One week market review. This week, the CSI 300 index rose by 1.11%, the environmental protection index fell by 3.36%, and the weekly relative yield was – 4.48%; The electricity and Utilities Index fell 0.68%, with a weekly relative yield of – 1.79%, ranking 25th and 14th among 31 Shenwan industries respectively. The science services sector fell 7.46%.
Small topic research: rich countries pioneered water REIT. Wells Fargo’s first water REIT adopts the product structure of “public fund + infrastructure asset-backed securities”. More than 80% of the fund assets will be invested in infrastructure asset-backed securities of sewage treatment infrastructure projects, and obtain the full operation rights of the underlying infrastructure through asset-backed securities, project companies and other special-purpose carriers.
Industry highlights. The Ministry of industry and information technology and other three departments issued the action plan for high quality development of environmental protection equipment manufacturing industry (2022-2025). The Ministry of industry and information technology, the Ministry of science and technology and the Ministry of ecological environment recently jointly issued the action plan for high quality development of environmental protection equipment manufacturing industry (2022-2025). It is proposed that the technical level of environmental protection equipment manufacturing industry will be significantly improved by 2025, Breakthroughs have been made in a number of key short board technology and equipment that restrict the development of the industry, and the supply capacity of high-efficiency and low-carbon environmental protection technology and equipment products has been significantly improved to fully meet the needs of major environmental governance. The comprehensive strength of the industry has been continuously strengthened, the core competitiveness has been steadily improved, a number of specialized and new “little giants” enterprises have been created, and a number of single champion manufacturing enterprises in subdivided fields with international competitive advantages have been cultivated, forming a new pattern of financing and development of upstream, middle and downstream, large, medium and small enterprises, and the diversified and complementary development model has become more prominent. The output value of environmental protection equipment manufacturing industry will strive to reach 1.3 trillion yuan.
Comments on changes. This week, the A-share environmental protection sector fell by 3.36%. Among the 97 environmental protection companies in the Shenwan industry, 11 rose, 85 fell and one was sideways. The top three gainers are Kingland Technology Co.Ltd(000711) (14.64%), Beijing Sdl Technology Co.Ltd(002658) (2.47%), Zhejiang Feida Enviromental Science & Technology Co.Ltd(600526) (1.99%). Kingland Technology Co.Ltd(000711) its main business is ecological and environmental protection business including intelligent ecological operation services and clean energy services. The main products include water-saving irrigation, infrastructure construction, municipal gardens, real estate gardens, soil remediation, clean energy, product sales, operation and maintenance and technical services. The company has established a strategic partnership with Suntront Technolocy Co.Ltd(300259) to complement each other’s advantages and promote the development and application of animal networking technology in agriculture, water conservancy and other fields. Jinglan Yunzhi business indirectly held by the company involves this field and can provide customers with agricultural blockchain Production Traceability services.
Investment strategy: environmental protection industry: 1. High performance growth and low valuation: the performance growth rate of leading companies is basically in the range of 20-30%, corresponding to 10-15 times of 21-year valuation; 2. The business model has been improved, and the operation indicators have continued to improve: the sector has got rid of its dependence on pure engineering, the operation attribute of steady growth has appeared, and the yield and cash flow indicators have continued to improve; 3. Policy catalysis improves the valuation repair expectation: in the first quarter, the environmental protection policy was intensive, the attention of the sector caused by carbon neutralization continued to rise, and the valuation repair is expected. Recommend Grandblue Environment Co.Ltd(600323) , Beikong city resources, Infore Environment Technology Group Co.Ltd(000967) , and pay attention to Fujian Longma Environmental Sanitation Equipment Co.Ltd(603686) , Everbright environment, Dynagreen Environmental Protection Group Co.Ltd(601330) .
Power and power equipment: 1. Reduce energy consumption per unit GDP and vigorously develop contract energy management. It is estimated that the market space will be 1.5 trillion in 2030. It is suggested to pay attention to China Southern Power Grid Energy Efficiency&Clean Energy Co.Ltd(003035) , Chongqing Fuling Electric Power Industrial Co.Ltd(600452) . 2. The rapid growth of photovoltaic installed capacity will also bring investment opportunities for the whole photovoltaic industry chain (operation, silicon material, silicon wafer and energy storage), and CCER will increase the operating income of new energy. Cecep Solar Energy Co.Ltd(000591) is recommended. It is recommended to pay attention to Sichuan Chuantou Energy Co.Ltd(600674) , Longyuan Power, China Yangtze Power Co.Ltd(600900) , Tongwei Co.Ltd(600438) , Longi Green Energy Technology Co.Ltd(601012) , Sungrow Power Supply Co.Ltd(300274) , Jiangsu Goodwe Power Supply Technology Co.Ltd(688390) , Nari Technology Co.Ltd(600406) .
Science Service Industry: 1. At present, China’s science service market exceeds 200 billion, and continues to increase with the increase of scientific research investment. 2. At present, foreign-funded enterprises control more than 90% of the share, and there is huge room for domestic substitution. 3. With the development of China’s economy and technology, a number of domestic scientific service enterprises have emerged. We believe that in the future, with the continuous improvement of product R & D capability and localized service capability, the comprehensive competitiveness of large local service institutions will continue to increase, the domestic alternative path is clear and enter the track of rapid development. Shanghai Titan Scientific Co.Ltd(688133) , Beijing Labtech Instruments Co.Ltd(688056) , Shanghai Aladdin Biochemical Technology Co.Ltd(688179) , Focused Photonics (Hangzhou) Inc(300203) are recommended.
Risk warning: epidemic impact; The environmental protection policy is not as expected; Intensified market competition; The growth rate of power consumption is lower than expected; Electricity price reduction; The terminal price of natural gas has been reduced.
