A better-than-expected third-quarter report is pushing this nuclear power leader, CGN Power (01816), from a "defensive holding" toward a "trend leader."
According to ZhiTong Finance APP, on October 28, CGN Power released its 2026 third-quarter report, showing revenue and shareholder net profit for the first three quarters of 51.098 billion yuan and 9.603 billion yuan, up 3.98% and 12.75% year-on-year respectively. The third quarter performed even more strongly, with revenue and shareholder net profit of 19.615 billion yuan and 3.498 billion yuan, exceeding market expectations and rising 16.99% and 36.08% year-on-year respectively. Driven by the positive earnings, the company's share price opened higher and climbed further the next day, with H-shares rising over 6% at one point and A-shares gaining more than 7% intraday. By the close, A-shares and H-shares were up 7.22% and 3.48% respectively. In addition, the company's H-share price has risen for four consecutive years, with a cumulative gain of over 135%.
In fact, in 2026, AI computing power has pushed global electricity demand to a new level. The International Energy Agency (IEA) estimated in its "Energy and AI" report that by 2030, global data center electricity consumption will double to about 945 billion kilowatt-hours, slightly exceeding Japan's total electricity consumption. China's data center electricity consumption will climb from about 400 billion kilowatt-hours in 2024 to over 600 billion kilowatt-hours in 2026, approaching 6% of total social electricity consumption. Electricity has been pushed from a backstage "public utility" to the forefront of computing infrastructure. Can CGN Power's report card of sequentially rising growth rates sustain its bull market trend?
Both Revenue and Profit Rose, with Single-Quarter Profit Accelerating
From a quarterly performance perspective, CGN Power's Q1, Q2, and Q3 revenue grew -13.25%, 11.8%, and 16.99% respectively. Performance resumed growth starting in the second quarter, and profit grew in tandem, with profit margins continuing to improve. In the first three quarters of 2025, the shareholder net profit margin was 18.79%. Return on shareholder equity also showed a quarterly upward trend, but due to the overall low return level of heavy-asset investment, the annualized ROE for the first three quarters was 6.63%. Data source: financial report data and processing.
The company's earnings growth was mainly driven by the commercial operation of Huizhou Unit 1, Unit 2, and Cangnan Unit 1 in 2026. Huizhou Unit 1 entered commercial operation on April 19, Huizhou Unit 2 on August 3, and Cangnan Unit 1 on April 29. These three units happened to fall within the second and third quarter windows, successively entering operation and releasing electricity. In the first three quarters, the total on-grid electricity of nuclear power units managed by the company was 176.749 billion kilowatt-hours, up 2.65% year-on-year, of which subsidiary on-grid electricity was 141.491 billion kilowatt-hours, up 4.23% year-on-year.
Profit quality improved simultaneously. The company's gross margin for the first three quarters was 43.54%, up 3 percentage points year-on-year. Period expenses remained stable, R&D expenses grew 20%, and the R&D expense ratio was 2.08%. Cash flow was healthy, with net cash flow from operating activities in the first three quarters of 26.567 billion yuan, up 19.00% year-on-year. In 2023-2025, the company's net operating cash flow was 33.12 billion yuan, 37.506 billion yuan, and 29.971 billion yuan respectively, basically sufficient to cover investment and financing expenditure needs.
CGN Power has a relatively high debt ratio. As of September 2026, the asset-liability ratio reached 68%, of which the interest-bearing debt ratio was 51.38%. Structurally, short-term borrowings were 60.05 billion yuan, long-term borrowings were 249.536 billion yuan, while cash equivalents were only 24.288 billion yuan, indicating certain funding pressure. However, as a heavy-asset industry, the company's asset profitability level is far higher than its interest expense level. In the first three quarters, its financing cost was 3.848 billion yuan, accounting for 18% of operating profit.
Clear Growth Curve, Expected to Remain in an "Uptrend Channel"
CGN Power operates 30 nuclear power units, including the Daya Bay Nuclear Power Plant, Ling'ao Nuclear Power Plant, Lingdong Nuclear Power Plant, Yangjiang Nuclear Power Plant, Taishan Nuclear Power Plant, Huizhou Nuclear Power Plant, Fangchenggang Nuclear Power Plant, Ningde Nuclear Power Plant, and Cangnan Nuclear Power Plant from subsidiaries, as well as the Hongyanhe Nuclear Power Plant from an associate enterprise. The company's main business includes electricity sales and construction, installation, and design services, with electricity sales accounting for over 95%.
In the first nine months of 2026, the total on-grid electricity of nuclear power units managed by the company was approximately 176.749 billion kilowatt-hours, up 2.65% year-on-year, and subsidiary on-grid electricity was approximately 141.491 billion kilowatt-hours, up 4.23% year-on-year. In addition, the company's installed capacity of operating nuclear power units reached 35,450 megawatts, with 19 units under construction. In the third quarter, Huizhou Unit 5 and Unit 6 were approved by the State Council, and Zhaoyuan Unit 2 started full-scale construction.
On-grid electricity drives the company's earnings growth, while the maintenance schedule determines short-term electricity elasticity. In the third quarter, the company completed one annual refueling overhaul and one ten-year overhaul, while starting two new annual refueling overhauls and one ten-year overhaul. In the fourth quarter, it plans to carry out four more annual refueling overhauls. Overhauls are an unavoidable "regular checkup" for nuclear power companies. Concentrated maintenance in a single quarter will inevitably reduce part of the power generation, but it also secures full-capacity generation capability for the next cycle.
In addition, the company continues to expand through capital. In June, it acquired 46% equity of Cangnan Nuclear Power and 51% equity of Cangnan Second Nuclear Power from its controlling shareholder. Ningde Second Nuclear Power changed from a joint venture to a subsidiary starting January 5, with a 51% stake. For Lufeng Unit 3 and Unit 4, six parties including CATL (Zhaoqing), China First Heavy Industries, and Mingyang Smart Energy jointly contributed, with the company holding 70%, tying industry chain partners into the project company.
From an industry perspective, AI data centers, the spread of electric vehicles, climate warming, and manufacturing expansion are jointly pushing up electricity demand. In particular, AI development consumes large amounts of electricity, and nuclear energy is key to solving the power gap. Tech giants such as Meta, Google, and Amazon are investing nearly a trillion in capital expenditure for AI infrastructure, and nuclear energy is one of the key areas of focus. In the first half of the year, the country's cumulative installed power generation capacity was 4.04 billion kilowatts, up 10.8% year-on-year, of which nuclear power was 66 million kilowatts, up 8.6% year-on-year, accounting for only 1.63%, leaving substantial room for improvement.
From 2022 to 2026, China approved 8 to 11 units per year. In July 2026, the State Council executive meeting approved 8 nuclear power units at once: Zhejiang Jinqimen Phase II Units 3 and 4, Guangdong Taipingling Phase III Units 5 and 6, Liaoning Zhuanghe Phase I Units 1 and 2, and Shandong Laiyang Phase I Units 1 and 2. According to estimates by the China Nuclear Energy Association, from 2026 to 2030, China will put into operation 8, 7, 7, 5, and 7 units per year respectively, corresponding to installed capacity of 8.6GW, 8.1GW, 9.0GW, 6.2GW, and 8.6GW. This will be the certainty driving industry growth.
As an industry leader, CGN Power is undoubtedly one of the biggest beneficiaries. According to China Nuclear Energy Association data, as of the end of June 2026, China had 62 operating nuclear power units with about 66GW of installed capacity, while CGN Power alone manages 30 operating units, accounting for 44.47% of the country's total operating and under-construction nuclear power installed capacity. Moreover, the company is actively increasing market share through acquisitions and other means, and its domestic duopoly position with China National Nuclear Power is difficult to shake.
In the capital market, the company's H-shares have risen for four consecutive years, and market value has doubled, but valuation is not high. The AH premium is still as high as 39.2%, with a PE (TTM) of 13.8 times and PB of 1.1 times, so the valuation is not high. Moreover, most investment banks are bullish. Citi raised the company's net profit forecasts for 2026 to 2028 by 12% to 17%, with a target price of HK$3.8, a 55% increase from the previous target. BofA Securities said CGN Power's second-quarter performance beat expectations, maintained a positive view on its operations in the coming quarters, and raised its target price to HK$4, an 8% increase.
Overall, CGN Power's 2026 performance is strong, with both revenue and profit achieving double-digit growth for two consecutive quarters, profitability continuing to improve, and the company's on-grid electricity and installed capacity both maintaining stable growth trends. It is also continuously expanding through acquisitions and other means, solidifying its industry leadership. The AI infrastructure wave is driving nuclear power development. As a domestic nuclear power leader with low valuation and bullish investment banks, its market value is expected to remain in an uptrend channel.
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