The incident was announced by Shandong Mining Machinery on June 6. Following negotiations with Baishupo Coal Company (the company holds 51% of the shares), all parties agreed to transfer all of Baishupo Coal Company's shares at a price of 770 million yuan. At the same time, the company passed a board resolution to establish a joint venture with Pingmei Shenma Machinery Equipment Group in Pingdingshan, Henan. The company invested 100 million yuan, accounting for 44% of the registered capital. Comment on the transfer of shares in coal companies to solve the current policy restrictions: the company transferred 51% of Inner Mongolia Baishupo Coal Company's shares for 326.4 million yuan in June 2011 (the overall cost of the coal mine was 640 million yuan) to plan and carry out the construction of a 1.2 million tons/year mine. In August 2011, the Inner Mongolia Autonomous Region issued the “Approval of the Work Plan for Mergers and Reorganization of Coal Enterprises in Ordos City”, which determined that the minimum production scale standard for coal enterprises after mergers and restructuring is 3 million tons/year. However, if the company continues to acquire coal mines according to the above plan, it will need to raise a large amount of capital, and at the same time, it is not in line with the company's development strategy of using coal machines as its main business. Therefore, the company negotiated with other shareholders of Baishupo Coal Company and agreed to transfer 770 million yuan to Inner Mongolia Jinyue Energy Co., Ltd. According to the agreement, after deducting about 84 million yuan of various debts incurred by the coal company during the early construction process, it is estimated that the company can obtain a transfer of 349.86 million yuan based on 51% of the shares held by the company. After the company received the transfer price before June 30, 326.4 million yuan will still be deposited into the overfunded special account, and the premium portion of 23.46 million yuan is expected to be managed as its own funds. Overall, if the transfer was successfully completed, the company would have earned 7% of the revenue, but at the same time, it also paid management costs and other setbacks. Cooperate with Pingmei Shenma Machinery and Equipment to secure major customers: On March 13, the company announced the signing of a letter of intent to cooperate, and this time it has officially signed an agreement. The joint venture was tentatively named “Pingmei Shenma Machinery Equipment Group Henan Mining Machinery Co., Ltd.”, with a registered capital of 220 million yuan. Among them, Pingmei Shenma Machinery Equipment Group invested 51%, the company invested 44%, and the subsidiary's executives and core employees invested 5%. The business scope of the joint venture is supporting products (hydraulic supports, single hydraulic props, roof beams, etc.), and the two parties agreed to cooperate closely based on their respective advantages in technology, market, etc. According to the operating scale of the Pingmei Shenma Group (the 2012 coal production and sales plan is 53 million tons; the “12th Five-Year Plan” development target is to produce more than 100 million tons of coal), we estimate that its demand for hydraulic supports is around 500 million yuan a year. In the early stages of the joint venture's plant construction, it can become a sales channel for the company's hydraulic supports and other products; after production capacity is built, the company mainly received investment income and sales contributions such as spare parts. Return to the main battlefield: Due to the current fierce competition in the coal machine industry, the company is focusing more on the coal machine market in terms of business strategy. The focus is also on strategic cooperation with major customers (currently mainly Pingmei Shenma and Guizhou Power Energy) to change the situation where the number of customers is small and product profit margins are low. According to the investment proposal, we adjusted the company's profit forecast according to the company's agreement to transfer shares in Baishupo Coal Company. In 2012-2014, we achieved operating income of 2,025 million yuan, 2,404 million yuan, and 2,793 million yuan respectively, and realized net profit of 190 million yuan, 225 million yuan, and 258 million yuan respectively. According to the latest share capital, EPS corresponding to the latest share capital was 0.355 yuan, 0.421 yuan, and 0.483 yuan respectively (mainly excluding the coal business, and included premium income from the transfer in 2012. Non-operating income in yuan). The company's current stock price is 19 times that of 2012 PE, maintaining an investment rating of increased holdings.