Analysis Report on the Mechanism of Controlled Nuclear Fusion Concept Stock Speculation's Impact on Valuation of A-Share Listed Companies

Based on the above data analysis, I will provide you with a

, and in-depth interpret the risk of divergence between hot concepts and actual business revenue reflected by the China First Heavy Industries case.

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Controlled nuclear fusion, known as the ‘ultimate energy dream of humanity’, has been included in the core areas of the national 15th Five-Year Plan. Recent technological breakthroughs include: the Institute of Plasma Physics, Hefei Institutes of Physical Science, Chinese Academy of Sciences announced that the Experimental Advanced Superconducting Tokamak (EAST) experiment confirmed the existence of the tokamak density free regime, providing important physical basis for high-density operation of magnetic confinement nuclear fusion devices[1][2]. At the international level, nearly 40 countries around the world are advancing fusion plans, with more than 160 fusion devices in operation, under construction, or planned[1].

On January 8, 2026, the controlled nuclear fusion concept sector index rose over 3% on heavy volume, hitting a new all-time high for the 4th consecutive trading day. Individual stocks performed actively; as of the close of trading that day, 10 stocks including Snowman Group, Aerospace Chenguang, China Nuclear Engineering Corporation, Parker New Materials hit the daily limit, while Hekang Xinneng, Harbin Welding Hua Tong, Tianli Composite Materials rose over 10%[1].

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The impact of concept stock speculation on valuation is transmitted through a multi-level mechanism, forming a complete cycle of ‘technological breakthrough - expectation formation - capital inflow - valuation bubble - performance falsification - valuation reversion’.

Transmission Phase	Driving Factors	Impact Mechanism	Valuation Change
Concept Initiation	Technological breakthrough news	Optimized long-term expectations	Valuation restoration
Capital Speculation	Inflow of hot money/retail investors	Capital-driven rise	Valuation expansion
Media Amplification	Research reports/media coverage	Concept generalization and diffusion	Valuation premium
Bubble Formation	Herd buying sentiment spreads	Deviation from fundamentals	Valuation bubble
Performance Falsification	Unrealized revenue	Expectations dashed	Valuation reversion

The market’s optimistic expectations for the long-term industrialization prospects of controlled nuclear fusion push up current valuations through the discount of long-term cash flows in the DCF model. The International Energy Agency (IEA) and the International Atomic Energy Agency (IAEA) predict that the global nuclear fusion market size is expected to reach USD 496.55 billion by 2030, and exceed USD 1 trillion by 2050[1]. This long-term market space is prematurely incorporated into current valuations, creating a situation where ‘valuation advances while technology has not yet been commercialized’.

Hot concepts attract concentrated short-term capital speculation, leading to capital-driven price increases. According to data analysis, the controlled nuclear fusion concept sector has seen continuous heavy volume and significant net capital inflows[1]. Short-term capital abundance brings a liquidity premium, lifting the overall valuation level.

Once a company is included in a concept index or marked as a concept stock by mainstream market data platforms, it passively gains capital attention. Although China First Heavy Industries’ main business is heavy machinery manufacturing with extremely low correlation to nuclear fusion, it received significant attention after being categorized as a ‘controlled nuclear fusion’ concept stock by the market[1][2].

After technological breakthrough news is amplified and disseminated by the media, it triggers investors’ ‘Fear of Missing Out’ (FOMO) sentiment. Investors rush to buy out of fear of missing out on price increases, forming a positive feedback loop[3].

During concept speculation, there is a significant shift in the weight of valuation drivers:

Valuation Factor	Normal Weight	Weight During Speculation	Change Range
Technological expectations	10%	30%	+200%
Capital conditions	15%	25%	+67%
Market sentiment	10%	20%	+100%
Policy support	10%	15%	+50%
Fundamentals	55%	10%	-82%

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Financial Indicator	Value	Industry Comparison	Evaluation
Net Profit Margin (TTM)	-38.05%	Industry average ~5%	Severe loss
ROE	-68.45%	Industry average ~8%	Severe underperformance
P/E	-10.22x	Meaningless due to loss	Negative earnings
Revenue Growth	Under pressure	Industry growth ~8%	Significantly lagging

Time Period	Increase	Market Ranking
Past 1 Year	+98.90%	Top 5%
Past 6 Months	+91.84%	Top 3%
Past 1 Month	+51.12%	Top 2%
Past 5 Days	+35.59%	Top 1%

Data shows that while China First Heavy Industries’ fundamentals continue to deteriorate (negative net profit, ROE of -68.45%), its stock price has surged nearly 100% in the past year and 51% in the past month, presenting a typical divergence pattern of ‘worse performance, higher stock price’[0].

• Stock price around RMB 3.21; the market began to associate it with the controlled nuclear fusion concept
• Business reality: Only undertook a very small number of related accessory project research

• Stock price broke through RMB 4, with consecutive daily limits
• Catalyzed by technological breakthrough news: EAST experiment confirmed the tokamak density free regime[2]
• Surge in trading volume: Average daily trading volume skyrocketed from the usual 140 million shares to over 500 million shares[0]

• The company issued a stock trading abnormal fluctuation announcement, clarifying that ‘related products have not yet generated revenue’[1]
• After 3 consecutive daily limit days, it continued to hit the daily limit on January 9
• The company reminded investors to pay attention to secondary market trading risks[1][2]

1. Business Relevance Confirmation
   : Although categorized as a ‘controlled nuclear fusion’ concept stock by the market, as of now, the company has only undertaken a very small number of related accessory projects[1][2]

2. Zero Revenue Contribution
   : Related products have not yet generated revenue

3. Main Business Status
   : Daily production and operation activities are normal; no major adjustments have been made to the main business, market environment, or industry policies[2]

4. Performance Risk Warning
   : The net profit attributable to shareholders of the listed company in Q3 2025 is negative[1][2]

Company	Nuclear Fusion Business Proportion	Stock Price Increase	Business Authenticity
China First Heavy Industries	~0%	+136%	No substantive revenue
Snowman Group	~3%	+85%	Has verified products
Western Materials	~5.2%	+62%	Obtained order qualifications
Hefei Forging Intelligent Equipment	~4.5%	+78%	Won RMB 200 million order

China First Heavy Industries’ nuclear fusion business proportion is close to zero, yet its stock price increase far outpaces that of other companies with substantive business, fully demonstrating the irrational characteristics of concept speculation.

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Price-to-Sales (P/S) and Price-to-Book (P/B) ratios are used for cross-validation:

Indicator	China First Heavy Industries	Industry Average	Divergence Degree
P/S	20.0x	1.5x	13.3x
P/B	7.03x	1.8x	3.9x

The company’s P/B ratio is as high as 7.03x, far exceeding the industry average of 1.8x, indicating that the market has granted a valuation premium severely mismatched with the actual profitability of its assets.

Risk Type	Risk Level	Risk Rating	Trigger Condition
Stock Price Volatility Risk	90/100	Extremely High	Sharp decline after consecutive daily limits
Valuation Bubble Risk	85/100	Extremely High	Concept fading
Performance Realization Risk	95/100	Extremely High	Annual/quarterly report disclosure
Concept Fading Risk	80/100	High	Sector rotation
Liquidity Risk	70/100	High	Main force selling

Cases of sharp declines after similar concept speculation in the A-share market are common:

Case	Increase During Speculation	Subsequent Decline	Speculation Logic
Antai Group	14 consecutive daily limits	“Plunged”	Pure concept speculation by hot money
Shangwei New Materials	1320% surge in 20 days	Sharp decline after regulatory attention	Restructuring expectations
Multiple ST Stocks	Over 700% increase in the year	Delisted	Betting on restructuring

These cases all confirm the principle that ‘speculation divorced from fundamentals will eventually return to value’[3].

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1. Regulatory Signals
   : The company frequently releases abnormal stock fluctuation or risk warning announcements, and the exchange takes regulatory measures against abnormal trading accounts[3]

2. Fundamental Divergence
   : Sustained losses but surging stock prices, a typical case of “severe deviation from company fundamentals”[3]

3. Concept Generalization
   : The company’s main business has extremely low relevance to the hot concept, and is only included in the concept sector due to its name or supplier relationship

4. Abnormal Liquidity
   : Trading volume surges sharply in the short term and then shrinks rapidly

Investor Type	Recommended Strategy	Risk Tolerance
Conservative	Stay away from pure concept speculation stocks; focus on high-quality fundamental targets	Low
Moderate	Allocate moderately to nuclear fusion concept stocks with substantive business	Medium
Aggressive	Control position size, set stop-loss, avoid chasing highs	High

It is recommended to focus on the following types of targets:

• Suppliers of materials and core components that have achieved domestic substitution
• Enterprises that have obtained international/domestic nuclear fusion project orders
• Enterprises with a certain proportion of business (recommended 5% or more)
• High technical barriers and scarcity

For companies with extremely low business proportion or no revenue generated yet, investors should remain highly vigilant to avoid being the last in the ‘musical chairs’ game.

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The impact of controlled nuclear fusion concept stock speculation on the valuation of A-share listed companies is essentially a

. The China First Heavy Industries case profoundly reveals the risk of severe divergence between hot concepts and actual business revenue:

1. Extremely High Divergence Degree
   : The company’s nuclear fusion business has not yet generated revenue, but its stock price has surged 136%
2. Deteriorating Fundamentals
   : Net profit margin of -38.05%, ROE of -68.45%, sustained losses
3. Significant Valuation Bubble
   : P/B ratio of 7.03x, 3.9 times the industry average
4. High Risk Accumulation
   : Faces valuation reversion pressure once the concept fades

Investors should bear in mind:

. In the current market environment, rational analysis of business substance and vigilance against concept speculation risks are more important than ever.

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[1] Securities Times - “Controlled Nuclear Fusion Concept Sparks Daily Limit Frenzy; Multiple Listed Companies Respond to Related Business Conditions” (https://www.stcn.com/article/detail/3580244.html)

[2] CLS - “Controlled Nuclear Fusion Concept Swings Higher; China First Heavy Industries and Other Stocks Hit Daily Limit” (https://www.cls.cn/detail/2250057)

[3] Eastmoney - “A Risk Lesson for Day Traders! Sustained Severe Losses, but Stock Prices Suddenly Surge” (https://caifuhao.eastmoney.com/news/20251213004814726458890)

[0] Jinling API Market Data (China First Heavy Industries real-time quotes, company profile, historical stock price data)