\u3000\u3000 Shanxi Coking Coal Energy Group Co.Ltd(000983) (000983)
Event: the company released the draft of Huajin coking coal acquisition plan. On January 16, the company issued a report on share issuance and cash payment for asset purchase and related party transactions (Draft). The company is planning to purchase 51% equity of Huajin coking coal and 49% equity of Mingzhu coal industry held by coking coal group after separation by issuing shares and paying cash, and raise supporting funds. Huajin coking coal is one of the five coal subsidiaries of the original Shanxi Coking Coal Energy Group Co.Ltd(000983) group. Compared with Shuiyu and Tenghui coal industries, Huajin coking coal has higher asset level and larger asset scale.
Purchase of assets: acquisition of 51% equity of Huajin coking coal and 49% equity of Mingzhu coal. The underlying assets are valued at 7.04 billion yuan, including 51% equity of Huajin coking coal of 6.6 billion yuan and Mingzhu coal of 440 million yuan. The company plans to pay 5.99 billion yuan (corresponding to 960 million shares), accounting for 85% of the total price. The issue price is 6.21 yuan / share, and the lock-in period is 3 years.
Raising supporting assets: the company plans to raise 4.4 billion supporting funds by non-public offering of shares to no more than 35 specific investors. We calculate that the issuance price is 6.94 yuan / share, 630 million shares are issued, and the lock-in period is 6 months. The supporting funds are used for the intelligent project of Shaqu No. 1 and No. 2 coal mine (RMB 920 million), the comprehensive development and utilization project of gas in Shaqu No. 1 and No. 2 coal mine (RMB 250 million), the payment of cash consideration for this transaction (RMB 1.06 billion) and the repayment of bank loans (RMB 2.17 billion).
“Chinese treasure”, with excellent resource endowment. Huajin coking coal is a large state-owned main coking coal production enterprise, which mainly develops and constructs Liliu mining area and Xiangning mining area of Hedong coal field, which is the main distribution area of high-quality coking coal resources in the province. In terms of reserves, the recoverable reserves of Liliu mining area are 3.5 billion tons and that of Xiangning mining area are 1.04 billion tons. The total recoverable reserves of the two are 4.54 billion tons, and the mining area is rich in resource reserves. In terms of coal types, the coal types in Liliu mining area are mainly high-quality main coking coal with low ash, low sulfur, ultra-low phosphorus, high calorific value and strong cohesiveness, and the coal types in Xiangning mining area are mainly high-quality lean coal with medium ash, low sulfur and ultra-low phosphorus, which is an excellent coking coal blending. Both of them are the “two areas and one type” protective development resources specified by the state and have good market competitiveness. In terms of production capacity and output, Huajin coking coal now has Shaqu No. 1 mine, Shaqu No. 2 mine, Jining mine, Mingzhu mine and other mines, with an approved production capacity of 11.1 million tons / year. From 2019 to now, Huajin coking coal has applied and upgraded the “110 construction method” to improve the output; The output of raw coal will reach 4.51 million tons in H1 in 2021, 104.9% of the planned output; The output of clean coal was 2.675 million tons, 104.1% of the planned output, all exceeding expectations; Among them, Shaqu No. 1 Mine and No. 2 mine under Huajin coking coal have not yet fully reached the production capacity, and there is still room for growth in the future. In terms of profitability, the company’s operating revenue was 5.94 billion yuan and net profit was 710 million yuan in 2020. Meanwhile, coking coal group promises that the annual performance commitments of Huajin coking coal from 2021 to 2024 are RMB 1.36 billion, RMB 1.22 billion, RMB 1.23 billion and RMB 1.86 billion respectively, and the cumulative committed net profit is RMB 5.67 billion.
Production capacity increased by nearly 30%. Huajin coking coal earnestly implemented the strategic plan of Shanxi Coking Coal Energy Group Co.Ltd(000983) “three years and three steps”, and continued to promote optimization design, equipment upgrading and cost control in the first half of 2021. The actual raw coal cost decreased to 285.4 yuan / ton, a year-on-year decrease of 17.1 yuan / ton; The efficiency of raw coal production personnel was 8.4 tons / worker, with a year-on-year increase of 7.2%. The “lean” promoted the all-round high-quality development of the company. After being incorporated into Huajin coking coal, Shanxi Coking Coal Energy Group Co.Ltd(000983) production capacity may grow to 48.9 million tons / year, an increase of 29.4% compared with that before the acquisition. However, compared with the total coal production capacity of 210 million tons / year of coking coal group, the company accounts for 23.6%, which is relatively low, and there is still room for improvement in the future. According to the company’s announcement, the net profit attributable to the parent company from Shanxi Coking Coal Energy Group Co.Ltd(000983) January to July 2021 after the transaction will increase from 2.27 billion yuan to 2.76 billion yuan, an increase of 21.8%, and the company’s profit will increase significantly.
The asset securitization of coking coal group was accelerated, and the overall listing of the group was accelerated. In February 2021, Shanxi Guoyun held an assessment and signing meeting of “one enterprise and one policy” for provincial enterprises, which proposed that the “asset securitization rate of provincial enterprises reached more than 80%. The coking coal group affiliated to the company is the second “double billion” coal enterprise with coal output of more than 100 billion yuan and sales revenue of more than 100 billion yuan in China, and its production capacity ranks first in China. The company is the main listing platform for the coal assets of coking coal group, which has always attached great importance to it. The group pursues the path of “making good use of the group’s listed companies and platforms, relying on the strength of the capital market to promote professional reorganization and resource integration”, and determines the main direction of “making good use of the platform of listed companies to promote coal resource integration and professional reorganization”. With the acceleration of the group’s asset securitization, the group’s asset injection space is worth looking forward to.
Investment advice. The company changed its name to ” Shanxi Coking Coal Energy Group Co.Ltd(000983) “, shouldering the important task of listing the group’s coal assets and clarifying the status of the leading listed company in the coking coal sector. It has purchased Shuiyu and Tenghui coal industries affiliated to the group in cash at the end of 2020. It wants to acquire 51% equity of Huajin coking coal, the group’s high-quality asset, and inject the assets into the next city. The future growth space is worth looking forward to. Considering that coking coal continues to rise and its performance is expected to continue to grow, it is expected that the net profit attributable to the parent company from 2021 to 2023 will be 5.33 billion yuan, 9.73 billion yuan and 10.18 billion yuan respectively, EPS will be 1.30 yuan, 2.37 yuan and 2.49 yuan respectively, corresponding to PE of 6.7, 3.7 and 3.5, maintaining the “buy” rating.
Risk tip: the coal price has fallen sharply, the control on imported coal has been relaxed, the reform progress of state-owned enterprises in Shanxi is less than expected, and there is uncertainty in asset injection
