Huaibei Mining Holdings Co.Ltd(600985) (600985)
1、 Event overview
On December 27, 2021, the company announced that it planned to jointly invest with related parties to establish Huaibei Mining Holdings Co.Ltd(600985) Green Chemical New Materials Research Institute Co., Ltd. (tentative name, hereinafter referred to as “Chemical Research Institute”).
2、 Analysis and judgment
Under the goal of “double carbon”, the transformation of the company is started
According to the announcement, the establishment of Chemical Research Institute is mainly used to carry out the technical development of new materials, new energy and green chemical industry; Hydrogen energy, carbon capture and conversion, research and development and utilization of polymer materials and graphene materials; Research, development and utilization of products, processes and catalysts in the field of coal chemical industry, Shanghai Chlor-Alkali Chemical Co.Ltd(600618) and its industrial chain extension. The establishment of Chemical Research Institute will promote the transformation of the company’s chemical industry to new materials and new energy.
The chemical industry chain was further extended by issuing convertible bonds to invest in methanol comprehensive utilization projects
The company plans to raise 3 billion yuan in the form of convertible bonds to invest in the construction of methanol comprehensive utilization project (600000 tons of ethanol project) and repay the company’s debts. After the project is put into operation, the company can extend the existing coal to methanol production line and extend the terminal products from methanol to ethanol. The company’s chemical industry chain is expected to be further extended to achieve high-quality development.
Expansion of coal growth potential
According to the company’s announcement on September 17, the company’s 3 million T / a Xinhu coal mine was officially put into operation, and the company’s capacity in property rights increased by about 2.04 million T / A. It is expected that the mine can continue to contribute to the output increment in 2022. In addition, the taohutu coal mine project proposed by Chengda mining, a subsidiary of the company, has a construction scale of 8 million tons / year, and has purchased the capacity replacement index. At the same time, according to the company’s announcement on December 11, the company signed a package agreement with other shareholders of Chengda mining, Huaikuang investment (a wholly-owned subsidiary) and Chery holdings reached an agreement on the equity transfer price of Chengda mining, which is conducive to accelerating the construction of taohutu mine field project. Although the company’s Zhuzhuang Coal Mine may be shut down during the 14th Five Year Plan period, the construction of taohutu project is expected to further increase the potential of the company’s main coal industry.
3、 Investment advice
It is estimated that the net profit attributable to the parent company from 2021 to 2023 will be RMB 4.892 billion, RMB 4.529 billion and RMB 4.919 billion, equivalent to EPS of 1.97/1.83/1.98 respectively, and the corresponding PE will be 6 times (calculated based on the stock price on December 28, 2021). It will be covered for the first time and given a “recommended” rating.
4、 Risk tips:
The coal price fell more than expected, the profit of new production capacity was less than expected, and the project of Chemical Research Institute was uncertain.
