Xinda Securities·2025-01-23 09:12Investment Rating - The investment rating for China Shenhua (601088) is "Buy" [1] Core Views - The report highlights the acquisition of 100% equity of Hanjin Energy Co., Ltd. from the National Energy Group, which is expected to drive value growth through asset acquisition and increased dividends [1] - The acquisition is projected to enhance China Shenhua's resource reserves and strengthen its integrated operational advantages, with significant increases in coal reserves and production capacity [6][7] - The report anticipates improved profitability for Hanjin Energy following the resolution of previous losses and the commitment of the National Energy Group to ensure a minimum profit contribution [7][8] Summary by Sections Acquisition Details - China Shenhua plans to acquire Hanjin Energy for approximately RMB 852.65 million, which will significantly increase its coal reserves by 38.41 billion tons and its recoverable reserves by 20.87 billion tons [6][9] - The transaction will add 25.7 million tons per year to China Shenhua's coal production capacity, including 10 million tons from ongoing projects [6] Financial Performance - Hanjin Energy reported a profit of RMB 83.56 million in 2022, but faced losses in 2023 due to operational disruptions and impairment provisions totaling RMB 1.35 billion [4][7] - The report projects that Hanjin Energy will achieve a cumulative net profit of no less than RMB 383.10 million from 2024 to 2029, with annual contributions expected to be around RMB 72 million [7] Shareholder Returns - China Shenhua has announced a shareholder return plan for 2025-2027, committing to distribute at least 65% of its net profit as cash dividends, an increase from previous commitments [12] - The report suggests that the company is likely to maintain a high dividend payout ratio, reflecting its strong cash flow and commitment to shareholder returns [12] Earnings Forecast - The report forecasts China Shenhua's net profit for 2024-2026 to be RMB 58.768 billion, RMB 57.020 billion, and RMB 58.036 billion respectively, with EPS projected at RMB 2.96, RMB 2.87, and RMB 2.92 [11][12] - The anticipated stability in earnings is attributed to high long-term contract ratios and integrated operations, which are expected to enhance profitability [12]