CSEC,China Shenhua(SH:601088) Xin Lang Cai Jing·2025-12-22 12:10Core Viewpoint - China Shenhua (601088.SH), the leading coal company, announced a plan to acquire assets from its controlling shareholder, China Energy Group, for a transaction value of 133.598 billion yuan, marking one of the largest acquisitions in the A-share market in recent years. This restructuring aims to resolve long-standing industry competition issues and is seen as a significant step in the deepening of state-owned enterprise reforms [1][9]. Group 1: Transaction Details - The transaction involves 12 target companies across coal, coal power, coal chemical, shipping, and port sectors, with a payment structure of 30% in shares and 70% in cash [3][11]. - The assets include 100% equity of nine companies under China Energy Group, along with partial stakes in Shenyan Coal and Jinshen Energy, and 100% equity of Inner Mongolia Construction Investment [3][11]. Group 2: Historical Context - The merger of the former Guodian Group and Shenhua Group in 2017 formed China Energy Group, which became the world's largest coal producer and power generation company [3][11]. - To facilitate the restructuring, China Energy Group and China Shenhua signed agreements to avoid competition, with a deadline for asset injection set for August 27, 2028 [4][12]. Group 3: Resource and Capacity Growth - Post-transaction, China Shenhua's coal reserves will increase to 68.49 billion tons, a growth rate of 64.72%, while its recoverable coal reserves will rise to 34.5 billion tons, a 97.71% increase. Coal production is expected to reach 512 million tons, a 56.57% increase [5][12]. - The installed power generation capacity will reach 60.88 million kilowatts, and polyethylene production capacity will be 1.88 million tons [5][12]. Group 4: Financial Impact - The total assets of the acquired entities are projected to reach 233.423 billion yuan by July 31, 2025, with a net asset value of 87.399 billion yuan. The combined revenue for 2024 is expected to be 113.974 billion yuan, with a net profit of 9.428 billion yuan [5][12]. - After the transaction, China Shenhua's revenue, net profit, and total assets are expected to increase by 27.27%, 11.56%, and 40.99% respectively compared to pre-restructuring levels [6][13]. Group 5: Broader Industry Context - The acquisition is part of a broader trend of state-owned enterprise reforms in China, with significant policy support for mergers and acquisitions aimed at enhancing efficiency and optimizing asset allocation [6][14]. - Recent policies, including the "National Nine Articles" and "Merger Six Articles," have created a supportive environment for state-owned enterprises to pursue mergers and acquisitions [6][14].