Key recommendations focus on: Miracle Automation Engineering Co.Ltd(002009) \\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\, Henan Bccy Environmental Energy Co.Ltd(300614) , Fujian Longma Environmental Sanitation Equipment Co.Ltd(603686) , China Resourcesand Environment Co.Ltd(600217)
Suggestions for attention: Road Environment Technology Co.Ltd(688156) , Zhejiang Weiming Environment Protection Co.Ltd(603568) , Wangneng Environment Co.Ltd(002034) , Chongqing Sanfeng Environment Group Corp.Ltd(601827) , China Tianying Inc(000035) , conch entrepreneurship, Jiangxi Jovo Energy Co.Ltd(605090) , Beijing Capital Eco-Environment Protection Group Co.Ltd(600008)
The opinions of the CPC Central Committee and the State Council on doing a good job in the key work of comprehensively promoting rural revitalization in 2022 was issued. According to the opinions, the following five-year actions will be taken to improve the rural living environment: 1) make an overall plan to ensure water supply and sewage treatment, promote the treatment of rural domestic sewage, and 2) accelerate the treatment of rural black and smelly water bodies. 3) Promote the classification and reduction of domestic waste at the source, strengthen the construction of comprehensive treatment and utilization facilities for organic waste in villages, and promote on-site utilization and treatment.
The notice on carrying out the pilot of hazardous waste collection in small and micro enterprises was issued. The notice emphasizes that 1) we should fully understand the significance of the pilot and open up the “last kilometer” of hazardous waste collection in small and micro enterprises; 2) Coordinate the layout according to local conditions. Before December 31, 2023, all localities shall reasonably determine the number and layout of pilot units for hazardous waste collection of small and micro enterprises in combination with local conditions to avoid surplus; 3) Strictly review and determine the collection unit. In principle, small and micro enterprises with a total annual production of hazardous waste of less than 10 tons should be the focus of collection services; 4) Clarify the responsibilities of the collection unit; 5) Strengthen environmental supervision and management; 6) Strengthen technical assistance, coordination and communication; 7) Do a good job in publicity and public supervision.
Benchmarking the EU to see the development of China’s carbon market: the two core mechanisms are taking shape, the carbon price is rising for a long time, and CCER is bullish for a short time. For the resumption of the EU carbon market, the total amount control and MSR mechanism are the key to the carbon price balance. The development of China’s carbon market is similar to that of the EU, and has the prototype of the total amount control market regulation mechanism. At present, the transaction scale and covering industries have large room to improve, the carbon price is far lower than overseas, the double carbon target time is tight, the task is heavy, the total amount tightening drives the carbon price to rise for a long time, and the carbon market releases the demand of CCER, Previously, the recorded emission reduction of CCER in China totaled more than 50 million tons, which took four years. We expect to basically fulfill the contract, and the approval policy is expected to restart. We expect the supply scarcity price of CCER to rise in the near future.
Carbon neutralization investment framework and environmental protection industry mapping: build an investment framework from front-end energy substitution, middle-end energy conservation and emission reduction and back-end recycling, and provide effective institutional support for carbon trading. From the perspective of environmental protection, 1) energy substitution: adjust the front-end energy structure, and pay attention to the substitution demand of sanitation new energy equipment and renewable energy (waste incineration, etc.). 2) Energy conservation and emission reduction: promote industrial transformation in the middle end and pay attention to energy conservation management & Application of emission reduction equipment. 3) Recycling: promote the recycling of renewable resources such as waste classification, waste household appliances / cars and hazardous waste recycling. 4) Environmental consultation: the improvement of environmental management promotes the expansion of the demand for environmental consultation. 5) Carbon trading: encourage the development of CCER projects such as renewable energy (waste incineration / biomass utilization), methane utilization (sewage treatment / biogas utilization), forestry carbon sequestration, etc.
Steady growth + undervalued value + high dividend + new track, fully recommend low-carbon environmental protection assets: 1) environmental asset value + Growth Logic 2.0: a) steady growth + new tools + new fields, from single dimension to combination. Increase macro investment in infrastructure and strengthen the policy of increasing carbon; Mode +: REITs improves the return on assets and opens the growth ceiling; Space +: the second growth curve. B) The value of cash flow driven by marketization is further highlighted: policy tools such as CCER green power, waste incineration bidding and marketization of water price enhance the certainty of return and improve cash flow. 2) Under the new logic, the valuation anchor has been significantly improved: undervalued + low position + growth, improved model and cash flow, and improved valuation. 3) Key targets: a) steady growth / high dividend / REITs: waste incineration [ Dynagreen Environmental Protection Group Co.Ltd(601330) ], water + pipe network [ Beijing Capital Eco-Environment Protection Group Co.Ltd(600008) ] [ Jiangxi Hongcheng Environment Co.Ltd(600461) ], water supply price increase + direct drinking water [China water]. B) new track: renewable resources: the most economical carbon premium + resource price increase: hazardous waste recycling [ Beijing Geoenviron Engineering & Technology Inc(603588) ], Baijiu liquor tank recycling [ Road Environment Technology Co.Ltd(688156) ], power battery reuse [ Miracle Automation Engineering Co.Ltd(002009) ], recycled plastics [ Beijing Sanlian Hope Shin-Gosentechnical Service Co.Ltd(300384) ]; Hydrogen energy: [ Jiangxi Jovo Energy Co.Ltd(605090) ]; High matte: [ Zhejiang Weiming Environment Protection Co.Ltd(603568) ].
Latest research: comprehensively recommend environmental protection asset logic 2.0: steady growth + new tools + new fields, environmental protection asset investment logic 2.0; Industry comments: urban environmental infrastructure accelerates and contributes to steady growth, focusing on solid waste / water / pipe network investment Soochow Securities Co.Ltd(601555) environmental protection industry’s annual strategy for 2022: double carbon vowels, rhythm and more circulation.
Risk tip: the policy promotion is less than expected, the interest rate rises more than expected, and the fiscal expenditure is lower than expected.
