Financial Services Association, January 6 (Editor Yu Qi) The nuclear energy and nuclear power sector has been stimulated by multiple advantages such as the acceleration of nuclear power projects approved by the National Standing Committee and the establishment of the Controlled Nuclear Fusion Innovation Consortium. Libert, which has one of the auxiliary equipment for international thermonuclear fusion test reactors, closed with 4 consecutive boards. Its subsidiary Shenma Electric Power, which has engineering products that can be used in nuclear power projects, and Shangwei Co., Ltd., which has cables for nuclear power plants, closed 5 and 4 connected boards respectively on Wednesday. The products can be widely used in the nuclear power field, Changfu Co., Ltd. rose and stopped at 30CM on Tuesday.

Wang Zhe of CITIC Securities and others said in the January 4 research report that China's nuclear power approval pace has entered a period of normalization and acceleration. The country's operating nuclear power assembly capacity is expected to reach 855-90 million kilowatts by 2025, and China's cumulative nuclear power generation accounts for 5.5%-6% of the country's cumulative power generation. In terms of the total investment scale of the domestic nuclear power industry, it is estimated to be close to 400 billion yuan in 2024.

▌Behind the establishment of the Controlled Nuclear Fusion Base Camp, CNNC Group, holds the nuclear power approval of these 4 A-share listed companies to speed up related equipment companies and ride the windmill

In the current round of the nuclear energy and nuclear power sector market, the direction of controlled nuclear fusion segmentation has risen to prominence. According to information published on the official website of CNNC (hereinafter referred to as “CNNC Group”) on December 31, the establishment of a controlled nuclear fusion innovation consortium composed of 25 state-owned enterprises, research institutes, universities, etc. was officially announced. CNNC has taken the lead in organizing central enterprises to share responsibility, promote the establishment of companies specialized in controlled nuclear fusion, and promote industrial development.

According to public information, compared to currently commonly used nuclear fission (such as nuclear power plants and atomic bombs), nuclear fusion is safer, has richer energy reserves, and produces far less waste. Wang Zhe from CITIC Securities and others said that the establishment of the consortium is a major breakthrough in the field of controlled nuclear fusion in China. It will strongly promote China's research and application in the field of controlled nuclear fusion, and the commercialization process will accelerate.

Yang Bin of Haitong International Securities and others reported on December 26 that the nuclear fusion power generator industry chain includes upstream material-side companies such as Western Superconductivity and Zhangyuan Tungsten Industry, and midstream equipment and downstream operators such as Dongfang Electric, Shanghai Electric, CGN Power, and China Nuclear Power. Since the capacity released by nuclear fusion far exceeds that of nuclear fission, the power generation capacity of downstream operators will be greatly increased, so we can focus on it.

Currently, CNNC is in the dominant position in China's nuclear industry and is the only domestic producer, supplier and service provider specializing in nuclear fuel. According to public data, the A-share listed companies under CNNC currently include China Nuclear Power, China Nuclear Power, China General Nuclear Power, and Changjiang Electric Power. CNNC holds 59.27%, 55.48%, 3.33%, and 1.15% of the shares in the above four companies, respectively.

Looking further, regarding the layout of the nuclear fusion field, China Nuclear Power, China General Nuclear Power, and China Nuclear Construction have all responded on interactive platforms recently. China Nuclear Power said on an interactive platform on December 23 that the nuclear fusion project is a research project organized and carried out by the research institute under CNNC, the controlling shareholder, and that the company will cooperate with major shareholders to develop fusion-related technology research and development and work layout. China General Nuclear Power also said this month that the company is concerned about and actively participating in the research and development of advanced nuclear energy. It is understood that the global controlled nuclear fusion research and development is still in the scientific testing stage. China Nuclear Engineering said on an interactive platform in September that it will always actively participate in the implementation and improvement of processes related to nuclear energy research. For example, the subsidiary participated in the installation and commissioning of the International Thermonuclear Fusion Test Reactor ITER Host Installation Contract No. 1 (TAC1). In addition, the official website of CNNC also mentioned that representatives of Xinao Group, the Three Gorges Group, Dongfang Electric, and China First Class exchanged statements on the development of the cooperative development of the fusion energy industry.

While the field of controlled nuclear fusion has ushered in benefits, on December 29, the National Standing Committee decided to approve the Taipingling Nuclear Power Project in Guangdong and Jinqimen in Zhejiang Province. The China Merchants Securities Research Report on December 30 said that since 2023, China has approved a total of 10 nuclear power units, and nuclear power has maintained a rapid approval rhythm. Among them, China Nuclear Power and China General Nuclear Power have each been approved 4 units, and Huaneng Group has been approved 2. It is expected to maintain an annual approval rhythm of 6-10 units for some time to come. Assuming that the investment amount for a single 1.2 million kilowatt unit is 20 billion yuan, which will bring an average annual construction investment of 120 to 200 billion yuan, the entire nuclear power industry chain is expected to usher in a boom cycle.

Furthermore, the Guoxin Securities Research Report further pointed out that of nuclear power plant investment, nuclear power equipment investment accounts for about 50%. According to the estimated trend of expected batch construction of nuclear power, the nuclear power equipment market size is about 720-100 billion yuan each year in the later stages. In terms of the competitive pattern, due to high entry barriers, the nuclear power equipment industry as a whole presents a pattern of monopolistic competition with high barriers. Specifically, state-owned enterprises monopolize the major equipment market, and the main equipment for nuclear power plants is mainly controlled by Shanghai Electric, Dongfang Electric, Harbin Electric Group, and China's dual monopoly, including reactor pressure vessels, reactor components, control rods, drive mechanisms, and voltage regulators. Some private enterprises occupy a dominant position in the segment. Among them, Jiangsu Shentong, Neway Co., Ltd. and CNNC Technology have taken a dominant position in the valve market, Zhongmi Holdings holds the main market share in the nuclear power main pump and secondary pump seals, and Jiadian shares dominate the motor sector.

▌After the bullish risk warning of the three controllable nuclear fusion concepts, Libert had a “very different fate” after the announcement, but the commercialization of nuclear fusion power generation is expected after 2030

The secondary market for many controllable nuclear fusion concept stocks was moved by the news, but a number of relevant listed companies hurriedly clarified the “rumor” popular concept. The stock price trends of Libert, Sunway, and Shenma Electric, which were previously linked to the same bulls, can be described as having very different fortunes after the disclosure announcement.

Specifically, Libert, Sunway Co., Ltd. and Shenma Electric won 3, 4, and 5 consecutive boards respectively at the close of trading on Wednesday. After the market, Libert issued a stock trading risk warning notice. The company did not involve the “controlled nuclear fusion” business in the order. The company has yet to confirm the sales target of Topene Technology's TAMT Tomite series SOOC products. This business has not yet brought business revenue to the company. It is expected that this business will account for a small share of the company's business in the future. According to the risk warning notice of Sunway Co., Ltd., no media reports or market rumors requiring clarification or response have been found to have an impact on the company's stock trading price, nor are there any hot market concepts involved. Shenma Electric Power announced that it has not discovered any other major events that may have had a significant impact on the company's stock trading price.

The day after the announcement was issued, Libert bucked the trend and recorded 4 consecutive boards on Thursday, while Sunway Co., Ltd. and Shenma Electric both fell to a standstill. The trend of the three controllable nuclear fusion concept stocks mentioned above on Friday was even more dramatic. Libert's “Earth and Sky Board” once won 5 consecutive shares but ended up falling 5.46%, while Sunway Co., Ltd. continued to fall to a halt. Shenma Electric Power closed down 9.43% after hitting a standstill several times in the market.

Judging from the business of the three listed companies mentioned above, according to Libert's 2023 semi-annual report, the company's main business industrial module is operating a nuclear electric body separation device. This device is used to make helium in nuclear power. It is one of the auxiliary equipment for international thermonuclear fusion test reactors, and requires high welding accuracy and pipeline cleanliness. Sunway Co., Ltd. mainly deals in special cables, including cables used in nuclear power plants. The company revealed in its semi-annual report that cable sales revenue in the nuclear power and new energy market was 213 million yuan, an increase of 7.02% over the previous year. Shenma Electric Power specializes in substation insulators. The company said on an interactive platform that composite insulators and seal products for power plants can be used in electrical equipment in substations supporting nuclear power projects.

It should be noted that although controlled nuclear fusion is viewed by the industry as the only direction of future energy, and is being driven by an overall acceleration in technology, industry, capital, etc., there is still a long way to go in commercializing power generation in the later stages. Yang Bin of Haitong International Securities and others said that commercialization of nuclear fusion power generation is expected after 2030.

According to media reports, some industry insiders further stated that the development of controlled nuclear fusion is still facing some problems to be solved. For example, in terms of technical bottlenecks, controlled nuclear fusion technology needs to solve problems such as reaction control and energy output under high temperature and pressure. Furthermore, CNNC posted an article on its official Weibo in November last year, citing responses from industry experts, saying, “It is expected that after another 20 years, that is, by the middle of this century, fusion energy can be applied.”