According to a research report issued by UBS, after the annual income of mainland coal equipment stocks has risen by 25% to 40% in the past five years, it is estimated that the industry will grow at an annual rate of 20% in the next five years. Under the 12th five-year Economic Plan, the requirement of coal concentration in the mainland will be further increased, and the mechanization ratio will be raised to more than 75%, which is believed to bring huge demand to the industry.

UBS said that International Coal Machinery was the "preferred stock" of the bank's coal equipment, reiterated its "buy" investment rating, and raised its target price 66% from 5.8 yuan to 9.65 yuan, which is equivalent to 19 times the price-to-earnings ratio for 2011. Close to the level of international peers, indicating that it can benefit from strong order demand in Shanxi Province, and raised its 2010-2012 earnings forecast by 1% to 2%.

UBS also said it first gave 00631-HK a "buy" investment rating and an one-year target price of Rmb15.35, which is equivalent to 28 times forecast 2011 earnings. It is expected to have a compound earnings growth rate of more than 50 per cent in the future, compared with its international peers by only 13 per cent, and said it could increase its annual sales along the road by 20 per cent over the next five years through plans to increase production capacity.

UBS International Coal Machinery's earnings per share forecast for 2010-2012 are 0.26, 0.43 and 0.57 yuan respectively, while the bank estimates that Sany International's earnings per share forecast for 2010-2012 are 0.3 yuan, 0.46 yuan and 0.69 yuan respectively.