China Expected to Resume Nuclear Projects, But at a Slower Rate

Some experts believe China will resume approving nuclear energy projects at some point later this year, albeit at a reduced rate than it had previously.  The country had suspended approvals on any new nuclear power stations after widespread international safety concerns arose about nuclear power in the wake of the March 2011 tsunami, which triggered a leak at the Fukushima nuclear plant in Japan.  During that time, all power stations, including those under construction, were thoroughly scrutinized for any and all safety concerns, reported government sources.

However, though projects are expected to resume, they will likely not resume at what was their preexisting pace.  The country will likely only approve about 3 or 4 new plants per year for at least the next few years.  During its 11th Five-Year Plan of 2005-2010, China had been accelerating the development of nuclear power stations, with a peak of 14 approvals in 2008, with another six the following year.  Last year, not one new nuclear station began construction, though there were six preapproved projects that were awaiting construction before the Fukushima incident.  Nonetheless, Chinese government expect a book in nuclear energy coming before 2015

The country is likely to implement newer, third generation nuclear technology (labeled 3G) because of their improved safety considerations for all new projects, and may even force existing projects who were approved with second generation to technology to upgrade. The country introduced AP 1000 3G nuclear technology in 2007 through its State Nuclear Power Technology Group; construction on the first such reactor began in 2009.

Thus far all the AP 1000 3G reactors under construction have an indigenous component rate of about 55 percent, meaning that a significant portion of its building material is not localized.  The country is also developing a new nuclear reactor, called the CAP 1400.

These stocks have an opportunity to benefit from the changes:

Cameco Corp. (NYSE:CCJ): CCJ shares recently traded at $23.66, up $0.39, or 1.68%. They have traded in a 52-week range of $16.59 to $44.81. Volume today was 1,068,063 shares versus a 3-month average volume of 2,495,900 shares. The company’s trailing P/E is 24.19, while trailing earnings are $0.98 per share.

Uranium Energy Corp. (AMEX:UEC): UEC shares recently traded at $3.95, up $0.35, or 9.72%. They have traded in a 52-week range of $2.20 to $7.08. Volume today was 486,017 shares versus a 3-month average volume of 447,035 shares. The company’s trailing earnings are $-0.33 per share.

Rio Tinto Plc (NYSE:RIO): RIO shares recently traded at $62.32, up $1.86, or 3.08%. They have traded in a 52-week range of $40.50 to $76.67. Volume today was 3,367,260 shares versus a 3-month average volume of 3,575,920 shares. The company’s trailing P/E is 7.64, while trailing earnings are $8.16 per share.

BHP Billiton Ltd. (NYSE:BHP): BHP shares recently traded at $81.22, up $1.78, or 2.24%. They have traded in a 52-week range of $62.54 to $104.59. Volume today was 2,594,894 shares versus a 3-month average volume of 3,217,080 shares. The company’s trailing P/E is 9.51, while trailing earnings are $8.54 per share.

To contact the reporter on this story: Jonathan Morris at staff.writers@wallstcheatsheet.com

To contact the editor responsible for this story: Damien Hoffman at editors@wallstcheatsheet.com