JPMorgan Chase & Co reiterated that 03369.HK had downgraded its holding rating, lowering its target price from 2.20 yuan to 1.90 yuan, and lowering its profit forecast for 2016-2018 by 80.3%, 69.2% and 41.4%, to reflect the average price drop. The bank believes that market expectations, valuations and share prices will gradually reflect the sharp decline in earnings, and the stock price is expected to have a great downward opportunity.

The bank pointed out that the volume of coal transported by mainland railways fell 12 per cent in the first half of this year, which was more serious than the 5 per cent expected by the bank, while the throughput of the main coal terminals fell by about 5 per cent year-on-year, but the retrogression has accelerated since April due to tighter production requirements. In February this year, the railway started to reduce freight charges and offer short-haul concessions to compete with trucks. The terminal price reduction is even more serious, ranging from a 20% reduction in Qinhuangdao to a 50% reduction in Caofeidian.

The bank's market survey found that the policy restrictions on production are being strictly enforced, although coal prices will recover in the second half of the year, but the company's wharf throughput will not recover, and railway coal transport is expected to fall 11% in the second half of the year.