UBS published a research report. The joint venture with Shanxi Coal Marketing Company will benefit from integrating small-scale coal mines, so it will maintain its “buy” rating, and the target price will remain at 9.65 yuan.

According to the UBS report, International Coal Machine and Shanxi Coal Marketing have set up a joint venture. The company expects to be put into operation by the end of next year. The bank pointed out that since the current small-scale coal mines continue to be integrated, it believes that more coal mining machinery will be needed during the integration process to improve safety levels and efficiency. The bank believes this cooperation is a key step for international coal engines to integrate from the international market to emerging markets.

Furthermore, UBS said that Shanxi Coal Marketing Group plans to integrate more than 400 small coal mines. The bank estimates that 160 TBMs will be needed, which is expected to bring 50 million investment income or 0.04 yuan per share to the International Coal Machine in 2012.

As a result, UBS expects net profit of International Coal Machine to be 338 million and 562 million yuan from 2010 to 2011, earnings of 0.26 and 0.43 yuan per share, with a return on share capital of 20.1% and 19.3%.

International Coal Mining declined 1.57% yesterday to close at HK$6.89.