Entered framework agreement with China Reform Corp (CRC) for a proposed reorganization of the coal-to-chemical and related businesses. CRC will acquire the assets or equity interest in these non-core businesses.
We are positive on the sale of the non-core operations. In 2013, the coal-to-chemical project suffered a CNY910m loss due to high depreciation and coal-to-gas projects Keqi and Fuxin also bear delay risks, in our view.
Transaction price not yet determined. We think it may induce a one-off disposal loss, but could help long-term cash flow and earnings visibility. Maintain HOLD.