Investment Rating - The report maintains a positive outlook on the industry [12] Core Insights - The global green low-carbon and biofuel policies are intensively implemented, providing core support for industry development. China's use of waste oil as raw material positions it advantageously in international trade [4][20] - UCO supply is limited while downstream expansion is vigorous, leading to potential price increases. The bio-diesel sector has seen anti-dumping impacts bottom out, with a concentrated supply structure benefiting industry leaders [4][9] - SAF/HVO profitability may show short-term differentiation, with a focus on leading companies with first-mover advantages [4][9] Policy Support - Multiple countries and regions are resonating in policy, opening up demand ceilings. China has elevated green fuels to a strategic level, with government support for bio-diesel and SAF demand [7][20] - The EU's RED III policy aims to double the demand for advanced biofuels, particularly HVO, to meet stringent emission targets [25][26] - The International Maritime Organization (IMO) has set a net-zero emissions target for shipping by 2050, significantly increasing the demand for bio-diesel due to its high decarbonization effect [28][30] Supply and Demand Dynamics - UCO supply is constrained, with a projected annual production of 8.33 to 12 million tons, while actual utilization in the biofuel industry is about 4.98 million tons by 2025 [8] - The demand for SAF is accelerating, with domestic SAF/HVO capacity exceeding 7.2 million tons/year, leading to increased raw material demand [8] - The price of UCO is expected to rise due to its significant price difference with SAF and strong price transmission capabilities [8] Bio-Diesel Market - The impact of EU anti-dumping measures has bottomed out, with a market restructuring benefiting leading companies. The share of the top three bio-diesel exporting provinces in China is expected to rise from 52% to 82% from 2023 to 2025 [9] - The export volume of SAF/HVO from China is projected to increase by 74.24% in 2025, with a focus on European markets [9] Investment Recommendations - Focus on companies with mature technology and first-mover advantages in production, such as Zhuoyue New Energy [10] - Attention should also be given to upstream raw material companies, particularly those dealing with UCO [10]

Investment Rating - The report maintains an "Buy" rating for the environmental protection industry [2] Core Insights - The government work report for 2026 emphasizes the need for a 17% reduction in carbon emissions per unit of GDP and a 3.8% reduction in total carbon emissions, marking a shift towards dual control of carbon emissions [12][14] - The report highlights the increasing demand for green energy and biofuels, particularly biodiesel, driven by rising oil prices and geopolitical tensions [5][21] - The report suggests focusing on companies involved in the recycling and green energy sectors, such as biofuels and green methanol, as potential investment opportunities [5][13] Summary by Sections Government Work Report - The 2026 government work report sets higher targets for carbon emissions reduction and introduces a national low-carbon transition fund to support hydrogen and green fuel development [12][15] - The report indicates that 2026 will be the first year of formal carbon assessments for local governments [12][14] Biodiesel Market - The average export price of UCO (Used Cooking Oil) in 2025 was 7,742 CNY/ton, a year-on-year increase of 21.6% [21] - UCO export volume for 2025 was 2.7558 million tons, with a 6.6% decrease compared to the previous year [21] - The report notes that the price of UCO has been on an upward trend, reaching 8,125.54 CNY/ton by December 2025 [21] Carbon Market and Policies - The report tracks developments in the carbon market, noting a recent trading volume of 56.05 million tons and a closing price of 81.85 CNY/ton [36][39] - It highlights the establishment of a comprehensive recycling system for retired solar panels, aiming for a cumulative utilization of 250,000 tons by 2027 [34] Key Companies to Watch - The report recommends monitoring companies such as Langkun Technology, Shanhai Environment, and Huanxin Co., which are positioned to benefit from the growing demand for biofuels and recycling [5][33]

Core View - Oil prices have surged 35% weekly, surpassing the psychological $90 mark, leading traders to assess whether this indicates a new uptrend or a temporary spike [1][2] Oil Price Dynamics - The United States Oil Fund (USO) tracks front-month WTI futures, providing a liquid investment option for those looking to express a directional call on crude without engaging in direct futures trading [2][3] - A sustained price above $90 is likely indicative of ongoing supply tightness and strong demand, while a rapid reversal may suggest speculative excess [2] Investment Vehicles - USO aims to reflect daily movements in spot WTI through near-dated futures, making it sensitive to price fluctuations and curve structure [3] - ProShares Ultra Bloomberg Crude Oil (UCO) targets double the daily performance of a WTI futures index, enhancing short-term gains and losses [3] - ProShares UltraShort Bloomberg Crude Oil (SCO) provides -2x the daily return of a similar crude index, serving as a leveraged short on oil [3] Investment Strategies - For investors viewing $90 as a new support level, USO offers a straightforward, unlevered exposure suitable for multi-week holdings [4] - More aggressive traders anticipating short-term momentum may prefer UCO for amplified upside potential, acknowledging its long-term return drag and volatility [4] - Tactical bears expecting a quick price correction may opt for SCO to express a short view on crude, though it is primarily a short-term trading vehicle due to its -2x leverage and daily resets [5] Market Drivers - The recent price surge is attributed to a severe supply shock, with disruptions in Middle East output and refining capacity, particularly due to the effective shutdown of the Strait of Hormuz [6] - Both WTI and Brent prices have reached multi-month highs as traders factor in prolonged supply risks, leading to significant increases in front-month futures and oil-linked ETFs [6]

Summary of SAF Industry and ST Jiaao Conference Call Industry Overview - The SAF (Sustainable Aviation Fuel) industry is experiencing price increases driven by seasonal demand recovery, policy support, and oil and gas price fluctuations. Recent prices have risen by approximately $200 to around $2,350 per ton [1][2] - The European HVO (Hydrotreated Vegetable Oil) spot price is approximately $2,750, indicating a $400 gap with SAF prices, suggesting potential for further SAF price increases [1] - Oil and gas prices serve as the pricing benchmark for SAF in Europe, with recent increases reflecting similar price surges seen during the 2021 Russia-Ukraine conflict [1][2] Key Insights and Arguments - Demand recovery is primarily driven by airlines stocking up for the spring travel season, with a significant increase in orders expected from March to May [2][3] - The policy environment, particularly the European RED C legislation, and rising HVO prices are also contributing factors to the price increase [2] - The company has adopted a delayed pricing model, where March shipments correspond to April prices, allowing for greater price flexibility if prices continue to rise [3][7] - Production capacity utilization is expected to remain above 70% once operations stabilize, with no plans for voluntary production cuts due to full order books [3][8] Price Projections - The highest SAF prices in 2026 are expected to be similar to those in 2025, around $2,700 to $2,800, but with a longer duration at high levels compared to 2025 [1][4] - Short-term price fluctuations will be influenced by oil and gas prices, while mid-term trends will be driven by seasonal demand and inventory replenishment [4][5] UCO Procurement and Pricing - UCO (Used Cooking Oil) procurement has shifted to a bidding model, with recent prices rising to approximately 7,500-7,700 CNY per ton (about $1,100) due to HVO demand and SAF production recovery [1][5] - The company emphasizes monitoring changes in oil fat structures and geopolitical developments affecting oil and gas prices [1][5] Production and Capacity - The company aims to achieve a total shipment target for the year despite a slow start due to maintenance in February, with production expected to stabilize in March [1][6] - Monthly production is typically around 33,000 tons, with potential increases to 35,000 tons per month as operational issues from 2025 are addressed [8][9] Regulatory and Market Dynamics - The SAF industry faces stringent safety and quality standards, making it difficult for new entrants to disrupt existing players [18][19] - The company is preparing for potential regulatory changes in the domestic SAF market, focusing on safety and economic viability [12][15] Future Outlook - The company plans to expand its production capacity in line with China's carbon neutrality goals, with potential investments in the second phase of production expected to begin in 2026 [15][18] - The demand for bio-naphtha is anticipated to rise, driven by environmental policies and market acceptance, with current prices around $2,150 per ton [9][10] Conclusion - The SAF industry is poised for growth, supported by recovering demand, favorable policies, and strategic pricing models. The company is well-positioned to capitalize on these trends while navigating regulatory challenges and market dynamics.

Core Insights - The company reported strong financial results for 2025, with significant growth in revenue, EBITDA, and net profit compared to 2024, driven by the execution of its long-term strategy and expansion of international LNG activities [2][3]. Financial Performance - Group revenue increased by 12% to EUR 105.2 million in 2025 from EUR 93.7 million in 2024 [2]. - EBITDA rose by 10% to EUR 53.5 million in 2025, up from EUR 48.8 million in 2024 [2]. - Net profit grew by 19% to EUR 18.2 million in 2025, compared to EUR 15.4 million in 2024 [2]. Segment Performance - The Liquid Energy Products Terminals segment achieved a net profit increase of 68% to EUR 5.1 million in 2025 [3]. - The Regulated LNG Activities segment reported a net profit of EUR 10.2 million, a 32% increase from 2024 [8]. - The Commercial LNG Activities segment net profit reached EUR 3.4 million in 2025 [10]. Operational Highlights - The Liquid Energy Products Terminals handled nearly 3.6 million tonnes of products in 2025, a 5% increase from 3.4 million tonnes in 2024, with biofuel handling volumes growing by 16% [5]. - The Klaipėda LNG Terminal operated with high efficiency, achieving an average utilization rate of 68% in 2025, significantly above the European average of 52% [6][7]. - The Klaipėda LNG reloading station had a record year, loading over 1.8 thousand LNG trucks and delivering nearly 260 thousand cubic meters of LNG to customers [13]. Strategic Initiatives - The company is focusing on future energy directions, including hydrogen carriers and carbon capture and storage (CCS) projects, with significant progress made in the CCS Baltic Consortium [14][15]. - The CCS project secured over EUR 3 million in EU funding for studies and aims to contribute to the EU's climate neutrality objectives for 2050 [15][16].

Summary of Conference Call Notes Industry Overview - The focus is on the environmental protection industry, with a specific emphasis on carbon reduction efforts and upcoming earnings reports from various companies in the sector [1][2]. Key Points and Arguments - **Earnings Reports**: By January 30, 2026, 61 environmental companies have released their earnings forecasts for 2025. Among these: - 14 companies are expected to see significant positive growth in earnings - 4 companies are projected to experience a decline in earnings - 8 companies are anticipated to turn losses into profits - 35 companies are expected to report losses [1][2]. - **Notable Performers**: - **Wanyi Technology**: Expected net profit for 2025 is between 42 million to 62 million yuan, representing a year-on-year increase of 191.52% to 330.34% - **Gao Neng Environment**: Projected net profit for 2025 is between 750 million to 900 million yuan, reflecting a year-on-year growth of 55.66% to 86.79% - **Yuehai Investment**: Expected net profit growth of 43% for 2025, with an estimated profit close to 4.5 billion HKD based on 2024 figures [2]. - **Carbon Reduction Initiatives**: The year 2026 marks a significant shift towards stringent carbon emission controls, with local governments facing formal evaluations of carbon neutrality targets for the first time [2]. - **EU Carbon Tariff**: The EU has implemented a carbon tariff as of January 1, 2026, which is expected to increase the cost of exports from China to the EU. Exporting companies can mitigate these costs through the use of green energy and recycled resources [3]. Additional Important Insights - **Green Energy Demand**: The demand for green energy in global transportation is increasing, particularly with the EU's plan to mandate a rise in Sustainable Aviation Fuel (SAF) usage from 2% to a long-term target of 70% by 2025 [3]. - **UCO Pricing**: The price of Used Cooking Oil (UCO) has reached 1,075 USD per ton, marking a 9.1% increase since early 2025. This price increase is expected to enhance profit margins for companies involved in the processing of waste oils [3]. - **Companies to Watch**: - **Recycling and Resource Recovery**: Companies like Yingke Recycling, Langkun Technology, and Dadi Ocean are highlighted for their roles in the recycling sector - **Green Steam and Methanol**: Companies such as Huanlan Environment and China Tianying are noted for their contributions to green steam and methanol production [3].

Investment Rating - The report assigns a "Buy" rating to the company, indicating a positive outlook for its stock performance relative to the market index [3]. Core Views - The UCO market is characterized by a clear supply-demand logic, with long-term scarcity locked in by fundamentals. The theoretical potential for supply is significant, but actual utilization is limited due to collection and processing challenges [2]. - Demand for UCO is expected to grow significantly due to policy drivers, particularly in the EU, where SAF demand is projected to reach 264 million tons by 2030 and 825 million tons by 2035, translating to UCO demand of approximately 245 million tons and 766 million tons respectively [2]. - The company has reported record high earnings for the first three quarters of 2025, with revenue of 1.386 billion yuan and a net profit of 249 million yuan, reflecting a year-on-year increase of 0.17% and 28.89% respectively [2]. - The company is actively responding to changes in overseas policies and has implemented strategies to mitigate risks associated with EU anti-dumping investigations [2]. Summary by Sections Market Overview - The price of UCO has seen a slight increase, with the price range for UCO in China reaching 7,500-7,600 yuan per ton, up by approximately 50 yuan per ton week-on-week [1]. - The average spot price for UCO-based HVO recorded 2,642.55 USD per ton, reflecting a 1.90% increase [1]. Financial Performance - The company’s revenue projections for 2025-2027 are estimated at 1.932 billion, 2.222 billion, and 2.562 billion yuan respectively, with corresponding net profits of 289 million, 357 million, and 437 million yuan [6][7]. - The earnings per share (EPS) are projected to be 1.20, 1.48, and 1.81 yuan for the years 2025, 2026, and 2027 respectively [6][7]. Production Capacity - The company has a current raw material capacity of approximately 50,000 tons per year and is expected to enhance UCO production capacity through various projects in major cities [5]. - The Beijing Tongzhou project is anticipated to be operational by the second half of 2026, with a designed processing capacity of 2,100 tons per day [5].

Investment Rating - The report assigns a "Buy" rating to the company, indicating a positive outlook for its stock performance relative to the market index [3]. Core Views - The UCO market is characterized by a clear supply-demand logic, with long-term scarcity locked in by fundamentals. The theoretical potential for supply is significant, but actual utilization is limited due to collection and processing constraints [2]. - Demand for UCO is expected to grow significantly due to policy drivers, particularly in the EU, where SAF demand is projected to reach 264 million tons by 2030 and 825 million tons by 2035, translating to UCO demand of approximately 245 million tons and 766 million tons respectively [2]. - The company has reported record high earnings for the first three quarters of 2025, with revenue of 1.386 billion yuan and a net profit of 249 million yuan, reflecting a year-on-year increase of 0.17% and 28.89% respectively [2]. Summary by Sections Market Overview - The price of UCO has seen a slight increase, with the price range for UCO in China reaching 7500-7600 yuan per ton, up by approximately 50 yuan per ton week-on-week [1]. - The average spot price for UCO-based HVO recorded at 2642.55 USD per ton, reflecting a 1.90% increase [1]. Supply and Demand Analysis - The theoretical total amount of waste oil in China is about 11 million tons, but only around 3 million tons are utilized due to various constraints [2]. - The company is actively expanding its UCO production capacity, with projects in major cities like Beijing and Guangzhou, which are expected to enhance its supply capabilities [5]. Financial Projections - Revenue projections for the company are estimated at 1.931 billion yuan in 2025, 2.222 billion yuan in 2026, and 2.562 billion yuan in 2027, with corresponding net profits of 289 million yuan, 357 million yuan, and 437 million yuan [6][7]. - The expected EPS for the years 2025, 2026, and 2027 are 1.20 yuan, 1.48 yuan, and 1.81 yuan respectively, with P/E ratios of 22.43, 18.13, and 14.82 [6][7].

Company and Industry Summary Company: Langkun Technology (朗坤科技) Key Points - **UCO Price Dynamics**: The price center of Used Cooking Oil (UCO) is expected to systematically rise due to demand growth and supply constraints, indicating a high level of certainty in this trend. Compared to Shanhigh, Langkun Technology has not received significant market attention previously, suggesting a potential investment opportunity [1][1][1] - **Policy Support**: The demand for UCO is being driven by rigid policy requirements, which are expected to enhance UCO demand and lead to a revaluation of its value. The long-term scarcity of supply is becoming increasingly evident. UCO is a high-quality raw material for producing Hydrotreated Vegetable Oil (HVO) and Sustainable Aviation Fuel (SAF) via the HEFA route, with carbon reduction potential exceeding 80%, outperforming palm oil and other vegetable oils. It has received priority support from EU policies such as REDIII and ReFuelEU [1][1][1] - **Market Positioning**: Langkun Technology's focus on first-tier cities is a strategic advantage. The company has a current capacity of 3,911 tons/day from existing kitchen waste projects and holds five large-scale projects in the Guangdong-Hong Kong-Macao Greater Bay Area, Beijing-Tianjin-Hebei, and the Yangtze River Delta, ensuring stable demand and payment capabilities [1][1][1] - **Capacity Expansion**: Projects in Tongzhou and Fangshan are expected to double the kitchen waste processing capacity to 6,761 tons/day by 2026-2027. The UCO output is projected to increase from 50,000 tons to 300,000 tons (10,000 tons from self-production and 200,000 tons from channel integration), indicating strong certainty in organic growth [2][2][2] - **Financial Metrics**: As of January 23, Langkun Technology has a Price-to-Earnings (PE) ratio of 24 times, while Shanhigh has a PE ratio of 59 times. The current UCO market conditions are favorable, and with the confirmation of the company's BOT (Build-Operate-Transfer) projects, the net profit is expected to exceed 400 million yuan by 2026, corresponding to a PE of less than 15 times [2][2][2] - **Long-term Projections**: If the self-produced UCO volume reaches 100,000 tons, and assuming UCO prices rise to 9,000 yuan/ton without considering contributions from HMOs, the projected net profit could exceed 600 million yuan, resulting in a PE of only 10 times [2][2][2]

Summary of Key Points from the Conference Call Industry Overview - The conference call discusses the current status and outlook of the Sustainable Aviation Fuel (SAF) and biodiesel markets, particularly focusing on the global and European markets [1][6]. Core Insights and Arguments - **Global SAF Market Growth**: The global SAF market is expected to grow by 300,000 to 400,000 tons in 2026, with significant contributions from the CORSIA mechanism in 2027, which mandates equal carbon emissions at both ends of flight routes [1][6]. - **European Market Demand**: The European market is experiencing high demand for Hydrotreated Vegetable Oil (HVO) due to the EU's RED3 legislation and double carbon credit policies in countries like Germany [1][4]. The total demand in Europe and non-EU regions is projected to be around 1.8 million tons in 2026 [2]. - **Domestic Supply Constraints**: In China, the supply of waste cooking oil is tight, estimated at 4-4.5 million tons, which is insufficient to support planned production capacities [1][10]. The potential for new capacity must be assessed cautiously to avoid oversupply due to raw material shortages [1][10]. - **Raw Material Viability**: Palm oil and agricultural waste are technically feasible as raw materials, but certification issues and high costs limit their large-scale application [1][11]. The demand for palm-based products in Europe is noteworthy [1][11]. - **Impact of Restructuring**: The restructuring of China National Aviation Fuel (CNAF) and Sinopec is not expected to have a significant short-term impact on the domestic aviation fuel market, but long-term implications could arise if Sinopec leads SAF applications [1][12]. Additional Important Insights - **Price Dynamics**: The price of HVO in Europe is currently around $2,500, while soybean prices have dropped below $2,100 [4]. The market is expected to stabilize in 2026, with less volatility in procurement structures [9]. - **Regulatory Factors**: The implementation of the EU ID3 legislation and potential changes in carbon credit policies could significantly impact supply gaps and cost burdens for airlines [3][13]. - **UCO and Plant Oil Price Correlation**: There is a moderate correlation between UCO (Used Cooking Oil) and plant oil prices, with a correlation coefficient of approximately 0.6 [21]. - **UCO Production and Export**: China produces over 4 million tons of UCO annually, with about 2 million tons exported [22]. Future growth in UCO production may slow as potential resources are fully developed [22]. Conclusion The conference call highlights the complexities and dynamics of the SAF and biodiesel markets, emphasizing the importance of regulatory frameworks, supply constraints, and price stability in shaping future market conditions. The potential for growth in these sectors remains significant, but careful monitoring of raw material availability and regulatory changes is essential for stakeholders.