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Nuclear companies preparing to go public despite industry uncertainty

By Liang Fei (Global Times)

08:48, August 08, 2012

China Nuclear Engineering Corporation Ltd (CNEC), a subsidiary of State-owned China Nuclear Engineering Group, has started preparing for an initial public offering (IPO), the 21st Century Business Herald reported Tuesday.

If it is successful, it could become the first publicly listed company in the nuclear sector.

So far, CNEC has filed an application with the Beijing municipal securities authority, and is expected to file an IPO application to the China Securities Regulatory Commission (CSRC) in October, said the report.

Recent media reports said that another State-owned nuclear company, China National Nuclear Corp, is also planning a public offering on the Shanghai Stock Exchange, in the hope of raising some 16 billion yuan ($2.5 billion).

The 21st Century Business Herald report said the potential public offerings of the two companies may indicate that investment in the domestic nuclear sector has been "restarted," citing a company source close to the matter.

But experts noted that it might not be such good timing for nuclear companies to embrace the capital market just now.

"The government has not yet issued clear policies to boost investment in the nuclear sector, and the general public is also doubtful about the safety of nuclear power," Lin Boqiang, director of the Center for Energy Economics Research at Xiamen University, told the Global Times.

The National Development and Reform Commission set a target in 2007 that China's installed nuclear power capacity should reach 40 million kilowatts by 2020. A research note from Haitong Securities last month said that the government may readjust the target to some 70 million kilowatts.

However, Lin expressed doubts about this. "Further development in the nuclear sector is surely expected, but it is not very likely to happen very soon," he said, noting that development of the sector still remains uncertain.

Currently China has total installed nuclear power capacity of 12.4 million kilowatts and there are another 31.6 million kilowatts under construction.

"Total electricity consumption in China is slowing down, which has affected the performance of stocks in the new-energy sector. So investors will not be very enthusiastic about nuclear power stocks," said Li Weidong, research director at ChinaVenture Investment Consulting Group.

Li said that after CNEC files its application to the CSRC, six months or so will be needed to complete the whole IPO preparation process, but when the company will float still depends on market conditions.

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