Anhuaneng (601699): The planned annualized PE cash acquisition of the mine is expected to significantly increase the performance
Event: On November 21, 2019, the company issued an announcement saying that it planned to purchase its held Shanxi Lu’an Mining Group Cilinshan Coal Industry Co., Ltd. from its controlling shareholder, Shanxi Lu’an Mining (Group) Co., Ltd.100% equity, the transaction price is 75174.
Comment on the proposed acquisition of group assets, capacity expansion, and increased production: Cilinshan Coal Industry includes three mines: Cilinshan Coal Mine Headquarters (60 tons / year), Cilinshan Xiadianjing (180 tons / year) and Licun Mine (300 announcement /(Years), with a total capacity of 540 units / year, accounting for the equity capacity of listed companies.
Among them, the recoverable reserves of Licun Coal Mine are 7,043.
6 Each year, the approved production capacity is 300 tons / year, and coal washing plants and railway dedicated lines are supported.
3 # coal seam is currently being mined. The main coal types are low-ash, ultra-low sulfur, high-quality lean coal and anthracite, which can be used as thermal coal, civilian coal and injection coal.
Licun Coal Mine entered a joint trial operation at the beginning of this year. It is expected that after 武汉夜网论坛 reaching the output, Cilinshan Coal Industry will contribute an increase of 540 crops, accounting for 13 of the company’s total output in 2018.
Contribution to the theoretical acquisition of Cilinshan Coal Industry 6.
19% profit increase: According to the announcement, in the first half of 2019, Cilinshan Coal Industry achieved a net profit of 8245.
980,000 yuan, annualized profit for the first half of the year, the previous net profit reachability1.
65 ppm, the theoretically feasible company’s net profit increased by 6.
It is expected that after the full production of Li Cun in the second half of the year, the profit will be better than the first half, and the actual profit contribution will be.
According to the announcement, as of June 30, 2019, the net assets of Cilinshan Coal Industry were 50,577.
280,000 yuan, the purchase price corresponds to 1.
49 times PB, 4.
56 times PE (annualized in the first half), the overall acquisition value is not expensive.
The net interest rate of Cilinshan Coal is 5.
27%, the net interest rate of listed companies in the same period was 13.
At 34%, we believe that the low profit rate of Cilinshan Coal Industry is ultimately due to the high financial costs caused by high liabilities. According to the announcement, the asset replacement of Cilinshan Coal Industry was 93.
58%, and Lu’an Huaneng has abundant book cash. As of the end of the third quarter of 2019, the company’s books had a total of 177 monetary funds.
US $ 4.1 billion. After the acquisition, Cilinshan Coal will be able to reduce its ability to reduce liabilities. After the reduction, the profitability of Cilinshan Coal will be more prominent.
The company’s cash flow has improved significantly: Since 2016, the company’s operating net cash flow has continued to improve, and the increase in cash flow has even been significantly better than the increase in profit. In 2018, the company’s operating net cash flow was 93.
400 million, the highest level since listing.
As of the end of the third quarter of 2019, the company had a total of 177 monetary funds on its books.
41 trillion, at the same period with interest denied budget of 181.
4.2 billion, covering 98% of interest-bearing debt.
The asset impairment caused by the merger and consolidation of minerals has been basically dealt with, and the company will enter the market lightly, and its performance is expected to be fully released.
Investment suggestion: It is expected that net profit will reach 30 in 2019-2021.
1.6 billion / 31.
33 ppm / 33.
The company’s performance burden has been digested, and the company’s future performance elasticity release can be expected.
Currently the company is only 0.
78 times PB, we think the company is seriously undervalued.
Maintain BUY-A investment rating with 6-month target price of 10.10 yuan, corresponding to 10 times PE.
Risk reminders: 1) the macroeconomic downturn, 2) the risk of falling prices in downstream industries; 3) there is still uncertainty in this equity acquisition