Biodiesel is becoming the focus of institutional investors.
Longyan Zhuoyue New Energy Co.Ltd(688196) ( Longyan Zhuoyue New Energy Co.Ltd(688196) . SH), China’s leading biodiesel enterprise, recently disclosed the information of institutional research in March. The company received at least 10 institutional research in March, including nearly 60 institutions including Guotai Junan Securities Co.Ltd(601211) securities, Sinolink Securities Co.Ltd(600109) , Wells Fargo fund, Haitong Securities Company Limited(600837) , Dacheng Fund and so on.
On April 18, all the “biodiesel concept stocks” in the A-share market rose, of which Longyan Zhuoyue New Energy Co.Ltd(688196) above 2.77% closed at 60.02 yuan, Zhejiang Jiaao Enprotech Stock Co.Ltd(603822) ( Zhejiang Jiaao Enprotech Stock Co.Ltd(603822) . SH) rose 4.37% to 42.49 yuan, Beijing Sanju Environmental Protection & New Materials Co.Ltd(300072) ( Beijing Sanju Environmental Protection & New Materials Co.Ltd(300072) . SZ) rose 1.91% to 5.86 yuan, and Bece Legend Group Co.Ltd(000803) ( Bece Legend Group Co.Ltd(000803) . SZ) rose 1.19% to 13.61 yuan.
“biodiesel has lower carbon emissions than fossil fuels in the whole life cycle and enjoys carbon tax preference in Europe. However, the current engine can not completely use fatty acid methyl ester biodiesel as fuel.” Guotai Junan Securities Co.Ltd(601211) securities environmental protection chief analyst Xu Qiang said in an interview with the 21st Century Business Herald reporter that the carbon neutralization goal of the International Aviation Association and the EU has promoted the evolution of China’s waste oil utilization from simple fatty acid methyl ester to biological hydrocarbon based diesel / aviation coal, with a significant increase in added value. “At the same time, the bottleneck of raw material supply has been gradually lifted, and the biodiesel industry has ushered in a pattern of double rise in volume and price.”
waste oil value of “waste utilization” H4 / H4
Few people know that biodiesel, which has attracted much attention from the capital market, comes from the waste oil abandoned by large and small restaurants in urban life (i.e. used cooking oil in a broad sense, referred to as UCO).
Data show that biodiesel is a fatty acid methyl (b) ester made from animal and vegetable oils or waste oils by transesterification or esterification of methanol or ethanol under the action of catalyst. It can replace fossil diesel as a renewable fuel. It is an internationally recognized renewable clean energy, which is mainly used in the field of power fuel and bio based materials.
Western Securities Co.Ltd(002673) research report points out that the main raw material for biodiesel production in the world is soybean oil, accounting for about 67%; Followed by corn oil and rapeseed oil. In China, biodiesel is mainly produced from non grain raw materials such as catering waste oil (UCO).
Xu Qiang told the 21st Century Business Herald that China has advantages in the raw material side of waste oil. China’s output of gutter oil is the highest in the world. According to Irena, China’s annual output of gutter oil is 5.58-10 million tons, accounting for more than 31% of the global output of gutter oil.
Under the adjustment and implementation of global carbon emission regulations and China’s “double carbon” policy, biodiesel products are in short supply in the global market because of their carbon dioxide emission capacity far lower than that of fossil fuels under the same combustion efficiency.
In the A-share market, biodiesel enterprises represented by Longyan Zhuoyue New Energy Co.Ltd(688196) , Zhejiang Jiaao Enprotech Stock Co.Ltd(603822) actively expanded their production to meet the growing demand for “zero carbon” and “low carbon” fuels in overseas markets such as the European Union and China’s energy market, and made great achievements last year.
On April 7, Zhejiang Jiaao Enprotech Stock Co.Ltd(603822) disclosed the 2021 annual report. During the reporting period, the company achieved an operating revenue of 1.916 billion yuan, a year-on-year increase of 55.77%; The net profit attributable to the parent company was 102 million yuan, with a year-on-year increase of 174.61%, which was due to the increase of the operating revenue of the main business of environmental protection plasticizer products and biomass energy products and the increase of the gross profit margin
On March 29, the 2021 annual report disclosed by Longyan Zhuoyue New Energy Co.Ltd(688196) revealed that during the reporting period, the company achieved an operating revenue of 3.083 billion yuan, an increase of 92.91% year-on-year; The net profit attributable to the parent company was 345 million yuan, a year-on-year increase of 42.33%. The main reason for the performance growth is Longyan Zhuoyue New Energy Co.Ltd(688196) ‘s “rapid growth in biodiesel production and booming production and sales”, especially “the company’s new 100000 ton biodiesel project in Meishan plant reaches the production capacity on schedule, and other plants produce at full capacity, resulting in a significant increase in biodiesel production and sales”.
Another biodiesel concept company – Beijing Sanju Environmental Protection & New Materials Co.Ltd(300072) has not disclosed its annual report for 2021, but its expected performance turns losses into profits. It is estimated that the net profit attributable to the parent company in 2021 will be 69-103 million yuan.
On April 10, 21st Century Business Herald reporters sent interview emails to Longyan Zhuoyue New Energy Co.Ltd(688196) , Zhejiang Jiaao Enprotech Stock Co.Ltd(603822) and Beijing Sanju Environmental Protection & New Materials Co.Ltd(300072) respectively, but as of April 18, they had not received replies from the above three companies.
Earlier, Bece Legend Group Co.Ltd(000803) also disclosed the annual report of 2021. During the reporting period, the company achieved an operating revenue of 827 million yuan, a year-on-year increase of 138.33%; The net profit attributable to the parent company was 81 million yuan, with a year-on-year increase of 78.38%. The reason is that “the high price of waste edible oil of the company’s food waste recycling products has improved the profitability of the company.”
“the company’s waste oil procurement mainly comes from the company’s own production and outsourcing, and acidified oil will be added later, and some partners will also give some support.” Bece Legend Group Co.Ltd(000803) relevant person in charge said in an interview with 21st Century Business Herald that the company is currently cooperating with Shandong Binhua Binyang Fuel Chemical Co., Ltd. and plans to carry out biomass diesel production through the establishment of a joint venture. “The two sides have set up a special working group to jointly promote the implementation of the project as soon as possible.”
European market demand has increased significantly H4 / H4
Europe is the most important market for Chinese biodiesel enterprises.
“Chinese biodiesel enterprises are mainly exported to the European market.” In an interview with 21st Century Business Herald, Xu Qiang said that the demand for biodiesel in Europe is driven by the EU renewable energy directive (Red II). “The EU’s demand for renewable biofuels is expected to increase significantly, especially advanced biofuels, which will receive long-term policy support and encouragement.”
In 2018, the EU adopted the renewable energy directive II (Red II), which stipulates that “by 2030, the EU will reduce greenhouse gas emissions by at least 40% (from 1990 levels) and achieve net zero emissions by 2050; at least 32% of total energy use comes from renewable energy; energy efficiency will be increased to at least 32.5%. Renewable fuels account for no less than 14% of fuel consumption in the transportation sector.”
On July 14, 2021, the European Commission proposed after revising Red II: “by 2030, the EU’s greenhouse gas emission reduction target will increase from 40% previously set to 55%; the proportion of renewable energy in the total energy consumption of the EU will increase from 32% to 40%; the proportion of renewable fuel in the fuel consumption of the transportation sector will increase from 14% to 26%.
The revised Red II is expected to be adopted by the end of 2022. “
The overweight of policy has led to the growth of demand. According to the data of the General Administration of customs, the export volume and export amount of biodiesel products in China increased steadily from 2014 to 2020, with CAGR (compound annual growth rate) of 86.1% and 88% respectively. In 2021, China’s export volume of biodiesel reached 1.29 million tons, and the export price rose rapidly to more than 10000 yuan / ton, an increase of 52% over the beginning of 2021.
The agency is also very concerned about the demand of the European market. In the survey of Longyan Zhuoyue New Energy Co.Ltd(688196) in March this year, the most concerned question of the organization is “what is the demand of the European market?”
In response, Longyan Zhuoyue New Energy Co.Ltd(688196) ‘s reply was, “the European Commission proposed in a plan outline on March 8 that Europe should accelerate the transformation of clean energy in order to get rid of its excessive dependence on fossil energy. The conflict has exacerbated the uncertainty of energy supply risks in Europe and prompted Europe to accelerate the pace of replacing fossil energy with non fossil energy.”
In addition to biodiesel, China is also a major exporter of UCO (waste oil) in the European Union, and waste oil will be the main source of biodiesel instead of palm oil in the future.
Due to the enforcement of EU policies and the impact of the epidemic since 2020, European biodiesel producers also lack UCO raw materials. Therefore, China’s UCO export volume is also rising rapidly in recent years.
According to Argus data, in 2020, China’s UCO export volume reached about 900000 tons, with a year-on-year growth rate of about 30%. By the second half of 2021, due to the continuous market gap, the selling price of UCO per ton will exceed 8000 yuan / ton.
“at present, the UCO of the company is mainly sold to Europe. The high price of waste oil is mainly due to the short supply in Europe. The EU has formulated laws to gradually restrict the biomass diesel with palm oil as raw material after 2023. Now, the proportion of palm oil exported to the EU is still very large. If this part is restricted, the waste oil with very good carbon reduction effect is a good supplement and replacement.” The above Bece Legend Group Co.Ltd(000803) relevant person in charge told the 21st Century Business Herald reporter
“the main source of waste oil is East Asia. The output of waste oil in China is more than 10 million tons. If it can be used as a resource, our statistical data may be several million tons, and even less if it is processed into biomass diesel. Therefore, UCO is very scarce from the source, and the current demand in Europe is rigid, so the company is cautious and optimistic.”
biodiesel “Qianjing” geometry H4 / H4
Despite the strong demand for biodiesel in Europe, China’s biodiesel production capacity is limited due to the supply of raw materials.
“our research results show that although some listed companies have proposed to expand biodiesel business and planning, many places are actually idle. The main reason is that the supply of raw materials can not be guaranteed. If the raw materials are unstable, it is likely to lead to overcapacity and idle.” A chemical industry analyst at a securities firm told the 21st Century Business Herald that the collection, transportation and disposal of kitchen waste and oil production have been affected to a certain extent since this year. “Now many enterprises that want to expand production or put into production biodiesel are subject to the supply of UCO.”
In the interview, the 21st Century Business Herald reporter learned that Bece Legend Group Co.Ltd(000803) the kitchen waste treatment is a heavy asset operation mode. The company plans to increase from 6 Faw Jiefang Group Co.Ltd(000800) 0 tons / day in 2022 to 8 Tcl Technology Group Corporation(000100) 00 tons / day in 2023.
The above Bece Legend Group Co.Ltd(000803) relevant person in charge said that when the layout of heavy assets reaches this volume, the expansion will slow down, and the total amount of high-quality projects is limited. “The company can’t ignore quality for the sake of scale, so the scale will always be controlled. From the perspective of raw material end support, we hope to achieve a scale of 300000 tons in 2022, 500000 tons in 2023 and 700000 tons in 2024.”
At the performance presentation meeting on April 12, Longyan Zhuoyue New Energy Co.Ltd(688196) Dong Secretary Zheng Xuedong also told investors that the company currently has a production capacity of 400000 tons of biodiesel and 90000 tons of bio based materials. The main workshop of the new 100000 ton biodiesel project has been fully capped and is expected to be completed in October. In addition, the company’s annual output of 100000 tons of hydrocarbon based biodiesel and 50000 tons of natural fatty alcohol are expected to start construction in the second half of the year.
In the investigation in March this year, Longyan Zhuoyue New Energy Co.Ltd(688196) also disclosed to institutional investors that the preliminary work of the company’s project with an annual output of 200000 tons of biodiesel and bio based plasticizer and the project with an annual output of 50000 tons of propylene glycol are in progress.
With tight supply and growing demand, this is undoubtedly a time of high prosperity and best performance for the biodiesel industry.
In 2022, some biodiesel concept stocks in the A-share market also disclosed the performance forecast for the first quarter. Among them, Longyan Zhuoyue New Energy Co.Ltd(688196) it is estimated that the net profit attributable to the parent company in the first quarter of 2022 will be about 947173 million yuan, an increase of about 373874 million yuan compared with the same period of last year, an increase of about 65.21% year-on-year Bece Legend Group Co.Ltd(000803) it is estimated that the net profit attributable to the parent company will be 40-45 million yuan in the first quarter of 2022, with a year-on-year increase of 296.88% – 346.49%.
Thus, the “money view” of biodiesel concept stocks is still good. However, from the perspective of the secondary market, the performance of these stocks this year is very general.
On April 18, Longyan Zhuoyue New Energy Co.Ltd(688196) closed at 60.02 yuan, up 2.72% this year Zhejiang Jiaao Enprotech Stock Co.Ltd(603822) closed at 42.49 yuan, up 2.16% this year Beijing Sanju Environmental Protection & New Materials Co.Ltd(300072) Bece Legend Group Co.Ltd(000803) closed at 13.61 yuan (the reinstatement price is 19.05 yuan), an increase of – 17.10% this year.
