Summary of Conference Call on UCO Industry and Company Insights Industry Overview - The UCO (Used Cooking Oil) market is driven by carbon attributes and green premiums, with prices currently around 7,700-7,800 RMB/ton, reflecting a 500-600 RMB increase since early June [2][5][25] - The market dynamics have shifted due to mandatory bio-jet fuel (SAF) blending policies in Europe and the commissioning of large domestic plants, enhancing the bargaining power of domestic producers [2][5] - The annual production of UCO from regulated kitchen waste treatment plants in China is approximately 800,000 to 900,000 tons, with slow capacity expansion due to strict project approvals [2][3][8] Company Positioning - The company specializes in kitchen organic waste treatment and UCO resource utilization, processing about 4,700-4,800 tons of waste daily with a design capacity of 5,400 tons, achieving an 88% utilization rate [3] - The company’s UCO production is around 90,000 tons annually, positioning it as a leader in the domestic UCO sector [3] Market Dynamics - UCO pricing has been influenced by the European SAF blending mandate, which requires a 2% addition by 2025, leading to increased domestic demand [5][17] - The company’s UCO sales have transitioned from international clients to domestic SAF producers, with major clients including Hai Xin Neng Ke and He Nan Jun Heng [11][12] Production and Supply Chain - UCO is categorized into several types based on quality, with the highest quality sourced from kitchen waste treatment plants, followed by mixed oils and lower-quality oils like gutter oil [9][10] - The company plans to expand its UCO production capacity to 200,000 tons annually through acquisitions and projects like "urban oil fields," targeting a daily processing capacity of 8,000 to 10,000 tons [4][15][16] Regulatory Environment - The UCO industry faces significant regulatory hurdles, with project approvals requiring local government consent and operational experience, limiting the emergence of new large-scale producers [8][9] Future Outlook - The demand for UCO is expected to grow, particularly with European policies mandating higher SAF blending ratios, which could lead to a supply shortage if domestic production does not keep pace [21][22] - The company anticipates a substantial improvement in performance in 2025, driven by cost reductions and increased oil extraction rates, with a focus on monitoring oil price fluctuations [25] Key Risks and Considerations - Oil price fluctuations significantly impact profitability, with a 1,000 RMB increase in oil prices affecting profits by approximately 90 million RMB [25] - The company is advised to keep an eye on UCO price trends and the prices of palm oil and rapeseed oil, as they are closely linked to UCO pricing [25]

Market Performance - The stock indices in the two markets rose significantly, with the Shanghai Composite Index increasing by 0.65% to 3381.58 points, and the Shenzhen Component Index rising by 0.43% to 10048.39 points, while the North Star 50 Index surged by 1.54% [1] - The total trading volume in the Shanghai, Shenzhen, and North markets reached 1.1471 trillion yuan, an increase of approximately 55 billion yuan compared to the previous day [1] Industry Insights - The oil sector showed strong performance, with logistics, chemicals, semiconductors, non-ferrous metals, coal, pharmaceuticals, and brokerage sectors also rising [1] - The A-share market is expected to maintain a stable upward trend due to the expansion of equity public funds, the influx of medium to long-term capital, and supportive policy tools [1] AI Glasses Market - Meta has launched a new series of AR glasses in collaboration with Oakley, priced at $399 for the standard version and $499 for the limited edition, with pre-orders starting on July 11 [2] - The new AI glasses feature improved battery life and are designed for sports scenarios, which may enhance market acceptance and attention [2] Optical Lens Industry - The rise of smart glasses is creating new variables for the optical lens industry, with manufacturers collaborating directly with lens suppliers to address optical prescription issues [3] - Companies with strong manufacturing and R&D capabilities in the lens sector are expected to benefit from this trend [3] SAF Price Trends - The price of SAF (Sustainable Aviation Fuel) in Europe has risen to $2230 per ton, a 10% increase from the previous week and a 27% increase from the previous month [4] - The price of SAF in China has reached $1800 per ton, reflecting a 3% weekly increase and a 6% monthly increase [4] Military Industry Outlook - Global military spending is projected to reach approximately $2.7 trillion in 2024, a 9.4% increase year-on-year, driven by geopolitical tensions [5] - The demand for military materials such as titanium alloys and tungsten is expected to grow significantly, benefiting upstream companies in the military metal sector [5] Automotive Industry Concerns - The National Federation of Automobile Dealers has called for car manufacturers to optimize rebate policies and shorten the rebate payment period due to significant operational pressures faced by dealers [7] - Despite achieving sales targets, dealers are still struggling with losses in new car business [7] Gold Industry Development - A new implementation plan for the high-quality development of the gold industry has been issued, aiming for a 5-10% increase in gold resource capacity and a 5% increase in gold and silver production by 2027 [8] Energy Market Developments - The National Energy Administration is pushing for the establishment of a nationwide unified electricity market by 2025, focusing on provincial electricity spot market coverage [9] - Solar power generation capacity has seen a significant year-on-year increase of 56.9% in the first five months of 2023, reaching 108 million kilowatts [10] Robotaxi Commercialization - Tesla has initiated a Robotaxi pilot service in Austin, Texas, with the first ten Model Y vehicles, marking a significant step in the commercialization of autonomous taxi services [11]

Group 1: Company Overview and SAF Production - In 2024, Pengyao completed the technical transformation for SAF and successfully produced 4,950 tons of bio-jet fuel, achieving an overall product yield of 82% with 46 indicators meeting international standards [2] - The company is continuously optimizing the SAF process to potentially increase yield in the future [2] - Pengyao operates on a light asset model, utilizing site leasing and equipment refurbishment, resulting in lower production costs compared to competitors using heavy asset investments [8] Group 2: Domestic SAF Policy Landscape - China officially launched SAF application pilot work in September 2024, marking a significant milestone in the aviation industry's green transition [2] - The first phase of the pilot (September to December 2024) involved 12 flights across four airports, validating SAF's applicability and operational safety on domestic routes [2] - The second phase starting in 2025 will expand the network of participating airlines and airports for broader SAF promotion [2] Group 3: International SAF Policy Landscape - The EU has set a target for carbon neutrality by 2050 and has introduced the "Fit for 55" package, aiming for a 55% reduction in greenhouse gas emissions by 2030 compared to 1990 levels [3][4] - The ReFuelEU plan mandates that by 2025, at least 2% of aviation fuel must be SAF, increasing to 6% by 2030, 20% by 2035, 34% by 2040, 42% by 2045, and 70% by 2050 [4] - The revised Energy Taxation Directive will impose taxes on traditional fossil fuels, gradually increasing to €10.75/GJ for transport fuels by 2033 [5] Group 4: Comparative Analysis of SAF Development - SAF development is still in its early stages globally, with major economies like the EU, the US, and China implementing supportive policies [6] - China's SAF policies are primarily encouragement-based, lacking specific blending ratio requirements or a clear development timeline [6] - The Chinese government has recognized SAF as a crucial part of the aviation decarbonization strategy, as indicated in various national plans [6] Group 5: Company Performance and Projects - In 2025, Pengyao secured several water project contracts, including a water supply project in Xinjiang with a daily capacity of 99,000 cubic meters and a BOT project in Henan with a design scale of 30,000 cubic meters per day [8] - The SEED water plant model combines renewable energy technology with prefabricated construction, enhancing efficiency and sustainability [8] - Revenue from new BOT projects will be recognized based on project implementation progress, with expected completion within approximately one year [8]

Group 1: Company Overview and SAF Production - The company completed the technical transformation for SAF in 2024, achieving a product yield of 82% and meeting 46 international standards [2] - In December 2024, the company signed a contract with China National Petroleum International to export 4,950 tons of bio-jet fuel to international markets [2] - The company continues to optimize the SAF production process, aiming to improve yield in the future [2] Group 2: Domestic SAF Policy Landscape - China officially launched SAF application pilot work in September 2024, marking a significant milestone in the aviation industry's green transition [3] - The first phase of the pilot (September to December 2024) involved 12 flights across four airports, validating SAF's applicability and operational safety [3] - The second phase starting in 2025 will expand the network of participating airlines and airports for SAF promotion [3] Group 3: International SAF Policy Landscape - The EU has set a target for carbon neutrality by 2050 and introduced the European Green Deal, which includes policies to support SAF development [4] - The ReFuelEU plan mandates that by 2025, at least 2% of aviation fuel must be SAF, increasing to 70% by 2050 [4] - The EU Emissions Trading System is undergoing reforms to enhance carbon reduction efforts, impacting the SAF industry [4] Group 4: Comparative Analysis of SAF Development - SAF is still in its early stages globally, with major economies like the EU, the US, and China issuing supportive policies [6] - China's SAF policies are primarily encouragement-based, lacking specific blending ratio requirements for fuel suppliers or airlines [6] - The Chinese government has indicated strong support for SAF as a key component of the aviation industry's decarbonization strategy [6] Group 5: Company Advantages and Market Position - The company operates a light asset model, utilizing site leasing and equipment refurbishment for SAF production, resulting in lower capital and operational costs [8] - The company's SAF products have been certified by ISSC-EU and ISCCCORSIA, confirming quality and market competitiveness [8] - The company has secured several new water treatment projects, indicating a robust business expansion strategy [8]