Dongfang Securities: The green polyester industry is expected to usher in rapid development driven by new technologies

According to the Zhitong Finance APP, Dongfang Securities released a research report stating that the industrial level of the green polyester industry processed by physical methods is relatively mature, but "physical methods" can almost only use bottle flakes as raw materials, and the products are mainly short fibers and bottle flakes. The annual production of polyester fibers is 79 million tons, with polyester bottle flakes accounting for about 32 million tons. Therefore, the problems that can be solved are also limited to the global annual production of bottle flakes, which only accounts for about one-third of the total polyester annual output. Breakthroughs in new technologies will allow the raw materials for green polyester to no longer be limited to bottle flakes, and the products can completely replace virgin materials, thereby opening up about 80 million tons of new space.

The main viewpoints of Dongfang Securities are as follows:

New technology for green polyester has the potential to open up huge new development space

The industrial level of the green polyester industry processed by physical methods is relatively mature, but "physical methods" can almost only use bottle flakes as raw materials, and the products are mainly short fibers and bottle flakes. The annual production of polyester fibers is 79 million tons, with polyester bottle flakes accounting for about 32 million tons. Therefore, the problems that can be solved are also limited to the global annual production of bottle flakes, which only accounts for about one-third of the total polyester annual output. Breakthroughs in new technologies will allow the raw materials for green polyester to no longer be limited to bottle flakes, and the products can completely replace virgin materials, thereby opening up about 80 million tons of new space. The various characteristics of polyester also lay an important foundation for the development of new technologies.

From a physical property perspective, polyester is easier to depolymerize compared to other plastics, and it is also easier to find bio-based raw materials for replacement. From a market perspective, the recycling system for polyester is relatively mature, and the price of waste materials is low; developing new technologies has significant economic scale advantages. These reasons make green polyester significantly ahead of other plastics in industrial development and poised for rapid growth.

Biological methods have outstanding advantages in recycling technology

In terms of recycling, chemical depolymerization recycling technology is relatively mature, with commercial projects already in place in China, such as Zhejiang Jiarun. However, chemical methods require high reaction temperatures, and the products are oligomers such as DMT or BHET, which have certain limitations in application. The biological method using enzymes as depolymerization catalysts is about to enter the stage of industrial operation, with France's Carbios expected to cooperate with domestic enterprises, and Tianjin Yuantian Biological already having demonstration devices.

The biological method has mild reaction conditions, and the products first obtain regenerated PTA and regenerated ethylene glycol, which can be used to produce polyester or other products, offering high flexibility. Although the industrialization progress is slower than that of chemical methods, it has already attracted interest from many major food and beverage, clothing, and tire companies. It is expected that once industrialization is realized, it will quickly gain market share and maintain a high return rate.

Bio-based materials are receiving high attention from the industry and are about to be commercialized

In terms of bio-based materials, a technology route has been developed in China to replace PTA with furandicarboxylic acid (FDCA). Livi Biological is the main producer of the key raw material FDCA and has received investments from several important enterprises in the polyester industry chain. Recently, XfmGroup has added an investment of 100 million, planning to use FDCA to replace PTA to produce polyethylene furanoate (PEF) for high-end bio-based fibers. The major shareholder of Nongfu Spring, Yangshengtang, has also made a significant early investment, and it is expected that their goal is to use PEF to replace the "polyester + additives" solution to address the recycling issues of the Dongfang Shuye product line beverage bottles The industrial application of bio-based polyester is also on the verge of commercialization, with clear application scenarios expected to lead to rapid scaling after its implementation.

Investment Recommendations

Dongfang Securities believes that the domestic green polyester industry is about to enter a rapid growth phase due to strong demand for green and low-carbon consumption. A quality customer base is expected to maintain a high level of return on investment. The relevant listed companies are as follows:

Wankai (301216.SZ): Has identified key nodes in both major development directions of green polyester mentioned above and has made forward-looking arrangements. Its major shareholder, Zhengkai Group, has already communicated with France's Carbios in 2024 and plans to build a 50,000-ton industrial project domestically. Chengkai Fund, part of the B+ round financing of Lifetech, is a private investment fund under Zhengkai Group, and Wankai itself is also a major supplier of bottle sheets for Nongfu Spring. Wankai has achieved precise positioning in the industrial chain through investments from its major shareholder. Since both the biological recycling and the final product form of bio-based materials are polyester, and Wankai is the listed company under Zhengkai Group engaged in polyester production, we expect that the final industrial landing projects should also be carried out by the listed company to avoid competition, which will open up broad new development space for the listed company.

XfmGroup (603225.SH): Is a leading enterprise in the domestic polyester filament industry and has also invested in Lifetech. It plans to produce bio-based fibers and green packaging using FDCA as raw material, which is expected to become a leading bio-based materials company.

Nengte Technology (002102.SZ): Has invested in the construction of a 100,000-ton recycled polyester project, using BHET produced by its affiliated company Chenghua Technology through chemical methods as raw material.

Risk Warning

Policy risks; new project progress risks; raw material price fluctuation risks