Overall plan

The company plans to spend 10.8 billion yuan (including issuing 1,427 million shares and 1.5 billion yuan in cash) to buy 100% of the shares of 12 international power companies and buy 45% of the shares of Xingrun Coal Jiao Linfen Mining; the issue price is 6.59 yuan/share. At the same time, the company plans to issue shares privately to no more than 10 specific investors, raising no more than 3 billion yuan, with an issue price of no less than 659 yuan/share: 1.5 billion yuan is the cash consideration of the target asset; 808 million yuan will be used to participate in 3 coal mines; and the remaining capital will be used to supplement working capital.

First step: Acquire the target assets, profit increase significantly, profit promises to ensure stable performance. The targets of this transaction are 4 coal mines (with equity production capacity of 4.78 million tons) and 12 coal railway trading companies. According to the profit promises of International Electric Power and Xingrun Coal Coke, the net profit of the acquisition for 14-16 was not less than 1,073 million yuan, 1,313 million yuan, and 1,363 million yuan. After the acquisition is completed, we expect the company to earn $0.56, $0.66, and $0.69 per share in 2014-16, an increase of 58%, 72%, and 65% respectively over the current period.

Step 2: Supporting financing to slightly dilute performance and reduce majority shareholders' shareholding ratio

Part of the capital from the ancillary financing is to participate in the distribution and marketing group Yangquan Company's three coal mines, with an equity production capacity of 1.38 million tons. After the ancillary financing, with reference to the company's performance promises, we expect the company's earnings per share for 2014-16 to be 5%, 6%, and 7% weaker, respectively, after the first step of the acquisition.

There is huge room for the company to inject assets in the future, but short-term injections are less likely

The listed company is the coal marketing platform for Coal Marketing Group, which plans to reach 106 million tons/year in 2015. However, since there are currently many substantive issues with mine asset ownership, licenses, etc., and the profitability of most coal mining companies is poor, we expect that coal mine assets will be less likely to be injected in the short term.

? Excluding acquisitions, the company's earnings per share for 13-15 years are expected to be 0.35 yuan, 0.37 yuan, and 0.39 yuan without taking into account the above acquisitions and supporting financing. The company's earnings per share in 14 years were 0.37 yuan, with a price-earnings ratio of 14 times; considering the completion of the acquisition and supporting financing, it is expected to earn 0.52 yuan per share in 14 years, with a price-earnings ratio of 9.2 times, which has a valuation advantage. Furthermore, given that the company has plenty of room for extension growth and the certainty of its performance is high, we gave a buying rating.

Risk warning: The progress and profit of asset injection are lower than expected.