Summary of Key Points from the Conference Call Industry Overview - The nuclear fusion sector is experiencing rapid advancements, with both state-owned and private enterprises exceeding expectations in project progress. The Helen project plans to sell electricity to Microsoft by 2030, indicating a rising phase for industry catalysts [1][2]. Core Insights and Arguments - Various technical routes for nuclear fusion exist, with magnetic confinement technology showing greater scalability potential. The Tokamak device is the mainstream choice, with projects like ITER and BEST adopting this technology, while smaller FRC designs are more suitable for distributed power generation [1][6]. - Superconducting materials are critical to Tokamak devices, with high-temperature superconductors expected to account for nearly 50% of materials used in the future. Companies to watch include Shanghai Superconductor, Yongding, and Jinda, as well as magnet companies like Lianchuang Optoelectronics [1][7]. - The magnetic confinement scheme is preferred due to its strong engineering feasibility and long energy confinement time, achieved through strong magnetic fields that confine charged particles for controlled nuclear fusion [1][8]. Market Trends and Projections - The market demand for high-temperature superconducting materials in nuclear fusion magnets is projected to grow from 300 million yuan in 2024 to 4.9 billion yuan by 2030, with a compound annual growth rate (CAGR) of approximately 60% [3][15]. - The current focus in the nuclear fusion sector includes domestic project planning and bidding, as well as ignition progress in international projects. Key upcoming events include the Chengdu advanced skills unveiling and various bidding activities from companies like Shanghai China Fusion Energy and Nova Fusion [2][5]. Technical Insights - The Tokamak discharge process involves three stages: gas injection into the vacuum chamber, rapid current induction to accelerate free electrons, and further gas injection to increase reactant density and temperature [10][11]. - Superconducting materials significantly enhance nuclear fusion performance, with early materials achieving magnetic field strengths of 3-5 Tesla, while future trends indicate potential peaks of 12 Tesla with high-temperature superconductors [12][14]. Competitive Landscape - In the superconducting cable sector, notable companies include ASD, FFG, and Furukawa Electric internationally, with domestic players like West Superconducting Cable and Shanghai Superconducting Cable leading the market. Shanghai Superconducting Cable is expanding rapidly and supplying to major projects [16][17]. Additional Important Points - The distinction between magnetic mirror, stellarator, and Tokamak devices lies in their magnetic field structures and plasma confinement methods, with Tokamak being the most researched and developed [9]. - High-temperature superconductors are more advantageous than low-temperature ones due to their operational efficiency in liquid nitrogen environments and lower production costs, despite the initial high costs associated with first-generation materials [13]. This summary encapsulates the essential insights and developments within the nuclear fusion industry as discussed in the conference call, highlighting both current trends and future projections.

Core Viewpoint - The establishment of China Fusion Energy Company marks a significant milestone in advancing nuclear fusion commercialization in China, supported by major state-owned and private enterprises [2][10]. Group 1: Industry Growth and Investment - The global fusion industry has seen explosive growth, with total investments reaching $9.766 billion, a 414% increase since 2021 [3][4]. - The investment surge indicates increased investor confidence, technological advancements, and a maturing supply chain in the fusion sector [3][4]. Group 2: Technological Advancements - Major breakthroughs in China's nuclear fusion projects include the EAST achieving 1 million degrees Celsius for 1066 seconds, and the "China Circulation No. 3" reaching dual billion-degree operation [5][6]. - The international ITER project has completed all components for its superconducting magnet system, marking significant progress in global fusion efforts [6]. Group 3: Commercialization Timeline - The industry anticipates that the first commercial fusion power plants will begin operations between 2030 and 2035, with 35 companies planning to operate net energy gain demonstration plants by this timeframe [7][8]. Group 4: Capital and Investment Structure - The fusion industry in China is characterized by a collaborative structure involving national strategic capital, local industrial capital, and private innovation capital [10][11]. - The establishment of China Fusion Company, with over 11.469 billion yuan in registered capital, reflects a strategic move to solidify the central enterprises' role in the fusion sector [10]. Group 5: Supply Chain Development - The supply chain for nuclear fusion is maturing, with several A-share listed companies entering the sector, including Antai Technology and West Superconducting [12][13]. - The fusion industry is expected to drive demand across various supply chain segments as it transitions from technology validation to engineering implementation [13].

Core Viewpoint - The establishment of China Fusion Energy Company marks a significant milestone in China's efforts to commercialize nuclear fusion energy, supported by major state-owned and private enterprises, indicating a shift from speculative interest to long-term industrial investment in fusion energy [1][7]. Investment and Market Growth - The global fusion industry has seen explosive growth over the past five years, with total investments reaching $9.766 billion, a 414% increase since 2021, reflecting heightened investor confidence and technological advancements [2]. - The report indicates that the fusion industry is attractive due to its potential for energy security and clean energy, despite historical challenges in technology investment [2]. Technological Advancements - Significant breakthroughs in China's nuclear fusion technology have been achieved, with major devices like EAST and the Chinese Circulation No. 3 reaching record operational parameters, positioning China as a leader in plasma confinement technology [3]. - The first compact fusion energy experimental device, BEST, is set to complete construction by 2027, aiming to demonstrate fusion power generation [3]. Private Sector Involvement - Private enterprises in China, such as New Hope, have made notable advancements in fusion technology, achieving high-density plasma discharge, marking a step towards commercializing hydrogen-boron fusion [4]. - Internationally, projects like ITER and agreements between tech giants and fusion startups indicate a global acceleration in fusion commercialization [5]. Future Projections - The period from 2030 to 2035 is recognized as critical for the commercialization of fusion energy, with many companies planning to operate demonstration power plants during this timeframe [5][6]. - Industry experts predict that the first fusion power generation could occur in China by 2030, highlighting the urgency and potential of fusion energy [5]. Capital and Structural Support - The fusion industry in China is supported by a combination of national strategic capital, local industrial capital, and private innovation capital, with significant investments made by major state-owned enterprises [7][8]. - Local investments in projects like BEST have increased the capital scale significantly, indicating strong regional support for fusion energy initiatives [8]. Supply Chain Development - The maturation of the fusion supply chain is seen as a crucial factor in advancing fusion energy projects, with several companies entering the supply chain and contributing to the development of essential components [10]. - The focus on upstream materials and equipment is expected to drive demand across the industry as fusion technology progresses from validation to engineering implementation [11]. Synergistic Technologies - The convergence of AI and high-temperature superconductors with fusion technology is anticipated to accelerate the development of fusion energy, enhancing both feasibility and economic viability [11].

Investment Rating - The report indicates a positive outlook for the controlled nuclear fusion industry, suggesting that companies with leading technologies and core component supply capabilities are likely to benefit first as fusion devices are deployed [3]. Core Insights - Controlled nuclear fusion is viewed as a clean, safe, and sustainable ultimate energy source, with significant potential for large-scale commercialization in the future [4][8]. - The report highlights the importance of the Lawson criterion and the Q factor in achieving sustainable fusion reactions, emphasizing that meeting these conditions is crucial for commercialization [17][18]. - The global landscape for fusion energy is rapidly evolving, with multiple countries, including the US, UK, Germany, and Russia, actively pursuing fusion power projects expected to come online in the 2030s [34][36]. Summary by Sections 1. Development Window for Controlled Nuclear Fusion - The report notes that the domestic and international fusion energy sector is entering a critical development phase, with significant projects underway [5][34]. - Key projects include the Hefei BEST project in China, which aims to be the world's first to conduct steady-state deuterium-tritium combustion by 2027 [52]. 2. What is Controlled Nuclear Fusion? - Controlled nuclear fusion is characterized by high energy release efficiency, safety, abundant fuel sources, and minimal environmental pollution [4][8]. - The primary fuels for fusion are deuterium and tritium, with deuterium being readily available from water and tritium produced through lithium reactions [8][11]. 3. Technical Pathways for Controlled Nuclear Fusion - Magnetic confinement is identified as the most effective method for achieving fusion energy, with the Tokamak design being the most widely researched and developed [18][19]. - The report discusses advancements in high-temperature superconductors and AI technology that enhance plasma control and reduce the size and cost of fusion devices [26][27]. 4. Progress in Controlled Nuclear Fusion - The report outlines significant international efforts, including the ITER project, which aims to demonstrate the feasibility of fusion energy by achieving a Q factor greater than 10 [38][43]. - Various countries are ramping up investments in fusion energy, with the US planning to build the world's first fusion power plant by 2028 [34][35]. 5. Beneficiary Companies - The report identifies several companies poised to benefit from the growth of the fusion energy sector, including those involved in magnet systems, high-temperature superconductors, vacuum chambers, and other supporting technologies [3].

Summary of Key Points from Conference Call Records Industry Overview - The nuclear power industry is recognized as a baseload energy source, with continuous growth in installed capacity and high Return on Equity (ROE) being critical for cash flow value [1][2][15] - The establishment of China Fusion Energy Company under China National Nuclear Corporation (CNNC) aims to finance and construct Tokamak devices, although it does not engage in scientific research [1][4][9] Core Insights and Arguments - Despite short-term concerns regarding annual long-term electricity price fluctuations in Guangdong Province, the long-term outlook remains positive due to project increases and stable capital expenditures driving operational cash flow growth [2][15] - The current Tokamak devices are experimental and lack commercial viability, with commercialization expected around 2050 [1][6] - The value distribution of Tokamak components shows that the magnet system holds the highest value (28% for low-temperature superconductors and 50% for high-temperature superconductors), followed by the vacuum chamber (8-10%) and other auxiliary systems [1][7][12] Financial Performance and Market Dynamics - The investment value of nuclear power operators like China National Nuclear Corporation and China General Nuclear Power Group is assessed based on cash flow value, growth potential, and the critical role of nuclear power in the energy system [2][3] - The decline in electricity prices has pressured the performance of these operators, but valuations have already reflected this impact [3][20] - The anticipated increase in installed capacity and operational projects is expected to enhance free cash flow and dividend rates [15][21] Future Projections and Strategic Recommendations - The nuclear power sector is projected to maintain a strong growth trajectory, with expectations of increasing profitability and ROE due to rapid project commissioning [18][19] - The need for adjustments in the current pricing mechanism is emphasized to better reflect the value of nuclear power, potentially through capacity compensation or green premiums [25][26] Key Companies and Competitive Landscape - Major players in the nuclear power sector include China General Nuclear Power Group and China National Nuclear Corporation, with their valuations currently ranging from 18 to 19 times earnings [26][27] - The market is expected to favor companies with strong operational capabilities and favorable market positions, particularly in the Hong Kong stock market [27][28] Additional Considerations - The nuclear power industry is characterized by a stable cost structure, with unit costs remaining around 0.2 yuan per kilowatt-hour, primarily influenced by depreciation and fixed costs [22] - The impact of coal price fluctuations on nuclear power profitability is limited, but market-driven price declines in certain regions have created challenges [22][23] - The overall sentiment towards the nuclear power industry remains optimistic, with expectations for continued investment and technological advancement [28]

Core Viewpoint - Marathon Fusion, a San Francisco-based fusion energy startup, claims to have developed a method to transmute mercury into gold through nuclear transmutation, potentially solving the age-old alchemical quest of turning base metals into gold [2][3]. Company Overview - Founded in 2023 by Kyle Schiller and Adam Rutkowski, Marathon Fusion aims to tackle key technological challenges in fusion power plant construction [2][3]. - The company currently employs 12 full-time staff and has secured $5.9 million in private investment along with approximately $4 million in government grants [3]. Technological Innovation - The proposed fusion process utilizes neutrons released during fusion reactions to facilitate the transmutation of mercury into gold, with an estimated annual production of about 5,000 kilograms of gold per gigawatt of power generated [2][3]. - The process involves introducing mercury-198 into the breeding blanket of a fusion reactor, where it can be converted into mercury-197, which then decays into stable gold-197 [3][4]. Market Potential - The global annual gold production is approximately 3,500 tons, and the company believes that the gold market is large enough to absorb additional supply without significantly disrupting prices [5]. - The potential revenue from gold production could double the overall revenue of fusion power plants, as the estimated market value of the gold produced would be comparable to the electricity generated [2][5]. Industry Context - The fusion industry has seen a surge in private investment, with $2.6 billion raised in the past year, bringing the total funding to $9.8 billion across 53 companies [5]. - Despite the theoretical feasibility of fusion energy, achieving net energy output remains a significant challenge, with some experts suggesting that commercial fusion power may still be decades away [5][6].

Group 1 - China Fusion Energy Co., Ltd. was established on July 22, with a focus on nuclear fusion energy [1] - China National Nuclear Power plans to invest 1 billion yuan for a 6.65% stake in China Fusion Energy Co., Ltd. [1] - Zhejiang Energy Power intends to invest 751 million yuan for a 5% stake in the same company, contributing to a total investment of approximately 11.49 billion yuan from multiple entities [2] Group 2 - The global landscape for controllable nuclear fusion technology is diverse, with significant developments in Tokamak and FRC technology routes [2] - Major companies like Google and Microsoft are engaging in agreements to purchase fusion energy, indicating a growing interest in this sector [2] - The Chinese Academy of Sciences and China National Nuclear Corporation are focusing on Tokamak technology for their fusion projects [2] Group 3 - Breakthroughs in Tokamak technology are expected from projects like EAST and the HL-3, with the BEST project by Fusion New Energy already in the early stages [3] - The power systems for Tokamak devices are crucial, with the value of core components being significant, particularly the magnetic power systems [3]

Group 1: Core Insights - Public funds are rapidly shifting investment strategies, focusing on sectors like innovative pharmaceuticals, short dramas, robotics, and controllable nuclear fusion, reflecting a proactive approach to structural market trends [1][7] - The Longcheng Pharmaceutical Industry Fund achieved a remarkable 102.52% increase in year-to-date performance, driven by strategic investments in leading innovative pharmaceutical companies [2][4] - The success of the fund is attributed to its combination strategy of investing in both Hong Kong and A-share markets, with significant contributions from partnerships like the $6 billion deal between Sanofi and 3SBio [2][5] Group 2: Sector-Specific Strategies - The Tongtai Industrial Upgrade Mixed Fund, previously on the brink of liquidation, successfully pivoted to a focus on robotics, resulting in a recovery of its scale from 80 million to 140 million yuan, with a net value increase of 42% [3][5] - The Yongying Fund's aggressive strategy includes launching funds focused on controllable nuclear fusion and deep-sea technology, with significant investments in companies like Guoguang Electric and Zhongke Haixun [5][6] - The deep-sea technology sector is projected to see investments exceeding 200 billion yuan by 2025, driven by national strategies and the potential for domestic replacements in materials and exploration technologies [5][8] Group 3: Industry Transformation - The public fund industry is undergoing a transformation from broad-based investment strategies to more targeted approaches, as evidenced by the shift in focus from renewable energy to AI-driven technologies [6] - Innovative fund products, particularly those with a three-year lock-up period, are becoming more prevalent, allowing for long-term strategic investments without short-term redemption pressures [6] - High volatility is becoming a norm in the market, with significant daily fluctuations in sectors like controllable nuclear fusion, yet fund managers remain committed to long-term technological breakthroughs [6][7]

Summary of Key Points from the Conference Call Company and Industry Involved - **Company**: Hechuan Intelligent (禾川智能) - **Industry**: Nuclear Fusion Technology and Energy Sector Core Insights and Arguments - **Shareholding Changes**: Hebei Construction Investment plans to reduce its stake in Hechuan Intelligent due to increased funding needs, which is a normal investment return behavior and will not affect the core business or development strategy of Hechuan Intelligent [2][3] - **Chairman's Position**: Chairman Yan has submitted his resignation from the position at Jiu Bian New Energy but continues to serve due to the lack of a suitable replacement. He does not receive a salary or accept administrative roles [2][4] - **Upcoming Tendering Phase**: Jiu Bian New Energy is expected to enter a concentrated tendering phase in the second half of the year, with an estimated order scale of approximately 7 billion yuan, potentially reaching a total tendering scale of around 10 billion yuan when including other projects [2][5] - **International Fusion Technology Progress**: International advancements in nuclear fusion technology have exceeded expectations, with companies like Google securing half of the power generation capacity from the CFA/CFS Tokamak device. This rapid progress in the U.S. and Europe necessitates that China accelerates its development efforts [2][6] - **Breakthroughs in Laser Fusion**: Hechuan Intelligent has made significant breakthroughs in the field of laser fusion through collaboration with Shanghai Jiao Tong University, which may enhance the company's value in the future [2][7] - **Market Position Enhancement**: The company is involved in the joint development of a filter and is expected to participate in the upcoming tender for this technology, which will significantly improve its market position and competitiveness [2][7] Other Important but Possibly Overlooked Content - **Funding and Investment Context**: The decision by Hebei Construction Investment to reduce its stake is influenced by internal management regulations and the need for capital due to large external investments anticipated in 2025 [3] - **Future Focus of Chairman**: Chairman Yan plans to focus on scientific research and the fusion industry fund association while still holding the chairman position at Jiu Bian New Energy until a suitable replacement is found [4]

Investment Rating - The report gives a strong recommendation for Hewei Electric (禾望电气) with a market capitalization of 15.4 billion and a projected EPS of 1.54 for 2025, resulting in a PE ratio of 22.0 [2]. Core Insights - The report highlights the acceleration of the commercialization of controlled nuclear fusion, emphasizing the importance of power systems in midstream manufacturing, power equipment, and renewable energy [1]. - The global nuclear fusion industry is experiencing significant investment and technological advancements, with various countries and private companies increasing their efforts in this field [9][18]. - The power system is identified as a critical component of controlled nuclear fusion devices, with high barriers to entry, suggesting that companies with established technology will benefit [24]. Summary by Sections Section 1: Acceleration of Overseas Nuclear Fusion Commercialization - The report notes that controlled nuclear fusion is nearing the critical stages of combustion and engineering trials, with significant government and private sector investments in the U.S., U.K., Japan, and the EU [9][11]. - Various technological routes for nuclear fusion are being explored, including magnetic confinement and inertial confinement, with the tokamak being the most mature technology [12][14]. Section 2: China's Concurrent Efforts - China is ramping up its nuclear fusion research, with state-owned enterprises and private companies collaborating to accelerate project implementation [18][19]. - The report mentions the establishment of new companies and projects, such as Fusion New Energy (聚变新能) and China Fusion Energy Co., which aim to attract investment and expedite development [19][23]. Section 3: Importance of Power Systems in Nuclear Fusion - Power systems are crucial for providing energy to controlled nuclear fusion devices, with significant cost implications, especially in the field-reversed configuration (FRC) route where power systems may account for nearly 40% of costs [24][39]. - The report details the complexity and high standards required for power systems, particularly in tokamak and FRC technologies, highlighting the need for companies with relevant technological expertise [30][40]. Section 4: Company Analysis - The report provides financial metrics for key companies in the nuclear fusion sector, including Hewei Electric, which is strongly recommended for investment due to its promising financial outlook [2]. - Other companies mentioned include Aikesaibo (爱科赛博) and Xuguang Electronics (旭光电子), which are also involved in the nuclear fusion supply chain but do not have specific ratings [2][24].