According to Zhiyuan Finance APP, GF Sec has released a research report stating that the scarcity of SAF raw materials has increased, and solid waste companies that have control over the supply of waste oil raw materials may gain dominance. Currently, the SAF application pilot has officially started. In the future, with the expansion of domestic SAF application pilots, the release of domestic demand will fill the export gap; biodiesel companies are accelerating the layout of SAF production lines, ushering in a heated competition phase in the industry as the scarcity of raw materials rises. Companies handling waste oil raw materials in the food service industry and those with refining technology will be the beneficiaries in this rising cycle of biodiesel.

GF Securities' main points are as follows:

The tide rises: demand is escalating with a dual carbon commitment, leading to simultaneous increase in quantity and price domestically.

Biodiesel, as an emission-reducing energy sourced from waste oils and vegetable oils, is experiencing a mandatory increase in blending ratios against the backdrop of enhanced dual carbon commitments in Europe, creating a twenty-year golden development period—according to USDA data, consumption rose from 0.8 million tons in 2000 to 42.2 million tons in 2020, with a compound growth rate of 22%. Since 2017, China has opened up the European export chain, and according to China Customs data, from 2017 to 2022, the compound growth rates of biodiesel and waste oil exports reached 60% and 36%, respectively, with processing capacity expanding rapidly at companies represented by Longyan Zhuoyue New Energy.

Additionally, between 2020 and 2022, the high oil prices have pushed up the scarcity attributes and cost-effectiveness of biodiesel, leading to an explosion in China's biodiesel industry under the conditions of simultaneous increases in quantity and price. Taking Longyan Zhuoyue New Energy as an example, according to Wind, the company's net profit attributable to the parent from 2020 to 2022 was 0.24/0.35/0.45 billion yuan, and the production volume of biodiesel was 0.231/0.358/0.408 million tons/year.

The tide recedes: demand is no longer growing, and Europe's anti-dumping measures are the last straw.

Since 2023, the performance and valuation of biodiesel enterprises have been declining continuously, mainly due to two reasons: weak demand and European policy attacks.

(1) With electrification and bottlenecks in blending limits leading to a slowdown in biodiesel demand, the IEA expects that biodiesel will maintain a level of around 40 million tons in the coming years, transitioning the industry from growth to maturity, with domestic processing enterprises seeing a slowdown in production capacity growth and a significant decrease in small enterprises' capacity utilization rates.

(2) To protect the interests of domestic processing enterprises, on July 19, the European Commission proposed to impose temporary tariffs of 12.8% to 36.4% on biodiesel exported to the EU from China, directly resulting in biodiesel enterprises lacking the ability to export to Europe, thus the industry has entered a winter period.

The arrival of SAF (Sustainable Aviation Fuel) marks that market demand is awaiting expansion.

After experiencing the negative impacts of tariff influences and declining external demand over the past two years, looking forward to next year, the mandatory introduction of SAF will begin to become an important turning point.

(1) Foreign market: According to the EU's "Guidelines for Ensuring a Fair Competitive Environment for Sustainable Aviation Transport," the proportion of sustainable aviation biofuels (bio aviation kerosene) in aviation fuel needs to reach 2% by 2025 and 63% by 2050 (corresponding to a demand potential for bio aviation kerosene exceeding 43 million tons/year), the increase in the blending ratio is expected to stimulate external demand and contribute to incremental market space.

(2) Domestic market: The SAF application pilot has officially started, and future expansion of domestic SAF pilot applications will release domestic demand to fill the export gap. Currently, global refining giants such as UOP and Shell, along with domestic biodiesel enterprises like Sinopec, are accelerating the layout of SAF production lines, signaling the arrival of a fiercely competitive layout stage in the industry.

The scarcity of raw materials is increasing, leading to a strong demand for "waste oil."

Companies that handle food waste with discarded oil raw materials and processing companies with refining technology will be the beneficiaries in this rising cycle of biodiesel. Especially solid waste companies represented by longyan zhuoyue new energy are expected to secure a large supply of discarded oil raw materials through their food waste projects, which will provide them with a dominant position in the future SAF market.

It is recommended to pay attention to longyan zhuoyue new energy (301305.SZ), grandblue environment (600323.SH), junxin shares (301109.SZ), etc. In addition, biodiesel processing companies with refining technology are currently in the capacity construction and debugging stage, so it is important to monitor the progress of subsequent production lines. Keep an eye on zhejiang jiaao enprotech stock (603822.SH), beijing haixin energy technology (300072.SZ), etc.

Risk warning: low order expectations, risk of policy changes, low dividend expectations.