J.P. Morgan Chase published a research report. It is expected that the coal price trend will continue to be strong next year, so the target price of coal stocks was raised by 2.7% to 8.6% to reflect the expected rise in thermal coal and coking coal prices to 120 US dollars and 220 US dollars per ton, respectively.
According to the J.P. Morgan report, due to continued heavy rains in Australia and Indonesia, which strained global coal supply, the price of coal for electricity generation rose 9.4% to 116 yuan per ton in the past two weeks. On the other hand, the continued strength of the Australian dollar and the continued rise in mining costs also supported the rise in coal prices. Motong expects that mainland coal prices will also continue to strengthen globally in the future due to rising coal prices. At the same time, China has become a coal importer since 2009, and believes coal prices will rise to 120 US dollars per ton in 2011.
As for the coking coal market, benefiting from a recovery in mainland steel production in November, coking coal prices were under upward pressure. Therefore, Motong raised its coking coal price forecast for next year from 221 US dollars per ton to 220 US dollars per ton.
Based on the above reasons, J.P. Morgan raised the target prices and profit forecasts of the four listed coal companies in Hong Kong, mainly due to the increase in the prices of thermal coal and coking coal, and reiterated the “increase in holdings” of the Mongolian coking coal company (00975-HK), maintaining the “increase in holdings” rating of the Yanzhou Coal Industry (01171-HK), while upgrading the rating of China Coal Energy (01898 - HK) from reduced holdings to neutral, and maintained the “neutral” rating of Shenhua (01088-HK).
Stock Name/Investment Rating/Target Price
Mongolian coking coal company (00975-HK) /increased holdings/11->11.3 yuan.
Yanzhou Coal Industry (01171-HK) /maintained an increase in holdings/26.7->29 yuan.
China Coal Energy (01898 - HK)/Reduced holdings -> Neutral/ 11.5->12 yuan.
Shenhua Energy (01088-HK) /Maintains neutral/31.5->33.5 yuan.
