China Coal 1898

[winston]

DJ MARKET TALK: China Coal Off 4.3% Post-Results; GC Cuts To Hold
October 29, 2009

1524 [Dow Jones] China Coal (1898.HK) down 4.3% at HK$10.56, but off intraday low of HK$10.30, after worse-than-expected results; GuocoCapital notes 9M09 net profit accounts for only 60% of FY09 earnings forecast from market consensus.

House downgrades stock to Hold from Buy, as valuation viewed as fair at 18.7X FY09 P/E; keeps target at HK$11.80 (17X FY10 P/E). Also cuts FY09, FY10 earnings forecasts by 15%, 11% to reflect weak 9M results, despite company's plan to raise production by 10 million ton to 15 million tons in next 2 years

Source: Dow Jones Newswire

[winston]

Not vested.

DJ MARKET TALK: Citigroup Upgrades China Coal To Buy From Hold

1151 [Dow Jones] STOCK CALL: Citigroup upgrades China Coal (1898.HK) to Buy from Hold, raises target price to HK$16.20 from HK$10.90 due to stronger coal demand and rising coal prices. Says China Coal has been outperformer in November, but house thinks share price can continue to perform on more positive outlook for coal prices, benefits from Shanxi mine-closure policy; quality volume growth coming through in 2010, as house sees 2010 average selling price increasing by 17%.

Notes historically, China Coal has traded at 18% discount to Shenhua (1088.HK) but house thinks improvements in quality warrant lower discount. Notes upside on China Coal is therefore justified on absolute and relative basis.

Source: Dow Jones Newswire

[winston]

Not vested. And it has been a hot summer ...

DJ UPDATE: China Coal Energy 1st-Half Net Up 26% At CNY4.46 Bln

HONG KONG (Dow Jones)--China Coal Energy Co. (1898.HK) said Friday its first-half net profit rose 26% from a year earlier due to increased coal demand.

But demand could moderate in the second half due to government efforts to cut emissions and save energy, the country's economic planning agency said in July, though it expects domestic coal prices to remain steady because of coal-industry consolidation, security checks at mines and transportation constraints.

China Coal Energy, the country's second-largest coal producer by revenue after Shenhua Energy Co., said in a statement its net profit for the six months ended June 30 was CNY4.46 billion (US$655.5 million), up from CNY3.53 billion a year earlier, according to Chinese accounting standards.

Revenue rose 55% to CNY35.56 billion from CNY22.95 billion.

Hong Kong- and Shanghai-listed China Coal said in July its first-half raw coal output rose 27% to 62.26 million metric tons from 49.06 million tons a year earlier, while coal sales rose 46% to 59.87 million tons from 41.13 million tons.

The average sales price of the firm's self-produced commercial coal during the first half was CNY463 a metric ton, up 9.5% from CNY423 a ton a year earlier.

The unit cost of sales of its self-produced commercial coal during the period was CNY209.9 a ton, up 5% from CNY200 a year earlier.

China is the world's biggest producer and consumer of coal, from which about two-thirds of the energy consumed in the country is derived.

Benchmark spot coal prices of Datong Quality Mix at China's Qinhuangdao port rose more than 5% in the second quarter from a year earlier, though prices remain more than 30% below their peak in July 2008.

Source: Yvonne Lee and Wang Ming, Dow Jones Newswires

[winston]

Not vested.

DJ MARKET TALK: China Coal 1H Results In Line - Deutsche Bank

1119 [Dow Jones] STOCK CALL: China Coal's (1898.HK) 1H10 results in line with estimates, Deutsche Bank says; notes 1H10 net profit +25% on-year at CNY5.446 billion vs house's expectation of CNY5.368 billion.

Says liked average selling price, production, sales volume, cost. Notes self-produced commercial coal ASP +9% on-year at CNY463/ton vs house's full-year forecast at CNY452/ton; production, sales both ahead of house's FY estimates.

Notes production cost/ton +9% on-year at CNY289/ton, in line with house's expectation, but adds cost control impressive as industry has pointed to cost pressure so far in 2010.

Says dislikes weak yield, but offset by strong ASP, production. Notes announcement indicates progress on Nanlin River Mining Area, other projects; says will be looking for more clarity at Aug. 17 results briefing.

Stock to be included in HSI on Sept. 6. Rates at Buy, target HK$13.10. Stock +3.4% at HK$10.86; HSI down 0.3%.

Source: Dow Jones Newswire

[winston]

Coal producer to double output Sophie He

China Coal Energy (1898) said it will raise annual coal output to 200 million tonnes by 2014 or earlier - twice the 108.56 million tonnes it produced in 2009 - to meet growing demand in the mainland.

The country's second-largest coal producer plans to achieve its target by acquisitions, expanding and upgrading existing projects, as well as exploring new mines, said Yang Lieke, president and executive director.

Yang said he sees the country's coal supply and demand maintaining an overall balance in the second half, although the growth of demand is expected to slow in tandem with economic growth in China.

Meanwhile, the company said it is under great pressure from inflation and acclerating production costs for raw materials and labor.

"It is inevitable that costs will keep going up," said chairman Wang An, adding that he sees growth in costs moderating for the whole year.

Wang said his company's unit cost of sales for commercial coal increased 2.1 percent in the first half compared to the end of 2009. The cost growth in the second half should be maintained at the same level.

China Coal's gross margin fell 2.4 percentage points to 26.6 percent in the first half, from a year ago.

Its cost of sales increased by 59.5 percent, while revenue increased 54.3 percent.

Wang said it is good news that the company has been selected to join the Hang Seng Index.

"It will help us to attract more strong investors while encouraging existing shareholders."


http://www.thestandard.com.hk/news_deta ... 00818&fc=4

[winston]

Not vested

DJ MARKET TALK: Deutsche Bank Keeps China Coal Energy At Buy

1224 [Dow Jones] STOCK CALL: Deutsche Bank keeps China Coal Energy (1898.HK) at Buy, target at HK$13.50 after company reiterates plan to double coal production to 200 million metric tons by 2014.

Says company adding 10 billion tons of resources in Xinjiang, Inner Mongolia, Shanxi, Shaanxi to company's 15.8 billion-ton resource base (as end-2009); acquisitions should increase sustainability of future growth, although resource acquisition of 6 billion tons in

Xinjiang is long-term development as Xinjiang currently lacks distribution channels. Notes key downside risks are failure to upgrade reserves to sustain production, obtaining approvals for new projects; also any deterioration in supply-demand for coal would hurt coal prices. Stock last +0.4% at HK$11.34.


Source: Dow Jones Newswire

[winston]

Not vested. From Phillips:-


Risk
1. Higher than expected sales taxes and surcharge;
2. Lower than expected sales volume;
3. Resources tax reform;
4. Periodic Change of economy may affect the operating performance and production of the Company;
5. Higher than expected transportation cost


Valuation

Compared with its peers, China Shenhua (1088.HK) and Yanzhou coal (1171.HK), they are now trading at 15.02x and 13.6x times 2010 PE respectively.

We set fair 2010 PE and EPS of China Coal Energy (1898.HK) to be 15.0x and RMB 0.83 respectively as relatively small effect of price cap and the lowest debt ratio among peers; while, in the long term, revenue from coal mining equipments, which is unique among peers, will contribute more than expected profit to the company.

Our 12-month target price is HK$ 14.20, which is in between mean and +1SD in the forward PE band shown below, according to the assumptions we mentioned above, implying 20.4% of upside potential relative to the closing price of 08/09/2010.

Rating: Buy.

[winston]

Not vested

DJ MARKET TALK: HSBC Raises China Coal Target To HK$18.60
Oct 27, 2010

1348 [Dow Jones] STOCK CALL: HSBC Research raises China Coal (1898.HK) target price to HK$18.60 from HK$15.80 after rolling over to 2011 P/E of 17X.

Says company reported 3Q net profit of CNY1.61 billion, down 35% from 2Q on lower self-produced coal average selling price and sales volume.

Adds, due to weaker-than-expected 3Q results, house cuts 2010-2012 net profit estimates by 10% as lowers contract coal prices forecasts.

Expects 4Q net profit to recover, helped by winter coal demand. Keeps stock at Overweight. Shares last down 4.3% at HK$14.36.

Source: Dow Jones Newswire

[winston]

Not vested

DJ MARKET TALK: China Coal Down 3.6%; L/T Positive Priced In - MS
Oct 27, 2010

1112 [Dow Jones] China Coal (1898.HK) down 3.6% at HK$14.46 post-results, also due to profit-taking after stock +16.8% month-to-yesterday.

Morgan Stanley says 9M results largely within expectations, with 9M net profit +14% on-year at CNY7.1 billion under IFRS, marking about 69% of house's FY10 net profit forecast.

"With better spot coal pricing momentum and an improved demand outlook for 4Q10, we look for a stronger quarter and hence maintain our full year forecast of CNY10.3 billion."

Keeps stock at Equalweight, but raises target to HK$16.50 vs HK$14.50 after rolling over to 2011. Also marginally raises China Coal's earnings forecast by 1.0%-2.0% over next 2 years.

Adds, "long-term positive priced in" after stock's recent outperformance, with stock (even excluding net cash of HK$1.41/share) trading at 11% premium to Yanzhou Coal (1171.HK).

Source: Dow Jones Newswire

[winston]

Not vested

DJ China Coal: Oct Coal Output 10.46 Million Tons, Up 23% On Year

HONG KONG (Dow Jones)--China Coal Energy Co. (1898.HK), the country's second-largest coal producer by revenue, said Friday its October output totaled 10.46 million metric tons, up 23% from a year earlier.

Total sales fell 0.9% to 9.32 million tons, the company said in a statement.

Coking coal output fell 19% to 170,000 tons.

The Beijing-based company said that in the 10 months ended October, total coal output rose 20.5% to 102.5 million tons, while sales rose 26% to 97.25 million tons.

Source: Joanne Chiu, Dow Jones Newswires