Policy driven warm wind blows frequently, and the new market space of pipe network exceeds trillion
Recently, the transformation of underground pipe network has been mentioned many times at key meetings such as the national Standing Committee. The demand for urban pipe network transformation at the policy level has increased significantly. We expect that the pipeline investment in the 14th five year plan stage is expected to accelerate. Under conservative calculation, the potential pipeline investment scale may exceed 1.4 trillion, Mainly optimistic about investment opportunities in several major fields: 1) the transformation and renewal of urban pipe network is expected to drive the release of demand for pipelines in municipal fields such as hydropower and heat combustion, which is expected to drive the market for water supply pipe network transformation of 19.1 billion yuan (including pipe investment of 11.5 billion yuan) and gas pipeline transformation (including construction) of 60.6 billion yuan; 2) The water conservancy policy is frequently overweight. The 14th five year plan focuses on flood control and disaster reduction, water supply and drainage, water ecological restoration and intelligent water conservancy. It plays a significant role in boosting the pipeline of major projects such as water diversion and water source projects, which is expected to drive the market scale of water transmission pipeline (including construction) to more than 474.4 billion yuan, an increase of nearly 110 billion yuan compared with the 13th five year plan; 3) In addition, there is room for the demand of pumped storage, agricultural irrigation, rural water supply and other fields.
The investment demand in three major fields is large, and the underground pipeline network ushers in the development opportunity period 1) water conservancy projects: at present, 15 provinces and cities have issued the investment plan for the 14th five year water conservancy project, of which water supply projects account for more than 50% of the total investment, of which PCCP concrete pipes are expected to continue to benefit, and the market scale of pipeline (including construction) driven by the investment of water conservancy project reaches 474.4 billion yuan, An increase of 30.2% year-on-year in the 13th five year plan; 2) Municipal reconstruction: the 14th five year plan for the construction of a water-saving society proposes that China’s water supply leakage rate will be reduced to 9% by 2025, which still has a large space compared with the current 13.4%. We expect that the water supply pipeline is expected to continue to benefit during the 14th five year plan period, and the market scale of renewal and reconstruction will reach 19.1 billion yuan; There is an urgent need for the renewal and transformation of gas pipelines, and the market scale is expected to be 60.6 billion yuan during the 14th Five Year Plan period; 3) Pumped storage: at present, concrete pipes and penstocks are mainly used. During the 14th Five Year Plan period, the construction scale is expected to reach more than 100gw, which is expected to drive the market demand of penstock of RMB 11.6 billion. In addition, steel plastic composite pipes have advantages in the application of Pumped Storage Power station. At present, Henan Luoning pumped storage power station has adopted steel plastic composite penstock produced by Shandong Donghong Pipe Industry Co.Ltd(603856) , The permeability of the pipeline is expected to be gradually improved in the future.
The demand for plastic pipes is supported by the old transformation + stock houses. The rural water supply, underground pipe gallery and other fields are blooming in many places. The transformation of the old community and the secondary decoration of the stock houses in the 14th five year plan are expected to drive the growth of pipeline demand: 1) there are about 170000 old communities built before the end of 2000, with a construction area of about 4 billion square meters. By the end of the 14th five year plan, all the old transformation is completed, which is expected to drive the demand for plastic pipes of 65 billion yuan; 2) China’s stock houses account for more than 40%. According to the calculation of 20-year reinstallation cycle, the potential scale of pipe network transformation will be 212.2 billion yuan by 2025; 3) The construction of 1100million mu of high efficiency water-saving irrigation farmland in China was put on the agenda by the end of the 14th five year plan. Low pressure pipe irrigation and spray drip irrigation are expected to drive 46.1 billion yuan of new pipeline market; 4) By the end of the 14th Five Year Plan period, the popularization rate of rural tap water will increase to 88%, which is expected to drive the investment of 440.4 billion yuan in water supply network; 5) There is still room for growth in the construction of urban underground comprehensive pipe gallery, which is expected to drive an investment of 85.3 billion yuan in new pipelines by the end of the 14th five year plan.
Investment suggestion: from the perspective of industrial chain, we believe that the investment opportunities of underground pipe network mainly focus on the four aspects of “pipeline manufacturing”, “pipeline construction”, “pipeline security” and “exploration and design”. We expect that during the 14th Five Year Plan period, different segments of the track are expected to show a trend of recovery in prosperity. We mainly recommend Shandong Donghong Pipe Industry Co.Ltd(603856) , China Liansu, ad shares, Zhejiang Weixing New Building Materials Co.Ltd(002372) , It is recommended to pay attention to Xinxing Ductile Iron Pipes Co.Ltd(000778) , Tianjin You Fa Steel Pipe Group Stock Co.Ltd(601686) , Fujian Superpipe Co.Ltd(300198) , Zhengyuan Geomatics Group Co.Ltd(688509) , etc.
Risk tips: the investment and construction of water conservancy is less than expected, the renewal of urban pipelines is less than expected, the construction of pumped storage is less than expected, the growth rate of infrastructure investment and real estate completion is less than expected, and the market space is less than expected.
