Policy support for reclaimed water. 1. The Ministry of ecological environment and others prepared the pilot implementation plan for regional reclaimed water recycling. The implementation plan proposes to form a number of excellent cases with good effect, sustainability, replicability and national promotion value in the construction, operation and management of regional reclaimed water recycling by 2025; Areas with water shortage are encouraged to use reclaimed water as an important source of water for industrial production in the park. Priority should be given to the use of reclaimed water for urban greening, road cleaning, vehicle washing, construction and landscape environment. The implementation plan encourages to increase the use and frequency of reclaimed water, orderly promote the use of reclaimed water, is expected to open the demand space for reclaimed water, and is beneficial to the head sewage treatment enterprises. It is recommended to pay attention to Hongcheng water industry with great potential in Jiangxi sewage market and attractive valuation and dividend rate. 2. Notice of the Ministry of industry and information technology on printing and distributing the action plan for innovation and development of intelligent photovoltaic industry (2021-2025). It is proposed that by 2025, the intelligent level of photovoltaic industry will be significantly improved and the industrial technological innovation will make a breakthrough; The ability to support new power systems has been significantly enhanced, and the characteristic application fields of intelligent photovoltaic have been greatly expanded to adapt to the continuous enhancement of power grid performance. The plan promotes the healthy development of the photovoltaic industry in all aspects from the policy level, further reduces the power generation cost, opens the space for green power demand, and improves the proportion of renewable energy in power terminals, 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.
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 national development and Reform Commission issued the notice on carrying out comprehensive utilization demonstration of bulk solid waste; 2) The national development and Reform Commission and the Ministry of water resources issued the special management measures for investment in the central budget of national water network backbone projects; 3) The eco economic development plan of Qinghai Province (2021-2025) was issued and implemented.
Plate Market Review: the environmental protection plate performed poorly this week, losing the market and the gem. Last week, the Shanghai Composite Index rose by – 1.57%, the gem index rose by 0.06%, the environmental protection engineering and services (Shenwan) rose by – 1.79%, outperforming the Shanghai Composite Index by 0.21% and the gem by 1.85%; Public utilities rose by – 4.35%, underperforming the Shanghai Composite Index by 2.78% and the gem by 4.41%. Monitoring (- 3.13%), atmosphere (- 0.50%), water treatment (- 1.34%), solid waste (- 2.76%), water operation (- 0.87%), energy saving (0.24%).
Risk tip: the environmental protection policy and supervision are less than expected, and the industry demand is less than expected.
