Water price hikes will be an enduring process. Given the current situation of the industry, rise in water price in the future will be first and foremost characterized by improvement of prices for both supply water and sewage treatment. As a result, enterprises within the industry will generate more profits.
Among all the subdivisions, scaling up and price increase anticipation within the field contribute a more brilliant prospect for the sewage treatment industry. At present, valuation for the industry is over-estimated. Moreover, long-term water price hikes and its trend of scaling up contributed for the predict value disparity for the time being. On the basis of the analysis, we give “neutral” rating to the industry. We suggest a strategic buy-in and a long-term hold after the predicted value adjusted to a reasonable level. As for the leading companies, Shanghai Chengtou Holding (600649) and Beijing Capital (600008) deserve ratings of “overweight” and “neutral” respectively.