Stepped water prices open smart meter market Sanchuan shares most benefit

[Chinese instrument network enterprise weather vane] Recently, the Minister of Water Resources Chen Lei published an article in the People's Daily “Save Water Resources to Safeguard Water Security” and proposed the role of urban residential water use ladder prices. The industry believes that the reform of the water price ladder will have a significant impact on smart water meters and related listed companies. As for the leading Sanchuan water meter of the domestic intelligent meter industry, benefiting from the drive of the price-driven water price ladder, smart meter business is expected to gradually increase.


With the stepped water price reforms, smart watches have replaced the traditional machinery to represent the general trend. In 2013, the National Development and Reform Commission and the Ministry of Housing and Urban-Rural Development issued the "Guidance Opinions on Accelerating the Establishment of a Stable Price System for Urban Residents' Water". By the end of 2015, municipal cities should, in principle, fully implement the residential ladder water price system, and towns with established conditions must also be implemented. Actively promote the residential ladder water price system. Household transformation and new residential water meters should actively promote intelligent management. The replacement of traditional mechanical watches with smart watches is an inevitable trend in the industry.

At present, the penetration rate of smart water meters in our country is only about 10%, and CAGR is 40% in the next five years. There are about 55 to 60 million water meters that need to be produced each year in the country, and the current sales volume of smart watches is only about 6 million. Assuming that the penetration rate of smart water meters will reach 80% in 2020, the output value of smart water meters will be 12 billion in the current year, and the CAGR of smart meter industry will reach 40% in 2015-2020.

Sanchuan water meter smart meter business volume is expected to be about 70% CAGR in the next three years. The company currently has a market share of approximately 10% in the smart metering industry and sales of 600,000 units. The company's downstream customers are mainly water plants. There are more than 4,000 county-level water plants in the country, of which more than 1,400 water companies have cooperation with the company, accounting for more than 30%. The obvious advantages of the channel can play an important role in the company's subsequent promotion of smart water meters. The company's leading position and customer channel advantage will enable the company's smart meter sales to increase substantially. It is expected that sales volume will reach 100, 200, and 3 million units in 15-17 years. Each intelligent water meter of the company sells for 230-280 yuan, gross profit rate is as high as 40%, while the traditional water meter sells for only 45-50 yuan and the gross profit rate is as low as 20%.

As of the third quarter of 2014, the asset-liability ratio of Sanchuan Water Meter was as low as 12%. Cash in hand amounted to 420 million. If we count 400 million in cash after the completion of the increase, the company is expected to have cash in hand exceeding 800 million. At present, the company's main business is concentrated in the field of water meters, and it is expected that the follow-up will focus on expanding the water industry. On the one hand, the use of smart water meters to enhance the management efficiency of the water industry, and the existing main business to form a greater degree of synergy; the other hand, gradually from the manufacturing industry to the service industry, expand business scope.

As the only domestic listed water meter R&D and production enterprise, Sanchuan Water Meter is gradually shifting from the traditional 1.0 mechanical water meter to the 2.0 Internet of Things water meter, cutting into the smart city area. As a medium for water plants and consumers, smart water meters are expected to act as data collection ports and Internet portals for the water industry in the future, providing users with fee payment, water quality security and urban water management services. Based on this development concept, Sanchuan Water Meters has successively deployed in smart water services, such as the acquisition of 51% stake in Guode Technology to create a water information software platform; and China Mobile to launch the Internet of Things water meter, to build water smart collection ports.

It is understood that Guode Science and Technology is positioned in the water information software platform, mainly to provide informatization products and services for downstream water supply companies. Sanchuan Water Meter, through the acquisition of Guode Technology, can quickly increase the company's level of development in the Internet of Things and control software, and promote the company's transition from manufacturing to service companies. China Mobile Internet of Things is a professional company first established in China Mobile's nine business bases. In 2014, Sanchuan Water Meter and China Mobile Internet of Things signed the “Smart Water and Big Data Application Strategic Cooperation Framework Agreement”. The main purpose is to create intelligent water meters based on mobile Internet of Things technology and promote the application of water resources big data to form smart cities. Vertical field - the competitive advantage of smart water.

According to the data, the Sanchuan water meter has been deeply cultivating the water meter industry for 40 years. The main product types include water-saving water meters, smart card water meters, and network remote water meters. The company's smart watches are mainly divided into three categories: plug-in cards, with data lines, Internet of things meters (direct mobile cards included in the water meter, direct transmission of data).

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