Market Overview - The unexpected strength of the US PPI has dampened interest rate cut expectations, leading to a decline in major US stock indices, with the Nasdaq and Dow Jones slightly down while the S&P 500 managed a marginal increase [1] - Bitcoin surged past $124,000 before retreating over $7,000, while gold fell to a near two-week low [4] - Asian markets saw declines across stocks and bonds, with the Shanghai Composite ending an eight-day winning streak [5] Key Economic Indicators - The US PPI for July rose 0.9% month-on-month, marking a three-year high, and increased 3.3% year-on-year, significantly exceeding expectations [6][19] - The two-year US Treasury yield rose after the PPI announcement, while the dollar rebounded from a two-week low [3] Company Earnings - JD.com reported Q2 revenue growth of 22.4% year-on-year, driven by a 198.8% surge in new business revenue from food delivery, although overall profitability was impacted [22][27] - NetEase's Q2 revenue grew 9.4% year-on-year, but fell short of expectations, with a slowdown in gaming business growth [22] - Tencent's Q2 advertising revenue increased by 20%, with video ads growing over 50%, indicating strong potential for future growth [28] Investment Moves - Berkshire Hathaway reduced its stake in Apple by 20 million shares, while increasing its holdings in UnitedHealth and NewCore Steel [23] - Goldman Sachs significantly increased its positions in technology stocks, including Nvidia and Microsoft, during Q2 [23] Industry Trends - The electric tools market is projected to be a multi-billion dollar industry, with demand expected to rise as the US economy stabilizes [35] - The traditional storage market is anticipated to see a resurgence as competition in the HBM segment intensifies [34] Upcoming Events - Key economic data releases include China's retail sales, industrial output, and fixed asset investment [36]

Group 1: Performance Improvement - The company's performance improved significantly in the first half of the year due to multiple factors, including a rise in UCO prices driven by new EU and UK policies, which are expected to bring an incremental demand of approximately 180,000 tons of UCO [2] - The company's refined management practices led to a continuous increase in the capacity utilization rate of kitchen waste projects, resulting in a growth in oil yield [2] - The optimization of production processes contributed to a reduction in cash costs per ton by 13.04% year-on-year [2] Group 2: Future Price Outlook - The current UCO price has reached approximately 8,000 RMB/ton, a two-year high, with strong support expected for future prices due to the implementation of bio-jet fuel blending policies and stable domestic waste oil production [3] Group 3: Strategic Development Plans - The company plans to focus on expanding kitchen waste project capacity and acquiring high-quality projects to enhance profitability, while also considering projects that synergize with its main business [3] - Future capacity expansion aims to increase kitchen waste processing capacity to 8,000-10,000 tons/day, supported by a robust project identification mechanism and collaboration with local governments and industry associations [4] Group 4: Cost Reduction Measures - The company will implement various measures to further reduce production costs, including improving collection efficiency, optimizing wastewater treatment processes, and enhancing detailed management practices [3] Group 5: Core Competitiveness - The company has established a "three-in-one" model to strengthen its competitive edge, which includes a robust network for collection and processing, a comprehensive digital platform for smart control, and a complete technical advantage for cost reduction and efficiency improvement [3] Group 6: Current Order Situation - The company currently has a substantial number of inquiries from domestic and international biofuel leaders, with a strong order backlog primarily from domestic clients, and some orders resuming from the U.S. market after previous tariff issues [3] Group 7: Accounts Receivable Management - The company emphasizes the collection of accounts receivable, achieving a nearly 100% rolling collection rate, with a projected 8.1% increase in kitchen waste processing volume in 2024, despite a year-on-year decrease in accounts receivable [3] Group 8: Dividend Policy - The company currently has negative retained earnings and does not have the conditions for cash dividends, but plans to consider dividends once retained earnings turn positive [4] Group 9: Biofuel Demand Outlook - The bio-jet fuel sector is expected to see significant growth, with pilot programs expanding and government support for green fuel production, indicating a promising future for domestic biofuel demand [4] Group 10: Competitive Strategy - The company will maintain its competitive advantage by enhancing project management, increasing capacity utilization, and absorbing high-quality projects within the industry [4]

Investment Rating - The report assigns an "Add-A" rating to the company, indicating a positive outlook for its stock performance in the near term [3][6]. Core Insights - The company is positioned to benefit from the launch of Sustainable Aviation Fuel (SAF) in 2025, with expectations of increased demand for Used Cooking Oil (UCO) as a key raw material [3][4]. - The European Union's regulations mandate a gradual increase in SAF blending ratios, which is expected to drive UCO demand significantly [3][4]. - The company is actively expanding its UCO processing capabilities through acquisitions and new projects, which will enhance its market position [4][6]. Market Performance - The company's stock closed at 7.13 yuan, with a yearly high of 7.36 yuan and a low of 3.05 yuan [2]. - The circulating market value is 32.78 billion yuan, while the total market value stands at 33.58 billion yuan [2]. Financial Projections - Revenue is projected to grow from 1.56 billion yuan in 2025 to 1.93 billion yuan in 2027, reflecting year-on-year growth rates of 7.6%, 11.4%, and 10.8% respectively [6]. - Net profit is expected to increase dramatically from 87 million yuan in 2025 to 219 million yuan in 2027, with growth rates of 569.8%, 63.6%, and 53.4% [6]. - Earnings per share (EPS) are forecasted to rise from 0.19 yuan in 2025 to 0.47 yuan in 2027 [6]. Industry Opportunities - The SAF market is anticipated to grow significantly, with European SAF demand projected to reach approximately 137,000 tons in 2025 and 411,000 tons by 2030 [3][4]. - The company is well-positioned to capitalize on the increasing UCO demand driven by SAF policies and market dynamics [4][6].

Investment Rating - The report maintains a "Recommended" rating for companies with significant biodiesel or raw material production capacity, including Zhuoyue Xinneng, Jiaao Environmental Protection, Shanggao Huaneng, Haineng Kexin, and Langkun Environment [4][5]. Core Insights - The biodiesel market is expected to see increased demand and raw material supply due to the cancellation of export VAT refunds on raw materials, which will drive growth in the biodiesel sector [4]. - Recent agreements, such as the one between Cathay Pacific and Sinopec for SAF procurement, indicate a positive trend in the adoption of domestic SAF, enhancing the supply chain for biodiesel [3]. - The average prices for domestic waste cooking oil and gutter oil have increased, with waste cooking oil priced at 6640 CNY/ton and gutter oil at 6180 CNY/ton, reflecting a stable export outlook for UCO to Europe, the US, and Southeast Asia [2][4]. Summary by Sections Price Trends - The report notes a week-on-week increase in external HVO/SAF prices, with SAF at 1884.5 USD/ton (up 4.87%) and HVO at 1960.75 CNY/ton (up 3.46%) [1]. - Domestic price differences for biodiesel exports to Europe have reached 2539 CNY/ton, showing a weekly increase of 163 CNY/ton [1]. Export Expectations - The report anticipates a significant rise in China's HVO/SAF export volumes for May, with estimates nearing 40,000 tons, supported by rising external prices [3]. - The report highlights that the domestic HVO/SAF factories are maintaining strong procurement levels, indicating robust market demand [2]. Company Performance Forecast - The earnings per share (EPS) and price-to-earnings (PE) ratios for key companies are projected, with Zhuoyue Xinneng expected to have an EPS of 3.16 CNY in 2025 and a PE of 14 [5].

Group 1: Performance Growth - The significant growth in 2024 and Q1 2025 performance is attributed to refined management practices that increased oil yield and effectively reduced production costs. The processing volume of kitchen waste increased by 8.1% year-on-year, and oil yield rose by 7.1% in 2024 [2] - The unit production cash cost decreased by 7.1% year-on-year in 2024, while the unit collection cash cost dropped by 2.0%. In Q1 2025, the unit production cash cost further declined by 11.7% year-on-year and 10% quarter-on-quarter [2] - The UCO (Used Cooking Oil) price saw a significant increase due to additional demand, reflecting a strong market condition [2] Group 2: UCO Market Dynamics - The company primarily focuses on domestic sales of UCO, with some exports to Europe and Asia-Pacific. The cancellation of export tax rebates has led to a slight increase in export prices, but the overall impact on the company is minimal [2] - The demand for UCO has remained stable since the beginning of the year, with an estimated additional demand of approximately 1.8 million tons due to the EU and UK’s mandatory blending requirements starting in 2025 [3] Group 3: Operational Efficiency - The capacity utilization rate for kitchen waste projects reached 79.1% in 2024, an increase of 6.7% year-on-year. The company aims to further enhance collection efficiency and expects continued improvement in capacity utilization in 2025 [3] - The company’s internal oil extraction rate was approximately 4.5% in 2024, with plans to optimize processes to increase this rate further [3] Group 4: Future Development and Cost Management - The company plans to expand kitchen waste project capacity to 8,000-10,000 tons per day, focusing on identifying quality projects and enhancing operational efficiency [4] - Cost control measures will continue, including improving collection rates and optimizing project processes to reduce material and energy consumption [4] Group 5: Competitive Advantages - The company has established a "three-in-one" model to strengthen its competitive edge, including a strong regional advantage through its licensing model and a comprehensive collection network [4] - The digital platform for full-process intelligent control has been developed, allowing for precise tracking and management of resources from collection to product delivery [4] Group 6: Financial Outlook - The company reported an asset impairment loss of approximately 26 million in 2024, but the main business does not face significant impairment risks [4] - The company has not distributed dividends in recent years due to negative retained earnings but plans to consider dividends once profits turn positive [4]