Building a “waste free city” with increased resource demand; Promote the economical and intensive utilization of water resources. 1. The Ministry of ecological environment and other 18 ministries and commissions jointly issued the work plan for the construction of “waste free cities” during the 14th Five Year Plan period. The plan proposes: 1) strengthen the regional hazardous waste recycling and treatment capacity, promote centralized collection, transportation and storage, encourage waste producing enterprises to cooperate with hazardous waste recycling enterprises, and build the whole chain treatment capacity of hazardous waste. Benefit hazardous waste recycling enterprises with mature technology and large disposal scale; 2) Promote the reduction and recycling of solid waste from domestic sources. Improve the incineration capacity of domestic waste. Good growth and strong certainty of waste incineration companies; It is recommended to pay attention to (1) the Zhejiang Weiming Environment Protection Co.Ltd(603568) with outstanding roe; (2) the hazardous waste disposal company Zhefu Holding Group Co.Ltd(002266) with rich hand projects and strong technical barriers; (3) the Beijing Geoenviron Engineering & Technology Inc(603588) with many high-quality projects in hand and accelerated production. 2. The national development and Reform Commission and others jointly issued the notice on printing and distributing the implementation plan for the economical and intensive utilization of water resources in the Yellow River Basin, the implementation plan Encourage the recycling of sewage, encourage the demonstration and promotion of resource and energy benchmark renewable water plants, reduce the energy consumption and carbon emission of sewage treatment, promote the economical and intensive utilization of water resources, and benefit the leading enterprises in the water treatment industry. It is recommended to pay attention to Jiangxi Hongcheng Environment Co.Ltd(600461) with large growth space of endogenous business and expected revaluation of water assets.
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) the Ministry of industry and information technology issued the “14th five year plan” for industrial green development; 2) The Ministry of ecology and environment issued the decision on Amending Some departmental rules; 3) The Ministry of ecological environment issued the technical guide for the protection and restoration of river and lake ecological buffer zones.
Plate Market Review: the environmental protection plate performed well this week, outperforming the market and the gem. Last week, the Shanghai Composite Index fell by – 0.93%, the gem index fell by – 0.94%, the environmental protection engineering and services (Shenwan) rose by 0.00%, outperforming the Shanghai Composite Index by 0.93% and the gem by 0.94%; Public utilities rose by 6.54%, outperforming the Shanghai Composite Index by 7.47% and the gem by 7.48%. Monitoring (3.24%), atmosphere (8.99%), water treatment (2.71%), solid waste (3.77%), water operation (2.83%), energy saving (3.85%).
Risk tip: the environmental protection policy and supervision are less than expected, and the industry demand is less than expected.
