CHINA SHENHUA (01088.HK): Acquires 50% of Guoneng Xinjiang Coal-to-Gas for RMB617.7m

NewTimeSpace News: On 23 October 2026, China Shenhua Energy Company Limited (stock code: 01088) announced that the board approved the acquisition, under which its wholly-owned subsidiary Guoneng Xinjiang Energy and Chemical Co., Ltd. (新疆能源) will acquire from China Energy Western Energy Investment Co., Ltd. (西部能源) a 50% equity interest in Guoneng Xinjiang Coal-to-Gas Co., Ltd. (国能新疆煤制气有限公司) for a cash consideration of about RMB617.674 million. Upon completion, Xinjiang Energy will hold 100% and the target will become an indirect wholly-owned subsidiary consolidated into the Company's financial statements.

The consideration comprises RMB367.674 million, being the appraised value of the equity corresponding to Western Energy's paid-in capital ratio of approximately 43.21% as at the valuation date of 31 March 2026, plus RMB250 million of additional paid-in capital injected by Western Energy after the valuation date; payment is due in cash within 30 days after the agreement takes effect. Under the asset-based approach, the appraised value of all equity interests of the target was RMB850.90 million, a 3.71% premium to its book net assets of RMB820.50 million.

Incorporated on 13 March 2024 with registered capital of RMB3 billion, the target is engaged in the sale of coal and coal products, coal washing, production and sale of chemical products, coal mining, gas operations and power generation. It is responsible for the investment, development, construction and operation of the Zhundong 2 billion cubic metre-per-year coal-to-gas project, with total investment budgeted at RMB15.077 billion; construction began in October 2025 and trial operation is planned for the end of 2027. As at 31 March 2026, the target had total assets of RMB1,817.51 million, total liabilities of RMB997.01 million and net assets of RMB820.50 million; as it is still in the construction phase, it has not recorded any revenue or profit.

Western Energy is a wholly-owned subsidiary of China Energy Investment Corporation (国家能源集团), which holds about 70.02% of the Company and is its controlling shareholder, so the acquisition constitutes a connected transaction. As one or more applicable percentage ratios exceed 0.1% but all are below 5%, it is subject to the reporting and announcement requirements under Chapter 14A but exempt from independent shareholders' approval. Aggregated with similar transactions in the past 12 months, one or more ratios exceed 25% but are below 100%; however, the earlier acquisitions from China Energy complied with the major transaction requirements, including shareholder approval, and this acquisition does not raise the aggregated classification, while all ratios on a standalone basis are below 5%. The Company said the acquisition will deepen synergies in its coal chemical business, optimise its industrial layout and reduce ongoing coal supply connected transactions with China Energy.