BOC International has released a research report stating that CHINA SHENHUA (01088) recently announced the acquisition of target assets from its controlling shareholder, National Energy Group. As of the end of Q2 2025, the attributed book value of the target assets totaled 90.5 billion yuan. The attributed net profit after excluding special items and impairments was 8.3 billion yuan in 2024, and 1.3 billion yuan in Q1 2025. Additionally, the company plans to distribute an interim dividend of no less than 75% of its first-half earnings.

The brokerage noted that the company's stock price has risen approximately 10% in the two weeks following the acquisition announcement, recommending investors to take profits at this stage. It maintains an H-share target price of HK$32.18 with a "Hold" rating.

The firm indicated that affected by declining coal prices, some target assets showed deteriorating profitability in Q1 this year, with Shenhua Coal Liquefaction posting losses. Furthermore, the acquisition funding sources include issuing A-shares to the parent company, using own cash, and additional A-share offerings to investors. The brokerage estimates that 2.438 billion A-shares need to be issued, expanding the total share capital by 12.3%.

The firm believes this acquisition may slightly dilute earnings per share in the short term, with the company's commitment to a 75% dividend payout serving as reassurance to investors. Based on the midpoint of earnings guidance, the interim dividend would be 1 yuan, representing a dividend yield of 2.9%.