Core view
The reconstruction of water supply and drainage pipelines is expected to become the focus of infrastructure construction during the 14th Five Year Plan period. Urban pipe network is related to people's livelihood. With the continuous promotion of China's urbanization construction, the importance of urban pipe network is becoming more and more prominent. In view of the safety accidents such as urban waterlogging caused by pipeline disrepair in 2021, Xi Jinping General Secretary specially approved at the central economic work conference that "during the 14th Five Year Plan period, pipeline transformation and construction must be taken as an important infrastructure project", and wrote "moderately surpassing the previous infrastructure investment" into the meeting document, The task list clearly points out "including accelerating the aging, renewal and transformation of urban pipelines." As one of the "urban blood vessels", the water supply and drainage pipeline is expected to usher in accelerated transformation during the 14th Five Year Plan period.
Intellectualization will become an important part of water supply pipeline transformation and water network engineering construction. The guiding opinions on the implementation of major national water network projects recently issued by the Ministry of water resources stipulates that by 2025, a number of national water network backbone projects will be built, provincial, municipal and county water network construction will be implemented in an orderly manner, and efforts will be made to make up for weaknesses and weak links such as water resource allocation, urban and rural water supply, flood control and drainage, water ecological protection and intelligent water network. Intelligent construction of water affairs is an important starting point to ensure the safety of water supply and drainage and improve management efficiency. On the one hand, the continuous increase of the length of water supply and drainage pipe network continuously improves the coverage of water supply services, and the management difficulty of urban water supply and drainage pipe network also increases. It is urgent to improve the management efficiency through intelligent means. On the other hand, the original "heavy plant light network" mode makes it difficult for the existing old pipe network facilities and backward management methods to achieve accurate monitoring and control, and it is impossible to predict potential safety accidents. The safety of water supply and drainage needs to be guaranteed by intelligent construction.
The intelligent construction of water affairs can also create economic benefits. According to the data of the Ministry of housing and urban rural development, the leakage volume of public water supply networks in more than 600 major cities in China in 2019 was 8.164 billion cubic meters, with an average leakage rate of 14.12%. The leakage of public water supply networks was serious, which was also a great waste of water resources. The newly introduced water price reform in August 21 included the investment in water informatization into the allowable cost, and made clear requirements for the leakage rate, which is calculated according to 10% in principle. Reducing the leakage rate through intelligent investment will bring direct economic benefits to customers and guide the benign development of the industry.
Investment proposal and investment object
We believe that during the 14th Five Year Plan period, the acceleration of Pipeline Transformation and the construction of major water network projects will accelerate the release of intelligent demand in the water industry, and the new water price reform will also provide guarantee for the investment in intelligent water affairs. The head water information company taking the lead in the layout is expected to benefit. We recommend Zhejiang Heda Technology Co.Ltd(688296) (688296, buy), and we recommend paying attention to Wpg (Shanghai) Smart Water Public Co.Ltd(603956) (603956, not rated) Meter Instruments Co.Ltd(301006) (301006, not rated).
Risk tips
Pipeline reconstruction progress is less than expected;
The implementation of water price reform was less than expected.
