Source: Yaya Hong Kong Stock Circle Author: Kyle In the first half of this year, statistics show that at least 180 Hong Kong stock companies have implemented share buybacks, with a total amount of HKD 121 billion, setting a new high in the same period of history. Especially in the Internet companies, almost every shareholder return program has been significantly improved, which can be said to have opened a new era of Internet shareholder returns. Among these companies, Tencent, the "North Star" of Hong Kong stocks, is undoubtedly the most prominent. In the first half of this year, it contributed more than 40% of the repurchase volume of the Hong Kong stock market, firmly occupying the seat of the "repurchase king" of the Hong Kong stock market. In the second quarter, Tencent's single-quarter repurchase amount reached HKD 37.5 billion, which doubled from the first quarter's HKD 14.8 billion. The repurchase average price increased from HKD 290.6 to HKD 361.8, an increase of nearly 25%. It is worth mentioning that Tencent's repurchase amount this year will exceed HKD 100 billion, doubling from last year's HKD 49 billion. What is the concept of a one trillion repurchase plan? This amount is the sum of Tencent's total repurchase amount in the past ten years, which proves the management's confidence in future development and attaches importance to the demands of investors. Through various means such as repurchase cancellation, dividends, and physical distribution, Tencent has truly given back to shareholders in the capital market while achieving performance growth. One, the significance of a trillion repurchases is actively emerging. Looking back at the past two years, since Tencent's major shareholder Prosus began to reduce its holdings, the stock price has been somewhat suppressed. In particular, there have been regular trading behaviors in the market when Hong Kong stocks perform poorly. For example, Hong Kong-listed companies have a "silent period for repurchase" in the month before the financial report is released, during which repurchase is not allowed. This caused great upward pressure on the stock price whenever Tencent entered the repurchase silent period before last year. As can be seen from the following data, of the five silent periods before the end of 2023, only Tencent's stock price in October-November 2022 rose, and in other times it fell. However, since the end of last year, Tencent's stock price has risen during two consecutive silent periods. Especially after the launch of the trillion-dollar repurchase plan this year, the repurchase volume has far exceeded the number of shares sold by major shareholders. Therefore, whether it is on normal trading days that can be repurchased, or during silent periods, the impact brought by the sale of major shareholders can be ignored, and this point is being formed by market consensus. For example, during the repurchase silent period from January to March this year, which happened to be the worst half-year Hong Kong stock market, the Hang Seng Index fell to 14,800 points. Tencent's performance during this period was significantly better than before. Even though the short selling ratio once reached 20%, the stock price did not fall, and the final interval increase was 6%. After the release of the better-than-expected 2023 annual report and the restart of the repurchase at the end of March, Tencent's stock price performed even better in the second quarter, with an increase of nearly 25%. During the same period, the Hang Seng Index and the Shanghai and Shenzhen Composite Indexes fell significantly, with gains of only 8% and 4%, respectively, while Tencent significantly outperformed the Hong Kong stock market with a gain of 25%. Behind this phenomenon, there is no doubt that the trillion-dollar repurchase plan, which has doubled from last year's amount, has played an important role. More importantly, after the repurchased shares are cancelled, Tencent's share capital has been declining for three consecutive years. Since 2021, Tencent's total share capital has decreased from 9.608 billion shares to 9.355 billion shares. In the first quarter of this year, Tencent issued ordinary shares decreased by 1.1% compared to the previous quarter, and the repurchased shares have also been gradually cancelled since this year. This trend will continue to increase earnings per share and further enhance shareholder value. (Caption) Starting in 2022, Tencent has increased its repurchase efforts. With the repurchase cancellation, the company's total share capital has gradually decreased.

Source: Yaya Hong Kong Stock Circle Author: Kyle The weather is good today The weather is good today.

The rapid growth of AI has been a hot topic this year, especially in terms of its impact on electrical utilities demand. Previously, discussions on similar topics mentioned the use of high-speed copper cables in AI servers, with the market speculating that AI may potentially drive up copper prices. However, according to calculations by foreign investment banks, the increased use of copper cables in AI servers has had minimal impact on copper prices, so this topic has temporarily come to a close.

Although there are currently no specific numbers indicating the demand for AI in electrical utilities, the market's recognition of the power consumption of AI servers is highly logical, such as the most widely discussed restarting of nuclear power plants or increasing the construction of nuclear power plants.

In the past two weeks, $Alphabet-A (GOOGL.US)$ invested in a small nuclear reactor, reportedly$Microsoft (MSFT.US)$And.$Amazon (AMZN.US)$There will be more similar investments. With a series of reports, recently, the US stocks have been discussing whether technology companies will all have a small nuclear reactor story in the future.

1. Is there a boom in investment in nuclear energy?

According to WSJ, Amazon, Google, and Microsoft have recently reached agreements to increase the use of nuclear energy to meet the energy needs for AI growth. They are investing billions of dollars, betting that nuclear energy can help curb the surging carbon emissions associated with data centers because these emissions threaten their climate commitments. However, the construction of these nuclear reactors will also take several years to complete.

Following the actions of these three tech giants, US stocks related to nuclear power companies have been skyrocketing. The biggest gainer is the company invested by OpenAI CEO Altman, which has nearly tripled in the past month. $Oklo Inc (OKLO.US)$ After tripling in value, this company is now worth just over $2 billion, approximately 20 billion RMB, with total revenue in the first half of this year only reaching $1.86 million. Its stock price certainly reflects speculation about the future, but it is also worth paying attention to, as it may be another branch in the development of AI, currently in the early stages of 0 to 1.

This round of market trends began in mid-October when Google invested in 7 small nuclear reactors, making it the first technology giant to invest in nuclear power for AI energy needs, igniting this uptrend. According to the agreement terms, Google will receive electricity generated by the 7 reactors built by nuclear startup company Kairos Power. The company stated that this agreement aims to increase nuclear power by 500 megawatts in the future, similar to wind energy purchase agreements signed by technology companies with nuclear power companies.

In fact, Google's chosen approach differs from previous market expectations because the market previously predicted that technology companies might invest in larger nuclear power plants due to the high energy demand from AI. However, the production capacity of small nuclear power plants cannot support such high demand.

According to Goldman Sachs estimates, driven by AI demand, global data center electricity consumption will increase by 160% by 2030. In addition, according to the International Atomic Energy Agency's data, nuclear power capacity in North America will double by 2050. Of course, talking about 2050 seems distant, but for listed nuclear power companies, capital expenditures have begun, presenting an opportunity for speculative narratives.

From the analysis of foreign institutions, investing in small nuclear power plants now may be due to the high cost of large nuclear power plants, the long construction time of nuclear power plants, and the consideration of safety and technical issues by technology giants in order to generate more returns, or it might be to consider investing in a small nuclear power plant first. Especially investing in small modular reactors (SMRs) can receive government subsidies, at a lower cost compared to investing in large nuclear power plants.

Statistics show that nearly 20% of the electricity in the United States comes from nuclear power plants, but due to high costs and lengthy construction times, large new projects have been suspended. It is estimated that by 2040, the SMR market may grow to a size of $300 billion.

According to data from the U.S. Department of Energy, the levelized cost of electricity for the first batch of SMR projects is approximately $180 per megawatt-hour. Currently, this mainly relies on government subsidies, reducing to around $100 per megawatt-hour after subsidies, and with technological advancements, costs may continue to decrease in the future.

Since it takes several years to build SMR projects, many opinions suggest that technology giants should directly invest in more natural gas power plants, which are more cost-effective and efficient than investing in SMRs. A direct comparison shows that the cost of natural gas power generation is much lower than that of small nuclear reactors (SMRs). In the United States, the cost of natural gas power generation is usually between $40-70 per megawatt, and without government subsidies, SMR project costs are 2-3 times more expensive than natural gas power generation.

The average cost of wind energy is $146, solar energy is $109, and nuclear power plants have an average normal operating time of over 90%, while wind energy is only 35% and solar energy is only 25%. Nuclear energy is more stable in operation compared to wind/solar energy.

而核电站的建设时间，美国平均需要80个月的时间，全球平均建设周期是85个月，而我们国内平均建设周期要73个月左右。由于国内AI服务器的电力需求量还没有那么紧缺，这波行情也轮不上国内的核电炒作。

所以，用核电来给AI补充电力需求，这还处在早期阶段，短期内还是以天然气、风能、太阳能为主。

二、AI有多吃电？

根据WSJ报道称，亚马逊大型数据中心的电力消耗大致相当于一个中型城市的用电量。

若更具体的说，2023年，仅$Taiwan Semiconductor (TSM.US)$一家就占台湾电力消耗的9%，单独占台湾工业部门需求的16%，高于2019年的5.1%。相比之下，半导体产业小号了台湾电力的13.4%，高于2019年的8.4%。

根据标普预计，到2030年，台积电的用电量将占台湾总用电量的15.6%。假设AI发展更乐观的情况下，台积电一家的耗电量最多可能达到台湾总用电量的23.7%。  

With the increase in Capex and the production of more advanced technology, it is expected that by 2028, the electricity demand related to AI will increase by 8 times; Taiwan plans to build more than 10 data centers this year, and the growth in electricity demand is expected to accelerate by more than 2.8% annually. In comparison, over the past 10 years, the annual growth rate of electricity demand was only 1.4%.

Meanwhile, as electricity demand continues to rise, so do electricity prices. Industrial users in Taiwan saw a 12.5% increase in mid-October. Taiwan is increasing its reliance on natural gas for power generation while phasing out nuclear energy sources.

These days, both Google and ChatGPT have added connected search features. It is expected that other internet products will also increase the AI search component, following these two. This may lead to a significant energy consumption increase. For example, ChatGPT's single Q&A session is estimated to consume 6-10 times more energy than traditional Google searches.

Goldman Sachs predicts that driven by AI, by 2030, global data centers' electricity demand will increase by 165% compared to 2023. Data centers will contribute a 0.3% CAGR to the global total electricity demand. By 2030, data center electricity demand will increase from 1-2% of global power consumption to 3-4%.

Taiwan's electricity demand growth mainly comes from the semiconductor industry and since 2020, tech giants have begun building AI data centers in Taiwan, including Microsoft's Azure, Google's AWS, and especially this year with more than 10 new data centers planned to be established, such as Apple, AWS, Fujitsu, and more. It is expected that these investments will increase from $1.5 billion in 2023 to $3.5 billion in 2029.$NVIDIA (NVDA.US)$Apple, AWS, Fujifilm, and others. It is expected that these investments will increase from $1.5 billion in 2023 to $3.5 billion in 2029.

So, looking at it this way, AI undoubtedly has a significant impact on electricity demand, and US tech companies are just beginning to develop nuclear power domestically. Gas-fired power generation is still more convenient, considering cost factors, especially with uranium prices not being cheap in recent years. Although uranium prices fell this year, the supply side is also not optimistic.

According to the figure below, if uranium mining companies no longer conduct large-scale zinc mining, the uranium market will soon face a supply shortage.

As technology companies begin to invest in nuclear reactors, in addition to speculation on nuclear power plants, US stocks are also speculating on uranium mining companies. For example, in September, after Microsoft announced the restart of nuclear power plants, the ETF rebounded from a low point by 30-40%, reaching a near high in recent years. $Global X Uranium ETF (URA.US)$ Over the past year, electrical and uranium ETFs have received a capital inflow of $1.6 billion, while clean energy fund outflows have been $2.4 billion. The asset size of nuclear energy ETFs has exceeded other clean energy funds. The total assets of nuclear energy ETFs exceed $6 billion, while popular clean energy funds such as ICLN have plummeted from $22 billion to $5.5 billion in just three years.

However, in the final analysis, the nuclear power plants invested by Microsoft and Google will not be officially delivered until 2030 at the earliest. Currently, nuclear energy investments are still in the very early stages. The hype around nuclear power plant stocks in the market is based on expectations. In the short term, other energy sources are more reliable.

The URNM ETF holding physical uranium has risen by over 300% since 2019.

Conclusion

After all, the earliest delivery of the nuclear power plants invested by Microsoft and Google will not be until 2030 at the earliest. At present, nuclear energy investments are still at a very early stage. Market speculation on nuclear power plant stocks is based purely on expectations, and in the short term, other energy sources are more reliable.

Moreover, if technology companies are restricted by carbon emissions standards, perhaps in order for AI development to proceed smoothly, indicators may be relaxed, after all, technology companies prioritize profit. If they really invest in building nuclear power plants at higher costs, it will in turn restrict AI Capex. If they speculate on nuclear power stations, the market's conclusion is that it is not as profitable as speculating on uranium miners.

Editor/Rocky