Credit Suisse upgraded the Mongolian coal company rating (00975-HK) from “outperforming the market” to “neutral”, raising the target price of the stock from 3 yuan to 3.3 yuan.

According to a report released by Credit Suisse, the bank lowered the profit forecasts of Mongolian coking coal companies this year and next year by 64% and 17%, respectively, to reflect the company's lower than expected average sales price and revised coking coal price forecasts. However, Credit Suisse said that if the government takes over the railway project from the Mongolian coal company, the company will save 800 million US dollars in capital expenses from 2012 to 15, and the company's valuation is expected to gradually improve.

Credit Suisse pointed out that in an environment where the market was weak in the third quarter of this year, compared to other domestic peers, as remote suppliers to the terminal market, Mongjiao coal companies faced higher inventory pressure. The company's average selling price fell below the market standard by 20%, and sales were below 15% of this year's budget.

However, sales volume and average sales prices have recovered somewhat since the end of September. Credit Suisse expects the market to be more stable and balanced next year, and that the average sales price of Mongolian coking coal companies will remain stable, with sales reaching 10 million tons, up 70% from this year.