China Nuclear Power Equipment 16 Oct 2025 07:48:12 ET │ 23 pages Ac t i o n | More-Than-Expected Profit Contribution from Nuclear; Buy Dongfang CITI'S TAKE We are bullish on Dongfang Electric (DFE) on (i) higher nuclear equipment prices in 2023-25 vs. before 2023, (ii) rising new orders from China's fast nuclear power expansion, and (iii) DFE being an oligopoly supplier of important nuclear equipment. China approved 41 new nuclear units in 2022 to 2025, and we expect China's nuclear installation volume to g ...

Group 1: Nuclear Power Projections - The International Atomic Energy Agency (IAEA) has revised upward its nuclear power projections for the fifth consecutive time since 2021, indicating a significant shift in momentum for the sector [1] - The IAEA's high-case scenario predicts global nuclear capacity could reach nearly 1,000 gigawatts electric (GW(e)) by 2050, with a quarter of this capacity expected to come from small modular reactors [3] Group 2: Global Consensus and Energy Security - There is a growing global consensus that nuclear power is essential for achieving clean, reliable, and sustainable energy, as highlighted by IAEA Director General Rafael Mariano Grossi [2] - Governments are increasingly viewing nuclear power as a low-carbon baseload option and a hedge against energy insecurity, prompting financial institutions like the World Bank to lift funding bans on nuclear projects in emerging markets [4] Group 3: U.S. Nuclear Landscape - The United States operates 94 reactors that generate about one-fifth of the nation's electricity, with electricity demand projected to double by 2050 due to factors like artificial intelligence and electrification of transport [5] - U.S. Energy Secretary Chris Wright emphasized the need for larger domestic uranium inventories and indicated a shift away from reliance on Russian enriched uranium [6] Group 4: Uranium Supply and Domestic Operations - U.S. utilities currently hold only around 14 months' worth of uranium supply, significantly less than the 2.5 years held by the European Union and over a decade's worth in China, which poses a risk to U.S. nuclear operators [9] - Domestic uranium suppliers like Energy Fuels and Peninsula Energy have secured contracts with the Department of Energy, while other firms such as Ur-Energy, enCore Energy, and Centrus Energy are also notable players in the uranium market [8] Group 5: Future Investments and Projects - Building secure uranium reserves will be critical as the IAEA anticipates a multi-decade nuclear expansion, requiring a mix of public and private capital [10] - New enrichment projects in Ohio and investments from notable figures like Peter Thiel are seen as signs of momentum in the sector [10]

Core Insights - The demand for GPUs is surging, leading to increased power consumption and a forecasted 100x growth in compute needs for next-generation AI models, indicating a sustained demand for nuclear energy as a sustainable power source [2] Group 1: Nuclear Industry Developments - Major tech companies like Amazon, Meta, and Alphabet have pledged to support the expansion of nuclear power, aiming to triple global nuclear capacity by 2050, despite the current limited project pipeline [3][4] - There are currently 60 atomic projects under construction globally, primarily in Asia, representing only a 13% increase from the 440 operational reactors [4] Group 2: Company-Specific Insights - NuScale Power is a leader in small modular reactors (SMRs), with plans to bring the first reactors online within 3-5 years and currently has 12 modules in production [5][6] - Analysts predict that NuScale Power will not generate significant revenue until 2030, with revenue expected to exceed $1 billion only after that [7] - Oklo focuses on liquid-metal-cooled fast reactors, which can operate at lower temperatures and reuse spent fuel, with initial projects set to commence operation in the coming years [9][11] - Cameco is a leading supplier of uranium fuel and reactor components, currently profitable and paying dividends, with revenue growth tracking higher over time [13][14]