\u3000\u3000 Meter Instruments Co.Ltd(301006) (301006)
Event: on January 14, 2022, the company announced that it planned to win the bid for the intelligent ultrasonic water meter procurement project of Putian urban and rural water supply Co., Ltd., with a proposed winning amount of 300 million yuan.
It is proposed to win the large order of 300 million yuan for Putian ultrasonic water meter, forming a demonstration effect for the development of ultrasonic water meter in China. The bid winning of Fujian Putian urban and rural water supply intelligent ultrasonic water meter procurement project has formed a demonstration effect for the promotion of ultrasonic household water meters in China. According to the Meter Instruments Co.Ltd(301006) prospectus, the penetration rate of ultrasonic water meters in China in 2019 is less than 1%. The company's revenue in 2020 is 420 million yuan. The bid winning is 300 million yuan. It is supplied in three years, with an annual revenue of 100 million yuan, accounting for about 24% of the company's revenue in 2020. We expect that the promotion of ultrasonic household water meters in Putian, Fujian will have a demonstration effect on the whole country, and the penetration rate of ultrasonic water meters in China is expected to accelerate during the 14th Five Year Plan period.
*** With the advent of the era of intelligent transformation of China's water pipe network, the transformation of water supply network focuses on intelligent and information construction (intelligent water meter + water informatization); The reconstruction of drainage pipe network focuses on the new laying of drainage pipes. The construction of drainage pipe network is also the top priority to solve urban waterlogging and sewage treatment. Since 2019, from the high performance of intelligent water meter industry and water information companies to the end of 2021, the central economic work conference emphasized the construction of drainage pipe network, and China's intelligent water has officially moved from intelligent water supply to intelligent water supply and drainage.
China's smart water meter is moving towards 2.0, and the penetration rate of ultrasonic smart water meter is less than 1% in 2019. China has a large market space for intelligent ultrasonic water meters. Although the penetration rate of intelligent water meters has increased to 44.91% in 2019, the penetration rate of ultrasonic water meters is still less than 1%. China's smart water meter market has entered a period of rapid development, and the penetration rate of ultrasonic water meter is expected to increase significantly. We expect the market penetration of ultrasonic water meters in China to increase from 1% in 2019 to about 12% in 2024. During the 14th Five Year Plan period, the application and penetration promotion logic of ultrasonic intelligent water meter in China are clear.
With the intelligent transformation of pipe network and the construction of rural drinking water, China's water meter industry has entered the era of intelligent meters. Intelligent water meter is the most important collector of pipe network data. During the 14th Five Year Plan period, the logic of intelligent water meter replacing traditional mechanical meter is clear. During the 13th Five Year Plan period, thanks to the promotion of Nb IOT narrowband wireless network technology in mature + national water resources protection plan and other policies, the proportion of sales revenue of intelligent water meters has increased significantly; During the 14th Five Year Plan period, as the work focus of water supply enterprises (main customers of water meter industry) shifts to the fine and digital management of water supply pipe network, intelligent water meter is the most important collector of pipe network data (water flow, water pressure, water quality, leakage, working conditions, etc.), and the logic of intelligent water meter replacing traditional mechanical meter is clear.
Profit forecast and investment rating: we maintain the expectation that the company's EPS from 2021 to 2023 will be 1.75 yuan, 2.44 yuan and 3.35 yuan respectively, corresponding to 14, 10 and 8 times of PE. Considering the high prospect of the intelligent water meter industry, the company, as the leader of ultrasonic water meter, maintains the "buy" rating.
Risk tip: macroeconomic downside risk; The risk that the business process of China's intelligent water meter is not as expected; Risk that the company's production capacity is less than expected
