Original-Research: Verbio SE - from NuWays AG
Classification of NuWays AG to Verbio SE
E20: A potential catalyst for ethanol demand Germany and France are considering higher biofuel blends, with German Transport Minister Steffen Bilger citing E20 petrol, containing up to 20% ethanol, compared with up to 10% in the E10 blend, as a potential option. The initiative follows the two countries' proposal to ease the EU's 2035 CO2 reduction target for new cars from 100% to 90%, allowing combustion-engine vehicles to remain on sale beyond 2035. While no formal E20 proposal or timetable has been announced, political momentum could pave the way for an initial rollout from 2027. The demand opportunity could be significant. The EU consumed c. 5.0mt of fuel ethanol in 2025, while producing c. 4.5mt. An increase in ethanol blending towards 20% could substantially increase demand: a full transition from a 10% to a 20% blend would require an illustrative c. 5.0mt of additional ethanol p.a., assuming the current consumption base corresponds to a 10% blend. The theoretical increase could be higher where E20 replaces lower blends such as E5. Actual volumes will depend on the blends replaced, vehicle compatibility and adoption. Higher demand could support European ethanol prices and margins, although the impact will also depend on imports. Higher biofuel blends could also help meet rising GHG reduction targets. In January, the German Bioenergy Association (BBE) argued that higher physical blends, including an increase from B7 to B10 in diesel and from E10 to E20 in petrol, would be needed to meet increasingly ambitious targets under Germany's implementation of RED III. This was before Germany adopted an even steeper trajectory, with the GHG reduction obligation rising from 12% in 2026 to 17.5% in 2027. While higher blending could increase the supply of eligible GHG savings, it would not necessarily lead to lower quota prices, given the simultaneous increase in compliance demand. The contribution of crop-based biofuels to Germany's GHG obligation is capped at 4.9% of the relevant fuel energy base; other options include waste- and residue-based biofuels. Higher ethanol blending would increase demand in a European market already reliant on imports. With its European production capacity already running at high utilisation, VERBIO could benefit from higher ethanol spreads or through international trading, potentially selling its US ethanol production in Europe. Based on European ethanol production of c. 334kt p.a. at 91% utilisation, a € 100/t increase in margins would add c. € 33m to annual EBITDA, or c. 15% of our FY26/27 estimate and c. 9% of our adjusted medium-term estimate, all else being equal. For context, we expect European ethanol spreads of c. € 230/t in Q1 FY26/27, compared with c. € 380/t in Q4 FY25/26, illustrating their volatility. The € 100/t increase is an illustrative sensitivity, not an estimate of the impact of E20. Our current estimates assume a medium- to long-term ethanol margin of € 160/t, versus c. € 200/t expected until year-end. We maintain our estimates and € 41 price target, based on the average FY27/28-FY28/29 FCF yield, pending further details. The next catalyst will be the Q1'26/27 results on 12 November. We expect EBITDA to quadruple yoy to € 61.5m (eNuW), supported by stronger European biodiesel and ethanol spreads, higher utilisation as Nevada continues to ramp up, and significantly higher German GHG quota prices. The expected strong start supports our FY26/27 estimates, with potential upside from higher GHG quota prices or a prolonged period of elevated biodiesel spreads. For further details, please see our Q1 preview. You can download the research here: verbio-se-2026-10-27-update-en-c0be9 For additional information visit our website: https://www.nuways-ag.com/research Contact for questions: NuWays AG - Equity Research Web: www.nuways-ag.com Email: research@nuways-ag.com LinkedIn: https://www.linkedin.com/company/nuwaysag Adresse: Mittelweg 16-17, 20148 Hamburg, Germany ++++++++++ Diese Meldung ist keine Anlageberatung oder Aufforderung zum Abschluss bestimmter Börsengeschäfte. Offenlegung möglicher Interessenkonflikte nach § 85 WpHG beim oben analysierten Unternehmen befindet sich in der vollständigen Analyse. ++++++++++ The EQS Distribution Services include Regulatory Announcements, Financial/Corporate News and Press Releases. | ||||||||||||||||||
2422662 27.10.2026 CET/CEST
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