New | China’s nuclear power equipment makers deserve a closer look, say analysts

China’s nuclear power sector is beginning to light up in an interesting way.

An index of 44 nuclear-power related companies listed in Shenzhen and Shanghai, known as the CSI Nuclear Energy & Power, is up 17.1% so far in October. The recent advance is a rare bright spot for the sector, which has been suffering from an extended slump, along with much of world’s nuclear power industry, in the wake of the Fukushima Daiichi disaster.

The questions facing investors now, is whether the recent gains, not to mention the spotlight on the sector from China’s nuclear power agreements signed with Britain last week, add up to better times ahead for the China’s nuclear equipment makers.

The stakes are huge. China’s own domestic nuclear build-out programme is massive. As of July, China has 26 nuclear power plants operating, and a further 25 under construction, according to the World Nuclear Association.

That however, represents only what’s been on the drawing board for years. Looking ahead to 2020 China will need to initiate construction of 6GW to 8GW worth of nuclear power projects every year on average for the next five years, according to calculations by UBS. If Beijing adopts the enlarged target of 150 GW worth of nuclear power capacity by 2030, authorities will need to approve and commence the construction of 10 GW worth of nuclear power projects each year on average for the next 10 years, according to UBS.

“We believe China is entering a booming cycle of nuclear power plant construction,” wrote UBS analysts Bonan Li in an inaugural report on the sector dated September 2.