SDIC Power (600886): The dust is settled: The value-added rate of thermal power distribution and transfer is 49%. It is expected to increase asset disposal income.

900 million

SDIC Power (600886): The dust is settled: The value-added rate of thermal power distribution and transfer is 49%. It is expected to increase asset disposal income.

900 million

All 6 equity shares have been traded, and the total transfer price is 2.4 billion. The company issued an announcement: following November, 55% of the state investment Beibu Gulf was allocated 5 shares.

After the transfer of 91 million U.S. dollars to Guangxi Investment Group, on December 27, the company restructured the contract to choose another five shares (51% equity of SDIC Xuancheng, 60% equity of SDIC Ili, and 51 of Jingyuan Second Power.

22% equity, Huaibei Guoan 35% equity, Zhangye Power 45% equity) to 18.

09 million was transferred to China Coal Energy Group Co., Ltd.

The transfer appreciation rate is 49%, and it is expected to increase the asset disposal income.

The 6 thermal power stocks transferred by the 90,000 yuan company are assets with relatively weak profitability. According to our calculations, the total of the above six assets in 2019H1 contributes a net profit of equity of -0.

5.5 billion, overall budget.

Benefiting from the improvement of the regional power market and the decline in coal prices, the overall profitability of SDIC Power’s thermal power sector improved significantly in the first half of the year, but Jingyuan Second Power, Yili and other power plants are still in a state of substitution, dragging down the company’s performance.

We believe that the sale of the above thermal power equity will help the company revitalize its asset structure and promote the overall strategic layout.

The valuation of the net assets of the six stocks increased compared to the double split ratio of the book value, of which the Beibu Bay appreciation rate was 168.

48%, Jingyuan Second Power 117.

45%, SDIC Yili 59.

46%, SDIC Xuancheng 40.

51%, Huaibei Guoan 57.

77%, Zhangye 15 of Gansu.

18%.

The 55% equity of Beibu Bay, which was the first to be sold in November, is one of many high-quality assets. The highest value-added rate is evaluated among the 6 equity shares, and its transfer price (5.

910,000 yuan) compared to our first listing price (4.

7.8 billion) also has a significant premium; the transferee Guangxi Investment Group Co., Ltd. held a 27% stake in Beibu Gulf before the transaction, which is the second largest shareholder after SDIC Power.

This time, another five ownership transfers were selected and transferred to China Coal Energy Group Co., Ltd. We think it may be a win-win result. The company revitalized its assets and recovered the funds, and the transferee is expected to break through the coal-electricity synergy effect and improve the profitability of the above thermal power assetsability.
According to our calculations, the total net equity of all six equity interests is 16.

11 trillion, the final transaction price totaled 24 trillion, the overall value-added rate of 49%.

We expect that the transfer of 6 equity interests will increase asset disposal income.

89 ppm, based on the two closing times, we judge the disposal 都市夜网 gain of Beibu Gulf4.

13 trillion may be included in the 2019 statement, while gains on disposal of the other five equity interests3.

76 trillion may be included in the 2020 statement and is expected to increase net profit for the corresponding year.

Profit forecast: We expect the company’s net profit attributable to its parent to be 48-20 in 2019-2021.

02, 53.

98, 54.

8.5 billion yuan, corresponding to 0 EPS.

71, 0.

80, 0.

81 yuan / share.

Maintain “Buy” rating.

Risk warning: macroeconomic fluctuations, electricity price reductions, rising coal prices, insufficient electricity demand