Key investment points:
China's waste incineration power generation industry is growing rapidly. From 2006 to 2020, the amount of municipal solid waste incineration in China increased from 11.376 million tons to 146 million tons, with a compound growth rate of 20.00%. The waste incineration power generation industry grew rapidly. From 2006 to 2020, China's municipal solid waste incineration rate increased from 14.52% to 62.29%, rising year by year. Waste incineration has gradually become the most important waste treatment method in China.
The policy objective is expected to guide all localities to increase domestic waste incineration power generation projects. In 2020, the incineration capacity of urban domestic waste in China will be about 661900 tons / day, accounting for 58.93% of the total. In May 2021, the national development and Reform Commission issued the development plan for urban domestic waste classification and treatment facilities in the 14th five year plan, requiring all localities to increase financial investment. By the end of 2025, the national urban domestic waste incineration capacity will reach about 800000 tons / day, and the urban domestic waste incineration capacity will account for about 65%. It is estimated that by 2025, the national urban domestic waste incineration capacity will have a growth space of about 138100 tons / day, and the compound growth rate from 2020 to 2025 will be about 3.86%. Under the guidance of policy objectives, all localities are expected to increase domestic waste incineration power generation projects, and the waste incineration power generation industry is expected to usher in good development prospects.
CCER project is expected to restart, improve enterprise performance and promote industry development by playing the role of "subsidy". We expect that CCER project is expected to restart, mainly because: on the one hand, CCER project has good emission reduction effect and environmental benefits; On the other hand, as a market-oriented means to promote carbon emission reduction, CCER project is supported and encouraged by policies, the construction of relevant markets continues to be promoted, and the restart conditions are gradually mature. With the restart of CCER project, CCER project is expected to play the role of "subsidy", improve the performance of waste incineration power generation enterprises and promote the development of the industry.
Investment suggestion: China attaches importance to waste incineration power generation, the industry is growing rapidly, and multiple factors are expected to continue to promote the development of the industry in the future. First, China has made clear the goal of domestic waste incineration capacity in 2025. The policy goal is expected to guide all localities to increase domestic waste incineration power generation projects, and the industry is expected to usher in better development prospects. Second, in the government work report, it is proposed that GDP is expected to grow by about 5.5% in 2022, and it is required to enhance consumption capacity and willingness to promote the sustained recovery of consumption. Economic growth and consumption recovery are expected to increase the amount of domestic waste and harmless treatment capacity, and promote the increase of demand for domestic waste incineration treatment. Third, China's CCER project is expected to restart, and play the role of "subsidy" to improve enterprise performance and promote the development of the industry. It is suggested to pay attention to the target Zhejiang Weiming Environment Protection Co.Ltd(603568) ( Zhejiang Weiming Environment Protection Co.Ltd(603568) ), Dynagreen Environmental Protection Group Co.Ltd(601330) ( Dynagreen Environmental Protection Group Co.Ltd(601330) ) and Chongqing Sanfeng Environment Group Corp.Ltd(601827) ( Chongqing Sanfeng Environment Group Corp.Ltd(601827) ) with capacity release, strong management ability, outstanding ability to explore the national market and innovation ability and core technology.
Risk warning: policy promotion is not as expected; Macroeconomic development is less than expected; The restart of CCER project was not as expected; The construction progress of waste incineration power generation project is less than expected.
