Made in China:Guodian/Shenhua merger;Results,Fuxin/CRSC/Wuliangye/Kantons(+)CNBM(-)

GD Power - A fair JV proposal to minority shareholders (600795.SS, Hold, Target Price: CNY 3.50, Closing Price: CNY 3.60, Michael Tong)

    GD Power announced the proposal of formulating a JV with Shenhua by injecting thermal power assets from both companies. Meanwhile, the State Council also approved the merger between Guodian Group and Shenhua Group, parentco of the two listcos, into a newly named State Energy Investment Corporate, which will be the new parentco of both GD Power and Shenhua Energy. Based on preliminary terms disclosed, the terms look fair to GD Power’s minority shareholders and the merger of both parentcos should be strategically positive on the back of stronger vertical integration between coal and power and enhanced consolidation in the power sector. (Michael Tong - 852 2203 6167)