Lyon Securities (Asia) purchased the rating from Mongolia Mining Company (0975.HK) for the first time. The target price was set at HK$7.20, as the company's earnings are expected to triple during the 2011-2013 fiscal year, thanks to strong production growth and strong profit margins.

According to the bank, the compound annual revenue growth rate of the Mongolian Mining Company for the 2012-2013 fiscal year is expected to be 83%, and the net revenue for fiscal year 2013 is expected to be 398 million US dollars, as production in fiscal year 2013 will double to 15.7 million tons, compared to 7.1 million tons last year.

The bank added that coal washing and improved logistics are driving up profit margins, which also supports rapid production growth.

Lyon Securities said that after the recent stock price correction, the stock was undervalued. The price-earnings ratio for fiscal year 2013 was 6.3 times, and the ratio of price to net present value was 0.6 times; the company's stock price should rise because production targets were met, showing room for profit margins through coal washing, and speeding up its cost-saving railway project.