Coastal market power prices are returning to an upcycle, which is expected to drive a recovery turning point in nuclear power company earnings, while the growth value of nuclear power assets will continue to be realized amid a peak period of new unit commissioning. The industry's earnings and valuation bottom is now relatively clear, according to a research report cited by market media.
The report expects nuclear power to emerge from the power price downcycle of 2024-2026. The commissioning cycle for nuclear power units under construction is beginning, and rising volumes and prices together will help nuclear power companies enter a new round of earnings release. The market has not yet fully priced in the earnings catalyst from higher power prices for nuclear power companies, and the sector's valuation still offers a strong margin of safety, the report's main views said.
From 2024 to 2026, nuclear power prices followed coastal market power prices lower. The share of market-based nuclear power transactions has exceeded 50%, and market supply and demand has become the core factor affecting nuclear power on-grid tariffs. From 2024 to 2026, power supply and demand in the southeastern coastal provinces and municipalities is generally trending looser, with prices falling notably in representative coastal provinces such as Guangdong, Jiangsu and Zhejiang. Nuclear power sales prices moved in line with the industry trend. According to company announcements, in 2025 the average nuclear power sales prices of China National Nuclear Power and China General Nuclear Power fell by 0.02 yuan/kWh and 0.04 yuan/kWh, respectively, from their 2023 highs.
Nuclear power earnings are highly sensitive to power prices, and prices are now shifting from decline to rise. Earnings at nuclear power enterprises are extremely sensitive to power price fluctuations, and the report estimates that a 1% change in power prices would lead to a roughly 3% change in net profit for nuclear power companies. Hit by falling power prices, China General Nuclear Power's net profit fell 9.9% in 2025, while China National Nuclear Power's net profit fell 35.7% in the first half of 2026.
Continued gains in thermal coal prices and slower release of new capacity support a stabilization and rebound in coastal long-term contract power prices in 2027, and will also drive a marginal improvement in nuclear power on-grid tariffs.
Nuclear power earnings are returning to an upcycle, and the market will subsequently price in the impact of higher power prices. Considering the positive impact of the coming power price turning point, the report raised its earnings forecasts for nuclear power companies. Its forecasts for the two nuclear power companies' net profit attributable to parent-company shareholders for 2027-2028 exceed Wind market consensus by 5% to 13%. The report believes the market has not yet fully priced in the positive impact of higher power prices, and that this impact will be gradually incorporated going forward.
At present, the valuation levels of nuclear power operators remain at historical low-to-mid percentiles, offering a strong margin of safety. Against the backdrop of marginal improvement in market power prices, the current market capitalization level has not yet fully reflected the growth value of nuclear power operators, giving the sector strong allocation appeal.
Risk factors include nuclear power unit commissioning progress falling short of expectations, unit outage maintenance times exceeding expectations, slower-than-expected progress in implementing mechanism-based power price policies, market-based power prices falling short of expectations, and major accidents at nuclear power units.
Comments