Build a resource-based industrial system, and the installed capacity of green electricity in the 14th five year plan accounts for more than 50%. The state owned assets supervision and Administration Commission of the State Council prepared and issued the guiding opinions on promoting the high-quality development of central enterprises and doing a good job in carbon peak and carbon neutralization. Focusing on reduction, reuse and recycling, it is pointed out that efforts should be made to build a resource recycling industrial system. It is suggested to pay attention to hazardous waste disposal companies with rich projects and high technical barriers Zhefu Holding Group Co.Ltd(002266) ; There are many high-quality projects for hazardous waste and waste incineration, and the operation is accelerated Beijing Geoenviron Engineering & Technology Inc(603588) ; At the same time, the notice points out to comprehensively promote wind power and Cecep Solar Energy Co.Ltd(000591) power generation; By 2025, the installed proportion of renewable energy power generation will reach more than 50%. The cost of superimposed photovoltaic and fan modules continues to decline, which is expected to contribute considerable profits to renewable energy operators. It is recommended to pay attention to power operators with clear renewable energy installation planning and good quality. 2. The Ministry of industry and information technology and others jointly issued the implementation plan for industrial wastewater recycling. The plan puts forward specific requirements for the reuse rate of industrial water for national key industries such as iron and steel, petrochemical industry, nonferrous metals and papermaking, and requires the park to implement the technical transformation of wastewater recycling according to the characteristics of internal wastewater quality, so as to improve the reuse rate of water and reduce the discharge of wastewater. In 2025, the reuse rate of industrial water above Designated Size will reach about 94%, which will benefit the leading sewage treatment company. It is recommended to pay attention to Hongcheng water industry with great potential in Jiangxi sewage market and attractive valuation and dividend rate.
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, Focus on 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, strong technology and high 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. The 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 32nd meeting of the Standing Committee of the National People’s Congress passed the wetland protection law of the people’s Republic of China; 2) The Jiangsu provincial government printed and distributed the opinions on the implementation of energy conservation of the whole society in the 14th five year plan of Jiangsu Province; 3) The Ministry of industry and information technology, the Ministry of science and technology and the Ministry of natural resources jointly issued the “14th five year plan” for the development of raw material industry.
Plate Market Review: the environmental protection plate performed poorly this week, losing the market and the gem. Last week, the Shanghai Composite Index rose 0.60%, the gem index rose 0.78%, the environmental protection engineering and services (Shenwan) rose 0.00%, underperformed the Shanghai Composite Index by 0.60% and underperformed the gem by 0.78%; Public utilities rose by – 1.27%, underperforming the Shanghai Composite Index by 1.87% and the gem by 2.05%. Monitoring (- 1.47%), atmosphere (2.45%), water treatment (6.46%), solid waste (1.60%), water operation (0.20%), energy saving (5.77%).
Risk tip: the environmental protection policy and supervision are less than expected, and the industry demand is less than expected.
