UBS published a report that International Coal Machinery's acquisition of Qingdao Tianxun helped improve gross profit margins, so it maintained its “buy” rating. The target price was raised 13.73% to HK$5.8 from HK$5.1 to HK$5.8 to reflect a price-earnings ratio of 11.8 times in 2011. According to the UBS report, International Coal Machinery's acquisition of Qingdao Tianxun for RMB 38.9 million is equivalent to Coal Machinery's acquisition of Qingdao Tianxun in the first half of the year with a price-earnings ratio of 7 times the expected price-earnings ratio. Among them, Qingdao Tianxun's revenue was 50%, and the acquisition helped the company's long-term development. UBS added that Qingdao Tianxun's gross margin was 50 to 60%, while the net profit margin for the past 2 years was 25 to 35%. The bank believes that the Group's TBM products expect there will be room for improvement of 3 to 5% in 2011. In view of this, UBS expects net profit for International Coal Machinery this year and next to be $329 million and $558 million (RMB, same below), earnings per share of $0.25 and $0.43, and return on equity of 19.6% and 19.2%. International Coal Machinery closed at HK$3.86 yesterday.