Investment Rating - The report maintains a "Positive" investment rating for the industry [11]. Core Insights - In the first half of 2025, China's total exports of HVO and SAF reached 338,400 tons, a year-on-year increase of 8.06%, with domestic SAF export channels successfully opened [2][6]. - Biodiesel exports fell to 381,000 tons, a decrease of 42.4% year-on-year, primarily due to anti-dumping tariffs [7][17]. - UCO exports totaled 1,262,000 tons, down 10.5% year-on-year, with Singapore replacing the U.S. as the largest export destination [8][31]. - The report suggests monitoring overseas policies and demand changes, anticipating more supportive domestic policies to be implemented [9][43]. Summary by Sections SAF & HVO - In H1 2025, China's SAF export channels were successfully opened, with a total export volume of 338,400 tons, marking an 8.06% increase year-on-year. Jiangsu Province exported 14,900 tons of SAF to Belgium and Spain in June, likely from the Jiaao Environmental Lianyungang factory [6][16]. - Domestic SAF exports require approval from four government departments, and Jiaao Environmental received a license for 372,400 tons of bio-jet fuel, indicating a positive trend for future SAF exports [6][16]. Biodiesel - Biodiesel exports in H1 2025 were 381,000 tons, down 42.4% year-on-year, mainly due to anti-dumping tariffs imposed by the EU [7][17]. - Major export partners included Malaysia (141,000 tons), Singapore (98,700 tons), and the Netherlands (70,000 tons), with significant increases in exports to Malaysia and Singapore, likely for blending with marine fuel [7][22]. - The average export price for biodiesel was $1,103 per ton, a slight increase of 2.0% year-on-year, while total export value dropped by 40.6% to $3.02 billion [17]. UCO - UCO exports in H1 2025 were 1,262,000 tons, a decrease of 10.5% year-on-year, attributed to increased domestic SAF production and the cancellation of export tax rebates [8][29]. - The average export price for UCO was $1,048 per ton, up 17.9% year-on-year, driven by the EU's mandatory blending policy for SAF [8][29]. - Singapore became the largest export destination for UCO, with exports to the U.S. declining significantly due to high tariffs [31][35]. Market Outlook - The report emphasizes the need to track overseas policy changes and anticipates more domestic supportive policies to be implemented [9][43]. - The U.S. market faces significant uncertainty due to fluctuating tariff policies, while the EU's blending ratio requirements for SAF are expected to boost China's SAF industry [43]. - In Singapore, the demand for clean alternative fuels is projected to increase due to new carbon quota regulations for the shipping industry [43]. Investment Recommendations - The industry is viewed positively due to its reliance on waste oils as raw materials, with several companies producing qualified SAF and obtaining airworthiness certification. The report recommends focusing on raw material suppliers and processing companies like Zhuoyue New Energy [9][47].

Company Overview -卓越新能 is the first domestic company specializing in the research and production of biodiesel from waste oils, and it is a leading enterprise in ester-based biodiesel production in China [2][3] - The company has maintained profitability despite extreme tariff policies, showcasing superior cost control, supplier management, and sales channel expansion capabilities [2][3] - The company currently has ester-based production capacity of nearly 500,000 tons, with plans to expand biodiesel production to approximately 1.3 million tons [2][3] Industry Outlook - The biodiesel industry has significant growth potential, driven by domestic and international policy support, with the EU being the largest consumer of biodiesel globally [3] - The demand for biodiesel is expected to increase as carbon pricing and marginal cost improvements create profitability opportunities [3] - The company can mitigate the impact of EU anti-dumping duties by exporting to high-demand regions outside the EU and establishing production facilities in non-tax regions [3] Financial Projections - The company is projected to achieve revenues of 4.807 billion, 7.304 billion, and 8.529 billion yuan from 2025 to 2027, with year-on-year growth rates of 34.9%, 51.9%, and 16.8% respectively [4] - Net profits for the same period are expected to be 360 million, 619 million, and 774 million yuan, with growth rates of 141.6%, 71.8%, and 25.2% respectively [4] - The estimated EPS for 2025, 2026, and 2027 are 3.00, 5.15, and 6.45 yuan per share, with corresponding PE ratios of 15.37, 8.95, and 7.15 [4] Catalysts for Stock Price - New production capacity coming online both domestically and internationally [5] - Decrease in raw material costs [5] - Acceleration of demand growth driven by domestic policies [5]

Core Viewpoint - Indonesia will implement a mandatory 50% palm oil-based biodiesel blending policy (B50) starting in 2026, although the policy is still under research and testing, which may delay its launch until later in the year [1] Group 1: Policy Implementation - The Indonesian Ministry of Energy and Mineral Resources reiterated the B50 blending policy, which is expected to increase biodiesel demand significantly [1] - The Indonesian Biodiesel Producers Association (APROBI) predicts that B50 will raise annual biodiesel demand from 15.6 million kiloliters to approximately 19 million kiloliters [1] - The Ministry estimates that around 19.7 million kiloliters of biodiesel will be needed to implement B50, necessitating the establishment of new production facilities [1] Group 2: Current Status and Future Goals - Indonesia currently enforces a B40 blending policy, with a consumption target of 13.5 million kiloliters for the year [1] - From January to June this year, B40 consumption reached 6.8 million kiloliters [1] - Critics warn that without stronger safeguards and clear planning, the implementation of B50 in 2026 could pose significant environmental and economic risks [1]

Group 1 - Sustainable fuels are a global hotspot, with China's National Energy Administration launching initiatives for green liquid fuel technology and industrialization trials, focusing on SAF, sustainable diesel, bioethanol, green methanol, and green ammonia [2] - The first batch of pilot projects includes nine companies working on fuel ethanol, green methanol, and green ammonia, with notable projects such as 30,000 tons of cellulose fuel ethanol by Guotou Bio and 500,000 tons of green methanol by Goldwind Green Energy [2] - Internationally, companies like LG Chem and Mitsubishi Chemical are also making significant moves in sustainable fuel technologies [3] Group 2 - Mitsubishi Chemical's venture capital arm, Diamond Edge Ventures, invested in Licella Holdings, which specializes in advanced recycling and renewable fuel technologies [4] - Licella's technology can produce SAF, bio-crude oil, and renewable diesel from lignocellulosic waste using supercritical water [5] - Mitsubishi Chemical aims to expand its chemical recycling facilities and diversify raw materials as part of its "KAITEKI Vision 35" [6] Group 3 - LG Chem's subsidiary, LG-Eni BioRefining, has begun construction of South Korea's first HVO plant, expected to produce 300,000 tons annually by 2027 [7] - HVO is a new generation bio-oil made from waste cooking oils and can be used for SAF, biodiesel, and bio-naphtha production [8] - LG Chem plans to increase the proportion of bio-naphtha in its BCB products, which are certified by ISCC PLUS for environmental sustainability [9] Group 4 - The fourth Synthetic Biology and Green Bio-Manufacturing Conference (SynBioCon 2025) will be held in Ningbo, Zhejiang, focusing on AI in bio-manufacturing, green chemicals, new materials, future food, and agriculture [12] - The conference aims to explore trends in bio-manufacturing during the 14th Five-Year Plan and promote technology transfer and talent acquisition [12][20] - Various activities, including forums and workshops, will take place during the conference to facilitate discussions on innovations in the bio-manufacturing sector [12][29]

Investment Rating - The industry investment rating is "Positive" (maintained) [1] Core Insights - The report highlights a positive outlook for the basic chemical industry, driven by supply optimization and recovery in profitability [3][4] - The demand for Sustainable Aviation Fuel (SAF) is expected to grow steadily due to continuous support from multiple countries [4] - The price of Used Cooking Oil (UCO) is anticipated to rise further due to increasing demand and carbon tax prices [5] - The European Union has confirmed that there is no evidence of fraud in the import of biodiesel from China, which may boost demand [6] Summary by Sections Industry Trends - The basic chemical industry is projected to outperform the overall market, with a positive investment rating [1] - The industry has shown a significant price increase for SAF, with EU and China prices rising by 10% and 3% respectively since the beginning of 2025 [4][10] Demand Drivers - The demand for UCO is increasing, driven by the growth in SAF and Hydrotreated Vegetable Oil (HVO) requirements [5] - The HVO demand in Germany is expected to increase by 1.5 million tons by 2026, nearly quadrupling the 2025 levels [5] Beneficiary Companies - Companies such as Shandong Hi-Speed Energy and Jiaao Environmental Protection are positioned to benefit from the growing SAF market and UCO production [7] - Shandong Hi-Speed Energy plans to increase its waste processing capacity, which will double its UCO output [7] - Jiaao Environmental Protection is set to gain market share in the domestic SAF sector with new capital investments [7]

Core Points - A significant explosion occurred at a biofuel plant in Nebraska on July 29, resulting in the death of three individuals [1] - The focus of the response shifted from rescue operations to recovery efforts as of July 30, according to the Dodge County prosecutor [1] Company and Industry Summary - The incident highlights potential safety risks associated with biofuel production facilities, which may impact regulatory scrutiny and operational protocols in the industry [1] - The explosion could lead to increased insurance costs and potential financial liabilities for biofuel companies operating in similar environments [1]

Group 1 - Zhejiang Jiaao Environmental Technology Co., Ltd. announced a capital increase and share expansion for its subsidiary Lianyungang Jiaao New Energy Co., Ltd., with China Aviation Oil Group investing 261 million yuan for a 10% stake [1] - After the capital increase, Lianyungang Jiaao's registered capital will rise from 2.353 billion yuan to 2.614 billion yuan, while Jiaao Environmental will maintain its controlling stake [1] - In May 2025, Lianyungang Jiaao is expected to produce 372,400 tons of bio-jet fuel at full capacity, having received approval for export licenses [1] Group 2 - Lianyungang Jiaao successfully achieved its first market sale of bio-jet fuel, amounting to approximately 13,400 tons, marking a significant milestone in the commercialization of bio-jet fuel [2] - The successful sale indicates a breakthrough from technology development to industrial application, enhancing the company's competitiveness in the biofuel sector [2] - Bio-jet fuel, a type of sustainable aviation fuel (SAF), is produced from biomass and has the potential to significantly reduce carbon emissions compared to traditional aviation fuel [2] Group 3 - The global aviation industry is accelerating its transition to "net-zero emissions," with clear policy support for SAF in China [3] - The 2024-2025 Energy Conservation and Carbon Reduction Action Plan emphasizes the promotion of advanced bio-liquid fuels and sustainable aviation fuels [3] - Sustainable aviation fuel is seen as a core technology for the aviation industry's green transition and aligns with sustainable development goals by utilizing waste materials [3]

Core Viewpoint - China Aviation Oil plans to strategically invest in Jiangsu Jiaao Environmental Protection's subsidiary, Lianyungang Jiaao New Energy, which will enhance the subsidiary's capital strength and support new project development, aligning with the company's strategic planning and long-term interests [1] Company Summary - Jiangsu Jiaao Environmental Protection is a leading domestic company in biodiesel and sustainable aviation fuel (SAF), having obtained certifications from the EU for its biodiesel products and approvals for its aviation fuel [2] - The company has been recognized as the first domestic enterprise included in the biodiesel export whitelist, allowing it to apply for export permits for its production capacity of 372,400 tons of SAF [3] Industry Summary - The global push for carbon neutrality and stricter environmental policies are creating significant opportunities for the biodiesel and SAF industries, supported by a series of encouraging policies from the Chinese government [2] - The Chinese government has established a clear policy framework to support the development of SAF, with pilot projects initiated at major airports and plans to expand by 2025 [3] - International giants are entering the Chinese SAF market, recognizing the strategic advantages of companies like Jiangsu Jiaao, which has built a unique closed-loop capability in raw materials, technology, certification, and distribution channels [3]

Group 1 - The company, Jiaao Environmental Protection, has reported cumulative losses exceeding 440 million yuan over the past three years, with a debt ratio soaring to 80.45% [1] - In 2024, the company's revenue plummeted by 52.23% year-on-year to 1.274 billion yuan, and net profit losses expanded to 367 million yuan, with a gross margin dropping to -0.23% [2] - The company faces a liquidity crisis with short-term borrowings of 1.405 billion yuan and debts due within one year amounting to 313 million yuan, while cash on hand is only 230 million yuan, resulting in a current ratio of 0.62 [2] Group 2 - The company has been under scrutiny from regulators regarding the authenticity of its financial statements, with the Zhejiang Securities Regulatory Bureau issuing a warning in August 2024 about accounting errors in its 2022-2023 reports [2] - Jiaao Environmental Protection has a history of financial misconduct, having inflated revenue by over 500 million yuan between 2019-2020, leading to penalties and a systemic failure in internal controls [2] - Despite the financial turmoil, the company is aggressively investing in construction projects totaling 9.558 billion yuan, including a 500,000-ton bio-jet fuel project costing over 5 billion yuan [3] Group 3 - The actual controller, Shen Jian, has initiated a private placement to raise 367 million yuan, ostensibly to supplement liquidity, while simultaneously having a high stock pledge ratio of 29.03% [3] - The aggressive investment in the SAF project contrasts sharply with the company's deteriorating cash flow and the industry's overcapacity rate of 30% [3] - The SAF business is unlikely to resolve the company's issues in the short term, as the first quarter of 2025 saw significant depreciation and a 31% increase in R&D expenses, resulting in a quarterly loss of 47 million yuan [3]

Group 1 - The city of Puyang is transforming from a petroleum hub to a base for new materials and renewable energy, emphasizing the importance of technological innovation and sustainable development [3][4][12] - The Henan Junheng Industrial Group has developed technology to convert waste cooking oil into sustainable aviation fuel (SAF), becoming the first private company in China to obtain SAF airworthiness certification, with an annual production capacity of 300,000 tons [4][6] - The local government is focusing on high-quality development and the cultivation of new productive forces tailored to local conditions, as highlighted by Xi Jinping [5][12] Group 2 - Agricultural waste, such as straw, is being repurposed into biodegradable materials, with companies like Longdu Tianren Bio-Materials Co. leading the way in producing eco-friendly plastic bags from straw [7][10] - The Puyang region is home to a unique closed-loop industrial chain for biodegradable materials, showcasing the potential for traditional industries to innovate and adapt [7][10] - The Shengyuan Group has successfully transitioned from a petroleum transport company to a new materials group valued at 7 billion yuan, demonstrating the effectiveness of strategic restructuring and technological advancement [12][13][14] Group 3 - Puyang's new chemical base, covering 65 square kilometers, is driving the rise of the new materials industry, contributing to the city's economic transformation [14] - The region's development strategy emphasizes optimizing industrial structures towards high-end, intelligent, and green production, fostering a collaborative effort for high-quality regional growth [14] - Innovations in traditional industries across the Central Plains region are becoming new business cards, highlighting the successful integration of modern technology with established sectors [14]