Investment summary:
Talk every Monday:
The overall market fell this week, and the decline of environmental protection ranked in the middle (- 4.31%). Among the sub sections, only the water affairs and water treatment (- 2%) decreased slightly. Among the leading stocks, green city water (7.8%), entrepreneurship and environmental protection (5.52%) and other enterprises with high proportion of sewage treatment business, as well as Xinjiang Guotong Pipeline Co.Ltd(002205) (7.64%) focusing on the construction of drainage pipe network.
During the two sessions, many representatives put forward suggestions on the reconstruction and repair of sewage pipe network, the management, operation and maintenance improvement of sewage collection system and other aspects; In the development plan of urban sewage treatment and resource utilization in the 14th five year plan, the sewage collection rate is included as the target index for the first time. In the “14th five year plan” period when the new sewage production capacity and the length of the new pipe network are gradually shrinking, the transformation and maintenance of the existing pipe network has improved the sewage collection capacity, which has become a new driving force for the development of the sewage industry in the “14th five year plan”.
During the 13th Five Year Plan period, the length of drainage pipe network, especially sewage pipe network, increased rapidly. However, according to the calculation of urban built-up area, population density and drainage pipe length in various provinces and cities in China, the uneven development of urban drainage pipe network density and per capita drainage pipe network length is still prominent.
According to the relevant data disclosed by Yunnan Province, which is close to the national average density, of the 24 key cities in the province that have defined the target of centralized sewage collection rate, 18 have a centralized sewage collection rate of less than 50% and less than 20%. Assuming that the average urban sewage collection rate in China is 50%, there is still about 20 PCT room for improvement compared with the target of 70% sewage collection rate set in the 14th five year plan.
It is further assumed that the national urban sewage collection volume will reach 57.1 billion cubic meters in 2020 at the level of 50% collection rate, and when the sewage collection rate increases to 70%, the sewage collection volume will reach 79.9 billion cubic meters. The urban part alone can increase the treated water volume by 40%. If all of them are estimated according to the lowest level of 5% increase in the 14th five year plan, only the most conservative increase in sewage collection rate will also lead to a 10% increase in treated water volume. It can be seen that during the “14th five year plan” period when the capacity of new sewage treatment shrinks and the pace of standard upgrading and transformation slows down, improving the sewage collection rate through the construction and transformation of sewage pipe network can become another driving force for the growth of sewage industry.
Investment strategy: pipe network construction, transformation and maintenance zone
As the new growth driving force of the sewage industry during the 14th Five Year Plan period, it is suggested to pay attention to the leading enterprises of sewage treatment, such as Beijing Capital Eco-Environment Protection Group Co.Ltd(600008) .
Risk tip: the policy promotion is less than expected, the pipe network reconstruction project promotion is less than expected, and the improvement of pipe network maintenance level is less than expected.
Market review:
Last week, Shenwan environmental protection sector rose or fell – 4.31%, ranking 15 / 31 in Shenwan level industry.
In terms of sub sections, water affairs and water treatment, comprehensive environmental treatment, atmospheric treatment, environmental protection equipment and solid waste treatment decreased by – 2%, – 4.46%, – 5.2%, – 5.3%, – 6.22%.
In terms of specific stocks, Wuhan Xianglong Power Industry Co.Ltd(600769) (14.13%), Zhejiang Tuna Environmental Science & Technology Co.Ltd(603177) (10.31%), Bohai Water Industry Co.Ltd(000605) (10.31%) rose against the market Tus Environmental Science And Technology Development Co.Ltd(000826) (- 11.26%), AVIC TEDA (- 13.82%) and Qingdao Guolin Environmental Technology Co.Ltd(300786) (- 13.85%) decreased significantly.
