Summary of Key Points from the Conference Call Industry Overview - The focus is on the **nuclear power equipment industry** in China, particularly the companies **Dongfang Electric (DFE)** and **Shanghai Electric (SHE)**, which dominate the market for nuclear equipment [1][2][4]. Core Insights and Arguments - **Profit Contribution**: DFE is expected to benefit from higher nuclear equipment prices from 2023 to 2025, alongside a surge in new orders due to China's rapid nuclear power expansion. The approval of 41 new nuclear units from 2022 to 2025 is anticipated to drive a **17.6% CAGR** in nuclear installation volume from 2025 to 2030 [1][17]. - **Market Share**: DFE and SHE each hold a **1/3 market share** in nuclear equipment biddings, with each nuclear power unit potentially generating **Rmb1.3 billion** in new orders for these companies [1][16]. - **Earnings Growth**: DFE's revenue and gross profit from power equipment sales are projected to grow at **16.3%** and **22.9% CAGRs**, respectively, from 2025 to 2027, with a potential boost from a mega hydropower project in Tibet starting in 2030, estimated at **Rmb10.6 billion** annually [3][27]. - **Valuation**: DFE's target price has been raised by **10%** to **HK$22**, reflecting a favorable valuation compared to global players, with Chinese suppliers' average **2026E P/E** and **P/B** at **26.2x** and **1.3x**, significantly lower than global averages of **65.5x** and **5-164x** [4][38]. Key Suppliers and Equipment - The main suppliers of nuclear equipment in China include **DFE**, **SHE**, and **Harbin Electric**, which together account for approximately **60%** of the nuclear island's construction costs [2][25]. - Key products include steam generators, pressure vessels, and turbine generators, with DFE noted for having the most comprehensive range of nuclear products [2][21]. Additional Important Insights - **Nuclear Equipment Pricing**: Prices for nuclear equipment have risen due to the cancellation of reference prices in recent bids, which may enhance gross profit margins for DFE and SHE [18][19]. - **Production Capacity**: DFE, SHE, and Harbin Electric each have the capacity to produce six units of **1GW** nuclear equipment per year, with shared production lines for conventional island equipment [22][21]. - **Market Dynamics**: The nuclear equipment market is characterized by limited competition due to the dominance of state-owned enterprises and a cautious approach to capacity expansion following past overcapacity issues [23][25]. - **Export Opportunities**: Chinese manufacturers are leveraging the Belt-and-Road Initiative to secure overseas orders, with notable contracts signed for projects in Pakistan and Saudi Arabia [36]. Financial Performance - DFE's revenue from nuclear equipment is expected to increase from **10%** of total revenue in 2024 to **17%** by 2030, with gross profit contributions rising from **15%** to **26%** in the same period [31][27]. - SHE's revenue from nuclear equipment showed a modest increase of **8.2%** year-over-year, but gross profit margins declined [43]. This summary encapsulates the critical insights and projections regarding the nuclear power equipment industry in China, focusing on the performance and outlook for key players like DFE and SHE.