The reorganization of central coal enterprises is expected to speed up the formation of 10 giants by the end of 2020

According to the report of Economic Information Daily on April 13, relevant departments required to speed up the introduction of guidance on promoting the transformation and upgrading of coal industry merger and reorganization, implement the merger and reorganization of small coal mines in different regions within two years, and strive to form 10 billion ton "Big Macs" nationwide by the end of 2020. In addition, enterprises are encouraged to strengthen cross regional capacity reduction cooperation through equity replacement, resource mutual insurance and other ways.
The implementation period of local policies is also gradually approaching. Merger and reorganization measures of coal enterprises in Henan, Guizhou and other places have surfaced. The reform plan of state-owned enterprises in Shanxi, a large coal producing province, is expected to be introduced by the end of April. All of this makes the capital market expectations keep heating up. However, some insiders pointed out that due to many factors such as management system and personnel debt, large-scale coal mergers and acquisitions, especially cross regional mergers and acquisitions, are more difficult, and the combination of upstream and downstream coal power, coal transportation, coal chemical, coal science and engineering is easier to operate.
According to the 2017 government work report, this year, we will withdraw more than 150 million tons of coal production capacity, use more market-oriented and legal means, and promote enterprise mergers and reorganization, bankruptcy liquidation. "To resolve overcapacity, we should not only base ourselves on the current situation, but also focus on the long-term. We should take into account and simultaneously promote overcapacity reduction, merger and reorganization, transformation and upgrading, and optimization of layout, and constantly improve the overall quality and core competitiveness of the industry." Wang Xiaolin, deputy director of the National Energy Administration, said at the recent symposium on stable supply of overcapacity reduction in the coal industry.
Xing Lei, director of the Research Center for Coal Listed Companies of the China Coal Economics Research Institute of the Central University of Finance and Economics, also said that one of the problems faced by coal de productivity is that the concentration of the coal industry is too low at present, while small coal mines also have security risks, so we need to eliminate backward production capacity, develop advanced production capacity, and improve our resilience.
For this reason, this round of merger and reorganization tide first swept to small coal mines. According to the requirements of regional promotion, mergers and reorganizations will be carried out within two years for coal mines of 300000 tons/year (including 300000 tons/year) to 600000 tons/year (excluding 600000 tons/year) in 4 regions including Shanxi, Shaanxi, Inner Mongolia and Ningxia, and coal mines of 150000 tons/year (including 150000 tons/year) to 300000 tons/year (excluding 300000 tons/year) in 11 regions including Hebei, Liaoning, Jilin, Heilongjiang, Anhui, Shandong, Henan, Gansu, Qinghai and Xinjiang; If the restructuring has not been implemented by the end of the period, the provincial people's government will orderly guide and incorporate it into the capacity reduction plan according to the development needs. In principle, coal mines of less than 300000 tons/year (excluding 300000 tons/year) will not implement the technical transformation of new production capacity except those that have been included in the special plan for technical transformation.
At the same time, we will encourage competitive enterprises to increase mergers and acquisitions, and build large enterprises and groups, especially mega coal enterprise groups of 100 million tons. According to the target, the number of coal mining enterprises will be reduced to 3000 by 2020, and the output of large enterprises above 50 million tons will account for more than 60%, of which 10 will strive to reach 100 million tons. "There were 6 enterprises whose coal output exceeded 100 million tons nationwide last year, up from 8 before," said Zhang Hong, deputy secretary general of China Coal Industry Association.
The State owned Assets Supervision and Administration Commission of the State Council has also previously stated that the number of central enterprises will be reduced to less than 100 within the year, steadily promote the merger and reorganization at the enterprise group level, accelerate the integration of steel, coal and electric power businesses, make professional steel and coal enterprises stronger, better and larger, optimize the allocation of resources for power and coal integrated enterprises, and other coal related central enterprises withdraw from the coal industry in principle.
It is understood that at present, the total coal production capacity of central enterprises is 846 million tons. Except Shenhua, China Coal and the five major power companies, the production capacity of central enterprises that do not focus on coal is about 100 million tons. In July 2016, Guoyuan Coal Asset Management Co., Ltd., a central enterprise coal asset management platform invested by China Guoxin, Chengtong Group, China Coal Group and Shenhua Group, was established and put into operation. On August 16 of that year, the controlling shareholder of Xinji Energy, SDIC, signed a free share transfer agreement with China Coal Group to transfer 30.31% of its shares of Xinji Energy to China Coal Group. This is considered to be the first case of the reorganization of central coal enterprises in this round of supply side reform, which opened the curtain of the reorganization of central coal enterprises.
Since this year, China Shenhua, as the industry leader, has been exposed to have carried out a series of M&A activities and is preparing for a larger scale of integration and reorganization. Recently, its bold dividend distribution and frequent personnel adjustment have heated up this expectation. Also interpreted as the prelude to merger and reorganization due to personnel adjustment is another coal giant, China Coal Energy.
While the merger and reorganization of central coal enterprises is expected to speed up, the local merger and reorganization is also taking action. According to the forthcoming reform plan of state-owned assets and state-owned enterprises in Shanxi, we will make good use of the platform of 18 state-owned holding listed companies in the future, and vigorously promote the capitalization, capitalization and securitization of state-owned resources. The research report of Shanxi Securities pointed out that there is an expectation of asset injection and integration behind this. The seven major coal groups in Shanxi have obvious homogeneous competition, and will use the platform of listed companies to build industry leaders through horizontal merger in the future.
Recently, the State owned Assets Supervision and Administration Commission of Henan Province held a meeting on the reform and development of state-owned enterprises and the supervision of state-owned assets in the whole province, which made it clear that this year three coal giants (Henan Energy Group, China Pingmei Shenma Group and Zheng Coal Group) will be reorganized into state-owned capital investment companies. In fact, since last year, Shandong Energy Group, Yankuang Group and others have established state-owned capital investment companies.
In order to solve the problem of overcapacity in the coal industry, Guizhou also adjusted relevant policies to promote the merger and reorganization of coal mining enterprises. On the basis of "halving the number", it proposed that the sum of coal mine capacity before restructuring should not be exceeded after restructuring, and the size after restructuring should not be less than 300000 tons/year. At the same time, echelon rewards and subsidies will be implemented for enterprises that actively carry out mergers and acquisitions and have completed capacity reduction and coal mine closure.
However, many insiders said frankly that large-scale coal merger and reorganization, especially cross regional merger and reorganization, inevitably involves management system, benefit distribution, personnel debt and many other issues between regions, central enterprises and provincial enterprises, which is more difficult.
"During the 12th Five Year Plan period, cross regional restructuring has been promoted, but the current integration is mainly based on geographical division." Xing Lei believes that, in contrast, the combination of coal power, coal transportation, coal chemical, coal science and engineering and other upstream and downstream is easier to operate, which is also conducive to extending the industrial chain, achieving integrated development, and improving the comprehensive competitiveness of enterprises. It is worth noting that in the process of improving industrial concentration, more market means should be used, such as cross shareholding, resource mutual protection, etc.