Longyan Zhuoyue New Energy (SH:688196) KAIYUAN SECURITIES·2025-06-09 08:23Investment Rating - The report assigns a "Buy" rating for the company, marking its first coverage [3]. Core Views - The company,卓越新能, is a leading player in the biodiesel industry in China, with plans to expand its production capacity to over one million tons in the context of global carbon reduction initiatives. The company is expected to achieve net profits of 386 million, 530 million, and 844 million yuan from 2025 to 2027, with corresponding EPS of 3.21, 4.41, and 7.03 yuan, indicating a strong growth trajectory [3][4]. Summary by Sections 1. Company Overview - 卓越新能 is the largest biodiesel producer in China, focusing on biodiesel as its main product while also developing high-value-added by-products such as industrial glycerin and fatty alcohols. The company has a production capacity of 500,000 tons of biodiesel per year as of the end of 2024, with plans for further expansion in Singapore, Saudi Arabia, and Thailand [4][15][16]. 2. Market Dynamics - The demand for biodiesel, particularly from used cooking oil (UCO), is expected to grow significantly due to its carbon reduction properties. Despite high anti-dumping duties imposed by the EU, the company remains competitive due to the high carbon reduction attributes of its biodiesel and the potential for exports to the EU [4][28]. 3. Financial Performance - The company experienced a decline in sales volume and revenue in 2023, with biodiesel sales dropping by 13.07% to 351,900 tons and revenue decreasing by 35.28% to 2.812 billion yuan. However, the company is projected to recover in 2024, with expected revenue growth of 26.71% [29][33]. 4. Production and Cost Structure - The company has optimized its production processes, achieving a transesterification rate of 99% for waste oils, which is among the highest in the industry. The production costs for first-generation biodiesel are significantly lower than for second-generation biodiesel, making it a cost-effective option [17][49]. 5. Future Outlook - The company is set to benefit from the increasing global demand for biodiesel and sustainable aviation fuel (SAF), with plans to enhance its production capabilities and expand its international sales channels. The establishment of subsidiaries in Europe and Southeast Asia is expected to bolster its market presence [22][24][33].