Main points of investment
Event: on February 21, 2022, Huaihe Energy released the preliminary Plan for absorbing and merging Huainan Mining (Group) Co., Ltd. According to the Plan, the company intends to absorb and merge Huainan Mining by issuing shares, convertible bonds (if any) and cash payments to Huaihe Holdings, China Cinda, Jianxin Investment, Guohua Investment, Bank of China assets, Jikai Group, Shanghai Electric Power, CLP Guorui and Huaibei Mining. The listed company is the absorbing merging party and Huainan Mining is the absorbed merging party. After the completion of this transaction, the listed company shall, as a surviving company, inherit and undertake all assets, liabilities, business, personnel and all other rights and obligations of Huainan Mining.
Comments:
Huainan mining core coal and power and other assets will be listed as a whole, and the production capacity of listed companies will be greatly expanded:
In terms of coal, according to the Huainan Mining Bond offering document, by the end of March 2021, the approved production capacity of the Group's in-production mines was 7610 million tons / year, including 9 main mines with an approved production capacity of 5610 million tons / year, and 3 Ordos mines in western Mongolia with an approved production capacity of 20 million tons. Considering that Dingji Mine (6 million tons) has been injected into the listing platform, it is expected that 70.1 million tons of coal mine capacity will be injected this time. In terms of electric power, by the end of March 2021, the total installed capacity of the group was 37.81 million kilowatts and the equity capacity was 1673 million kilowatts. Considering that the installed capacity of listed companies is 3.1554 million kilowatts, it is estimated that there will be 1357.46 kilowatts this time. Taken together, the coal production capacity of the listed companies is expected to increase by 1168.33%, and the electric power capacity may increase by 430.20%.
Listed company profit or thickening: according to the Huaihe Energy performance forecast, the company is expected to return to its mother net profit of 414-444 million yuan in 2021. According to the Huainan Mining announcement, the company achieved a net profit of 2.966 billion yuan in the first three quarters of 2021, with an annualized rate of 3.955 billion yuan. After the merger, it is estimated that the performance of listed companies will increase to 43.68-4.398 billion yuan, an increase of 891.14-955.75%.
After absorption and merger, a more complete industrial chain is expected to enhance the anti-cyclical ability of listed companies: at present, the main business of listed companies includes thermal power, railway transport and trade. after the completion of the transaction, the listed company will form a coal-gas (under construction)-electricity-transportation integrated industrial chain. A more complete industrial chain will help the company to enhance its competitiveness and resist the cycle.
Investment suggestion: do not consider absorption and merger for the time being, the company's net profit in 2021-2023 is expected to be 4.36cm 5.63 / 571 million yuan respectively, corresponding to EPS 0.11max 0.14max 0.15 for the first time to increase holdings-An investment rating.
Risk hint: transaction approval is not approved, transaction is suspended, coal price plummets.
