Yanzhou ++ 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.  

Yanzhou Coal +++ Yanzhou Coal (01171) Coal price increased 18% this year. The Group's production­ in the first half did not meet expectatio­n. However, improvemen­t is expected in the second half. The Group will make up for the shortfall in production­. Share price is cheap compared with Shenhua and China Coal. Buy $15.20 Target $17.00 Cut loss $12.00  

YANZHOU COAL 17.74 +2.32 +15.05%