22 October 2025 Asia-Pacific Nuclear Power Asia-Pacific Nuclear Power: What to invest in for China's next Five-Year Plan? Brian Ho, CFA +852 2123 2615 brian.ho@bernsteinsg.com Neil Beveridge, Ph.D. +852 2123 2648 neil.beveridge@bernsteinsg.com Hengliang Zhang +852 2123 2629 hengliang.zhang@bernsteinsg.com China is poised to become the world's largest nuclear power operator by 2030. China's nuclear capacity stood at 61GW in 2024 and is on track to reach 100GW by 2030, with further expansion to 150-200GW by 2 ...

Summary of Conference Call Notes Industry and Companies Involved - **Industry**: Electric Motor Suppliers in China - **Companies**: Johnson Electric and Wolong Electric Core Insights and Arguments - **Valuation-Driven Correction**: The recent share price correction for Johnson Electric and Wolong Electric is viewed as valuation-driven rather than based on the underlying investment thesis [2][8] - **Muted Earnings Expectations**: Anticipated muted earnings for 3Q25 for both companies, but the long-term structural drivers remain intact [2][8] - **Core Structural Drivers**: The three main structural drivers identified are: - AI Data Centers (AIDC) - Humanoid/Industrial Robotics - eVTOL (Electric Vertical Takeoff and Landing) and low-altitude economy [2][4] Key Developments - **AIDC Developments**: - Nvidia's Blackwell Ultra platform deployment is ramping up in October, with the first US-made Blackwell wafer unveiled on October 17 [4] - Alibaba announced a new green AI data center in Dubai expected to be operational by 2026, indicating global AI compute expansion [4] - **Robotics Sector Growth**: - Zhiyuan launched its Elf G2 and expects robotics revenue to grow more than tenfold YoY in 2025 [4] - Shanghai's AI terminal action plan prioritizes humanoid robots, benefiting companies like Shanghai Electric, a partner of Johnson [4] - UBTECH secured additional orders for its Walker S-series, reinforcing the acceleration of humanoid adoption [4] Policy and Market Indicators - **20th CCP Fourth Plenary Session**: Expected to reaffirm national strategic technologies, including AI industrialization and low-altitude economy ecosystems [2][8] - **eVTOL as a Strategic Priority**: The low-altitude economy and eVTOL are anticipated to be elevated as strategic national development priorities during the Fourth Plenary [8] Investment Outlook - **Investment Ratings**: - Johnson Electric is rated as Overweight (OW) due to its superior operating leverage in AIDC and humanoid robotics [8] - Wolong Electric is rated Neutral (N) as its structural story remains compelling, but near-term valuation is less favorable [8] - **Catalysts to Monitor**: Key catalysts include order wins, production ramp updates, and policy support that could influence the investment case for both companies [6][7] Additional Important Points - **Market Dynamics**: The report emphasizes that the recent pullback in stock prices is driven by macroeconomic factors rather than the companies' fundamental performance [8] - **Potential Risks**: Risks include faster-than-expected adoption of next-gen cooling technologies that could impact demand for existing products [7] This summary encapsulates the key points from the conference call, focusing on the industry context, company-specific developments, and investment outlook.

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.

Shanghai Electric has officially withdrawn its interest in buying Pakistani utility K-Electric, bringing to an end a nine-year pursuit https://t.co/3guuF7y8te ...