Incident: On September 28, 2013, the company issued the “Report on Significant Asset Reorganization (Draft)” (hereinafter referred to as the “Draft)”). It plans to issue shares to International Power and pay cash to buy 100% of the shares of each of its 12 wholly-owned subsidiaries, issue shares from Xingrun Coking Coal to purchase 45% of its shares in Linfen Mining, and also plans to raise no more than 3 billion yuan in supporting capital from the non-public offering of shares to no more than 10 specific investors. The issue price will be adjusted from 6.79 yuan/share in the “Plan” to 6.59 yuan/share according to the 12-year profit distribution plan. Investment rating and valuation: Based on the share capital after issuance, the company's EPS in 13-15 is expected to be 0.36, 0.44, and 0.49 yuan/share, corresponding to 14PE 13 times lower than the industry's 21 times. If the supporting financing cannot be completed, it is estimated that the share capital will be changed to 2.80 billion shares after the additional issuance, and the EPS is expected to be 0.34, 0.43, and 0.47 yuan in 13-15. The company's original power generation business is operating steadily, and the growth of the power grid and gas business is relatively good, improving valuation. Most of the additional shares issued in this “Draft” will be used to acquire international power high-quality coal assets and railway trade assets, so 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, this transaction acquired PE about 13 times; the additional offer price was 6.59 yuan/share, which is more than a 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 to be carried out by changing from a “fixed increase” to a “fixed increase+cash acquisition” model, and the use of supporting capital reduced to no more than 3 billion yuan is clear. According to the “Plan”, the company plans to acquire 100% of the shares of each of the 12 wholly-owned subsidiaries of Kokusai Electric Power and no more than 4 billion yuan in ancillary financing. In order to guarantee Tongbao Energy's listing status and reserve space for continued injection of high-quality assets in the future, the “Draft” adjusts the restructuring plan, and the underlying assets will be acquired by issuing shares and paying 1.5 billion yuan in cash. There is still a supporting financing plan of 812 million yuan 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 will 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, Kokusai Electric Power will increase its shareholding ratio to 68.5%. The underlying asset transaction price is 10.90 billion yuan (after deducting the profit attributable to the Coal Marketing Group of 310 million yuan during the period of its trusteeship), corresponding to the issuance of additional shares of 1.43 billion shares, including 1.38 billion shares of International Power and 40 million shares of Xingrun Coal Coke. Assuming supporting financing of 3 billion yuan, corresponding to the issuance of 460 million 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%. Changes in the range of underlying assets and changes in the evaluation date have caused significant changes in the underlying asset appreciation rate. The “Plan” proposes to inject assets into the Yuxing coal industry. Due to resource integration, production capacity has increased dramatically, and relevant licenses have not been processed in a timely manner; Jinda Coal has property disputes with minority shareholders; and coal trading assets such as Xiaolong coal and coke transportation also do not meet the conditions for injection due to poor licensing, property rights disputes, etc. According to the “Plan”, the underlying asset had a book value of 6,494 billion yuan at the end of 2012, an estimated value of 12.01 billion yuan, and a value-added rate of 84.96%; after the current change in the scope of the underlying assets, the underlying asset book value was 4.28 billion yuan, the assessed value was 11.21 billion yuan, and the value-added rate was 162.06%, using July 31, 2013 as the benchmark date. Three companies, including Yankan Coal, which have invested in shares, are expected to increase the company's equity production capacity by 1,092 million tons. The company plans to acquire 24%, 20%, and 20% of the shares of the three coal companies in Yanji, Shangshe, and Shangshe Erjing of Yangquan, a coal marketing group. The above coal mines have total reserves of 340 million tons, recoverable reserves of 180 million tons, production capacity of 5.1 million tons, and the company's equity production capacity of 1.092 million tons. From January to July '13, three mines including Yankan contributed a total of 100 million yuan in net profit, reaching 72.7% for the full year of '12. The above equity acquisition depends on whether the supporting financing can be implemented. The “Profit Compensation Agreement” was signed a few days ago to further protect the interests of listed companies and existing shareholders. The company signed a “Profit Compensation Agreement” with International Electric Power on September 27, 2013, stipulating that if the target assets and the mining assets owned by Gui Electric Power do not reach the assessed value, the net operating profit of any fiscal year of 14-16 does not reach the assessed value, then International Power shall compensate the company based on the portion that has not been realized. In addition, the net profit attributable to owners of the parent company for 14-16 was not less than 10.2 billion, 12.6, and 1.31 billion yuan, respectively, by the International Electric Power Company, which promised to own the equity portion of the underlying asset. The catalyst for stock price performance: asset injection is faster than expected, coal prices are recovering, key hypothetical risks: demand is expected to be low, coal prices will continue to fall, electricity prices will drop