Investment Rating - The report initiates coverage with a "Buy" rating for China General Nuclear Power Corporation (CGN Power) [2][8] Core Views - CGN Power is the sole operating platform for nuclear power generation under China General Nuclear Group, showing stable profit growth in recent years. The company was established in March 2014 and listed on the Hong Kong Stock Exchange and Shenzhen Stock Exchange in December 2014 and August 2019, respectively. The controlling shareholder is China General Nuclear Group, which held a combined stake of 58.89% in A-shares and H-shares by the end of 2024 [7][23]. - Nuclear power is crucial for achieving carbon neutrality goals, with China accelerating its nuclear power development. The company has seen a compound annual growth rate (CAGR) of 7.4% in revenue and 2.7% in net profit from 2019 to 2024 [7][24]. - The company is entering a phase of intensive construction and commissioning of nuclear power units, with 20 units under management as of June 2025, representing a potential increase of approximately 76% over the current operational capacity of 31.80 GW [7][33]. - Financial costs have been decreasing due to lower domestic interest rates, and the company has a robust cash flow to support capital expenditures and dividends. The operating cash flow net amount for 2024 is projected to be 38 billion yuan, a year-on-year increase of 14.8%, fully covering investment expenditures and dividends [7][8]. - The report forecasts earnings per share (EPS) of 0.21, 0.23, and 0.24 yuan for 2025-2027, with corresponding price-to-earnings (PE) ratios of 13, 12, and 11 times. The estimated reasonable market value for the H-shares is 186.6 billion HKD, indicating a potential upside of 25.2% [8][24]. Financial Data and Profit Forecast - Revenue (in million yuan) is projected to be 82,549 in 2023, 86,804 in 2024, and 87,245 in 2025, with growth rates of 0%, 5%, and 1% respectively. Net profit attributable to shareholders is expected to be 10,725 million in 2023, 10,814 million in 2024, and 10,753 million in 2025, with growth rates of 8%, 1%, and -1% respectively [6]. - The company’s dividend per share has increased from 0.0578 HKD in 2016 to 0.1032 HKD in 2024, with a dividend payout ratio consistently above 40% for six consecutive years [7][8]. Key Assumptions - Installed capacity is expected to reach 32.92 million kW, 35.24 million kW, and 37.64 million kW for 2025-2027. The on-grid electricity volume is projected to be 234.8 billion kWh, 243.9 billion kWh, and 255.5 billion kWh for the same period [9]. - The on-grid electricity price is anticipated to be 0.401, 0.3994, and 0.3987 yuan per kWh for 2025-2027 [9].

Core Viewpoint - China General Nuclear Power Corporation (CGN) has successfully listed its A-share convertible bonds, known as "CGN Convertible Bonds," which is the second-largest convertible bond issuance this year, slightly smaller than the previous 5 billion yuan issuance by Yiwei Lithium Energy [1][2] Group 1: Company Overview - CGN's convertible bonds have a credit rating of AAA, with the company's main credit rating also at AAA. The initial conversion price is set at 3.67 yuan per share, and the company will redeem unconverted bonds at 106% of face value within five trading days after maturity [1] - The top ten holders of the CGN Convertible Bonds include the controlling shareholder, large investment institutions, and individual investors. The controlling shareholder, China General Nuclear Group Co., Ltd., subscribed to 3 billion yuan, accounting for 61.22% of the total issuance [1] Group 2: Project Funding and Future Plans - The funds raised from the convertible bond issuance will be used for the construction of Units 5 and 6 at the Guangdong Lufeng Nuclear Power Station, both utilizing China's self-developed third-generation nuclear technology "Hualong One," with a single unit capacity of 1,200 megawatts. These units are expected to be operational in 2027 and 2028 [2] - The internal rate of return on the project's capital is expected to reach 9%, which will enhance CGN's installed capacity and market competitiveness [2] - The Lufeng project is a key part of CGN's strategic layout during the 14th Five-Year Plan period, aligning with the national strategy for the "active, safe, and orderly development of nuclear power" [2] - Currently, nuclear power accounts for about 5% of China's electricity generation, with projections indicating an increase to 10% by 2035. The country has approved more than ten units annually for four consecutive years, indicating a normalization of nuclear project approvals [2]

Group 1: Current Orders and Production - The company currently has a sufficient order backlog, but both orders and operational status have decreased compared to the same period last year [2] - The company actively engages in market sales through bidding and business negotiations [2] Group 2: Revenue Recognition and Financials - Revenue is recognized when the company fulfills its contractual obligations, with specific methods depending on the product type [3] - The delivery cycle for nuclear power products varies, generally taking around 3 years, with a manufacturing cycle of over 2 years [3] - The gross margin of nuclear power products may fluctuate due to various factors, but prices remain relatively stable [4] Group 3: Future Development and Strategy - The company will continue to focus on nuclear power equipment manufacturing and diversify products in energy, petrochemicals, and machinery sectors [5] - The company is involved in the ITER project for nuclear fusion technology, which is a long-term endeavor [6] - Plans to increase R&D investment in non-nuclear products and new materials while expanding market share [7] Group 4: Competitive Landscape and Market Expansion - The competitive landscape is stable, with high entry barriers for new competitors due to licensing requirements [8] - The company aims to strengthen its brand recognition and expand into new regional markets while maintaining existing customer relationships [9]

Summary of Conference Call Notes Industry Overview - The power equipment industry is underperforming due to multiple factors including delays in UHV projects, risks associated with new energy installations, price reductions in grid procurement, and weak industrial investment [1][3] - The anticipated approval for UHV DC lines in early 2025 is five lines, with two to four AC lines expected. However, only one AC line has been approved in the first half of the year, which is below expectations [1][4] Key Insights and Arguments - UHV construction aims to address the insufficient transmission channels caused by the rapid expansion of new energy sources, indicating a demand for advanced construction. However, the expectation of 5 to 6 DC lines annually during the 14th Five-Year Plan may be difficult to sustain [1][5] - The development of nuclear power significantly boosts the demand for grid equipment and transmission channel construction. Since 2022, over 10 nuclear power units have been approved annually, enhancing the value and profitability of transmission and transformation equipment [1][6] - New nuclear projects in inland areas will further promote the demand for supporting transmission and AC ring networks, presenting growth opportunities for related companies [1][6] Company-Specific Insights - Companies like XJ Electric and Xi'an Xikai are expected to benefit directly from UHV DC construction due to their involvement with DC converter valve-related businesses, making them more resilient in the short term [1][7] - For a more stable investment approach, companies such as Pinggao and NARI are recommended as they are less affected by negative industry impacts. Pinggao currently holds 16 interval orders, with 14 being competitive nuclear projects, and maintains a steady delivery rhythm for 750 kV [2][7] - Domestic solar energy companies are also showing slightly better performance due to mandatory installation power forecasts, suggesting potential investment opportunities [2][8] Additional Important Points - The overall market sentiment for the UHV sector has been negative since October 2024, with companies like XJ Electric and Pinggao experiencing nearly a 20% decline in 2025. This downturn is attributed to underwhelming performance expectations and various adverse factors affecting the power equipment industry [3][4] - The synchronization between UHV construction and new energy development is not complete, as UHV projects are required to catch up with the previous pace of new energy expansion [5][6]

Summary of the Conference Call Company and Industry Involved - **Company**: 中广核矿业 (CGN Mining) - **Industry**: Nuclear Energy and Uranium Market Key Points and Arguments Pricing Mechanism Adjustments - A new framework agreement adjusts the pricing mechanism for natural uranium, with fixed prices referencing UXN and TradeTech's long-term oil price forecasts, incorporating an inflation factor. The floating price ratio has increased from 60% to 70%, referencing spot index prices to balance stability and market elasticity [2][3][5] Market Confidence in Nuclear Power - The U.S. nuclear policy is optimistic, aiming to quadruple nuclear power capacity by 2050. This, along with clear nuclear development plans from emerging countries like China and India, and AI-driven electricity demand growth, enhances market confidence in nuclear power [2][6] Current Market Conditions - In the first half of 2025, natural uranium spot trading was stable with a total volume of approximately 8,000 tons, fluctuating between $65 and $70. Long-term supply-demand tensions are expected to keep the market bullish in the medium to long term [2][7][8] Long-term vs. Spot Prices - Long-term uranium prices reflect stable demand from nuclear power plants, remaining above $80, while spot prices are more volatile due to short-term factors. Spot prices typically rise faster and more significantly than long-term prices during upward trends [2][9] Resource Acquisition and Project Development - The group aims to stabilize resource security and promote exploration and project acquisitions. However, challenges exist with the Africa Jianhu Mountain project due to valuation issues and sanctions risks affecting the Kazakhstan mines [4][13][14] Production Capacity and Future Projections - 中矿资源 (China Mining Resources) currently operates at 80% capacity with a total capacity of 2,000 tons, allowing for an increase of 400 tons. The slag mine is expected to complete its first phase by 2027, achieving a capacity of 500 tons [4][17] Sulfuric Acid Supply Issues - Sulfuric acid supply issues are anticipated to be resolved by 2027 through a new plant, with no significant impact expected on production plans for 2025. Previous shortages were mainly a concern in 2023 and early 2024 [18] Financial Implications of Cost Increases - Rising sulfuric acid prices have significantly increased raw material costs, necessitating careful future cost control and budget management [20] Stakeholder Actions - The financial company under the group, 港投, reduced its stock holdings prior to the sales agreement announcement, which was part of a planned exit strategy and not indicative of the major shareholder's confidence in the company [15] Future Production Plans - The company plans to gradually reduce uranium production from one mine starting in 2025, with projections indicating a significant decrease by 2029 [16] Market Dynamics and Procurement Trends - Nuclear power owners prefer direct contracts with producers, with limited spot market purchases. Many are cautious due to uncertainties in production planning beyond 2030 [24] Other Important but Overlooked Content - The adjustments in pricing mechanisms are designed to attract investment for project acquisitions and avoid previous market mismatches [10][11][12] - The group is also exploring potential agreements with Paladin regarding uranium sales, although no immediate intentions have been established [19]

Group 1: Company Overview - The company specializes in manufacturing industrial waste heat boilers, large and special material pressure vessels, and nuclear safety equipment [1] - It provides environmental comprehensive governance services, including solid waste and wastewater treatment and recycling [1] - The company operates photovoltaic power plants [1] Group 2: Waste Heat Boiler Business - The industrial special waste heat boilers are energy-saving and environmentally friendly products, primarily used in industries such as steel, non-ferrous metals, coking, chemicals, power, and papermaking [1] - The company maintains a leading position in the domestic market for special waste heat boilers, with a significant market share [1] - It is one of the drafting and formulation units for national standards for dry quenching waste heat boilers and continues to lead in converter waste heat boilers and non-ferrous smelting waste heat boilers [1] Group 3: Pressure Vessel Business - The company holds A1 and A3 level pressure vessel design qualifications and manufacturing licenses [2] - Its pressure vessels are mainly used in coal chemical, petroleum chemical, and fine chemical industries, including products like heat exchangers, separators, reactors, tanks, towers, filters, and evaporators [2] Group 4: Nuclear Power Business - The company has been manufacturing nuclear power equipment since 1998 and has completed several international and domestic first-piece manufacturing tasks over 20 years [2] - Nuclear safety equipment includes various components such as injection boxes, core component lifting baskets, and emergency water supply tanks [2] - The fourth-generation nuclear power equipment project is progressing, which will alleviate current capacity bottlenecks and enhance production capabilities [2] Group 5: Future Strategic Planning - The company has strong R&D capabilities in manufacturing-related products and aims to ensure product quality while pursuing innovation [2] - Future strategies include deepening core business, increasing technological innovation, and enhancing management and cost control to improve profitability and market competitiveness [2]

Core Points - The U.S. Secretary of Energy, Dan Brouillette, announced that President Trump will sign an executive order aimed at promoting the development of nuclear power [1] Group 1 - The executive order is intended to enhance the growth and investment in the nuclear energy sector [1]

1. Report Industry and Investment Rating - The report focuses on the power equipment industry, but no investment rating is provided [2] 2. Core Viewpoints - The company, Hailu Heavy Industry, has strong R & D capabilities in manufacturing - related products, accurate market positioning, and rich design and manufacturing experience. In the future, it will continue to deepen its main business, increase technological innovation and management efforts, strengthen management and cost control, and optimize resource allocation to improve profitability and market competitiveness [21] 3. Summary by Directory 3.1 Research Basic Situation - The research object is Hailu Heavy Industry, belonging to the power equipment industry. The reception time was on May 15, 2025, and the listed company's reception staff was Zhang Guoyi, the board secretary [16] 3.2 Detailed Research Institutions - Participating institutions include Ping An Fund (a fund management company with relevant personnel Liu Wenping and Yang Beisi), Guohai Securities (a securities company with relevant personnel Zhong Qi), Guolian Minsheng Securities (a securities company with relevant personnel Zhang Tianhao), and CITIC Securities (a securities company with relevant personnel Hua Pengwei) [17] 3.3 Research Institution Proportion - Fund management companies account for 25%, and securities companies account for 75% [19] 3.4 Main Content Data - **Company's Main Business**: The company's current main businesses include the manufacturing and sales of industrial waste - heat boilers, large and special - material pressure vessels, and nuclear safety equipment; environmental comprehensive treatment services for the treatment and recycling of pollutants such as solid waste and wastewater; and photovoltaic power station operation [20] - **Nuclear Power Business**: The company started manufacturing nuclear power equipment in 1998. It has completed multiple international and domestic first - piece (set) manufacturing tasks. Its nuclear safety equipment includes various components. The fourth - generation nuclear power equipment project is advancing orderly, which will help expand production capacity, optimize technology, and enhance profitability [20][21] - **Company's Future Strategic Plan**: The company will continue to deepen its main business, increase technological innovation and management efforts, strengthen management and cost control, and optimize resource allocation to improve profitability and market competitiveness [21]

Group 1: Company Overview - The company specializes in manufacturing industrial waste heat boilers, large and special pressure vessels, and nuclear safety equipment [1] - It provides environmental comprehensive governance services, including solid waste and wastewater treatment and recycling [1] - The company operates photovoltaic power plants [1] Group 2: Nuclear Power Business - The company has been manufacturing nuclear power equipment since 1998, with over 20 years of experience in the field [2] - It has completed several international and domestic first-piece manufacturing tasks in nuclear power projects [2] - The nuclear safety equipment includes various components such as emergency water tanks, boric acid storage tanks, and non-active residual heat discharge systems [1] Group 3: Future Strategic Planning - The fourth-generation nuclear power equipment project is progressing, which will alleviate current capacity bottlenecks and enhance production capabilities [2] - The company aims to strengthen its nuclear power business in line with national development policies, improving production capacity and profitability [2] - The company focuses on technological innovation, management enhancement, and resource optimization to boost profitability and market competitiveness [2]

Core Viewpoint - President Trump aims to promote nuclear power through executive orders [1] Group 1 - The initiative is part of a broader strategy to enhance energy independence and reduce reliance on fossil fuels [1] - The administration believes that nuclear energy can play a crucial role in achieving environmental goals while ensuring energy security [1] - The move is expected to stimulate investment in the nuclear sector and create job opportunities [1]