Citi: CHINA SHENHUA (01088.HK) Acquires Parent Company Assets to Improve Operational Efficiency

The analyst rating for CHINA SHENHUA (01088.HK) is based on several key factors outlined in the CICC research report: 1. Restructuring Plan: The company has announced a restructuring plan that maintains the equity of other acquisition targets while excluding the e-commerce company. This indicates a strategic focus on core assets. 2. Transaction Pricing: The total transaction price of RMB133.598 billion is structured with a 30% share and 70% cash payment ratio, with the issue price per share set at RMB29.4. This pricing is slightly below the market average P/B ratio of 1.68 times for A-share thermal coal, suggesting a reasonable valuation. 3. Scarcity of High-Quality Assets: CICC notes that high-quality coal assets are scarce domestically, and CHINA SHENHUA's acquisition represents a significant increase in resource volume at a reasonable price. 4. Operational Improvements: The broker is optimistic about the company's efforts to strengthen integration, reduce costs, and enhance efficiency, which are expected to lead to a re-rating of the stock. 5. Capital Management: CICC expects CHINA SHENHUA to effectively balance capital expenditure with high dividend commitments, indicating a strong financial management strategy. Based on these factors, CICC has maintained an Outperform rating for CHINA SHENHUA, with a target price of HKD45.