


Core Viewpoint - China Shenhua Energy plans to acquire coal-related assets from its controlling shareholder, China Energy Investment Corporation, to enhance its integrated operations and mitigate intra-group competition [1][4]. Group 1: Asset Acquisitions - The acquisition includes 13 assets: six coal mines, one integrated coal-power asset, two coal chemicals projects, and four logistics assets, with a total coal capacity potentially exceeding 0.25 billion tonnes (bnt) and output over 0.2 bnt [1]. - The acquired assets have over 15 GW of coal-fired power capacity, compared to Shenhua's existing capacity of 21.75 GW in 2024 [1]. Group 2: Financial Data - The combined return on equity (ROE) of the acquired assets is less than 10%, with a liability-to-asset ratio exceeding 50%, while Shenhua's ROE and average liability-to-asset ratio were 15% and 25% from 2021 to 2024 [2]. - The total net assets of the 13 assets are estimated between RMB 100 billion and 150 billion, with the consideration for these assets projected at RMB 150 billion if priced at 1x price-to-book (P/B) [3]. Group 3: Management Guidance - Management aims to enhance earnings per share (EPS) and maintain high-return, sustainable dividend payments, committing to exceed previous dividend payout levels [4]. - The firm plans to raise the minimum payout ratio from 60% to 65% for the years 2025-2027 [4].