\u3000\u30 China High-Speed Railway Technology Co.Ltd(000008) 03 Bece Legend Group Co.Ltd(000803) )
Event: the company released the financial report for the first quarter of 2022. 22q1 achieved a revenue of 338 million yuan, a year-on-year increase of 75.73%, and a net profit attributable to the parent company of 40 million yuan, a year-on-year increase of 300.69%.
1. Listed companies completed major asset restructuring in 2020 and entered a period of high performance growth in 2022
At present, the company mainly focuses on the wholly-owned subsidiary Shifang Huanneng and the holding subsidiary Xincheng thermal power, 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 in China that focuses on the resource utilization of kitchen waste. It is 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. Layout the whole industrial chain of biodiesel, and the UCO capacity of renewable energy raw materials will grow rapidly in 2022
As of April 19, 2022, the company has become a rare listed company with a complete layout of the whole biodiesel industry chain in China: 1) upstream – the daily output of food waste treatment that has been disclosed and locked has exceeded 4000 tons, with a year-on-year increase of more than 200%. The company is also continuously expanding the source of raw materials through bidding and acquisition, including gutter oil, acidified oil and other oils. At the same time, it continues to improve the capacity of food waste treatment, with considerable business growth; 2) In the middle reaches, the annual production capacity of UCO renewable energy feedstock is expected to exceed 100000 tons, with a year-on-year increase of more than 200%. The company extracts and processes kitchen waste oil into industrial mixed oil (UCO). At the same time, the company will continue to improve the oil production rate of the project and strive to become the leader of kitchen waste oil in 2 to 3 years; 3) Downstream – the capacity of 400000 tons of hydrocarbon based biodiesel + 300000 tons of ester based biodiesel is arranged. The company expects the project to be implemented in 2022. The company plans to establish a joint venture with Shandong Binyang Fuel Chemical Co., Ltd. as of March 2022, the special working group is still in the process of adjustment.
3. In the future of biodiesel, the company’s UCO production capacity is leading and the raw material advantage is strong
In the context of global carbon reduction, the demand for biodiesel in the EU continues to grow, and the field of air transportation has become the next high-capacity market for global biodiesel producers. Bio aviation kerosene is one of the main means to reduce carbon in the aviation industry, and there is a large gap between production and demand. As the main raw material of UCO, the price of renewable raw material continues to rise due to short supply. Since the beginning of 2021, the price of UCO per ton has risen from 6200 yuan / ton to more than 9000 yuan / ton. We believe that Bece Legend Group Co.Ltd(000803) future performance will benefit from its exclusive resource advantages in renewable raw materials.
4. Profit forecast & investment suggestion: we expect that from 2022 to 2024, the company will achieve revenue of RMB 1.779/2.922/3.743 billion, with a year-on-year increase of 115.24% / 64.21% / 28.10%; The net profit attributable to the parent company was 245 / 440 / 582 million yuan, with a year-on-year increase of 204% / 79.94% / 32.06%, maintaining the “buy” rating.
Risk warning: international war risk; Risk of changes in global carbon reduction policies; The production capacity and production progress of projects outside China did not meet expectations; Risk of new technology substitution; The progress of kitchen project is less than 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.
