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Shenhua acquires parent's assets
By Richard Fu and Feng Jianmin |
December 22, 2010, Wednesday
|
Print Edition
Print Edition
CHINA Shenhua Energy Co agreed to pay 8.7 billion yuan (US$1.3 billion) to buy assets from its parent company to boost coal reserves, but analysts viewed the purchase as having only limited impact on earnings.
The purchase will boost the firm's recoverable coal reserves under Chinese standards by 21 percent to 14 billion tons, Shenhua told the Hong Kong stock exchange late Monday. Shares rose 3.85 percent in Hong Kong and 5.96 percent in Shanghai yesterday after the news.
As part of the deal, Shenhua is also buying power generation and clean coal assets from its parent, China Shenhua Group, the nation's biggest coal firm.
However, analysts said the purchase price means the deal will only have limited impact on earnings. The acquisition will only increase Shenhua's net profit by 2.3 percent, but it can help guarantee the sustainable development of the company's coal business in the long term, Changjiang Securities analysts said.
Though the clean coal business is still unprofitable, the purchase is significant because it makes Shenhua the first domestic listed coal company to be engaged in the business, Sinolink Securities analyst Hao Zheng said.
Shenhua said that it will use the proceeds from its A share initial public offering to finance the purchase.
The purchase will boost the firm's recoverable coal reserves under Chinese standards by 21 percent to 14 billion tons, Shenhua told the Hong Kong stock exchange late Monday. Shares rose 3.85 percent in Hong Kong and 5.96 percent in Shanghai yesterday after the news.
As part of the deal, Shenhua is also buying power generation and clean coal assets from its parent, China Shenhua Group, the nation's biggest coal firm.
However, analysts said the purchase price means the deal will only have limited impact on earnings. The acquisition will only increase Shenhua's net profit by 2.3 percent, but it can help guarantee the sustainable development of the company's coal business in the long term, Changjiang Securities analysts said.
Though the clean coal business is still unprofitable, the purchase is significant because it makes Shenhua the first domestic listed coal company to be engaged in the business, Sinolink Securities analyst Hao Zheng said.
Shenhua said that it will use the proceeds from its A share initial public offering to finance the purchase.
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