It is learned from the WiseNews App that on August 19th, the State Council held an executive meeting and approved five nuclear power projects, including China National Nuclear Corporation Jiangsu Xupu Phase I Project, China General Nuclear Power Corporation Guangdong Lufeng Phase I Project, Shandong Zhaoyuan Phase I Project, and Zhejiang San'ao Phase II Project, and National Energy Investment Group Guangxi Bailong Phase I Project, totaling eleven units. According to data from the China Nuclear Energy Association, it is expected that by 2035, the proportion of nuclear power in China's total power generation will reach about 10% (currently only 5%), and the future development space of nuclear power construction is broad. Related symbols: CGN Mining (01164), CNNC International (02302), CGN Power (01816).

Among them, the Xupu nuclear heating and power generation project in Jiangsu is the world's first nuclear energy comprehensive utilization project that couples a high-temperature gas-cooled reactor with a pressurized water reactor. The project adopts the collaborative operation mode of "nuclear reactor-turbine generator unit-heating system", with industrial heating as the main focus and power supply as the secondary focus. After completion, it will supply high-quality low-carbon industrial steam to the Lianyungang petrochemical industry base on a large scale, playing a leading and demonstrative role in accelerating the green and low-carbon transformation of energy, chemical and other industries. The Xupu nuclear heating and power generation project is expected to start construction in 2025. After the completion of the first phase of the project, it will supply 32.5 million tons of industrial steam per year, with a maximum production capacity of over 11.5 billion kilowatt hours. It can reduce the use of standard coal by 7.26 million tons per year, reduce the emission of carbon dioxide by 19.6 million tons per year, and effectively relieve the pressure of emission reduction and decarbonization in energy-intensive industries.

In addition, among the five projects approved this time, three of them belong to CGN. The Lufeng Phase I project in Guangdong will adopt the CAP1000 technology, and the Zhaoyuan Phase I and San'ao Phase II projects in Shandong and Zhejiang, respectively, will both adopt the Hualong One technology. Among them, the Phase I project of San'ao nuclear power is the finale of the 13th Five-Year Plan for Nuclear Power Construction. The first unit started construction on December 31st, 2020.

In recent years, the development of nuclear power has been highly valued, and relevant policies have been continuously introduced. From 2019 to 2023, the approved number of nuclear power units in China is 6, 4, 5, 10, and 10 respectively, showing a positive and safe development trend. On August 11th, the State Council issued the "Opinions on Accelerating the Comprehensive Green Transformation of Economic and Social Development", which pointed out the need to "accelerate the construction of clean energy bases such as northwest wind power, photovoltaics, southwest hydropower, offshore wind power, and coastal nuclear power". This is the first time that the country's top-level documents have clearly stated that it will accelerate the construction of coastal nuclear power clean energy bases.

In addition, the "Guidance on Energy Work in 2024" issued by the National Energy Administration also requires actively and safely promoting the approval of coastal nuclear power projects. Since 2019, the approval of nuclear power plants in China has been speeding up, with an average annual approved capacity of 10 units in 2022 and 2023, and a CAGR of 29.7% in nuclear power investment from 2019 to 2023. According to data from the China Nuclear Energy Association, it is expected that by 2035, the proportion of nuclear power in China's total power generation will reach about 10% (currently only 5%), and the future development space of nuclear power construction is broad. Guolian Securities pointed out that the scale of in-progress units is expected to increase by 24.4% in 2023, and the completed investment in nuclear power source will increase by 40.2%. The nuclear power investment in the first half of 2024 is 40.7 billion yuan, a year-on-year increase of 13.5%. The industry investment is expected to drive the performance growth of industry chain enterprises.

At the same time, the increase in capital expenditures and in-progress projects confirms the industry's prosperity. The nuclear power industry will enter a peak investment period in 2024. Units approved in the second half of 2022 and some of those approved in 2023 are expected to commence construction in 2024. Guolian Securities predicts that the number of construction units that will start in the year is expected to be close to 12 GW, and the investment scale in 2025 and 2026 may still be at a high level. It is recommended to focus on investment growth to drive the performance growth of equipment and operation enterprises.

Zheshang Securities pointed out that although the nuclear power industry has entered a new period of growth after approval to restart, it may face temporary capital expenditure pressures. However, with the reduction of interest expenses and the expiration of depreciation, it is expected that the profit per kWh will be increased, which will then drive the growth of the dividend per kWh. In the future, the continuous growth of the company's dividend ratio will make its dividend assets more prominent.

Guolian Securities stated that the scale of units under construction is expected to increase by 24.4% in 2023, and the completed investment in nuclear power source will increase by 40.2%. The nuclear power investment in H1 2024 is 40.7 billion yuan, a year-on-year increase of 13.5%. The investment in the industry is expected to drive the performance growth of industry chain enterprises.

In addition, the increase in capital expenditures and in-progress projects confirms the industry's prosperity. The nuclear power industry will enter a peak investment period in 2024. Units approved in the second half of 2022 and some of those approved in 2023 are expected to commence construction in 2024. Guolian Securities predicts that the number of construction units that will start in the year is expected to be close to 12 GW, and the investment scale in 2025 and 2026 may still be at a high level. It is recommended to focus on investment growth to drive the performance growth of equipment and operation enterprises.

Related concept stocks:

CGN Mining (01164): CGN Mining is one of the listed subsidiaries of China General Nuclear Power Corporation, which is the first and third largest nuclear power group in China and the world, respectively. It is also the only platform for investment and financing of overseas uranium resources development under CGNPC.

CNNC International (02302): China National Nuclear Corporation is the only state-owned wholly-owned enterprise that has established a complete nuclear science and technology industrial system in China. It is the main investor and owner of Chinese nuclear power plants and the supplier of nuclear power design, nuclear fuel, and nuclear technology equipment.

As of June 30, 2023, CGN Power has a total of 27 operating nuclear power units with a total installed capacity of 30,568 megawatts. The group has also built 6 nuclear power units with a total installed capacity of 7,208 megawatts (including 4 units managed by companies entrusted by the controlling shareholder). The construction of each unit is steadily progressing according to plan.