SHREG(SZ:000803) ZHONGTAI SECURITIES·2025-08-07 08:49Investment Rating - The report assigns an "Accumulate" rating for the company, marking its first coverage [1]. Core Views - The company is a key strategic player in the renewable energy sector under the Shankao Group, focusing on the green transformation of its business model, particularly in kitchen waste treatment and heating [2][3]. - The company has returned to a growth trajectory since 2021, with significant revenue increases following its strategic pivot towards environmental and green energy sectors [4][19]. - The demand for sustainable aviation fuel (SAF) is expected to grow significantly, driven by global carbon reduction initiatives, positioning the company favorably within this expanding market [8][58]. Summary by Sections Company Overview - The company, originally established as Sichuan Meiya Silk (Group) Co., Ltd., has undergone multiple ownership changes and strategic pivots, ultimately focusing on renewable energy and environmental services [3][12]. - Following a major restructuring in 2020, the company shifted its focus to kitchen waste resource utilization, becoming the only listed company in China primarily engaged in this sector [3][19]. Financial Performance - The company reported a revenue of 827 million yuan in 2021, a year-on-year increase of 138.33% [4][19]. - In 2024, despite a reduction in trading volume, the company achieved a 47.3% year-on-year increase in net profit attributable to shareholders [21]. - The first quarter of 2025 saw revenues of 434 million yuan, reflecting a 4.21% year-on-year growth, with net profit reaching 28.27 million yuan, up 222.23% [21][30]. Market Dynamics - Used cooking oil (UCO) is a critical raw material for SAF, with China accounting for over 60% of global UCO supply, highlighting its strategic importance in the SAF production chain [5][45]. - The global demand for SAF is projected to increase significantly, with various countries implementing policies to boost its usage in aviation fuels [8][59]. Operational Capacity - The company has established a robust operational capacity in kitchen waste treatment, with a daily processing capacity of 4,380 tons as of the end of 2024, with plans to expand to 8,000-10,000 tons [9][68]. - The company employs a heavy asset operation model, maintaining a high debt ratio of over 70%, which is typical for the industry [9][71]. Profitability Forecast - The company forecasts net profits of 104 million yuan, 179 million yuan, and 299 million yuan for 2025, 2026, and 2027 respectively, with corresponding P/E ratios of 31.2, 18.1, and 10.8 [1][9].