UBS published a report that expects the growth momentum of international coal machines to be strong in the next few years. The stock will be given a “buy” rating for the first time, with a target price of 5.1 yuan for 12 months to reflect the compound annual growth rate of coal machines from 2010 to 2012.

According to the UBS report, although coal prices have fluctuated recently, coal mine production capacity in the mainland is expected to rise, and coal mines want to adjust efficiency and improve safety levels; according to the China Coal Machinery Industry Association, which expects mainland coal machinery sales to be 90 billion yuan in 2010, UBS also expects the industry to grow by 20% over the next 3 years.

UBS also pointed out that International Coal Machine's fiscal year compound annual growth rate from 2010 to 2012 was 41%, mainly driven by a compound annual increase of 21% in sales. Coupled with an improvement in the rate, it is optimistic about the Group's prospects.

As a result, the bank expects net profit for International Coal Machine this year and next two years, and expects net profit of 329 million yuan (RMB, same below) and 488 million yuan for 2010 and 2011, earnings of 0.25 and 0.38 yuan per share, with a return on equity of 18.4% and 16.1%.

International Coal Machinery declined 3.19% throughout the day to close at HK$3.34.