\u3000\u3000 Shanxi Coking Coal Energy Group Co.Ltd(000983) (000983)
Key investment points
The company issued the report on the issuance of shares and payment of cash for asset purchase and related party transactions (Draft), and purchased 51% equity of Huajin coking coal and 49% equity of Mingzhu coal by issuing shares and payment of cash. According to the draft, the specific transaction contents are as follows:
Transaction overview: the company acquired 51% equity of Huajin coking coal from coking coal group at a transfer price of RMB 6.599 billion (net profit attributable to parent company in 2020 is RMB 364 million, corresponding to pe35.5 times; net profit attributable to parent company from January to July 2021 is RMB 862 million, corresponding to pe8.75 times and pb3.1 times), and acquired 49% equity of Mingzhu coal from Li Jinyu and Gao Jianping, The transfer price is 443 million yuan (the net profit attributable to the parent company in 2020 is 86 million yuan, corresponding to pe10.54 times, the net profit attributable to the parent company from January to July 2021 is 113 million yuan, and the annualized profit corresponds to pe4.65 times and pb1.76 times). Huajin coking coal has four coal mines, Shaqu No. 1 coal mine (holding 100%), Shaqu No. 2 coal mine (holding 100%), Jining Coal Mine of Jining coal industry (holding 51%), Mingzhu coal mine of Mingzhu coal industry (holding 51%, Li Jinyu and Gao Jianping holding 25% and 24% respectively). The design production capacity is 5 million tons / year, 3 million tons / year, 3 million tons / year and 900000 tons / year respectively, totaling 11.9 million tons / year, The total equity production capacity acquired this time is 5.54 million T / A.
Source of funds: Shanxi Coking Coal Energy Group Co.Ltd(000983) will pay in the form of cash + equity, including cash of RMB 990 million, RMB 34 million and RMB 33 million to Li Jinyu and Gao Jianping, shareholders of coking coal group and Mingzhu coal industry respectively; Through non-public offering, 964 million shares were issued to Li Jinyu and Gao Jianping, shareholders of coking coal group and Mingzhu coal industry, at a price of RMB 621 per share (a total of RMB 5.986 billion), and a share consideration of RMB 5.609 billion was paid to coking coal group (the shareholding ratio increased from 54.4% to 61.89%), with a share lock-in period of 36 months Gao Jianping paid the share consideration of RMB 192 million and RMB 184 million respectively (the shareholding ratio increased by 0.61% and 0.59% respectively), and the share lock period was 12 months. In addition, the listed company plans to raise supporting funds through non-public offering of shares to no more than 35 qualified specific objects. The total amount of supporting funds raised is expected to not exceed 4.4 billion yuan, and the lock-in period is 6 months, RMB 1056 million of the raised funds will be used to pay the cash consideration for this transaction (RMB 990 million, RMB 33.87 million and RMB 32.52 million to coking coal group, Li Jinyu and Gao Jianping respectively), another RMB 926 million will be used for the intelligent project of Shaqu No. 12 coal mine, RMB 248 million will be used for the comprehensive development and utilization project of gas in Shaqu No. 12 coal mine, and RMB 2.17 billion will be repaid to the bank loan.
Performance commitment: coking coal group promises that after deducting non recurring profits and losses from 2021 to 2024, the net profit attributable to the parent company of Huajin coking coal will not be less than 1.357 billion yuan, 1.218 billion yuan, 1.229 billion yuan and 1.862 billion yuan respectively, and the cumulative net profit will not be less than 5.666 billion yuan. The purchase price is estimated at 9.5 times of the PE corresponding to the performance in 2021.
This acquisition will further enhance the scale of the company’s high-quality assets and thicken the company’s performance. The products of Shaqu No. 1 mine (with recoverable reserves of about 600 million tons) and Shaqu No. 2 mine (with recoverable reserves of about 400 million tons) subordinate to Huajin coking coal are high-quality main coking coal, which is characterized by low ash, low sulfur, ultra-low phosphorus, high calorific value and strong cohesiveness. It is a scarce high-quality coking skeleton coal in China; Jining mine (with recoverable reserves of 100 million tons) and Mingzhu mine (with recoverable reserves of 24 million tons) mainly produce high-quality coking coal with medium ash, low sulfur and ultra-low phosphorus. This acquisition will further consolidate the company’s leading position in the coking coal industry and increase the company’s voice in China’s coking coal industry. Under the background of high dependence on China’s main coking coal import, the growth of the company’s main coking coal assets (a total of 8 million tons / year) is extremely scarce. From the profit side, the net profit attributable to the parent company from January to July 2021 will increase by 495 million yuan compared with that before the transaction. At the same time, if the performance commitment of the group is completed, Huajin coking coal will contribute net profits of no less than 692 million yuan, 621 million yuan, 627 million yuan and 950 million yuan respectively from 2021 to 2024, adding a strong impetus to the growth of the company’s future performance.
The average price of coking coal still rose in the fourth quarter, and the company’s profit may continue to increase month on month. The price of main coking coal in Jingtang Port dropped rapidly from a high level, from 4250 yuan / ton to 2350 yuan / ton. From the average price, the average price in the third quarter was 3176 yuan / ton. In the fourth quarter, under the condition of sharp price fluctuation, the average price still reached 3228 yuan / ton; Recently, the price of coking coal has increased. The price of main coking coal in Jingtang Port has increased by 480 yuan / ton to 2830 yuan / ton. Due to the objective contraction of supply and the continuous improvement of downstream demand margin, the price of coking coal is expected to remain at a high profit level. In the fourth quarter, the company’s coking coal Changxie coal price increased by 300 yuan / ton – 500 yuan / ton quarter on quarter, while the Changxie price was basically flat in the first quarter of this year, and the company’s profit level remained at a high position.
Profit forecast and Valuation: we expect the net profit attributable to the shareholders of the parent company in 2021 / 22 / 23 to be RMB 4.39/4.49/4.59 billion respectively, equivalent to EPS of RMB 1.07/1.09/1.12 respectively. The current share price of RMB 8.68 corresponds to PE of 8.1x/7.9x/7.8x respectively, maintaining the “buy” rating of the company.
Risk warning: fluctuation risk of coal price and coke price; Safety production risk.
