CGN MINING(HK:01164) Minsheng Securities·2025-06-24 13:39Investment Rating - The report initiates coverage with a "Buy" rating for the company [4]. Core Views - The global nuclear power sector is at a turning point, with long-term demand expected to rise significantly, leading to an upward trend in uranium prices. The average annual new installed capacity from 2025 to 2030 is projected to reach 13 GW, corresponding to a total initial natural uranium demand of approximately 31,200 tons [1][19]. - The company is positioned as a leading player in the uranium industry, backed by China General Nuclear Power Group, and is the only publicly listed pure uranium company in East Asia. It has stakes in four uranium mines in Kazakhstan and has seen strong investment returns due to rising uranium prices [2][4]. - The company's mining production is stable, with a total equity resource of 24,000 tons of uranium and an equity capacity of 1,899 tons. Production is expected to increase from 500 tons in 2025 to 900 tons by 2029, benefiting from low-cost operations [2][3]. - The company has adjusted its sales pricing mechanism, which is expected to enhance performance significantly from 2026 onwards, as the new pricing framework increases the base price from $61.78 to $94.22 per pound of U3O8 [3][4]. Summary by Sections 1. Uranium Industry - The nuclear power sector is experiencing a resurgence driven by global decarbonization efforts, energy security, and advancements in small modular reactor (SMR) technology. This is expected to lead to a compound annual growth rate (CAGR) of 4.2% in global nuclear power capacity from 2024 to 2050 [1][11]. - The supply side is facing a widening gap, with a projected increase of 15,300 tons of uranium from 2025 to 2030, which is significantly lower than the demand [1][30]. 2. Company Overview - The company is the only platform for overseas uranium resource development under China General Nuclear Power Group and has seen substantial profit growth due to rising uranium prices [2][4]. - The company’s mining operations are characterized by low production costs, which provide a competitive advantage in the market [2][3]. 3. Resource Sector - The company’s mining output is stable, with production expected to remain steady in 2025, and potential increases in capacity from 500 tons to 900 tons between 2025 and 2029 [2][3]. 4. Trade Sector - The company has benefited from a new pricing agreement that enhances its revenue potential, with significant increases in the base price for uranium sales expected to drive performance from 2026 [3][4]. - The international trade segment is positioned to improve profit margins as the company locks in favorable pricing while retaining some flexibility to benefit from rising uranium prices [3][4]. 5. Financial Forecast and Investment Recommendations - The company is projected to achieve net profits of 539 million, 994 million, and 1,209 million Hong Kong dollars from 2025 to 2027, with corresponding earnings per share of 0.07, 0.13, and 0.16 Hong Kong dollars [4][5].