After nearly a year of suspension, China Nuclear E&C Group has finally launched its IPO. According to China Securities Regulatory Commission (CSRC) on 13 May, the applies for the IPO of the nine enterprises, including China Nuclear E&C Group, have been approved in accordance with legal procedures.

The official website of China Nuclear E&C Group also published the news released by the CSRC on 16 May, which means that the Elite Troops of the Nuclear Power Construction is officially started its IPO and it would be the first A share of the nuclear power construction that enters the capital market this year.

According to the prospectus, the shares to be issued by China Nuclear E&C Group this time would be no more than 525 million, and the total share capital would be less than 2.625 billion. The fund raised from the IPO would mainly be used for constructing the nuclear power project, including the preparations for the nuclear power engineering constructions, project of purchasing construction equipments, research project of nuclear power engineer and nuclear engineering technologies, project of improving the company’s ability of informatization, and replenishing company’s operating funds.

China Nuclear E&C Group was set up by China Nuclear Engineering Group Corporation, together with China Cinda Asset Management Corporation, Aerospace Investment Holding Limited, China Reform Holdings Corporation, among which China Nuclear Engineering Group holds 79.2% of the joint venture, China Cinda Asset Management 14.85%, Aerospace Investment 4.95%, and China Reform Holdings Corporation 1%.

The major three business of China Nuclear E&C Group are the constructions of military engineering, nuclear power engineering, and the industry and civil engineering. In the field of nuclear power engineering construction in China, China Nuclear E&C Group is a giant with the highest professional integration services.

The Group has the absolutely dominant power in the market of nuclear island construction for the nuclear power plant, and it has contracted almost all the nuclear island constructions of the existed nuclear power units or the units under construction.

According to its official website, China Nuclear E&C Group has the constructing capacity of contracting 40 nuclear power units at the same time. Up until the end of 2015, it has contracted nuclear island and some conventional island constructions of 24 units in 11 nuclear power plants, including Hongyanhe Nuclear Power Plant of Liaoning Province, Taishan Nuclear power plant of Guangdong Province, Fuqing Nuclear Plant of Fujian Province, Sanmen Nuclear Plant of Zhejiang Province.

From 2013 to 2015, the net profits of China Nuclear E&C Group were RMB700 million, RMB733 million, and RMB913 million, respectively. With the expansion of the business, the debt scale of the Group has also increased.

According to the prospectus, the asset-liability ratios are 88.23%, 87.29% and 89.58%, respectively, from 2012 to 2014. And due to the financial pressure of the business expansion, China Nuclear E&C Group has always been very active in seeking listing among the recent years.

The prospectus of China Nuclear E&C Group was published on the website of CSRC as early as May 2014, but no further progress since then.

It was not until 22 May 2015 that the prospectus had been updated in the column of Disclosure in Advance on the official website of CSRC and it was approved by the Issuance Examination Commission of CSRC one month later.

According to the general listing process, China Nuclear E&C Group should be listed and traded within one month after it’s approved by the Commission. However, due to the stock market disaster of China, the Group cannot but postpone its listing date. 

It is widely believed that China needs to build 35GW more of the nuclear power before 2020 according to the requirements of country’s plan of nuclear power development, that is to say, in the next few years, there will be 5 to 6 units put into operation each year. The future market of the nuclear power construction is huge, which is absolutely good news for China Nuclear E&C Group.

In the recent years, many engineering enterprises began to cast their eyes on the nuclear island construction engineering and broke out the monopoly of China Nuclear E&C Group in the nuclear power market, and therefore the Group is facing the pressure of market competition.

In June 2013, Guangdong Power Engineering Corporation won the bidding of the nuclear island installation project of 5 and 6 units of Yangjiang Nuclear Power Plant and thus entered the core field of the nuclear power construction—nuclear island construction. Later, Zhejiang Thermal Power, the subsidiary of China Energy Engineering Corporation, contracted the nuclear island engineering of State Nuclear Power Technology Corporation (SNPTC) in 2014.

Considering the competition pressure of the future market, China Nuclear Engineering Group Corporation, parent company of China Nuclear E&C Group, hoped to rank itself amongst the proprietors of nuclear power and obtain bigger share of benefit.

Among the market of China’s nuclear power, there are only three nuclear power proprietors—China General Nuclear Power Group (CGN), China National Nuclear Corporation (CNNC), and State Power Investment Corporation (SPIC). These enterprises are license holders of nuclear power operation who can obtain the controlling interest among the project of nuclear power plant.

Recently, China Nuclear Engineering Group Corporation has been actively sought the nuclear power operation license. It is expected to be licensed by meeting the entry conditions of investor if the Regulations on Nuclear Power published.

As for the nuclear technology, CNEGC is focusing on the fourth-generation nuclear power technology—high temperature gas-cooled reactor (HTGR). The company now is very active in promoting the project of the high temperature gas cooled reactor with the capacity of 60 GW in Ruijin, Jiangxi Province, among which the phase one is planned to build two units with the installed capacity of 60 GW. The project, which was once thought to be first commercial fourth-generation nuclear power plant, was expected to go into operation in 2017.

According to an official of CNEGC, as China has been very cautious on the operation of inland nuclear power at present, there’s no timetable for restarting the project, and the commencement date of the project of high temperature gas cooled reactor may be postponed.

*This article is an edited and translated version by CCM. The original article comes from Jiemian.com.

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