LMT in Chinese Nuclear Plant Pact - Analyst Blog


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Lockheed Martin Corporation ( LMT ) and China-based State Nuclear Power Automation System Engineering Company ("SNPAS") have agreed to assist the Chinese authority in manufacturing Generation III nuclear power plant reactors. The companies will also ensure safety to the operations at the nuclear power plant. The terms of the agreement were not disclosed.

The growing economy of China has a huge demand for electricity with the demand rising every passing year. To cope with the dragon's energy demands Chinese authorities are focusing on the generation of power from nuclear sources besides traditional fossil fuel sources.

Unprecedented industrial development in the last couple of decades has had its side effects in China. Enormous power generation from fossil power plants resulted in  massive green house gas emissions. A recent report from International Energy Agency (IEA) pointed out that the green house release from China more or less negated the emission decline in Europe and the US in 2012.

In such a backdrop, the nuclear power plants would be a blessing for given as these release far less green house gas than fossil fuel units. These will also benefit the cost-side of companies as power generation in nuclear plants is less expensive. However, operational safety of nuclear power plants remains a challenge.

Consistent monitoring, safety checks and planned outages are required for the smooth running of the power plants. Lockheed's Nuclear Systems and Solutions business comes into the picture with its advanced products and solutions for the current and next-generation civilian nuclear systems. Lockheed's advance systems will autonomously and reliably monitor and detect likely failures in the nuclear system, ensuring safety at the facility.

With the Japanese nuclear plant accident still fresh in our memory, we believe ensuring safety in operation is a priority at the nuclear power plants. In the drive to multiply power generation and keep green house gas emissions under strict control, nuclear energy could play a vital role ahead.

Lockheed currently has a Zacks Rank # 3 (Hold) and generates the majority of its revenues from defense deals. Defense operators that are performing well include  Northrop Grumman Corporation ( NOC ), Wesco Aircraft Holdings, Inc. ( WAIR ) and Safran SA ( SAFRY ). Northrop and Wesco presently carry a Zacks Rank #2 (Buy) and Safran has a Zacks Rank # 1 (Strong Buy).

Based in Bethesda, Maryland, Lockheed Martin is a global security company that is principally engaged in the research, design, development, manufacture, integration and sustainment of advanced technology systems, products and services.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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