Want... State-run China National Nuclear Power Corporation (CNNPC) has been approved to launch a domestic IPO of over 16 billion yuan (US$2.57 billion), which could be China's largest in five years. As it will be the first nuclear power company to go public on the A-share market, CNNPC has been in the spotlight since submitting its IPO application to the government. Investors are gathering to see what to make of all the noise, according to the Beijing Business Today.
CNNPC is a state-run enterprise with its headquarters in Beijing's Xicheng district, where government and state-run enterprises such as the Ministry of Finance, the China Development and Reform Commission, and China Machinery Industry Construction Group cluster together.
The China National Nuclear Group (CNNG) controls 97% of the firm, with the remaining 3% stake shared by the China Three Gorges, China Ocean Shipping and an aerospace investment firm. Accordingly, CNNG will sustain an absolute majority of shareholdings in CNNPC after the latter goes public.
According to the prospectus released by CNNPC, all active nuclear power plants in China are operated by the company itself and CGN Power, which is affiliated with the China General Nuclear Power Group (CGN). Statistics compiled by the China Nuclear Energy Association showed that the nation's nuclear power generation amounted to 130.6 billion kilowatts in 2014, with 40.41% or 52.8 billion kilowatts generated by seven nuclear power plants operated by CNNPC. The remaining six active plants in China are operated by CGN.
In addition to CNNG and CGN, China Power Investment is emerging as the third player in the operation of nuclear plants. The company has also joined the construction of five new nuclear power plants, including plants in Zhejiang, Jiangsu, and Liaoning. The Haiyang Nuclear Power Station in Shandong, controlled by the company, was approved in 2009.
Through the IPO, CNNPC will amass 16.25 billion yuan (US$2.61 billion), with 7.05 billion (US$1.13 billion) to be used for replenishing liquid assets and the remaining used for supporting the construction of the Fuqing nuclear plant in Fujian province. In addition, funds will be funneled to phase-1 construction of the Sanmen plant in Zhejiang province, and the Changjiang and Tianwan plants in Hainan province.
As the said four nuclear power projects require a total budget of 154.4 billion yuan (US$25 billion), the funds raised by the CNNPC from the IPO are far from enough to support the budget. Accordingly, market insiders said that the CNNPC's IPO is not aimed at first-round fundraising, but is designed to pave the way for the securitization of nuclear power assets to secure the development of CNNPC's future business operations.
The 11th China Nuclear Energy Congress will open in Beijing on May 21, when China is expected to announce the renewal of nationwide nuclear power construction. Local securities firms share the view that, after four years of review by the government following Japan's Fukushima nuclear disaster in March 2011, a new nuclear power era has quietly arrived. Many nuclear concept stocks are poised to jump on this new development opportunity. As the only wholly nuclear power company listed on the A-share market, the CNNPC will stand to benefit the most.
Poster Comment:
Communist China making capitalism possible to enable citizens to earn income from industry rather than have to rely on food stamps for survival.