Key investment points
Event: on January 24, 2022, the State Council issued the comprehensive work plan for energy conservation and emission reduction in the 14th five year plan, which proposed: (1) implement the leakage control project of public water supply network. (2) Promote the construction and transformation of urban domestic sewage pipe network. By 2025, 80000 kilometers of sewage collection pipe network will be added and transformed, the sewage treatment capacity will be increased by 20 million cubic meters / day, and the harmless disposal rate of urban sludge will reach 90%; The treatment rate of rural domestic sewage reached 40%. (3) Promote sewage treatment in the Yangtze River Basin. By 2025, the overall water quality in the Yangtze River Basin will remain excellent, the water quality in the main stream will be stable and reach class II, and the water quality in the upper and middle reaches of the Yellow River will reach class II.
Current situation: the construction of China’s drainage system is not perfect, and insufficient pipe network coverage is common. The sewage treatment industry often says: “the black odor is in the water, the root is on the shore, the key is the outlet, and the core is on the official website”. The drainage pipe network can not be seen or touched, but the existing problems are very prominent. To truly improve the quality and efficiency of sewage treatment, it is bound to achieve full coverage of the drainage pipe network. Whether it is to solve sewage treatment, or to improve rainwater drainage standards and solve urban waterlogging, the construction of drainage pipeline must be the top priority.
*** In 2019, the three-year action plan for improving the quality and efficiency of urban sewage treatment (2019-2021), jointly issued by the Ministry of housing and urban rural development and other three ministries and commissions, focused on “accelerating the completion of the shortcomings of urban sewage collection and treatment facilities, and realizing the full coverage, collection and treatment of sewage pipe network as soon as possible”. During the 13th Five Year Plan period, China’s sewage treatment infrastructure construction has made great progress. By the end of the 13th Five Year Plan period, the national urban sewage treatment rate has reached more than 95%. However, the pipe network has always been a short board in China’s sewage treatment, and problems such as insufficient coverage, leakage, passenger and water crowding the pipe network, wrong connection and mixed connection, overflow and so on are common, This is also the main reason why China’s sewage treatment rate is high, but the sewage collection and treatment rate is still relatively low, and black and smelly water bodies occur frequently.
China’s water supply network reform focuses on water informatization and intellectualization; The reconstruction of drainage end focuses on the construction of drainage pipeline. Since 2019, from the high performance of intelligent water meter industry and water information companies to the end of 2021, the central economic work conference emphasized the construction of drainage pipe network, and China’s intelligent water has officially moved from intelligent water supply to intelligent water supply and drainage. In 2019, China’s urban water supply penetration rate reached 98.78%, while the township water supply penetration rate was 80.50%. Therefore, for the construction of water supply network, more focus is on intelligent and information construction, while the construction of drainage network focuses on pipeline laying.
Subject matter: it is suggested to pay attention to the investment opportunities of drainage pipe industry and smart water industry. It is recommended to pay attention to the leader of drainage pipe industry [ Xinxing Ductile Iron Pipes Co.Ltd(000778) ], recommend intelligent water faucet [ Wpg (Shanghai) Smart Water Public Co.Ltd(603956) ], [ Zhejiang Heda Technology Co.Ltd(688296) ], ultrasonic water meter faucet [ Meter Instruments Co.Ltd(301006) ]
Risk tip: the risk that the macro-economy is less than expected, the risk that the intensification of industry competition leads to the decline of gross profit margin, etc
