The Zhitong Finance App learned that CITIC Securities released a research report saying that in 2023, as the “first year” of controlled nuclear fusion development in China, as high-temperature superconductivity technology continues to break through, it is expected that ignition conditions for magnetic-restrained fusion devices will be greatly improved. 2024 may usher in centralized project bidding, which will benefit core component manufacturers such as high-temperature superconducting magnets, polarizers, vacuum chambers, and radio frequency power supplies; for more mature third-generation nuclear power units, 2024 is expected to usher in a centralized component delivery and verification period, which will benefit core component manufacturers and core components with continuous and stable approval guarantees Continued performance In addition, after the commercial operation of the fourth generation of nuclear power units is completed, subsequent developments are also worth looking forward to. It is recommended to focus on suppliers of core components for nuclear fusion and nuclear fission.

Incidents:

Recently, Guoneng's nuclear energy industry has been developing at an accelerated pace. In the field of fusion, on December 29, 2023, CNNC led the formal establishment of a controlled nuclear fusion innovation consortium composed of 25 state-owned enterprises, research institutes, universities, etc., to promote the establishment of a company specialized in controlled nuclear fusion. In the field of fission, after review by the Executive Meeting of the State Council on December 29, 2023, it was decided to approve units 1 and 2 of the Jinqimen Nuclear Power Project and units 3 and 4 of the Taipingling Nuclear Power Phase II Project. So far, 10 nuclear fission units have been approved, which is the same number approved in 2022.

▍ The main views of CITIC Securities are as follows:

Establish the “ultimate” energy position, and continue to make breakthroughs in controlled nuclear fusion.

2023 is the “first year” of domestic controllable nuclear fusion. The State Council's State-owned Assets Administration Commission launched a future industrial launch operation, clarifying that the field of controlled nuclear fusion is the only direction for future energy. With technological breakthrough+capital support, domestic controllable nuclear fusion projects have been implemented at an accelerated pace. Among them, in the second half of 2023, entities such as Singularity Energy, Star Ring Concentration, New Fusion Energy, Xinao Group, and the Southwest Nuclear Research Institute have successively announced investments in the construction of fusion devices. In particular, the Southwest Nuclear Research Institute has always led the development of the nuclear fusion industry.

In August 2023, the new-generation artificial solar “China Circulator No. 3” achieved high restraint operation under 1 million amperes of plasma current for the first time, once again breaking the operation record of China's magnetically constrained fusion device. On November 12, 2023, the South Nuclear Research Institute and Jiangxi Lianchuang Optoelectronics Superconductors signed a cooperation agreement to jointly build the fusion/fission hybrid test reactor project. The total project investment is expected to exceed 20 billion yuan, and the technical target Q value is greater than 30. It is currently the fusion device with the most advanced parameters planned to be built in China.

Overseas, the JT-60SA, the world's newest and largest nuclear fusion reactor, was successfully ignited at the end of October 2023, and the world's largest “artificial sun” (ITER) magnet support product was delivered in Guangzhou in early November 2023. It is expected that with the continuous iteration and support of technology, the release of core components represented by high-temperature superconductivity is expected to accelerate.

High-temperature superconductivity enables controlled nuclear fusion, and other core components are becoming more mature.

Currently, mainstream controllable nuclear fusion devices use magnetic restraint routes and rely on relatively mature tokmack devices to achieve fusion reactions. Among them, superconducting magnets, first walls, deflectors, cladding, power supply systems, and cooling systems are core components. In recent years, the industrialization of second-generation high-temperature superconducting strips (YBCO) has continued to advance, breaking through the upper field strength limit of low-temperature superconducting magnets in terms of material properties. It is expected that the “triple product” of fusion (temperature, restraint time, plasma density) can be greatly increased to meet the ignition conditions of fusion devices. At the same time, according to International Atomic Energy Agency data, the value of magnets in Tokmark devices using high-temperature superconducting magnets accounts for more than 40%, which is expected to accelerate the release of high-temperature superconducting strips and magnets.

In addition, in recent years, domestic parts companies have continuously received recognition from key overseas projects in terms of product quality, customer responsiveness, and R&D capabilities. While accelerating overseas business, they are actively participating in the construction of domestic fusion projects. It is expected that the planned projects to be built in 2024 are expected to accelerate the launch of core component bidding, which is expected to drive large-scale orders for companies related to filters, cladding, RF power supplies, vacuum chambers, etc.

Approval projects for third-generation nuclear power units continue to be implemented, and commercialization of fourth-generation reactors is expected to accelerate.

Since 2022, domestic nuclear power unit projects have been approved at an accelerated pace. Among them, 10 nuclear power units were approved in 2022 and 2023, respectively, reaching a record high in the past ten years. At the same time, the capacity of single units all exceeded 1,200 MW. This reflects the importance that the country attaches to the development of the nuclear power industry. It is expected that the average number of nuclear power units approved per year will reach about 10 units in the next 3-5 years.

On the technical route, as of mid-2023, more than 20 pressurized water reactors account for nearly 80% of the units under construction. At the same time, the domestic “Hualong 1” units have entered the batch construction stage. Among them, the CNNC Jinqimen nuclear power project, which was newly approved at the end of 2023, is the fourth nuclear power base in Zhejiang Province. The 6 nuclear power units planned for construction will all use internationally advanced “Hualong 1” technology.

In terms of fourth-generation reactors, on December 6, 2023, the world's first modular high-temperature air-cooled nuclear power plant was put into commercial operation. In June of the same year, the 2MWt liquid fuel thorium-based molten salt test reactor in Gansu Province obtained a national operating license, marking that China's fourth-generation nuclear power technology has reached the world's leading level. With higher power generation efficiency and greater stability, fourth-generation nuclear power units are expected to accelerate commercialization.

Approval and construction are progressing at an accelerated pace, and related parts manufacturers are about to launch.

Nuclear power unit components are expected to be delivered centrally in 2024. According to statistics from the China Nuclear Energy Industry Association, it often takes 6-8 years for a single nuclear power unit from approval to commencement of construction to operation, but the bidding-delivery-acceptance period for component companies is generally 3-5 years, so it is expected that the centralized delivery and acceptance of equipment will be carried out in 2024 for the six nuclear power units that were centrally built before 2020.

According to data from the China Nuclear Energy Industry Association, 54 domestic nuclear power main equipment units were delivered in 2022, of which 17 steam generators were delivered, accounting for more than 30%. It is one of the most valuable investments in nuclear power unit equipment. On the premise that the number of approved units remains stable, core spare parts companies such as pressure vessels, special motors, valves, steam generators, and fuel transport containers may usher in a period of performance harvest.

Investment Strategy:

1) Controlled nuclear fusion: 2023 is the “first year” of domestic controlled nuclear fusion development. As high-temperature superconducting technology continues to break through, it is expected that ignition conditions for magnetically constrained fusion devices will be greatly improved. 2024 may usher in centralized bidding for the project.

2) Third and fourth generation nuclear power units: 2024 is expected to usher in a centralized delivery and verification period for nuclear power unit core components companies, which will benefit the continuous volume of orders and performance of core component suppliers under continuous and stable approval guarantees.

Risk Factors:

The development of controlled nuclear fusion research fell short of expectations, cost reductions fell short of expectations, policy progress fell short of expectations, nuclear power plant construction progress fell short of expectations, and the expansion of high-temperature superconducting strip production capacity fell short of expectations.