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Verbio: The Federal Council Clears the way for Pure Biodiesel. The Group is Ready With its "verbiodiesel"!

The Federal Council has cleared the way for pure biodiesel at filling stations. Verbio offers the right product with its "verbiodiesel" made from rapeseed oil. In addition, the pressure from cheap imports of mislabeled biodiesel imports is easing, as the CEO recently indicated with falling inventories and better prices. Verbio could grow again from 2025 and would have a P/E ratio25e of 11.6, giving the share significant recovery potential!

Federal Council paves the way for pure biodiesel. Verbio has the right product with "verbiodiesel"!
On 22.03.24, the Federal Council cleared the way for pure biodiesel at filling stations. In future, truck and car drivers will also have the option of filling up with biodiesel that has been produced completely without crude oil. Instead, it comes from the processing of waste materials and vegetable oils. So-called paraffinic fuels are set to become more widespread, as they are likely to meet with interest, particularly in commercial use, in order to reduce CO2 emissions. One beneficiary of the decision is Verbio. This is because the company is prepared for the introduction. With "verbiodiesel", the company has had a product for years that is primarily made from rapeseed oil and fatty acids. Compared to fossil diesel, "verbiodiesel" can reduce CO2 emissions by 70 percent. Another point in favor of Verbio's product and technology is that only high-quality by-products are created during production, which are returned to the production process or processed into pharmaceutical glycerine and phytosterol.

Falling THQ quotas and cheap products from China slow down business
Verbio has not had an easy time of it in recent quarters. Falling THQ quotas and mislabeled biodiesel imports from China, which put pressure on the margin, had a negative impact on the company's development. This is because large quantities of advanced biodiesel suddenly began to arrive from China. However, this is said to have been biodiesel from palm oil, which does not count towards meeting the greenhouse gas reduction quota (GHG quota), which was relabeled as advanced biodiesel from residues. This is because this can be counted twice towards the GHG quota in Germany. There should now be an improvement here. In the first half of 2023/24, Verbio managed to generate a profit for the period of €76.9 million (-24%) on revenue of €908.9 million (-15%). The figures reflect the lower prices for biodiesel, bioethanol and GHG quota prices. For the year as a whole, Verbio expects EBITDA of EUR 120 million to EUR 150 million. The Factset consensus estimates EPS at EUR 0.97.

From 2025, a new profit increase should start - forward P/E 2025 ratio of 11.6!
According to Verbio, European measures have been taken to reduce biodiesel imports. However, as the massive Chinese imports have created a buffer of 6 million tons of CO2 savings, Verbio will probably not see better business again until 2025. One glimmer of hope is that, according to the CEO, stocks have fallen in recent weeks and higher prices have been established again. The Group could then be on the verge of a significant recovery in EPS. The Factset consensus estimates it at EUR 1.72. As a supplier of important products for CO2 reduction and gas supply, Verbio would not be expensive, but the company is heavily dependent on politics, input prices and prices for GHG quotas, biodiesel and bioethanol. Because a high level of pessimism is priced in at the current level, the Federal Council's decision should help the share to start a pronounced recovery.

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