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Coal Stocks Flying; N/T Coal Price To Stay High
Shenhua (1088.HK) +9.3% at HK$51,
Yanzhou Coal (1171.HK) +9.3% at HK$16.86,
China Coal (1898.HK) +5.8% at HK$26.55 despite recent sharp gains, as near-term coal prices tipped to stay high, on expected prolonged tight coal market, high oil price. DBS lifts average domestic/export coal price growth (thermal/coking) assumption to 5% growth for both FY08 and FY09, up from previous 2% and flat growth, respectively. "We believe near-term supply constraint will continue to underscore the spot coal market in 4Q07." Also ups earnings forecast by 5-6% for both Shenhua (1088.HK) and Yanzhou Coal (1171.HK) for FY08-09. Keeps Fully Valued on Shenhua given its current valuation, which 33X PER for 2008, highest among regional peers; keeps Hold on Yanzhou, with 13% upside to target price of HK$17.50.
Shenhua (1088.HK) +9.3% at HK$51,
Yanzhou Coal (1171.HK) +9.3% at HK$16.86,
China Coal (1898.HK) +5.8% at HK$26.55 despite recent sharp gains, as near-term coal prices tipped to stay high, on expected prolonged tight coal market, high oil price. DBS lifts average domestic/export coal price growth (thermal/coking) assumption to 5% growth for both FY08 and FY09, up from previous 2% and flat growth, respectively. "We believe near-term supply constraint will continue to underscore the spot coal market in 4Q07." Also ups earnings forecast by 5-6% for both Shenhua (1088.HK) and Yanzhou Coal (1171.HK) for FY08-09. Keeps Fully Valued on Shenhua given its current valuation, which 33X PER for 2008, highest among regional peers; keeps Hold on Yanzhou, with 13% upside to target price of HK$17.50.
