Group 1 - Nomura forecasts that the South Korean benchmark Kospi index will rise to 5,000 points in the first half of 2026, driven by the semiconductor supercycle and ongoing corporate governance reforms [1][2] - The target price represents a 21% upside from the Wednesday closing level of 4,135 points [1][2] - Preferred buy recommendations for the first half of the year include Samsung Electronics and SK Hynix, followed by Hyundai Motor, Doosan Enerbility, Korea Electric Power Corporation, Samsung Biologics, and Hyundai Rotem [1][2] Group 2 - Nomura raised the target price for Hyundai Motor by 16% to 370,000 KRW, citing a narrowing valuation gap with peers [1][2]

Summary of Key Points from the Conference Call Industry Overview - The report focuses on the diverging power solutions for AI data centers (AIDC) in the US and China, highlighting the growing demand for energy due to the rise of AI technologies [1][11][16]. Core Insights - **AIDC Power Consumption**: The International Energy Agency (IEA) forecasts that global electricity consumption of data centers will more than double from 416 TWh in 2024 to 946 TWh in 2030, with a compound annual growth rate (CAGR) of 15% [3][24]. - **Market Share**: By 2030, the US and China are expected to account for approximately 45% and 30% of the global data center market, respectively [3][25]. - **Primary Power Solutions in the US**: Due to grid connection shortfalls, onsite power generation, particularly gas turbines, is becoming the primary solution for data centers in the US. Gas turbines are favored for their shorter lead times (1-2 years) compared to grid connections (5-7 years) [4][33]. - **Backup Power Solutions in China**: China has sufficient grid power for primary needs, but there is a tight supply for backup power, especially for 2MW diesel engines, which are critical for generator sets [5][34]. Key Suppliers and Market Dynamics - A list of 16 key suppliers for AIDC power solutions is provided, which collectively account for about 10% of total AIDC capital expenditures [2][11]. - **US Market**: Gas turbine producers are experiencing strong demand, with significant order backlogs and ongoing capacity expansions [4][37]. - **China Market**: Foreign brands dominate the diesel engine market in China, but local manufacturers like Weichai and Yuchai are expected to increase their market share significantly by 2025 due to shorter lead times and quicker capacity ramp-up [5][34]. Investment Recommendations - The report covers nine stocks providing power equipment to AIDCs, with eight rated as "Buy" due to the booming AIDC capital expenditures and strong demand outlook. GEV is rated "Hold" due to higher costs associated with its offshore wind backlog [6][12]. Additional Insights - **AI Training Power Needs**: AI-focused hyperscalers can have capacities of 100MW, consuming energy equivalent to that of 100,000 households, compared to traditional data centers with capacities of 10-25MW [16]. - **Future Projections**: AIDC is projected to account for 80% of newly added data center IT power from 2024 to 2028, indicating a significant shift in energy requirements driven by AI advancements [22][23]. Conclusion - The report highlights the critical need for efficient power solutions in the rapidly growing AIDC sector, with distinct strategies emerging in the US and China. The investment landscape is favorable for companies involved in power generation technologies, particularly gas turbines and diesel engines, as demand continues to rise in response to AI developments [1][11][16].

Summary of Key Points from the Conference Call Industry Overview - The report focuses on the **gas power equipment industry** and its role in supporting the anticipated **USD 5 trillion AI investment boom** by 2030, particularly in the context of **gas turbine demand** driven by hyperscaler capital expenditure (capex) plans for AI datacentres [2][12][19]. Core Insights and Arguments - **Gas Turbine Demand Surge**: Gas turbine orders are projected to reach **decade-high levels in 2025**, with US orders expected to be **2.5 times the average from 2019-2024** [2][36]. - **Pricing Power and Margin Upcycle**: Strong demand from AI and other applications is leading to a margin upcycle for suppliers, supported by high pricing power on new gas power equipment [3][21]. - **Broadened Market Demand**: The demand for gas power generation equipment is expanding beyond heavy-duty turbines to include medium-duty turbines, industrial turbines, and fuel cells due to long lead times for new heavy-duty gas turbine orders [4][39]. - **Capacity Expansion**: Major suppliers are ramping up capacity by approximately **30%** each, with an estimated **90GW of supply capacity** expected by 2029 [4][46]. - **Investment Ratings**: Out of nine gas power supply chain players covered, **eight are rated as Buy**, with **GE Vernova rated Hold**. Siemens Energy is highlighted as a well-valued diversified supplier [5][90]. Important but Overlooked Content - **Bottlenecks and Supply Chain Risks**: Potential bottlenecks in the supply chain, particularly for components shared with aerospace suppliers, have not yet materialized significantly, indicating a more stable supply environment compared to previous cycles [51]. - **Emerging Business Models**: The **Bring-Your-Own-Power (BYOP)** model is gaining traction among datacentre developers to accelerate power delivery timelines, reflecting a shift in how power needs are met [56][57]. - **Global Datacentre Power Demand**: Global datacentre workload is expected to rise from **95GW in 2025 to 205GW by 2030**, with the US accounting for **55% of this growth** [67][69]. - **Natural Gas as a Key Resource**: Despite the rise of renewables, natural gas is expected to play a crucial role in meeting the growing demand for baseload power, particularly in the US where it is abundant and cost-effective [19][20][82]. Conclusion - The gas power equipment industry is poised for significant growth driven by the AI investment boom, with strong demand for gas turbines and a favorable pricing environment for suppliers. The emergence of new business models and the ongoing capacity expansion among major players further support a positive outlook for the sector.

Summary of Key Points from the Conference Call Industry Overview - The focus is on the energy and power sector, particularly in relation to China's carbon emissions and the transition to renewable energy sources [2][7][36]. Core Insights and Arguments 1. **Peak Emissions in China**: China is likely to record a decline in carbon emissions this year, potentially peaking five years ahead of its 2030 target [5][7]. 2. **Energy Demand Growth**: The fourth industrial revolution, driven by AI and robotics, is expected to significantly increase global energy demand, raising concerns about accommodating this growth while reducing emissions [3]. 3. **Carbon Dioxide Levels**: Atmospheric CO2 levels peaked at 430ppm this year, with an annual increase of nearly 3.5ppm, suggesting a potential rise above 500ppm by 2050 if current trends continue [3]. 4. **Renewable Energy Growth**: China is increasing its production of solar and wind energy at a rate that may outpace the growth in power demand, leading to a decline in coal consumption [7][19]. 5. **Coal Consumption Decline**: Coal demand for thermal power in China declined by 1% in the first nine months of 2025, with expectations for an overall decline in coal demand this year [8][10]. 6. **Electric Vehicle (EV) Adoption**: Electric vehicles account for over 57% of all vehicle sales in China, with projections for full electrification of light passenger vehicles by 2030 [24][30]. 7. **Battery Storage Investment**: China is investing heavily in energy storage solutions, expecting to add 170GWh of energy storage this year, which is double the previous year's rate [22][25]. 8. **Grid Upgrades**: The construction of 3,000km of ultra-high voltage transmission lines is underway to connect renewable energy sources in western China with demand centers in the east [22]. 9. **Decline in Oil Demand**: Oil demand in China is expected to remain flat or increase marginally, with gasoline demand peaking in 2023 [10][13][30]. 10. **Global Clean Energy Equipment Exports**: China is exporting US$15-20 billion per month in clean energy equipment, which is equivalent to exporting 12 million barrels of crude oil per day [37][38]. Additional Important Insights - **Tipping Point for Coal**: Despite ongoing coal plant construction, the utilization of these plants has fallen below 50%, indicating a shift in energy production dynamics [15][19]. - **Electrification of Transport**: The electrification campaign extends beyond cars to buses, trucks, and even ships, with over 90% of buses in China now electric [33]. - **Investment Opportunities**: The report highlights investment potential in batteries for energy storage, grid-related equipment, and nuclear energy as the shift to low carbon technologies accelerates [41]. This summary encapsulates the critical points discussed in the conference call, focusing on the energy sector's transition in China and its implications for emissions and investment opportunities.

Market Overview - Major U.S. index futures indicate a sharply higher open on Monday, suggesting a recovery after last week's weakness [1] - The Senate's vote to advance legislation to end the government shutdown, which is the longest in U.S. history, is contributing to the positive market sentiment [1][20] - The Senate voted 60-40 in favor of a temporary funding bill, which also aims to reverse some recent mass federal layoffs [1][20] Legislative Impact - Several Democratic Senators supported the legislation, which includes a vote on extending enhanced Obamacare tax credits [2] - Final approval of the bill may be delayed by any single Senator, and it still requires approval from the Republican-controlled House of Representatives [2] Economic Data and Market Sentiment - The end of the government shutdown would allow the release of key U.S. economic data that has been withheld, potentially alleviating market uncertainty [3][4] - Concerns about the shutdown have led traders to consider buying stocks at reduced levels due to recent valuation worries [3] Stock Performance - The major averages ended the day mixed, with the Nasdaq down 49.46 points (0.2%) to 23,004.54, while the S&P 500 rose 8.48 points (0.1%) to 6,278.80 and the Dow increased 74.80 points (0.2%) to 46,987.10 [5] - For the week, the Nasdaq fell 3.0%, the S&P 500 dropped 1.7%, and the Dow decreased by 1.2% [5] Sector Movements - Significant strength was observed in gold stocks, with the NYSE Arca Gold Bugs Index rising by 2.3% as gold prices climbed above $4,000 per ounce [11] - The NYSE Arca Computer Hardware Index surged by 3.2% after a substantial turnaround during the trading session [10] - Natural gas, airline, and commercial real estate stocks also showed strong upward movements, while networking and semiconductor stocks remained weak [11] International Markets - Asian stocks advanced following the U.S. Senate's vote to end the government shutdown, with China's Shanghai Composite Index rising 0.5% [13] - Japan's Nikkei 226 Index increased by 1.3%, driven by gains in the technology sector [15] - South Korean stocks surged 3.0% on renewed optimism over AI and expectations of tax cuts, with Samsung Electronics and SK Hynix showing significant gains [17] Commodity and Currency Markets - Crude oil futures increased by $0.25 to $60 per barrel, while gold futures surged by $98.90 to $4,108.70 per ounce [12] - The U.S. dollar traded at 154.01 yen, up from 153.40 yen, and at $1.1569 against the euro, compared to $1.1565 previously [12]

Economic and Market Sentiment - Asian stocks advanced following the U.S. Senate's bipartisan vote to end the government shutdown, which lasted 40 days, with the legislation now moving to the House of Representatives for consideration [1] - China's producer price deflation eased in October, while consumer prices returned to positive territory, with the Shanghai Composite index rising 0.53 percent to 4,018.60 [2] - Consumer price inflation in China unexpectedly rose by 0.2 percent in October after a 0.3 percent decline in the previous month, contrary to analysts' expectations of no change [2][3] Stock Market Performance - Hong Kong's Hang Seng index increased by 1.55 percent to 26,649.06, rebounding from previous sell-offs [3] - The Nikkei average in Japan climbed 1.26 percent to 50,911.76, with significant gains in the technology sector, while the broader Topix index settled 0.56 percent higher at 3,317.42 [4] - Seoul's Kospi average surged 3.02 percent to 4,073.24, driven by renewed optimism over AI and expectations of tax cuts [4] Company-Specific Developments - SoftBank Group's stock rallied by 2.6 percent, while Tokyo Electron surged 4.3 percent and Advantest added 3.8 percent [4] - Samsung Electronics rose by 2.8 percent and SK Hynix surged 4.5 percent, following Nvidia CEO's comments on strong demand for their Blackwell chips [5] - Honda Motor's stock slumped by 4.7 percent after the company cut its annual earnings forecast [4] Commodity and Currency Movements - Australian markets ended higher, with the S&P/ASX 200 rising 0.75 percent to 8,835.90, supported by a rally in gold, energy, and bank stocks [6] - Gold prices increased nearly 2 percent to $4,080 an ounce, aided by a weaker dollar in Asian trade [7]

Summary of Key Points from the Conference Call Industry Overview - **Industry**: AI Infrastructure in China - **Projected AI Capex**: China’s AI capital expenditure (capex) is expected to reach RMB800 billion (approximately US$110 billion) by 2030, accounting for one-third of total AI capex in China [1][62] - **Global AI Capex**: Global AI-related capex is projected to exceed US$1.2 trillion by 2030, nearly tripling from 2025 levels [1][54] - **China's AI Capex Growth**: Expected to grow from RMB600-700 billion (US$85-95 billion) in 2025 to RMB2-2.5 trillion (US$280-350 billion) by 2030, with a CAGR of 25-30% [1][61] Power Demand and Data Centers - **Power Consumption**: China's data centers are projected to consume 277 TWh of electricity by 2030, up from 102 TWh in 2024, representing a CAGR of 18% [1][42] - **Global Data Center Power Demand**: Global data center power consumption is expected to grow 2.3 times from 416 TWh in 2024 to 946 TWh in 2030 [1][28] Opportunities in Power Supply - **Nuclear Power**: China's nuclear capacity is expected to grow from 60 GW in 2025 to 100 GW in 2030, accounting for 60% of global capacity under construction [2][29] - **Power Equipment Demand**: Strong demand for transformers and power equipment is anticipated due to grid upgrades and rising renewable energy investments [2][45] - **Energy Storage Systems (ESS)**: The global ESS market is expected to grow at a CAGR of 21% from 2024 to 2030, with significant growth in China [2][47] Cooling and Metals Demand - **Cooling Market Growth**: The liquid cooling market in China is expected to grow at a CAGR of 42% from 2025 to 2030, driven by the increasing power density of AI workloads [3][50] - **Copper and Aluminum Demand**: Direct AI use of copper is projected to reach approximately 1 million tons by 2030, accounting for 5-6% of total copper demand. Data centers are expected to drive 936 kt of copper demand by 2030 [3][49] Investment Recommendations - **Key Stocks**: - **Power Equipment**: Buy recommendations for Sieyuan, Jinpan, and Huaming due to expected growth in power equipment demand [2][45] - **Nuclear**: Buy CGN Mining and Doosan Enerbility for exposure to nuclear power growth [2][44] - **Cooling Solutions**: Buy AVC for liquid cooling solutions [3][50] - **Metals**: Buy Zijin Mining, CMOC, and Chalco for copper and aluminum exposure [3][49] Additional Insights - **Government Support**: Continued government spending and initiatives are expected to drive AI capex growth in China [1][61] - **Energy Security**: The link between AI leadership and energy security is emphasized, highlighting the need for reliable power sources [1][42] - **Technological Advancements**: Emerging technologies in cooling and power supply are expected to create further investment opportunities [2][48] This summary encapsulates the critical insights and projections regarding the AI infrastructure landscape in China, highlighting the expected growth in capital expenditure, power demand, and investment opportunities across various sectors.

Core Insights - Fermi Inc. (NASDAQ:FRMI) has seen significant stock performance, attributed to its partnerships with South Korean companies for nuclear energy development [1][2]. Group 1: Partnerships and Contracts - Fermi Inc. has signed a deal with Doosan Enerbility to develop nuclear equipment, including reactor pressure vessels and steam generators, for Westinghouse Electric's AP1000 reactor projects [2]. - The company has also partnered with Hyundai Engineering & Construction for a major engineering contract related to the design of four AP1000 nuclear reactors under Project Matador, which aims to create a hypergrid energy campus with a capacity of 11 GW from various energy sources [3]. Group 2: Strategic Vision and Market Position - Fermi Inc.'s co-founder and CEO, Toby Neugebauer, emphasized the importance of collaborating with allies experienced in large-scale nuclear projects to enhance America's nuclear energy capabilities [4]. - Neugebauer noted that the commitment from Doosan Enerbility and Hyundai E&C positions Fermi America to effectively contribute to the development of clean nuclear power, aligning with the demands of the U.S. government [5].

Investment Rating - The report suggests a positive outlook for the nuclear power industry, particularly in the U.S., with a focus on companies involved in nuclear fuel supply, equipment manufacturing, and power operations [9][16]. Core Insights - The U.S. government has signed a cooperation agreement with Westinghouse Electric to build nuclear reactor projects valued at no less than $80 billion, indicating significant investment in the nuclear sector [1][11]. - The commercialization of Small Modular Reactors (SMRs) in the U.S. is expected to accelerate by 2025, driven by the demand from AI tech giants' data centers, regulatory support, and demonstration projects from leading SMR companies [2][12]. - The U.S. nuclear supply chain is heavily reliant on foreign suppliers for critical components and fuel, which presents both challenges and opportunities for domestic manufacturers and foreign suppliers from Japan, South Korea, and Europe [3][13]. - The surge in demand from AI data centers is revitalizing interest in nuclear power as a stable, low-carbon energy source, highlighting the urgency for new nuclear builds to meet rising electricity demands [4][14]. Summary by Sections Upstream - Focus on companies with scarce licenses and limited capacity, such as Cameco and Centrus Energy, which are positioned to benefit from the growing demand for nuclear fuel [9][16]. Midstream - Attention should be given to nuclear equipment manufacturers like BWX Technologies, Doosan Enerbility, and NuScale Power, which are expected to see growth as demonstration projects come online [9][16]. Downstream - Emphasis on nuclear power operators such as Talen Energy and Entergy, which are likely to have visible operating cash flows and benefit from the increasing reliance on nuclear energy [9][16].

22 October 2025 Asia-Pacific Nuclear Power Asia-Pacific Nuclear Power: What to invest in for China's next Five-Year Plan? Brian Ho, CFA +852 2123 2615 brian.ho@bernsteinsg.com Neil Beveridge, Ph.D. +852 2123 2648 neil.beveridge@bernsteinsg.com Hengliang Zhang +852 2123 2629 hengliang.zhang@bernsteinsg.com China is poised to become the world's largest nuclear power operator by 2030. China's nuclear capacity stood at 61GW in 2024 and is on track to reach 100GW by 2030, with further expansion to 150-200GW by 2 ...