Cinda: Clean and efficient nuclear power sources usher in a period of rapid development opportunities.

Cinda released a research report stating that nuclear power generation has the dual characteristics of stability and cleanliness. Under the "dual carbon" policy, the long-term growth space for nuclear power is broad. In terms of income, nuclear power guarantees the purchase of electricity and stable electricity prices. The performance of nuclear power companies is mainly driven by the growth of installed capacity. It is expected that China will add more than 50 million kilowatts of nuclear power installed capacity from 2024 to 2030, with a CAGR of 11%. In terms of costs, nuclear power costs are mainly depreciation and most fuel is locked in long-term contracts, resulting in stable costs and competitive advantages. In the short term, nuclear power costs may rise due to intergenerational turnover, but with standardized and mass construction, costs are expected to decrease. In addition, once interest payments are completed and depreciation is provided, net profits are expected to further increase. Nuclear power is a stable and clean base load power source, with vast long-term growth space under the "dual carbon" policy. Nuclear power generation is stable and has a low carbon emission rate, making it a stable and clean base load power source under the "dual carbon" background. At the same time, technological iteration improves unit safety and domestic equipment production reduces construction costs, providing possibilities for the large-scale development of nuclear power. Currently, mainstream third-generation nuclear power units have made significant improvements in safety and service life, with fourth-generation technologies promising fundamental breakthroughs in safety and fuel efficiency. In this context, China's nuclear power development policy in 2021 adjusted from "safety and efficiency" to "active and orderly", greatly promoting the approval process of nuclear power units. In August 2024, 11 nuclear power units were approved at once, reaching a new high in recent years. Cinda predicts that the construction of nuclear power plants during the "14th Five-Year Plan" period is expected to enter a peak period. From a medium to long-term perspective, in the "carbon neutral" scenario, China's nuclear power installed capacity is expected to reach 140 million kilowatts by 2030 and 350 million kilowatts by 2050, indicating a promising future for China's nuclear power development. With the increase in installed capacity, the assurance of electricity consumption, and the stability of electricity prices, nuclear power profitability is expected to grow steadily. China's nuclear power installed capacity has entered a new round of high growth, with strong growth certainty. According to approved projects, Cinda predicts that China is expected to add 53.575 million kilowatts of nuclear power installed capacity from 2024 to 2030, with a CAGR of 11%. Among them, CGN Power Co., Ltd. is expected to add 20.584 million kilowatts of installed capacity, and China National Nuclear Power is expected to add 20.641 million kilowatts of installed capacity. While the installed capacity is growing rapidly, nuclear power electricity enjoys priority access to the grid and policies to ensure consumption, with guaranteed utilization hours, with an average of over 7300 hours in the past five years. In terms of electricity prices, the non-market s(...)By 2024-2025, the company is expected to increase its new energy installed capacity by more than 10 million kilowatts, reaching a total of 30 million kilowatts.CGN Power Co., Ltd.: Currently the largest nuclear power operator in China, with a combination of dividends and growth potential. CGN Power Co., Ltd. is backed by China General Nuclear Power Group. As of the first half of 2024, the company has 28 operating nuclear power units with a total installed capacity of 31,756,000 kilowatts. In August 2024, the company was approved for 6 additional units with a total installed capacity of 7,348,000 kilowatts. As of the first half of 2024, the company holds controlling stakes in 16 units under construction or approved for construction (including 8 units managed on behalf of China General Nuclear Power Group), with a total installed capacity of 19,404,000 kilowatts. It is expected that these units will be completed and put into operation before 2030, showing a high growth potential in the companys nuclear power installed capacity. Meanwhile, since 2019, the company's dividend payout ratio has been maintained at above 40% and has been increasing year by year. In 2023, the company paid a dividend of 0.094 yuan per share, with a dividend payout ratio of 44.3%, corresponding to a dividend yield of 3.0% as of December 31, 2023, which is relatively high compared to its peers. Investment recommendation: Cinda is bullish on China National Nuclear Power (601985.SH) and CGN Power Co., Ltd. (003816.SZ), as they are nuclear power operators with stable operations, high-quality cash flow, steadily increasing dividends, and high growth potential in the medium to long term. Risk factors: Changes in the carbon emission situation and policies; Delays in nuclear power project approvals; Unexpected increases in nuclear power generation costs; Delays in the construction progress of nuclear power plants or longer-than-expected maintenance times; Adjustments in nuclear power electricity pricing policies; Risks of a significant increase in international uranium prices.