Talk every Monday:
Carry out the pilot of leakage rate treatment, focusing on the improvement of the operation and maintenance level of water supply network.
On March 15, the national development and Reform Commission and the Ministry of housing and urban rural development issued a notice on organizing the pilot construction of leakage control of public water supply network. It is planned to select no more than 50 built-up areas of cities (counties) with good demonstration and promotion significance to carry out the pilot. It is required that by 2025, the leakage rate of pilot cities (counties) with a leakage rate of more than 12% (2020) will not be higher than 8% in 2025; In the built-up areas of other pilot cities (counties), the leakage rate will not be higher than 7% in 2025.
In 2020, the national average leakage rate of China’s urban water supply network is 13.4%, which is still 5.4pct away from the reference index of 8%. The introduction of the policy reflects that the future development direction of China’s water supply system will turn to the improvement of operation and maintenance capacity based on water supply network, which is a concrete embodiment of the governance idea of “making up for weaknesses” in the water sector. Water enterprises with rich accumulation of water supply operation and management technology and water supply network maintenance and repair solution suppliers.
The Ministry of water resources issued the double control targets of total water consumption and intensity in the 14th five year plan, and reclaimed water will pass the honeymoon period.
Recently, the Ministry of water resources and the national development and Reform Commission organized and formulated the double control targets of total water consumption and intensity in the 14th five year plan of all provinces, autonomous regions and municipalities directly under the central government. The notice requires that by 2025, the total annual water consumption in China will be controlled within 640 billion cubic meters, the water consumption of 10000 yuan of China’s GDP and 10000 yuan of industrial added value will be reduced by about 16% and 16% respectively compared with 2020, and the utilization of unconventional water sources will exceed 17 billion cubic meters.
The utilization of unconventional water sources in the 14th five year plan set in the notice is obviously relatively conservative. Although the utilization of unconventional water sources is 17 billion cubic meters, which is 33% higher than the level of 12.8 billion cubic meters in 2020, according to the index estimation in the notice, the growth rate of unconventional water sources is likely to slow down during the 14th Five Year Plan period. Combined with the consideration of the water development strategy of “making up for weaknesses” and the index setting that the scale of new reclaimed water in the development plan of urban sewage treatment and resource utilization in the 14th five year plan is equal to that in the 13th five year plan, it is predicted that the development of reclaimed water resources will enter a stable growth stage during the 14th Five Year Plan period.
Due to the obvious uneven distribution of water resources in China, the demand for unconventional water sources, that is, reclaimed water, varies with different regions. Therefore, in the steady growth of unconventional water sources, there will be relatively prominent provinces. It can be seen from the figure that during the 14th Five Year Plan period, the increment of unconventional water sources in Sichuan, Hebei, Hubei, Jiangsu and Shandong provinces was more than 300 million tons, and the highest increase in Sichuan Province was 500 million tons; Meanwhile, the growth of unconventional water sources in Hubei (900%), Sichuan (455%), Ningxia (300%) and Qinghai (140%) increased significantly. The development prospect of reclaimed water in these provinces is relatively better.
Investment strategy: the increase of water supply leakage rate promotes the technical demand for operation and management of water supply system, and the water-saving index promotes the development of regional reclaimed water. It is suggested to pay attention to the leading water operators, such as Beijing Capital Eco-Environment Protection Group Co.Ltd(600008) , Chongqing Water Group Co.Ltd(601158) , Chengdu Xingrong Environment Co.Ltd(000598) .
Risk tips: the policy promotion is less than expected, the improvement of pipe network maintenance level is less than expected, and the development of reclaimed water projects is less than expected.
Market review:
Last week, Shenwan environmental protection sector rose or fell – 3.95%, ranking 29 / 31 in Shenwan level industry.
The sub sectors fell in an all-round way, and the four Shenwan III sectors of environmental protection equipment, comprehensive environmental treatment, water and water treatment, air treatment and solid waste treatment fell by -1.52%, – 3.59%, – 4.41%, – 4.41% and – 4.43%.
In terms of specific stocks, Anhui Huaqi Environmental Protection&Technology Co.Ltd(300929) (11.57%), Jiangsu Jiangnan Water Co.Ltd(601199) (7.48%), Anshan Senyuan Road & Bridge Co.Ltd(300210) (6.21%) rose ahead Bceg Environmental Remediation Co.Ltd(300958) (- 16.09%), Zhejiang Tuna Environmental Science & Technology Co.Ltd(603177) (- 14.09%), Wuhan Xianglong Power Industry Co.Ltd(600769) (- 11.44%) decreased significantly.
