CGN Power to take over 61.6% of China's nuke power capacity by end-2014

Thanks to strong new capacity pipeline.

CGN Power is the largest nuclear power company in China, and it is expected that the company will account for 61.6% of total nuclear power capacity in China by end-2014F.

According to a research note from Nomura, the company is the only listed pure nuclear power play not only in China but around the world.

With its strong new capacity pipeline ahead, they think CGN Power will be able to enjoy its advantageous position in the nuclear power industry domestically, at least in the near future.

Nomura also said it is confident in CGN Power’s management, as team members have on average 20-30 years of extensive experience in the sector and CGN Power has a partnership with strong corporate governance company CLP Holdings through the Daya Bay project.

Compared to CNNC, Nomura believes CGN Power possesses stronger financial and operating data, in terms of profitability, return, gearing, etc.

Here's more from Nomura:

High entry barriers for nuclear power business in China a positive for CGN Power. Given the nature of the nuclear power business, there are high entry barriers for conducting nuclear power generation business in China, in terms of licensing, technology and capital requirements.

In China, the only companies with the necessary licences to hold dominant stakes in nuclear power projects in China are CNNC, China Power Investment Corporation (CPI) and CGN Power; whereas the other China IPPs and foreign investors could only hold minority interests.

From a technology perspective, nuclear power requires stringent and highly technological requirements which CGN Power is already in possession of, given its self-reliant innovation and research on its new reactor type.

We also believe its state-owned enterprise status provides the company with better and more financing channels under this capital-intensive business.