HuaFu Securities: Starting in June, Guangzhou will implement new water prices, and the revaluation of water companies is worth paying attention to
Huafu Securities released a research report stating that Guangzhou will implement a new water price starting from June 1, 2025, with the first, second, and third tier prices for residential water usage increasing by 28.8%, 28.6%, and 93.2%, respectively. This reform is expected to accelerate facility upgrades for water supply companies and promote water conservation and the recycling of water resources. About 80% of households will see an increase of approximately 12 yuan in their monthly water bills, while 10% of households will see an increase of about 24.5 yuan
According to the Zhitong Finance APP, Huafu Securities released a research report stating that recently, the Guangzhou Development and Reform Commission issued a notice regarding the reform of tap water prices in the central urban area. The adjustment of tap water prices in the central urban area will take effect on June 1, 2025, with Guangzhou implementing new water prices. Compared to the tap water prices implemented in May 2012, the prices for residential water usage in the first, second, and third tiers will increase by 28.8%, 28.6%, and 93.2% respectively (previous values: 1.98 yuan/ton, 2.97 yuan/ton, 3.96 yuan/ton). It is expected that about 80% of households (first tier) will see an increase of about 12 yuan in their monthly water bills, while about 10% of households (second tier) will see an increase of about 24.5 yuan. This reform is expected to accelerate the upgrade and transformation of local water supply enterprises' facilities, promote water conservation, emission reduction, and the recycling of water resources.
The main points of Huafu Securities are as follows:
Event: Recently, the Guangzhou Development and Reform Commission issued a notice regarding the reform of tap water prices in the central urban area, with the adjustment of tap water prices taking effect on June 1, 2025.
The first tier of residential water usage will increase by nearly 30%: This price adjustment applies to areas including Yuexiu District, Liwan District, Tianhe District, Haizhu District, Huangpu District, Baiyun District, and University Town, among other central urban water supply service areas. The prices for residential water usage in the first, second, and third tiers will be adjusted to 2.55 yuan/cubic meter, 3.82 yuan/cubic meter, and 7.65 yuan/cubic meter, with a new combined water price of 2.80 yuan/cubic meter; the price for non-residential water usage will be adjusted to 4.40 yuan/cubic meter; and the price for special water usage will be adjusted to 25 yuan/cubic meter.
Compared to the tap water prices implemented in May 2012, the prices for residential water usage in the first, second, and third tiers will increase by 28.8%, 28.6%, and 93.2% respectively (previous values: 1.98 yuan/ton, 2.97 yuan/ton, 3.96 yuan/ton). It is expected that about 80% of households (first tier) will see an increase of about 12 yuan in their monthly water bills, while about 10% of households (second tier) will see an increase of about 24.5 yuan. This reform is expected to accelerate the upgrade and transformation of local water supply enterprises' facilities, promote water conservation, emission reduction, and the recycling of water resources.
A new round of water price adjustment cycles is being orderly carried out
In July 2024, the National Development and Reform Commission and five other departments issued the "Guiding Opinions on Accelerating the Development of the Water Conservation Industry," proposing to improve the water conservation market mechanism. The revenue from the increased tiered water prices should mainly be used for pipeline and household meter upgrades, water quality improvement, and to offset rising water supply costs, alleviating the cost pressure on water supply enterprises. Since November 2023, multiple cities including Shanghai, Guangzhou, Changsha, and Nanjing have conducted or plan to conduct water price adjustments. In some third-tier cities, such as Huangshan City, Tongling City, and Meizhou City, water price adjustment plans have been successfully implemented. Data from some cities since November 2023 shows that the average increase in the basic water price for the first tier of residential water usage has reached over 20%.
In March 2025, the Shenzhen Development and Reform Commission announced an adjustment to water prices, proposing to adjust the comprehensive price of tap water from 3.45 yuan/ton to 3.9 yuan/cubic meter (including tax), an increase of 13.05%. The new round of water price increases is expected to continue, and the increase in tap water prices will help water service enterprises pass on cost pressures to end users while ensuring reasonable returns for water supply enterprises, promoting the healthy and sustainable development of the water service industry Investment Advice
Since 2023, water supply prices have been adjusted in multiple regions, further ensuring the profitability of related water supply companies, promoting the healthy and orderly development of the industry. The revaluation of water companies is worth paying attention to, and it is recommended to focus on GRANDBLUE ENV (600323.SH), XREC (000598.SZ), Shunkong Development (003039.SZ), HONGCHENG ENVIRONMENT (600461.SH), and Jiangnan Water (601199.SH).
Risk Warning
Policy implementation may fall short of expectations; local fiscal pressure; extended accounts receivable collection period
