Datong Coal Industry Co., Ltd.: raising funds for projects to be put into operation and improve the company's value

Driven by the steel, real estate and communication sectors, the market emerged from a strong market. The indexes of both cities closed at the highest point, and the Shenzhen Composite Index also hit a new high in this round. As can be seen from today's market, in addition to the activity of large blue chip stocks, second tier blue chip stocks and theme stocks are willing to take the initiative to go long, which is in line with our earlier view. Therefore, in terms of large stock selection, we mainly focus on second tier blue chip stocks and theme stocks. After the overall rise of the steel sector today, we suggest investors pay attention to the coal and electricity sectors. Since the overall growth is relatively backward, the future market should show some performance, including 601001 Datong Coal Industry It is suggested that investors focus on the short and medium term.

Abundant steam coal resources

Datong Coal Industry is a comprehensive super large coal enterprise mainly engaged in coal production, and the coal produced is mainly steam coal. Datong coal is known as the "world fine grain of steam coal", and its calorific value per kilogram is far higher than other coals. At the same time, Datong coal is easy to ignite, suitable for making gas, and is a good raw material for processing and converting into coal chemical products, with high hardness and convenient transportation. As the leader of high-quality steam coal production enterprise, the company has formed four world famous brands, namely "Dayou", "Damo", "Kouquan" and "Dayou". In North China, the company has a high market share of its products and a strong competitive advantage in the market. At present, the company has 4 production mines, with the remaining recoverable reserves of 380 million tons. In 2005, the communist raw coal was 10.18 million tons. After the project under construction - Tashan Coal Mine is put into operation, the company's coal production capacity will reach 25 million tons, of which, the Tashan Coal Mine and Coal Preparation Plant project company accounts for 51% of the registered capital. The project was put into operation in July 2006, with an expected output of 3 million tons in 2006, 15 million tons in 2008, and 3.071 billion tons of recoverable coal reserves. The company's main customers include North China Power, Huaneng Power, Datang Power, Baosteel Group, Shougang Group, etc. The long-term and stable cooperative relationship with large enterprise groups has laid a solid foundation for the future development of the company.

The project with raised funds is put into production to release capacity

Datong Coal disclosed in the letter of intent that the raised funds will be invested in the technical transformation project of the main shaft lifting capacity and screening system of Tongjialiang Mine and the Tashan Mine project. The implementation of the main shaft lifting capacity and screening system technical transformation project of Tongjialiang Coal Mine will increase its annual production capacity by 600000-1100000 tons, and the project will probably be completed by the end of 2006; Tashan Industrial Park can be put into production in 2006, and is expected to reach its full capacity in 2007. The coal measures to be mined in Tashan Mine are Carboniferous Permian coal measures. The recoverable reserves of the mine are 3.071 billion tons, and the design service life is 122 years. The total recoverable reserves of the main coal seams are 2.647 billion tons, accounting for 86.19% of the total recoverable reserves of the mine. The Tashan Mine Project with an annual output of 15 million tons of raw coal and the supporting coal preparation plant project in Tashan Industrial Park, 51% of which is controlled by the company, will be put into production in the second half of 2006. All the raw coal produced will be washed, and the output of commercial coal after washing will be about 10.5 million tons. It is conservatively estimated that the production capacity will be about 4 million tons in 2006. Since the company holds 51% of the shares, the output increased to the company will be about 2 million tons. In 2007, the expected production capacity will be reached, and the production capacity increased to the company will be 5.5 million tons. Since the company has just been listed, the benefits generated by all the projects with raised funds could not be fully reflected, but we can predict that with the completion of new construction and technological transformation projects, the company's future production capacity will be gradually released, and its internal value will be improved.

The Group's coal resources will become the support of the Company's long-term value

The company is located in Datong, Shanxi Province, which is known as the "coal capital". Tongmei Group, the controlling shareholder of the company, is a comprehensive large coal enterprise with coal as its main business. In the history of China's coal industry, it has a prominent position, with an annual coal output of more than 100 million tons, which is second only to Shenhua, and has great potential for expansion. Its rich coal resources will become an important support for the long-term value of Datong Coal Industry. According to the relevant agreement reached by the Company and Tongmei Group on May 21, 2004, Tongmei Group gradually incorporated all the operational high-quality assets of coal production into the Company, making the Company the only operating entity in the coal mining and dressing business among the subordinate enterprises of Tongmei Group no later than 2014. Therefore, relying on the strong strength of major shareholders, it will effectively guarantee the rapid growth of the company's future performance.

In the secondary market, after the recent slight rise of the stock, there was a backpressure along with the market correction, but the support was strong below 8 yuan. With the current hot market and the overall active second tier blue chip, we believe that the gradual production of Datong Coal Industry's fund-raising projects will be recognized by the market, and investors are suggested to focus on the short and medium term.

Yingda