2023 A Turning Point in the Environmental Protection Industry
The turning point is the most remarkable feature of this year. According to the research of the whole year, it can be divided into the following aspects. These turning points are reshaping the underlying logic and competition pattern of the environmental protection industry:
Under the main logic of terminal governance in the first half, with the continuous investment in infrastructure construction, the incremental space of the environmental protection market has gradually narrowed, and the optimization and upgrading of the stock market has become a new growth point. Environmental protection enterprises need to shift from simply pursuing scale expansion to improving efficiency and quality, and enhancing service capacity and added value.
2. Drive turning point: the policy drive is weakened and the quality drive is strengthened.
The development of environmental protection industry has always been strongly influenced by policies, and government planning, standards and subsidies are all important driving factors. However, the objective and true situation of environmental problems still demands the service quality of environmental protection industry urgently, and the environmental protection industry is shifting from relying solely on policy-driven to quality-driven as the core.
3. Background turning point: the economic trend is weak, and the policy dividend period has passed.
The rapid growth of environmental protection industry in the past decade has two major backgrounds, one is the rapid economic growth, and the other is the construction of environmental protection policies. The former provides money and the latter provides the market. But now these two backgrounds are turning, and the environmental protection industry needs to adapt to the new economic situation and market environment, and find new growth drivers and competitive advantages.
4. demand transition: from extensive compliance to economic security and convenience.
In the past, the industry mainly solved the problem of reaching the standard. This is the goal of the environmental protection industry in the first half, and it is to pass the basic line. In the second half, it is necessary to solve the problem from more dimensions of users. The core pain point of the problem has changed from reaching the standard to economy, safety and convenience. Strictly speaking, the first half is to solve social problems, and the second half is to solve the pain points of owners.
5. Capital transition: from fanaticism to rationality.
The performance of the environmental protection industry in terms of capital has also changed significantly. In 2022, there were 14 IPOs of environmental protection enterprises, but this year there was a significant reduction; In addition, the number of mergers and acquisitions in the environmental protection industry has also decreased significantly this year, which shows the expectations of the industry's head enterprises for the downward trend. In the early years, the environmental protection industry was warmly welcomed by the capital market, and all kinds of capital poured in, which promoted the rapid development of the environmental protection industry. However, with the intensification of industry competition and increasing profit pressure, the attitude of the capital market towards the environmental protection industry has returned from fanaticism to rationality.
6. Track turning point: from competing for the big track to cultivating the small track.
In the past environmental protection market, most enterprises concentrated in several big racetracks, such as municipal water treatment, garbage incineration, desulfurization and denitrification, etc. These racetracks have a large market scale. With the saturation and homogenization of these big tracks, some enterprises began to turn to some small and long tracks. Although these tracks are small in scale, they have high technical content and professionalism, and can also bring high profit margins and sustainable growth potential.
7. Mode transition: from piling up resources to digging deeper internal driving force.
In the past environmental competition, many enterprises have adopted the mode of resource piling, and pursued scale effect and market share through mergers and acquisitions, expansion and integration. However, with the change of industry environment, this model is unsustainable, and environmental protection enterprises need to dig deeper into the driving force to enhance their core competitiveness and sustainable development ability through innovation, optimization and coordination. The environmental protection industry is switching between the first half and the second half, and the essence of the switching is that the above turning point occurs simultaneously and violently.
Perhaps some people will be pessimistic from the above analysis, but this is not the original intention of this article. These analyses are more to help practitioners see the status quo more truly and thus assist judgment.