Continue to promote the reform of power marketization; All provinces and cities shall strengthen the management of hazardous wastes. 1. The national development and Reform Commission and the National Energy Administration jointly issued the implementation plan for implementing the requirements of carbon peaking and carbon neutralization goal and promoting the green and high-quality development of new infrastructure such as data center and 5g, proposing to encourage the use of renewable energy and increase the proportion of renewable energy power generation; Take 5g and data center as the pilot to gradually expand power market trading. Power operators are expected to benefit from the expansion of power market-oriented transaction scope and the improvement of green power scene. It is recommended to focus on the investment opportunities related to the upstream industrial chain of companies with clear renewable energy installation objectives and good quality in the power sector. 2. All provinces and cities shall strengthen the supervision of hazardous waste and accelerate the construction of hazardous waste information management system. Zhejiang Province and Fujian Province issued the reform plan of hazardous waste supervision system, and Gansu Province and Jilin Province issued the work plan to strengthen hazardous waste supervision. The policy requires stricter supervision of hazardous waste, gradual improvement of utilization rate, and improvement of accuracy through information supervision, which is beneficial to hazardous waste recycling enterprises with mature technology and large disposal scale. It is suggested to pay attention to hazardous waste disposal companies with rich projects in hand, strong technology and high barriers Zhefu Holding Group Co.Ltd(002266) ; There are many high-quality projects for hazardous waste and waste incineration, and the operation is accelerated Beijing Geoenviron Engineering & Technology Inc(603588) .
The financing has recovered, the space is broad, and the value of environmental protection allocation is prominent. Since 2019, the interest rate has dropped, state-owned assets have taken ownership, and the debt financing of environmental protection enterprises has improved significantly. The new refinancing regulations have been issued to solve the difficulties of enterprise equity financing and eliminate the most important factor of suppressing PE in the sector. In 2019, the total amount of environmental protection special bonds was 54.6 billion, in 2020, it was 232.4 billion, and by October 29, 2021, it was 212.8 billion yuan; Since 2020, the proportion of environmental protection special bonds has increased: in 2019, the proportion of environmental protection special bonds has increased to 2.5%, 6.3% in 2020, and further increased to 7.5% by October 29, 2021. The Fifth Plenary Session of the 19th CPC Central Committee unswervingly adheres to the construction of ecological civilization. The goal is to achieve new progress in the ecological environment during the 14th Five Year Plan period, achieve a fundamental improvement in the ecological environment by 2035, and the industry itself has broad growth space under the catalysis of the great protection of the Yangtze River and the Yellow River Basin and waste classification.
Valuation bottomed out, focusing on stable operating assets and companies with reversed fundamentals. Over the past three years, the performance of the environmental protection sector has been sluggish, and the valuation and positions are still low. The introduction of environmental protection REITs provides new equity financing tools. Pollution control operations such as urban sewage and waste treatment, solid waste and hazardous waste treatment are the key driving industries. They are optimistic about enterprises with strong technical advantages and high wall. 1. Waste incineration companies with strong growth and certainty, Pay attention to Zhejiang Weiming Environment Protection Co.Ltd(603568) (ROE industry leading, sufficient orders), Grandblue Environment Co.Ltd(600323) (steady growth and obvious valuation advantages); 2. Hazardous waste disposal companies with rich projects in hand and strong technical barriers, pay attention to Zhefu Holding Group Co.Ltd(002266) (new leader of hazardous waste and layout of the whole industrial chain), Beijing Geoenviron Engineering & Technology Inc(603588) (leader of soil remediation benefiting from financing improvement); 3. Water companies whose value is expected to be revalued, pay attention to Hongcheng water industry (Jiangxi sewage market has great potential, and the valuation and dividend rate are attractive).
Industry news: 1) General Office of the CPC Central Committee The general office of the State Council printed and distributed the five-year action plan for the improvement of Rural Human Settlements (2021-2025); 2) the national development and Reform Commission publicized the list of demonstration bases and backbone enterprises for comprehensive utilization of bulk solid waste; 3) the general office of the people’s Government of Ningxia Hui Autonomous region printed and distributed the 14th five year development plan of Ningdong energy and chemical industry base.
Plate Market Review: the environmental protection plate performed poorly this week, losing the market and the gem. Last week, the Shanghai Composite Index rose by 1.63%, the gem index fell by – 0.34%, the environmental protection engineering and services (Shenwan) fell by – 2.20%, outperforming the Shanghai Composite Index by – 3.83% and the gem by – 1.86%; The decline of public utilities was – 0.01%, underperforming the Shanghai Composite Index by – 1.64% and outperforming the gem by 0.33%. Monitoring (1.76%), atmosphere (- 3%), water treatment (- 2.57%), solid waste (- 1.28%), water operation (0.01%), energy saving (- 2.70%).
Risk tip: the environmental protection policy and supervision are less than expected, and the industry demand is less than expected
