Huaihe Energy Investment Value Analysis: M&A Growth and Dividend Attraction

• “According to online searches: Huaihe Energy’s core businesses include coal (Dingji Mine: 6 million tons/year), power (equity installed capacity: 3.51 million kilowatts) and railway transportation. At the end of 2024, it launched the acquisition of 100% equity in the power group under its controlling shareholder (consideration: 11.694 billion yuan). After completion, its holding thermal power equity installed capacity will reach 3 times the current level.”
• “Research shows: The company’s asset-liability ratio of 41.6% is lower than peers, and its net cash flow is 2.76 times net profit, providing a margin of safety.”

• “Reddit user: Huaihe Energy is investment-attractive because EPS will increase by 13.6% after the merger and it has committed to distributing dividends of no less than 75% of net profit from 2025 to 2027 (current dividend yield is about 5.27%).”
• “Xueqiu user: Compared with Xinji Energy and Wanneng Power, Huaihe Energy is better in terms of liabilities, dividend-paying ability and long-term growth potential, but attention should be paid to the impact of coal price fluctuations on the gross profit of the power business.”

Both research and social media recognize the growth impetus from the merger and the attractiveness of high dividends for Huaihe Energy; the consensus lies in the advantages of stable cash flow and low asset-liability ratio; it should be noted that coal price fluctuations may affect the gross profit of the power business, while the commissioning of post-merger under-construction projects (expected to be completed in 2027) will further enhance EPS, but there is time uncertainty. In terms of investment impact, the current valuation (about 10 times from the cash flow perspective) is attractive, suitable for investors pursuing stable dividends and long-term growth.