Core view
The plate trend is upward. In 2021, the share price of the environmental protection sector showed a trend of first falling and then rising, and the performance of the sector significantly exceeded the Shanghai and Shenzhen 300 index. Among them, the information sector performed well, and the solid waste and water sector also rose strongly. In the context of the “double carbon” goal, the future will focus on four aspects: environmental protection operation, integration of environment and energy industry, progress of environmental protection technology and green assets.
From increment to stock, the core competitiveness is transformed. With the large-scale construction of environmental protection infrastructure entering a stable period, the industry characteristics have changed from “increment” to “stock”. The core competitiveness of environmental protection enterprises is transformed into strategic selection ability, operation and management ability, technical ability and so on. Profit quality and cash flow will also become the focus of the market.
Coordinated development of environmental services and energy services. During the “14th five year plan”, the core themes of the environmental protection industry are double carbon, fighting a tough battle of pollution prevention and control, building a resource-saving society and developing circular economy. As the carrier of a large number of industrial enterprises, industrial parks have always been the focus of the environmental protection industry. The expansion of large environmental protection enterprises to the energy field makes it possible to integrate energy conservation and environmental protection management in the park. Under the development trend of distributed energy such as photovoltaic and wind power and incremental distribution network, environmental protection enterprises are expected to open up the three links of energy supply, energy conservation and environmental protection, realize the coordinated development of energy supply, energy conservation, pollution reduction and carbon reduction, and finally realize the transformation from a single environmental protection treatment to a comprehensive operation service provider of energy and environmental protection.
Innovation never stops, and technological progress opens up industry space. The progress of environmental protection technology can not only reduce costs and provide higher quality products and services, but also better solve the problems of environmental governance. R & D capability and technical advantages will greatly improve the competitiveness of environmental protection enterprises, and pay attention to the new changes brought by environmental protection technology progress and digital operation to the pattern of environmental protection industry.
“Double carbon” leads change and green assets are on the stage. Carbon peak and carbon neutralization have established the long-term goal of “3060”, and the lifestyle, production mode and asset structure will usher in profound changes. In the context of “double carbon”, REITs, carbon assets and green credit have green value and measure “green capacity” (such as emission reduction capacity). Under the guidance of national policies, green assets will become important assets in society.
We maintain a “optimistic” investment rating for the industry, focusing on Grandblue Environment Co.Ltd(600323) , Beijing Geoenviron Engineering & Technology Inc(603588) , Beijing Spc Environment Protection Tech Co.Ltd(002573) and other companies.
Risk factors: the implementation of carbon neutralization policy is less than expected; The national power generation subsidy is less than expected; The competition of hazardous waste recycling enterprises intensifies; The implementation of sewage recycling policy is less than expected; The underlying operating assets of REITs are less than expected; The payment capacity of local governments is lower than expected.
