CITIC SEC has released a research report stating that AI demand is triggering a comprehensive global revival of the nuclear power industry, while domestic nuclear power in China has entered a period of normalized approvals and a peak in construction. The overall valuation of the nuclear power sector remains relatively low. Against the backdrop of orderly development of conventional third-generation nuclear power, advanced reactors represent a high-growth direction for the industry. Small modular reactors (SMRs) are expected to become one of the optimal solutions for powering data centers and for electricity export, driving a valuation reassessment for the nuclear power sector. For investment direction, the firm suggests focusing on companies involved in nuclear island equipment, valves, special materials, and main pumps.
The main viewpoints of CITIC SEC are as follows: Advanced nuclear reactors refer to fourth-generation reactors and small modular reactors. According to the MIT Technology Review, advanced nuclear reactors are the most critical technological carriers for achieving next-generation nuclear energy, typically encompassing fourth-generation reactors and SMRs. Among these, SMRs offer advantages such as faster construction, lower investment, higher safety, and flexible siting. The International Energy Agency forecasts that under ideal conditions, cumulative investment in SMRs could reach $670 billion by 2050.
SMRs are one of the optimal solutions for powering data centers and for electricity export. According to the International Atomic Energy Agency's definition, SMRs have an installed capacity below 300MW. IBM's official website notes that the power range of SMRs aligns well with that of data centers. SMRs can be manufactured in controlled factory environments and deployed within 12 to 24 months, significantly reducing capital risk. Furthermore, the refueling cycle for SMRs is generally between 5 to 10 years or longer, avoiding dependence on fossil fuel supply chains, which holds significant importance for certain countries.
SMRs are transitioning from a thematic expectation to a catalyst driven by tangible industrial progress. The firm believes the current landscape is characterized by several factors: first, policy objectives are shifting from a carbon neutrality narrative towards narratives centered on energy security and computing power assurance; second, regulatory systems are beginning to establish dedicated pathways for advanced reactors and SMRs; third, the first batch of demonstration projects are moving from planning to construction, cold testing, licensing, and building; fourth, government funding, capital from tech giants, and industrial investment are beginning to converge, indicating substantial progress within the industry.
Catalysts should focus on "milestones for the first domestic reactor + progress/orders for overseas projects." The investment strategy should differentiate between light-water reactors and fourth-generation SMRs. The firm anticipates that by mid-2026, focus will be on power purchase agreements, licensing, and financing closure, while by year-end, attention will shift to construction progress and customers converting to firm contracts.
The firm assesses that for light-water SMRs, nuclear island main equipment, nuclear-grade valves, and special materials are particularly important. For sodium-cooled fast reactors, key components include main pumps, control rod drive mechanisms, sodium valves, heat exchangers, and materials like 316H/nuclear-grade sodium. For high-temperature gas-cooled reactors, focus areas are main helium blowers, hot gas ducts, and valves. For thorium-based molten salt reactors, attention should be on corrosion-resistant materials, containers, and specialized safety systems.
Risk factors include the risk of major safety incidents in the nuclear power sector, delays in nuclear power project construction, significant price fluctuations in raw materials, and risks that the commercial development of advanced reactors may fall short of expectations.
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