Incident: On September 28, 2013, the company issued the “Major Asset Reorganization Report (Draft)” (hereinafter referred to as the “Draft)” (hereinafter referred to as the “Draft)” (hereinafter referred to as the “Draft)”. It plans to purchase 100% of its shares in each of its 12 wholly-owned subsidiaries by issuing shares from Xingrun Coking Coal, and to raise no more than 3 billion yuan in supporting capital from the non-public offering of shares from no more than 10 specific investors. The issue price will be adjusted from 6.79 yuan/share to 6.59 yuan/share according to the 12-year profit distribution plan in the “Plan”. Investment rating and valuation: Based on the share capital after the issuance, the company's EPS is estimated to be 0.36, 0.44, and 0.49 yuan/share in 13-15 years, corresponding to 14PE 13 times lower than the industry 21 times. If supporting financing cannot be completed, the share capital is expected to be changed to 2.8 billion shares after the issuance, and the EPSs are expected to be 0.34, 0.43, and 0.47 yuan for 13-15 years. The company's original power generation business is operating steadily, and the power grid and gas business are growing well, increasing valuation. Most of the additional shares issued in the “Draft” will be used to acquire high-quality coal assets for international electricity and railway trade assets, and there is plenty of room for imagination to continue to inject assets into the future. According to estimates of net profit attributable to the parent company in 2014, the transaction acquired PE about 13 times; the additional price was 6.59 yuan/share, which is more than 10% premium over the company's current stock price of 5.97 yuan/share. The company's valuation has a high margin of safety, and we maintain a “buy” rating. The target asset injection is proposed to be carried out from a “fixed increase” to a “fixed increase+cash acquisition” model, and the supporting capital will be reduced to no more than 3 billion yuan for clear purposes. According to the “Plan”, the company plans to acquire 100% of the shares of each of the 12 wholly-owned subsidiaries under International Electric Power and no more than 4 billion yuan in supporting financing. In order to guarantee the listing status of Tongbao Energy and reserve space for continuing to inject high-quality assets in the future, the “Draft” adjusts the restructuring plan and will acquire the underlying assets by issuing shares and paying 1.5 billion yuan in cash. There is still a plan of 0.812 billion in supporting financing to acquire shares in 3 coal mines including the coal marketing group Yankan, and the remaining capital will be used to supplement working capital. The successful issuance of supporting financing does not affect the implementation of the current issuance of shares and payment of cash to purchase assets. After the transaction is completed, the majority shareholder International Electric Power's shareholding ratio will increase to 68.5%. The underlying asset transaction price was 10.9 billion yuan (after deducting 0.31 billion yuan of profit attributable to the Coal Marketing Group during the period it was managed), corresponding to the issuance of 1.43 billion additional shares, including 1.38 billion shares of International Electric Power and 0.04 billion shares of Xingrun Coal Coke. Assuming 3 billion yuan of supporting financing, corresponding to the issuance of 0.46 billion additional shares, the total number of additional shares issued will reach 1.88 billion shares, and the total share capital of listed companies will reach 3.03 billion shares. It is estimated that the shareholding ratio of the majority shareholders will increase from 60.46% to 68.55%.