A research report highlights that AI-driven demand is sparking a global revival in the nuclear power industry, creating conditions for a revaluation of nuclear power manufacturing companies characterized by high profitability and rapid growth. Domestic nuclear power has entered a period of regular project approvals and peak construction activity. It is projected that component deliveries will begin to surge starting in 2026, accelerating profit generation for the sector. Additionally, significant incremental demand is expected from advanced reactors, applications of nuclear technology, exports, and spent fuel reprocessing. Against a backdrop of anticipated strong earnings growth, expanding long-term potential, and a shift in valuation benchmarks, the emergence of nuclear fusion is expected to substantially elevate valuations across the sector. Key recommendations include companies across the broader industrial chain, alongside leading component suppliers related to nuclear fusion.
The sector, characterized by high margins and growth, has historically faced valuation constraints. Nuclear power's share of electricity generation is projected to reach only 4.82% in China by 2025, compared to a global average of approximately 10% and over 20% in many developed countries. The AI-induced industry resurgence underscores China's considerable potential for expansion. The nuclear island represents the core segment of fission power plants, with high barriers to entry leading to relatively high gross margins; data indicates gross margins for core nuclear island equipment exceed 30%. Despite a history of steady earnings growth and high margins in nuclear operations, valuation multiples for component manufacturers have remained subdued, primarily due to market skepticism about the sector's long-term growth trajectory.
Nuclear power has now transitioned into a phase of regular approvals and construction. Following the validation of third-generation nuclear technology in 2019, project approvals have become routine. Industry data shows approvals for new reactor units from 2019 to 2025. Construction starts for nuclear projects have also followed a similar upward trend. Given that equipment delivery typically commences 3-4 years after approval, and considering the high number of construction starts, a peak delivery period for components is anticipated from 2026 onward.
The industry is experiencing multi-dimensional growth opportunities. In advanced reactors, China has demonstration projects for fourth-generation technologies. A preliminary design for a commercial-scale fast reactor has been completed. Regarding small modular reactors (SMRs), domestic projects are advancing, with global cumulative investment in SMRs projected to reach significant levels by 2050. In nuclear technology applications, annual output value is forecast to exceed a substantial figure by 2030. Furthermore, nuclear power exports and spent fuel reprocessing will contribute notable incremental demand to the industry.
Catalysts for nuclear fusion are intensifying, and a shift in valuation benchmarks could significantly boost nuclear power valuations. Nuclear fusion, often termed the "ultimate energy source," is a clear strategic direction globally. Substantial capital expenditure is expected during the 15th Five-Year Plan period, with progress reported on domestic and international experimental devices. As technological breakthroughs continue and a technical inflection point approaches, the industry's capital expenditure benchmark may shift from experimental reactors to commercialization. The long-term annual addressable market for fusion equipment is immense, potentially driving a substantial re-rating of the entire nuclear power sector's valuation.
Key risk factors include: instability in nuclear power development policies; risk of major safety incidents in the nuclear sector; delays in nuclear power project construction; fluctuations in raw material prices; and risks associated with the slower-than-expected commercial development of controlled nuclear fusion.