Recently, the Ministry of housing and urban rural development and the national development and Reform Commission issued the notice on strengthening the leakage control of public water supply network (hereinafter referred to as the "notice"), which made it clear that by 2025, the leakage rate of urban public water supply network in China will strive to be controlled within 9% and provide central budget support. The core work of the low leakage range below 10% is intelligent transformation, which opens a market space of 30 ~ 50 billion for system and software suppliers.
Smart water and smart pipe network documents have been issued one after another, and the policy environment has been continuously strengthened. In October 2021, the national development and Reform Commission and other five departments issued the "14th five year plan" for the construction of water-saving society, which clearly proposed to implement the leakage control project of urban water supply network; In January 2022, the Ministry of water resources issued the guiding opinions on vigorously promoting the construction of intelligent water conservancy, proposing to complete the construction of digital twin watershed and "2 + n" intelligent water conservancy business application system by 2025; In February 2022, the notice was issued to clarify the construction tasks of various water supply networks. Recently, many departments have intensively issued policies to promote the construction of smart water and pipe network, and the expectation of industry acceleration is becoming more and more obvious.
Tens of billions of market space ushered in cash. The high growth of relevant market scale has clear driving and catalysis:
(1) according to the prospective industry research institute, the scale of China's smart water market will reach 37 billion yuan in 2026; According to the calculation of Harbin Institute of technology, the investment in smart water at the prefecture and municipal levels is 30 billion and 50 billion respectively; According to CCID Consulting, the market scale of underground pipe network will reach 424.4 billion around 2022 (if it is estimated that the scale of intelligent pipe network will exceed 40 billion yuan according to the proportion of 10% information investment);
(2) the leakage rate of Japan (3%) and Singapore (5%) represents the international advanced level of leakage control. According to the data of Zhiyan consulting, the leakage rate of China in 2019 was 13.2%, with a large gap;
(3) in September 2021, the State Council and the Ministry of emergency management issued a notice to determine 18 cities (districts) as the pilot of urban safety risk monitoring and early warning construction, and plan to promote it throughout the country. The notice puts forward the responsibility implementation and incentive mechanism, and defines the financial support of the central budget to provide financial guarantee. It can be seen that the market space of tens of billions is expected to mature rapidly in 2 ~ 3 years.
The connotation of smart water task is clear. Smart water includes information management platform, pipe network model software, water ten (water pollution prevention plan), etc. The notice emphasizes the intelligent transformation of water supply network and the establishment of an intelligent water supply management platform based on the Internet of things. In terms of construction connotation, we interpret that it includes "4 + 1" tasks: 4 technical projects: 1 internal control management construction mechanism and overall leakage control, common water supply pipe network management of residential communities, contract water saving and DMA management.
To achieve low leakage rate, intelligent transformation is the key. According to the analysis of the school of environment of Tsinghua University, the leakage control experience of Shaoxing (with a leakage rate of less than 5%), Zhengzhou (with a leakage rate of about 7.5%), Changzhou (with a leakage rate of about 9.2%) and other cities believes that (1) in the range of more than 20% leakage rate, it is necessary to do a good job in the transformation of pipe network, the construction of measurement system and the updating of measurement instruments; (2) In the range of 10% - 20% leakage rate, zoning measurement and pressure regulation shall be done well; (3) In the low leakage rate range below 10%, the contribution of intelligent transformation and fine control is more prominent. China's leakage control work is entering the deep water area, and the focus of work will be inclined to intelligent transformation, which will bring a wide range of business opportunities and strong driving force for performance growth to the system and software suppliers in the field of Internet of things and smart city.
Investment suggestion: it is suggested to pay attention to Zhengyuan Geomatics Group Co.Ltd(688509) (a GIS industry leading enterprise focusing on underground pipe network and smart water affairs, with professional experience in underground pipe network safety operation and maintenance and smart city construction and operation). At the same time, you can pay attention to Beijing Egova Co.Ltd(300075) , Wpg (Shanghai) Smart Water Public Co.Ltd(603956) , Zhejiang Heda Technology Co.Ltd(688296) .
Risk warning: the policy is not as expected; Budget adjustment.
