WELL.E(SZ:300190) Changjiang Securities·2025-10-10 12:52Investment Rating - The report initiates coverage with a "Buy" rating for the company [9][11]. Core Insights - The company has a strong foundation in environmental protection and is transitioning into the biogas sector, leveraging its existing capabilities to tap into the growing demand for renewable energy [2][5]. - The biogas market is expected to experience rapid growth, driven by policy support and the need for low-carbon energy solutions, with the company's production capacity projected to reach 1 million cubic meters per day by 2027 [2][6]. - The company is well-positioned to benefit from the increasing green premium associated with biogas, which enhances its cost competitiveness against traditional energy sources [7][8]. Summary by Sections Company Overview - The company has a long history in environmental services, focusing on waste treatment and expanding into biogas production as part of its growth strategy [19][21]. - It has established itself as a leader in the domestic leachate treatment market and is diversifying into various segments of municipal and industrial environmental protection [5][19]. Biogas Market Potential - Biogas, derived from organic waste, presents a dual value proposition of environmental protection and energy generation, making it a key area for development under carbon neutrality goals [6][46]. - The global biogas production is projected to grow significantly, with an expected compound annual growth rate of 14% from 2024 to 2040, highlighting the market's potential [6][53]. Financial Performance and Projections - The company faced challenges in its traditional business segments, leading to a decline in revenue; however, operational cash flow is expected to improve in 2024 [26][36]. - Earnings per share (EPS) projections for 2025, 2026, and 2027 are estimated at 0.05, 0.50, and 0.86 yuan, respectively, indicating a recovery trajectory [9][11]. Strategic Initiatives - The company is focusing on resource acquisition and technological innovation to drive its biogas projects, with plans to enhance its operational capabilities through partnerships and research collaborations [8][42]. - The integration of traditional waste management with biogas production creates a synergistic ecosystem that enhances both environmental and economic outcomes [42][43].