WELL.E(SZ:300190) Xin Lang Cai Jing·2025-10-10 12:33Core Viewpoint - The company is transitioning from its traditional environmental protection business to the biogas industry, leveraging its existing capabilities in waste treatment to tap into the growing demand for renewable energy sources [1][2]. Group 1: Company Overview - The company started with environmental protection services, focusing on waste treatment, including leachate, kitchen waste, and mixed waste [1]. - It has established a leading position in the domestic leachate treatment sector and is expanding into various municipal and industrial environmental protection niches [1]. - The company has faced performance pressures and losses since 2022 due to intensified competition in the environmental sector, but operational cash flow is expected to improve in 2024 [1]. Group 2: Biogas Market Potential - Biogas, produced from organic waste such as crop residues and kitchen waste, is gaining traction as a dual-purpose solution for both environmental protection and energy generation [2]. - The global biogas production is projected to grow from 9.6 billion cubic meters in 2024 to 74.8 billion cubic meters by 2040, with a compound annual growth rate of 14% [2]. - China has abundant resources for biogas production, which is crucial for energy security and achieving carbon peak goals, indicating a rapid industrialization phase during the 14th Five-Year Plan [2]. Group 3: Technological and Operational Strengths - The company is one of the early entrants in the domestic environmental sector, with a strong track record of successful projects that facilitate rapid resource acquisition [3]. - It aims to scale biogas production to 500,000 cubic meters per day by 2025 and 1 million cubic meters per day by 2027 [3]. - The company emphasizes research and development, maintaining a leading position in patent numbers and R&D expenditure, and is recognized for its innovative projects in high-value biogas utilization [3]. Group 4: Financial Projections - The company projects earnings per share (EPS) of 0.05 yuan, 0.50 yuan, and 0.86 yuan for the years 2025, 2026, and 2027, respectively [4]. - Corresponding price-to-earnings (PE) ratios are expected to be 82.94X, 8.16X, and 4.71X based on the closing price on October 9, 2025 [4].