 2019, the recovery rate of PET bottles is as high as 94%. The reason is that China has a set of efficient PET bottle recovery system driven by economic interests. Scavengers, middlemen and recycling stations are profitable in the process of recycling waste plastic bottles. In the future, when the demand for biodiesel and food grade recycled PET breaks out, the raw materials of waste PET bottles are relatively abundant, and the impact of demand growth on the price of raw materials will be less than that of raw firewood on the price of gutter oil.
In the process of development, the industry pattern of recycled plastics is more stable: more and more enterprises pay attention to the dividend of firewood, such as Bece Legend Group Co.Ltd(000803) , Oriental Energy Co.Ltd(002221) and other enterprises entering this field. However, raw firewood is a bulk product, and the downstream is a fuel oil trader, and the certification barrier is not high. We believe that with the release of production capacity, the competition in the industry will intensify, the profits of processing links may decline, and the competition among enterprises will turn to the competition of integration ability. In contrast, the downstream customers of recycled PET are consumer goods companies, and the price is not the primary consideration of consumer goods companies. Safe and stable supply is the key. Enterprises such as Coca Cola have extremely strict certification requirements. Different from the completely competitive market such as biodiesel, we believe that the pattern of recycled PET will be relatively stable in the development process of the industry. The original PET bottle chip enterprises naturally have advantages in sales channels and are expected to take the lead in the field of recycling.
Recently, the investment logic of Longyan Zhuoyue New Energy Co.Ltd(688196) ( Longyan Zhuoyue New Energy Co.Ltd(688196) , not rated), Zhejiang Jiaao Enprotech Stock Co.Ltd(603822) ( Zhejiang Jiaao Enprotech Stock Co.Ltd(603822) , not rated), Bece Legend Group Co.Ltd(000803) ( Bece Legend Group Co.Ltd(000803) , not rated) in biodiesel field has been recognized by the market. We believe that Europe’s biodiesel policy has been ahead of the recycled plastics policy for five years. Chinese firewood enterprises have enjoyed dividends for some time, and the recycled plastics industry is expected to enjoy a policy dividend period in the future. In terms of recycling system and future industry pattern, recycled PET is better than biodiesel. Therefore, now is a good opportunity to lay out the recycled plastic track. It is suggested to pay attention to the investment opportunities of EPC service provider Beijing Sanlian Hope Shin-Gosentechnical Service Co.Ltd(300384) ( Beijing Sanlian Hope Shin-Gosentechnical Service Co.Ltd(300384) , buy), which has mastered the core technology of recycled PET, and Shandong Intco Recycling Resources Co.Ltd(688087) ( Shandong Intco Recycling Resources Co.Ltd(688087) , not rated), China Resources Chemical Innovative Materials Co.Ltd(301090) ( China Resources Chemical Innovative Materials Co.Ltd(301090) , not rated) and wankai new materials (301216, not rated).
Risk tips
The sharp decline of crude oil price leads to the loss of cost advantage of recycled materials; The implementation of relevant policies is less than expected; The emergence of new technologies to replace existing regeneration technologies; Changes in assumptions affect the calculation results
