1、March 23, 2011 EARNINGS REVIEW China Coal Energy (H) (1898.HK) Sell Equity ResearchBelow expectations; structurally weaker; Sell What surprised us China Coal reported FY10 net profit of Rmb7.46bn, 23% below our estimate of Rmb9.7bn and 24% below Bloomberg consensus of Rmb9.8bn. China Coals FY10 miss
2、 was mainly due to its higher-than-expected COGS (gross margin was 20.6%, about 3ppt below our estimate) as a result of a higher proportion of sales from coal trading, suggesting that China Coals capacity expansion projects are not likely to translate into any meaningful self-production volume growt
3、h before 2012. What to do with the stock We expect no material margin improvement for 2011-12 given China Coals: (1) increasing exposure to contract sales (65% of FY10 sales, up from 63% in FY09) and smaller proportion of coking coal sales (1% of FY10 sales, vs. 2% in FY09); and (2) persistent high
4、production cost as a result of the larger depth of its mines and lower grade of its raw coals than peers. The structural weakness in China Coals capacity growth outlook and product mix reaffirmed our view that, among the top 3 thermal coal producers, China Coal will likely have the slowest earnings
5、CAGR for 2010-12. The FY10 miss and the likely lack of growth in the medium term will put pressure on the stock, in our view. Reiterate Sell with unchanged 12m Directors Cut-based target price of HK$8.20. Key upside risks: (1) higher-than-expected coal ASPs on lower contract sales ratio; and (2) low
6、er-than-estimated cost profile on better cost reduction efforts. Read-across: In contrast, we believe Yanzhou Coal (1171.HK, Buy, HK$25.45), will likely to see margin expansion due to its increasing exposure to coking coal and spot sales. We believe Yanzhous FY10 earnings could come insignificantly
7、above consensus. FY2010 actual vs GS/Consensus Source: Company data, Bloomberg, Goldman Sachs Research estimates INVESTMENT LIST MEMBERSHIP Asia Pacific Sell List Coverage View: Neutral Julian Zhu +852-2978-7367 Goldman Sachs (Asia) L.L.C. The Goldman Sachs Group, Inc. does and seeks to do business
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10、. Global Investment ResearchKey data Actual GS est. Act. Vs GS Consensus Act. Vs Cons.Gross margin 21% 23% -3ppt 26% -5pptNet income (Rmb mn) 7,466 9,729 -23% 9,873 -24%Basic EPS (Rmb) 0.56 0.73 -24% 0.78 -28%GrowthReturns *MultipleVolatility VolatilityMultipleReturns *GrowthInvestment ProfileLow Hi
11、ghPercentile 20th 40th 60th 80th 100th* Returns = Return on Capital For a complete description of the investment profile measures please refer to the disclosure section of this document.China Coal Energy (H) (1898.HK)Asia Pacific Metals stocks not so assigned are deemed Neutral. Such assignments equ
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26、 the Japanese Securities Finance Company. China Coal Energy (H) (1898.HK)19171612.59.78.32.838.618.72215250510152025302030405060708090100Goldman Sachs rating and stock price target historyStock Price Currency : Hong Kong DollarSource: Goldman Sachs Investment Research for ratings and price targets;
27、FactSet closing prices as of 12/31/2010.The price targets show n should be considered in the context of all prior published Goldman Sachs research, w hich may or may not have included price targets, as w ell as developments relating to the company, its industry and financial markets.RatingPr ic e t
28、ar g etPrice target at removalCovered by current analystNot covered by current analystJan 1, 2008 BSep 28, 2008 to N from BMSCI ChinaIndexPriceStock Price Jan 30 May 18 Nov 13 May 7 Nov 5 Mar 17N B S N BFCSM A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D2008 2009 2010March 23, 201
29、1 China Coal Energy (H) (1898.HK) Goldman Sachs Global Investment Research 5 Ratings, coverage groups and views and related definitions Buy (B), Neutral (N), Sell (S) -Analysts recommend stocks as Buys or Sells for inclusion on various regional Investment Lists. Being assigned a Buy or Sell on an In
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