CITIC SEC: Investment support for the nuclear fusion field investment opportunity focusing on core components of the industry chain.

CITIC Securities issued a research report stating that two energy state-owned enterprises announced plans to increase their stake in China Fusion Energy Co., Ltd. by approximately 1.75 billion yuan, with the aim of strategically positioning themselves in the field of nuclear fusion energy. In recent years, several domestic companies have launched fusion projects, and by 2024, major countries such as the United States, China, and Germany are accelerating the development of controlled nuclear fusion research and gradually advancing commercial projects. The bank believes that key materials and devices in the controlled nuclear fusion industrial chain are expected to benefit from the increasing demand for orders in the accelerated construction phase of devices both domestically and abroad. Key points from CITIC Securities: - China Fusion Energy Co., Ltd. is expected to receive an investment of 1.75 billion yuan, and China's nuclear fusion projects are flourishing. On February 28th, China National Nuclear Power and Zhejiang Zheneng Electric Power announced plans to invest in China Fusion Energy Co., Ltd. through capital increase, with proposed investment amounts of approximately 1 billion yuan and 750 million yuan respectively. Both listed companies mentioned in their announcements that this investment is a strategic move to advance in the field of nuclear fusion energy, with the goal of promoting the future commercial application of nuclear fusion and providing support for China's energy structure transition and clean energy development. Recently, several nuclear fusion experimental devices in China have made breakthrough progress, and many domestic companies have initiated fusion project planning, with device installations set to start intensively between 2024 and 2026, further driving the development of the domestic fusion industry. - Major countries around the world are accelerating their research and commercialization of nuclear fusion. According to the "Analysis of the International Energy Technology Development Trend in 2024" released by the Development Planning Bureau of the Chinese Academy of Sciences in January 2025, major countries around the world are entering a new phase of accelerated development in controlled nuclear fusion research. The United States is developing in both strategic planning, experimental progress, and commercialization, achieving multiple successful inertial confinement fusion experiments and planning to build the world's first large-scale commercial fusion power plant. China's new generation artificial sun, "HL-3", and the world's first fully superconducting tokamak device, "HL-70" by the Energy_Peak company, have both made breakthroughs. Germany plans to establish a high-energy density research institute. The global research and commercialization of nuclear fusion are maintaining a good development trend, and the process of construction and testing both domestically and internationally is expected to benefit various segments of the industry chain. - Accelerated domestic substitution of core components, focusing on investment opportunities in the core industrial chain. The key components of compact tokamak devices include superconducting magnets, first walls, vacuum vessels, core pumps and valves, cooling systems, diverters, etc. According to the cost breakdown of ITER construction, magnets, vacuum vessels, and internal components account for over 50% of the device's core costs. In addition, due to the specific requirements of fusion reactions, the core of the fusion industry chain also involves upstream materials, mainly special metals and superconducting tapes, including special metals such as special steel, tungsten, copper, and superconducting tapes categorized as low-temperature superconducting materials (niobium-titanium, niobium-tin) and high-temperature superconducting materials (YBCO). The bank recommends focusing on key materials and device segments, as they are expected to benefit from orders in the accelerated deployment of fusion devices. Risk factors: - Breakthrough in controlled nuclear fusion technology is slower than expected; - Approval progress of investment plans is slower than expected; - Risks associated with changes in nuclear power policies; - Nuclear safety risks.