CHINA WATER (00855): Empowering with intelligence and fine management to create a benchmark for efficient water supply.

With the era of AI promoting revolutionary leaps in productivity and profound changes in production relations approaching, the "thirst" of AI for water is being overlooked. According to Morgan Stanley's estimates, by 2028, the annual water consumption of AI data centers due to cooling and power generation will reach 10.68 trillion liters (baseline scenario), an 11-fold increase compared to the estimated value in 2024. Against the backdrop of the global expansion of AI infrastructure, water resource management will become a key issue. Furthermore, in a country like China, with nearly 20% of the global population but only 7% of freshwater resources, efficient use and scientific management of water resources are particularly important. With the accelerated urbanization process, issues like aging water supply networks, external damage, and inadequate maintenance have led to serious water leakage problems. This not only causes resource waste but also increases the operational costs and water quality management difficulties for water supply enterprises. How to solve the industry's longstanding issue of "high loss in water supply and production" has become an important topic facing major water supply enterprises. In recent years, CHINA WATER (00855) has been continuously deepening its refined management and efficient operation in the water supply industry, especially in the field of smart water management, setting a benchmark for the industry. The company has significantly reduced the leakage rate of water supply networks by comprehensively introducing GIS, DMA zone metering, remote monitoring, and digital work order systems, achieving not only but exceeding international advanced levels, and reaping both economic and social benefits. Refined Management: From "Experience-based Network" to "Digital Network" Traditional water supply network management often relies on experience and manual inspections, which are both inefficient and difficult to detect concealed leaks in a timely manner. CHINA WATER has taken the lead in promoting the GIS system for water supply networks in numerous subsidiary companies, digitizing information such as network length, pipe diameter, material, depth, installation date, and valves, fire hydrants, etc., creating a "visual underground map." With GIS support, staff can quickly query and retrieve information, locate burst points, and even achieve emergency dispatch through "valve search," significantly improving repair efficiency. At the same time, the company has integrated GIS with the SCADA system to achieve rapid response to emergencies. This "transition from experience to data" refined management allows network management to move from behind the scenes to the "screen," greatly enhancing operational efficiency. Smart Water Management: Precision Leak Control with DMA Zone Metering Leak control is a recognized challenge in the industry. CHINA WATER uses DMA (Zone Metering Management) as the core, establishing a closed-loop management model of "zone monitoring-intelligent analysis-rapid response." Taking Shenzhen Industrial Zone Water Company as an example, the company has installed smart sensors at key nodes to monitor flow, pressure, and water quality changes in real-time, combined with insert flow meters to achieve secondary zone metering. When the system detects a rise in minimum nighttime flow abnormally, it automatically issues a warning and generates work orders, which are promptly sent to inspection personnel. This model not only makes leak pinpointing more precise but also compresses the response time to the shortest. According to statistics, the average leakage rate of Shenzhen Industrial Zone Water Company is only 3%, even better than the leading global Japan (about 3.7%). This achievement has not only gained industry recognition but also won the National Ministry of Water Resources' "Excellent Application Case of Smart Water Services" award. Success Case: "Smart Leak Reduction" at Huizhou Yiyuan The value of smart water management is fully demonstrated in the practice of Huizhou Yiyuan Company. Since 2019, the company has completed the construction of DMA zone metering in the Audou District as a pilot. Through multi-level zoning and remote monitoring, the company discovered more than 40 significant leaks within just a year, reducing water leakage by over 1.05 million cubic meters. With the gradual improvement of the system, Yiyuan Company has established a DMA system covering seven primary zones, fifteen secondary zones, twenty-seven tertiary zones, and eighty-seven quaternary zones. By the end of 2024, the company's production-sales difference rate had decreased from 12% in 2018 to below 7%, saving the company a significant amount of costs and ensuring the safety and sustainability of regional water supply. Efficient Operations: Digital Work Orders for Faster Leak Repair Reducing leakage not only requires "accurate leak detection" but also "fast leak repair." CHINA WATER digitizes work orders, inspections, and repairs through an external management system. When the DMA system detects abnormalities and generates work orders, the work order immediately appears on the map, displaying dispatch time, on-site photos, safety briefing content, and repair results. This transparency not only improves efficiency but also strengthens supervision and management. With this system, the company has significantly reduced the response time for leak repair, truly achieving "quick leak detection, quick repair, quick loss prevention." Industry Comparison: CHINA WATER's Leading Advantage According to data from the Ministry of Housing and Urban-Rural Development, the comprehensive leakage rate of urban and county public water supplies in China was 13.26% in 2020, with some cities exceeding 20%, while developed countries like Japan and Singapore have rates around 3.7% and 5% respectively. Against this backdrop, CHINA WATER has reduced leakage rates in some areas to 3% through the application of smart water services, reaching or even surpassing international standards. This not only demonstrates the company's leadership in technology applications and management models but also highlights its commitment to social responsibility: while conserving water resources, it ensures the stability and safety of urban water supply. Conclusion As AI development increasingly relies on water resources and under the national strategies of "water conservation first" and the promotion of the "dual carbon" goals, water supply enterprises must move towards a more refined, digital, and intelligent development path. Through continuous exploration and application in the field of smart water services, CHINA WATER has embarked on the path of "technology empowerment, refined management, and efficient operation." From the 3% leakage rate in the Shenzhen Industrial Zone to the continuous reduction of the production-sales difference rate brought by the Huizhou Yiyuan DMA system, CHINA WATER has proven the enormous value of smart water services through a series of successful cases. In the future, with the deepening promotion of smart water services, CHINA WATER will not only continue to lead the industry but also contribute more to safeguarding national water security and promoting sustainable development.