Shares of Yankuang Energy (ASX: YKC) have continued their decline, falling more than 5%. At the time of writing, the stock was down 5.5% to HK$14.95, with a turnover of HK$609 million.
The drop follows the company's announcement of a plan to acquire stakes in two companies from its controlling shareholder for a total of RMB 16.415 billion. This acquisition brings a full suite of power assets under one roof, encompassing thermal power, wind power, photovoltaic, energy storage, and electricity retailing.
A notable aspect of the deal is that the purchase prices for both assets involve a premium. The premium for Shandong Energy Power Sales is relatively modest at 1.83%. However, the core target, the New Energy Group, carries a significant premium of 109.81% over its net asset value, amounting to approximately RMB 8.149 billion. This represents a 59% increase over the consolidated net assets attributable to the parent company, with a premium of around RMB 6 billion.
Analysis indicates that for 2025, the New Energy Group is projected to deliver a net profit attributable to the parent of RMB 959 million, while Shandong Energy Power Sales is expected to report a loss of RMB 809,600, resulting in a combined net profit of roughly RMB 958 million. Based on the total acquisition price of RMB 16.415 billion, this translates to a price-to-earnings (P/E) ratio of 17 times.
Using annualized data projected for January 2026, the combined net profit for the two entities is forecast to reach RMB 3.02 billion. At this earnings level, the acquisition price would correspond to a P/E ratio of just 5 times.
Furthermore, Shandong Energy Group and Yankuang Hong Kong have provided performance guarantees for the New Energy Group.
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