How does "new infrastructure" investment affect the pump valve industry?

On March 4, 2020, the Standing Committee of the Political Bureau of the CPC Central Committee held a meeting and proposed to increase investment in public health services and emergency supplies, and accelerate the construction of new infrastructure such as 5g network and data center. The word "new infrastructure" has aroused heated discussion from all walks of life.

At present, 13 provinces and cities have issued a list of investment plans for key projects in 2020, which includes 10326 projects. According to E20 calculation, of the 6.35 trillion new infrastructure investment in 15 provinces and cities in 2020, 402.5 billion environmental projects will be completed this year.

According to the analysis of industry insiders, the increase of investment in some water conservancy projects directly benefits the manufacturers of pump, pipe and valve equipment

In the water treatment sector, the upgrading and reconstruction of cities and counties usher in opportunities. The purification of urban sewage or the tail water of sewage treatment plant as water source supplement for water deficient cities is an important direction of current development; there are huge short boards in rural sewage treatment, and there is a large space for improvement in the future; the long-term strategy of basin governance at the national level is beneficial to the comprehensive treatment of water environment.

On the other hand, there are also a large number of highway, intercity high-speed rail, science and technology parks and squares in the key project investment plans announced by various provinces and cities. Although these projects are not as closely related to the pump, pipe and valve industry as environmental protection, they are larger in scale (Accounting for more than 50% of the total infrastructure investment plan in 2020), and there is a huge demand for pump and valve equipment.

In short, under the impact of the new coronavirus epidemic, the export and consumption of the troika of economic growth have been greatly affected, and the whole society has even fallen into a state of "suspension". In this case, China has increased investment in infrastructure construction, trying to recover the economic losses caused by the epidemic.

As a national general equipment, the demand elasticity of pump, pipe and valve equipment is small. The impact of the epidemic situation only delays the procurement schedule of downstream customers, but the overall demand will not decrease. If the incremental investment in environmental protection and infrastructure construction in 2020 is included, the domestic demand of pump and valve industry will increase to a certain extent this year. With the stability of the domestic epidemic situation, enterprises resume work and start construction, we expect that the demand for pump valve equipment procurement is expected to usher in blowout at the end of the second quarter and the beginning of the third quarter.