The recycling transformation of the park has increased the demand for resources; The pilot project is expected to improve the investment and financing environment. 1. The general office of the national development and Reform Commission and the general office of the Ministry of industry and information technology issued a notice on matters related to the circular transformation of the park during the 14th five year plan. The notice proposes: 1) promote the efficient and comprehensive utilization of resources in the park. Key enterprises in the park fully implement cleaner production and promote the source reduction of raw materials and wastes. Benefit hazardous waste recycling enterprises with strong engineering construction capacity; 2) We will strengthen energy conservation and carbon reduction and increase the proportion of green electricity. Conducive to growth Waste incineration companies with strong certainty are recommended to pay attention to: (1) Zhejiang Weiming Environment Protection Co.Ltd(603568) with outstanding roe; (2) hazardous waste disposal companies with rich projects on hand and high technical barriers Zhefu Holding Group Co.Ltd(002266) ; (3) there are many high-quality projects on hand and Beijing Geoenviron Engineering & Technology Inc(603588) with accelerated production. 2. 9 departments such as the Ministry of ecological environment issued the work plan on carrying out climate investment and financing pilot , strengthen the of carbon financial products in the pilot areas, speed up the construction of carbon finance, strengthen accounting and information disclosure, and benefit the waste incineration enterprises with great growth. It is recommended to focus on (1) roe industry-leading Zhejiang Weiming Environment Protection Co.Ltd(603568) with sufficient orders; (2) Grandblue Environment Co.Ltd(600323) with steady growth and obvious valuation advantages.
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 national development and Reform Commission and other nine departments issued the construction plan for major projects of ecological protection and restoration support system (2021-2035); 2) the Ministry of ecological environment issued the notice on the management of industrial solid waste discharge permit; 3) Shenzhen Municipal Bureau of ecological environment issued the 14th five year plan for ecological environment protection in Shenzhen.
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 – 0.39%, the gem index fell by – 4.00%, the environmental protection engineering and services (Shenwan) rose by 0.00%, outperforming the Shanghai Composite Index by 0.39% and the gem by 4.00%; Public utilities rose by 0.83%, outperforming the Shanghai Composite Index by 1.22% and the gem by 4.93%. Monitoring (- 1.76%), atmosphere (- 3.80%), water treatment (- 4.85%), solid waste (- 1.32%), water operation (- 1.50%), energy saving (- 5.31%).
Risk tip: the environmental protection policy and supervision are less than expected, and the industry demand is less than expected.
