investment points:

sewage treatment is an indispensable part of the living environment and ecological environment. Water environment plays an important role in the construction of green ecological civilization in China. The recently issued "opinions on comprehensively promoting the Construction of a Beautiful China" also mentions such contents as "continuously and deeply fighting the battle to defend the clear water" and "speeding up the completion of the shortcomings of urban sewage collection and treatment facilities. In people's daily life, everywhere can not be separated from the use of water resources, resulting in a large number of wastewater, and accompanied by water pollution problems to be solved. In recent years, with the improvement of China's economic development and the deepening of the emphasis on the level of urban and rural environment, the use of water resources and the resulting sewage are also increasing day by day. In the past five years, the national sewage discharge has continued to rise, reaching 63.897 billion cubic meters by 2022, while the total amount of sewage treatment in the country has also continued to rise, reaching 62.689 billion cubic meters by 2022. Correspondingly, the number and treatment capacity of sewage treatment plants in the country have also continued to increase in the past five years. By 2022, a total of 13527 sewage treatment plants will be included in the statistics, with a total sewage treatment capacity of 0.316 billion tons per day. However, there is a large differentiation between cities and towns, and the sewage treatment capacity and sewage treatment rate in urban areas are much higher than those in township areas.

policy emphasis on clear water to defend the war. With the construction of green ecological civilization and the advancement of economic development, people's demand for the level of living environment is also increasing. Among them, the State Council and many relevant departments are facing different sources and types of water pollution problems in cities, counties, towns and other areas. Formulate a number of plans and opinions according to local conditions, and promote sewage treatment and resource utilization from rural to urban areas by classification and echelon, to ensure the safety of water use and the peace of mind of the people in all regions, and to ensure that the ecological environment of all regions will not be destroyed, and to fight the "clear water defense war".

sewage treatment market is expected to rise in volume and price. In the future, it is expected to gradually sink the sewage treatment market to established towns, villages and other areas, develop sewage treatment projects that are more suitable for the local environment and scale, and bring new growth space for related enterprises. In the future, it is expected to gradually adjust the charging standard of sewage treatment according to the national policy guidelines, or establish and improve the new mechanism of "pay for performance", so as to reduce the financial pressure of local governments and improve the performance of enterprises related to sewage treatment.

investment advice: give the environmental protection industry "standard" rating. The field of sewage treatment is a subdivision of the environmental protection industry. In recent years, with the construction of green ecological civilization, the advancement of economic development and the improvement of the level of human settlement environment, the state has paid more and more attention to water resources and water environment, and carried out environmental protection actions such as "clear water defense war" from top to bottom. In the future, the project market is expected to sink into the township area, bringing new market increments, as well as the "reasonable profit, pay-as-you-go" mechanism may bring price adjustment increases, sewage treatment enterprises will achieve performance growth. It is recommended to pay attention to sewage treatment project operators and upstream enterprises that provide technical equipment, including: Zhongshan Public (000685), Blue Water (300070), Sanda Membrane (688101), etc.

Risk Warning: Industry policy is less than expected risk, project release is less than expected risk, market competition intensifies risk.