Core views

The company announced a plan to issue shares to purchase assets. It will issue shares to purchase 51% of Tianyue Coal's shares at a price of 1.29 yuan/share. The share issuance price is 17.27% premium over the closing price of the previous trading day, which helps protect the interests of small and medium-sized investors. Based on the evaluation of the underlying assets and transaction pricing, the transaction is expected to further increase the company's earnings per share level. The company recently received a syndicated loan credit of no more than 5 billion yuan, which can continue to provide cash support for the construction of the Haizetan project. Currently, the construction of the Haizetan project continues to advance. The company expects to start operation in June 2026, with coal production reaching 3 million tons; after full production in 2027, the coal production capacity will reach 10 million tons. In addition, the company estimates its 2025-2027 operating results based on its own business development and market conditions, and the company's net profit from 2025 to 2027 is estimated at 2.8 billion yuan, 3.8 billion yuan, and 5.8 billion yuan, respectively.

occurrences

Yongtai Energy announced plans to issue shares to purchase assets, business performance forecasts, etc. Recently, Yongtai Energy announced a plan to purchase assets by issuing shares. The company plans to purchase 51% of Tianyue Coal's shares by issuing shares. The share issuance price is 1.29 yuan/share, and the transaction price is tentatively not more than 0.35 billion yuan. At the same time, the company issued a business performance forecast announcement for 2025 to 2027 based on the current business layout and the construction and commissioning of the Haizoutan coal mine. The company's net profit from 2025 to 2027 is estimated to be 28, 38, and 5.8 billion yuan, respectively, and is expected to achieve net operating cash flows of 73, 85, and 12.2 billion yuan.

Brief review

Issuing shares to acquire coking coal assets is expected to increase the level of earnings per share. The target asset of Yongtai Energy's current purchase is 51% of Tianyue Coal's shares held by Xinyi Group. According to the asset purchase plan, Tianyue Coal's main business is coal mining and sales, which is consistent with the company's main business. By the end of 2023, Tianyue Coal had identified a total of 44.08 million tons of resources and a total of 28.3696 million tons of resources. The coal products produced were high-quality coking coal, with an approved production capacity of 0.6 million tons/year. At the same time, the Tianyue Coal Mining Area is adjacent to Yongtai Energy's two existing mining areas (Fengjiatan Mining Area and Dangdangling Mining Area). After the merger and acquisition is completed, the company can integrate and develop the three mining areas to take advantage of economies of scale. In terms of transaction price, the company will issue shares at a price of 1.29 yuan/share to purchase the underlying asset, with a 17.27% premium compared to the price on the day before the company suspended trading (1.10 yuan/share), which will help protect the rights of small and medium shareholders. The total transaction price is tentatively not more than 0.35 billion yuan. Based on the issue price, no more than 0.271 billion shares were issued in this transaction. According to the mining rights assessment report of the underlying asset (Tianyue Coal), the average annual net profit achieved by the underlying asset is about 0.134 billion yuan. Assuming that 0.271 billion additional shares are required for this asset purchase, the underlying asset's equivalent earnings per share is about 0.2511 yuan/share, which is higher than the company's 2023 earnings per share level (0.1020 yuan/share). Based on Yongtai Energy's business situation in 2023, this asset purchase can increase the company's earnings per share in 2023 from 0.1020 yuan to 0.1038 yuan, and the return on net assets from 5.01% to 5.14%. At the same time, according to estimates of listed companies, if the underlying assets are effectively integrated, the annual net profit is expected to exceed 1.0.6 billion yuan. Using this as a benchmark, the earnings per share of listed companies in 2023 will increase from 0.1020 yuan to 0.1044 yuan, and the return on net assets will increase from 5.01% to 5.17%.

The Haizetan coal mine is advancing at an accelerated pace, and syndicated credit provides financial support

The construction of the Haizetan Coal Mine, a key project of the company's coal-power integration goals, continues to advance. It is expected that the first working surface will be put into operation in June 2026, with coal production reaching 3 million tons; after full production is achieved in 2027, the coal production capacity will reach 10 million tons. After the Haizetan coal mine was put into operation and production capacity was fully released, according to preliminary estimates of the average coal price in the 2023 market, the company added about 9 billion yuan in annual revenue, about 4.4 billion yuan in net profit, and about 5.1 billion yuan in net operating cash flow. Furthermore, the company recently received a letter from the Jinzhong branch of Shanghai Pudong Development Bank Co., Ltd. and obtained a syndicated loan credit of no more than 5 billion yuan, which can continue to provide financial support for the commencement of the Haizetan coal mine project. The company estimated operating results from 2025 to 2027 based on the current business layout, Haizoutan coal mine construction and operation situation, and market conditions. The company's net profit from 2025 to 2027 is estimated to be 28, 38, and 5.8 billion yuan, respectively, and is expected to achieve net operating cash flows of 73, 85, and 12.2 billion yuan.

The coal-to-aluminum project has progressed, and the company's performance is expected to continue to grow. The “Buy” rating company was initially commissioned by the China Metallurgical Geology Third Bureau to conduct a subcoal aluminum geological survey of 8 mines including the Sendayuan coal mine. The total estimated bauxite resources are 0.116 billion tons. Based on a 60% extraction ratio, the amount that can be recovered is about 69.58 million tons, and the annual production capacity can reach 6.9 million tons. Under these circumstances, according to the company's estimates, the development of aluminum under coal can increase the company's revenue by more than 2.7 billion yuan and net profit by about 0.46 billion yuan. Currently, the company's coal and power businesses have achieved complementary operations, and the Haizetan Coal Mine continues to advance. We expect the company's net profit to be 2.561 billion yuan, 2.643 billion yuan, and 3.055 billion yuan respectively from 2024 to 2026, corresponding to EPS of 0.12 yuan/share, 0.12 yuan/share, and 0.14 yuan/share, giving a “buy” rating.