(Yicai) June 4 -- Yankuang Energy Group’s shares rose after the leading Chinese coal miner agreed a CNY16.4 billion (USD2.4 billion) cash deal to acquire its parent company’s key power assets, speeding its shift from traditional coal miner to a diversified energy services provider.

Yankuang Energy [SHA: 600188] closed up 5 percent at CNY27.27 (USD4.02) a share in Shanghai today, after adding 8.8 percent yesterday. Its Hong Kong-traded stock [HKG: 1171] ended 0.6 percent higher at HKD15.82 (USD2.02).

Yankuang Energy has signed an agreement with Shandong Energy Group and related parties to buy all of Shandong Energy New Energy Group for CNY15.6 billion and Shandong Energy Power Sales for CNY845 million (USD124.8 million), the Jining-based company said in a stock exchange filing late yesterday.

Apart from ending the competition between Yanzhou Energy and its parent company in the power segment, the move will promote the coordinated development between Yankuang’s core coal mining business and thermal power assets, most of which are newly acquired, and enable it to build a full electricity supply chain from generation to wholesale and end-user consumption.

The acquired thermal power assets will help counter cyclical swings inherent to the coal sector and strengthen overall profitability and risk resilience, while the renewable power assets will help Yanzhou Energy's low-carbon and green energy transition.

An integrated model of coal production, electricity generation, and power sales can reinforce Yanzhou Energy’s end-to-end competitive edge and boost overall earnings and core competitiveness, the filing said.

Shandong Energy New Energy and its subsidiaries generated 22.9 billion kilowatt-hours of electricity last year, with thermal accounting for 18.75 billion kWh, wind 3.89 billion kWh, and solar 0.26 billion kWh. It also has multiple thermal and wind power projects under construction, as well as approved wind and solar projects that have yet to break ground.

Shandong Energy New Energy and its affiliates boasted a commercial installed capacity of 7,052 megawatts as of Jan. 31. Combined with not yet commissioned capacity of 1,750 MW and another 1,884 MW under construction, Yankuang Energy will acquire a total 10,686 MW of installed capacity, the buyer pointed out.

Shandong Energy Power holds nationwide electricity retail licenses, Yankuang Energy said, noting that beyond the sales business, the target also controls one distributed solar power producer and a thermal power project.

Shandong Energy New Energy had a net profit of CNY959 million last year on revenue of CNY7.7 billion (USD1.1 billion). Shandong Energy Power posted a net loss of CNY12.6 million (USD1.8 million), but excluding non-recurring gains and losses, it had a profit of CNY14.5 million. Revenue was CNY48 million.

Editor: Martin Kadiev