Incidents:

On August 7, Yongtai Energy issued relevant announcements: (1) a plan to issue shares to purchase assets; (2) an announcement on progress in obtaining mining rights for the sub-coal aluminum project; (3) an announcement on the approval of the 5 billion yuan syndicated loan credit approval for the company's Shaanxi Yihua Mining Development Co., Ltd. and Haizetan coal mine project.

The specific reviews are as follows:

Investment highlights:

A plan to issue shares to purchase assets. The company plans to purchase 51.0095% of Tianyue Coal's shares through the issuance of shares. The transaction price is tentatively not more than 350 million yuan, and the issuance price is expected to be 1.29 yuan/share. After the transaction is completed, the listed companies will directly and indirectly hold a total of 63.2571% of Tianyue Coal's shares. High-quality coking coal resource reserves can be increased by 28.3696 million tons, and coking coal production capacity can be increased by 0.6 million tons/year. At the same time, the company's original Fengjiatan mining area and Dangdangling mining area will be connected to Tianyue Coal Mine, forming a “three continuous mine” geographical advantage.

Based on Tianyue Coal's average annual net profit of 133.5845 million yuan after merger, the PE acquisition is valued at about 5.1 times.

Notice on progress in obtaining mining rights for the aluminum under coal project: Eight mines including the Sendayuan coal mine were carried out, and reviewed by the Shanxi Geological Association in February 2024. The total estimated amount of bauxite resources is 0.116 billion tons. Based on a 60% extraction ratio, the amount that can be extracted is about 69.58 million tons. According to the assessed reserves, based on the current production capacity of the 8 mines and the estimated amount of resources that can be extracted from bauxite, the average mining period can be extended by more than 10 years.

Based on the current production capacity of the eight coal mines of 6.9 million tons/year, the production cost of aluminum under coal is about 300 yuan/ton, and the sales price of the same type of bauxite products in the surrounding area is estimated to increase the company's total revenue by more than 2.7 billion yuan and net profit by about 0.46 billion yuan each year after carrying out aluminum under coal development.

Announcement on approval of the 5 billion yuan syndicated loan credit approval for the subsidiary Shaanxi Yihua Mining Development Co., Ltd. and the Haizetan Coal Mine Project. As the lead bank of the syndicate, SPD Bank provides syndicated loans with a total size of not more than 5 billion yuan to Shaanxi Yihua Mining Development Co., Ltd., which belongs to the company, including:

SPD Bank granted the company an additional 2.5 billion yuan group credit lines, all of which were project lines, and the type of credit business was fixed asset loans. The syndicated loan credit approval was approved, which is conducive to speeding up the construction progress of the Haizetan project. The company is building the Haizetan Coal Mine, which has 1.145 billion tons of high-quality coal resources. The main types of coal are high-quality chemical coal (long-flame coal, non-stick coal and weakly sticky coal) and thermal coal, with an average calorific value of 6,500 kcal or more. The Haizetan Coal Mine has a total investment of 8.533 billion yuan (excluding mining rights fees). Construction of the first working surface is expected to be put into operation in June 2026. Production will reach 3 million tons in that year. 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 annual increase in revenue was about 9 billion yuan, the net profit was about 4.4 billion yuan, and the net operating cash flow was about 5.1 billion yuan.

Profit forecast and investment rating: We expect the company's revenue for 2024-2026 to be 33.06/33.83/35.43 billion yuan, respectively, +10%/+2%/+5%, and net profit to mother will be 2.428/2.754/3.295 billion yuan, respectively, +7%/+13%/+20%; EPS will be 0.11/0.12/0.15 yuan, respectively (based on the principle of prudence, the purchase of shares to be issued will not be included in the profit forecast), corresponding to the current stock price PE It is 11/10/8 times. Considering the company's high future growth, on the one hand, the Haizetan mine is expected to be put into operation, there is plenty of room for capacity growth, and the energy storage transformation project will start as scheduled, which is expected to inject new vitality into the company's performance growth and maintain the “gain” rating.

Risk warning: Risk of a sharp drop in coal market prices; risk of production safety accidents; risk of falling short of expectations in coal mine production; risk that vanadium batteries fall short of expectations; risk of power plant power generation falling short of expectations; risk of company management and operation; risk of not completing this acquisition; risk of not completing this acquisition; if stock prices are low for a long time, there may be risks associated with face value delisting.