Water Resources Tax Reform Pilot Project: Pay Attention to Recycling Water and Hydropower Industry Opportunities

The Ministry of Finance, the Ministry of Water Resources, and the State Administration of Taxation jointly issued the Interim Measures for the Pilot Project of the Reform of the Water Resources Tax, and will take the lead in carrying out the tax reform of water resources in Hebei Province. We will analyze the impact of this incident on the environmental protection and hydropower industries, and The viewpoints are summarised as follows: 1) Environmental protection industry: After we discussed with the experts of the Institute of Environmental Protection, we believe that the introduction of this policy mainly aims to change the situation in which the previous collection of water resource fees was ineffective, and also to change the environmental fees to be introduced in the next step. Policies such as power trading have been pave the way and forced the polluting enterprises to actively seek renovation. We continue to recommend the water reuse industry that meets the changing trend of the “effects” of the environmental protection industry, and we recommend focusing on the South Huitong and Bishui sources for the core technologies of wastewater treatment and reuse. . 2) Hydropower industry: At present, the billing fees for hydropower and water resources are basically calculated at 5% per kilowatt-hour. The policy is equivalent to converting this part of the cost to a resource tax. The policy has a neutral influence on the hydropower industry, and the background of water abundance in 16 years Next, Guiguan Power, Wuyuan Power and Chuantou Energy are worth configuring.

Environmental protection industry: The increase in water cost and the trend of sewage resources are determined. It is an inevitable trend to increase the proportion of recycled water in the densely populated and water-short areas of the North and to expand the application scope of RO membranes. On the one hand, in the past, industrial companies relied on good relations with local governments to avoid the levying of fees. As a result of our calculation, after the taxation of water resource fees is promoted nationwide, incremental tax revenue is about 20 billion to 30 billion yuan. , compared with the current increase in the larger, at the same time we combined with the next step will be introduced environmental tax reform, water rights trading and other policies to determine that the country's scope of water costs and sewage costs to further increase is a high probability event, for water-consuming enterprises, water and The cost of sewage has been increased, and it has been forced to actively seek renovation or to use water as a water source. On the other hand, in the "Provisional Measures", it is stipulated that the reuse of water for sewage treatment and reclaimed water shall be exempted from the tax on water resources, and it is also beneficial to the reform of sewage resources. We believe that it will be an inevitable trend to increase the proportion of recycled water in the densely populated and water-scarce regions of northern China (around the Bohai Sea, Beijing-Tianjin-Hebei and other places) and expand the application of RO membranes. We estimate that during the “13th Five-Year Plan” period, the RO membrane market space brought by the reuse of municipal reclaimed water and industrial transformation will be approximately RMB 60.8 billion, and it is recommended to pay attention to South Huitong, the only domestic RO membrane manufacturer.

The municipal water reuse brings RMB 29.3 billion in RO membrane demand: Assuming that the per capita water resources occupancy is significantly lower than the national average for Beijing, Tianjin, and Jiangsu, where water shortages are severe, 8% of the water resources come from recycled wastewater. The proportion of non-water-reduced areas for reuse was 3%. The demand for new RO membranes was 14.3 billion yuan, and the replacement demand was 3 billion yuan/year. The total market space for five years was 29.3 billion yuan.

Industrial water treatment brings RMB 31.5 billion in RO membrane demand: 1) Boiler feedwater to be treated is 2 billion tons/year, assuming that 10% desalination treatment is required, and RO membrane technology accounts for 3%, resulting in new RO membrane demand 5.3 billion yuan; 2) 21 billion tons of industrial wastewater per year, assuming that the reuse rate of recycled water is 5%, and the proportion of RO membrane process is 1%, the demand for new RO membrane is 11.2 billion yuan; 3) Industrial water supply Refined processing + water reuse replacement demand is 3 billion/year.

Hydropower industry: The tax reform policy for water resources charges has a neutral influence on the industry, the water supply in the south exceeds expectations, and the allocation value of the hydropower industry appears. The El Nino phenomenon that lasted for 14 years has been the strongest since the 20th century with observations. Since the arrival of the El Niño, there have been 13 regional rainstorms in the southern region. As of May 10, the southeastern rivers, the Yangtze River, The precipitation of the Pearl River and the southwest rivers were 35%, 31%, 26%, and 23% more than the same period of previous years. Under the situation where the volume of water coming in was higher than expected, the average utilization hours of hydropower equipment in the first quarter was 691 hours, an increase of 82 hours over the same period of the previous year, and it was the highest level in the same period in the past decade. We believe that the current value of hydropower deployment is relatively obvious. It is recommended to pay attention to Guiguan Power, Wuyuan Power and Chuantou Energy.

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MLNS 15/15 Rice Mill Machine

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