On November 28, the website of the National Development and Reform Commission issued a notice agreeing to the feasibility study report on the construction project of the technical support base for the prevention and control of major urban safety accidents and approving the bidding.

The National Development and Reform Commission approved the bidding for the project of the technical support base for the prevention and control of major urban safety accidents, mainly relying on the construction of Tsinghua University, with a total amount of 953 million yuan. On November 28, the National Development and Reform Commission agreed to the feasibility study report on the construction project of the technical support base for prevention and control of major accidents in urban safety and approved the bidding. The technical support base for prevention and control of major accidents in urban safety will rely on the construction of Tsinghua University. It includes 4 sub-bases and 10 platforms / experimental sites, including urban building collapse test sub-base, urban traffic accident test sub-base, urban underground pipeline corridor test sub-base, urban crowded stampede test sub-base, etc., with a total investment of 953 million yuan.

The country attaches great importance to urban safety, and the company is deeply bound to Tsinghua University. On the one hand, the base construction shows that the country attaches great importance to the development of prevention and control technology for major accidents in urban safety, especially in preventing bridge collapse and underground pipeline explosion. Through real-time monitoring and analysis, the company has successfully warned 107cases of gas network leakage and 472cases of excessive biogas concentration alarm, and successfully warned 3780 cases of bridge structure health and safety incidents caused by overloading of heavy vehicles, avoiding a large number of urban underground pipe network and bridge traffic facilities operation safety accidents, and has a leading demonstration significance in China. On the other hand, relying on the construction of Tsinghua University shows that Tsinghua University has a high degree of authority in the field of domestic emergency technology. at present, the actual control of the company is Tsinghua University. Tsinghua Holdings is still the third largest shareholder of the company after controlling the transfer of equity in venture capital. the company and Tsinghua have an agreement with a unit for the transformation of scientific research achievements. Su Guofeng, vice dean of Hefei Public Security Research Institute of Tsinghua University and assistant dean of Tsinghua University Public Security Research Institute, is the president of the company, and Academician Fan Weicheng of Tsinghua University Public Security Research Institute is the company's chief scientist, so the company is deeply bound with Tsinghua University and will continue to take the lead in the field of emergency technology.

The company's urban lifeline business continues to grow in a single city and replicated in other cities, urban lifeline business is growing rapidly. The amount of the company's urban lifeline business in a single city is expected to continue to grow in the future: the first phase of the Hefei project is worth 76 million, the second phase is expected to grow to 920 million, and the third phase is expected to reach 2 billion. Second, off-site replication, Xuzhou, Jiangxia, Huaibei and Foshan project landing and bidding have proved that the company's urban safety lifeline business has off-site replication. From the perspective of target cities, there are 25 cities with more than GDP in Hefei, with 3 billion in the third phase as a whole, and the market space is expected to reach 75 billion. Medium-sized cities such as Xuzhou are expected to have a scale of about 1 billion, while 18 cities with GDP between 500 billion and Hefei GDP, with a market space of 18 billion. From the situation of Huaibei and other cities, small cities will also invest 0.5-150 million to build urban safety lifeline, about 200 cities, market space of 20 billion, the overall size of about 110 billion, is still in the early stage of development, it is still early from the ceiling.

Profit forecast and investment rating:

The NDRC approved the bidding technical support base for the prevention and control of major safety accidents, which shows that the country attaches great importance to urban safety, and is expected to promote more and more cities to strengthen bridge collapse and underground pipe network prevention and monitoring in the future. The company's urban lifeline business has landed in Hefei, accumulating a lot of data and prevention experience, which is of leading demonstration significance in China. In the future, the company's urban lifeline business is expected to grow in a single city and replicate in other cities, and the company's revenue is expected to maintain rapid growth. It is estimated that the company's net profit from 2019 to 2021 will be 2.05,2.90 and 398 million yuan respectively, and the corresponding EPS for 19 to 20 years will be 0.88,1.25,1.71 yuan respectively, and the corresponding share price PE will be 47, 33 and 24 times respectively, maintaining the buy rating.

Risk hint: the confirmed revenue of overseas orders is not as expected; the urban lifeline project of Hefei is not as expected; and the landing of other cities is slow.