In our latest Asia Monthly, we discuss the performance of major Asian credit indices and review UST curve movements in October 2024. We also provide a recap of major news and macroeconomic releases, including those from the US, China, India, Indonesia and Japan. In addition, we summarise the Top/Bottom performers, recent USD bond issuances and rating actions in Asian corporate credit, as well as a list of our recent research. The Asia Monthly publication serves to keep investors updated on d...
The general evaluation of YANZHOU COAL MINING (HK), a company active in the Coal industry, has been upgraded by the independent financial analyst theScreener with the addition of a star. Its fundamental valuation now shows 4 out of 4 possible stars while its market behaviour can be considered as moderately risky. theScreener believes that the additional star(s) merits the upgrade of its general evaluation to Slightly Positive. As of the analysis date April 1, 2022, the closing price was HKD 24.7...
Coal prices are reaching record-high levels on supply shortage in September. Port inventory is hovering at a 5-year low. There was no meaningful pick-up in domestic raw coal production, and the rising level of imports has been unable to offset the supply shortage. The power supply shortage is more severe than the market expected in September. For the upcoming winter season, securing coal and power supply should be the priority. We maintain MARKET WEIGHT on China’s coal sector.
China coal names posted upbeat 1H21 results. Market leaders’ margins have expanded to record-high levels, supported by rising sales volumes and coal prices. Looking ahead, despite the persistent policy headwinds, we expect coal names to deliver strong earnings growth in 3Q21, and the downside of coal prices to be limited in 4Q21’s heating season. However, the leading coal names’ valuations have recovered to historical mean levels. Maintain MARKET WEIGHT on the sector.
Full Article at IIR has reaffirmed its Recommended rating for PIA after undertaking a review post the appointment of a new Portfolio Manager, Harding Loevner. The full report can be found on the IIR website. On 26 July 2021, Pengana International Equities Limited (PIA) announced a fully franked dividend of 1.35 cents per share for the June quarter. This represents an 8% increase on the March quarter dividend and takes the total dividends declared for FY21 of 5.1 cents per share, fully franked....
Domestic coal prices have been staying at record-high levels in July thanks to robust downstream demand and supply tightness as a result of coal import restrictions and safety checks in domestic mines. We are now more cautious on the 2H21 outlook and expect coal prices to trend down in 2H21 with further rollout of government regulations to cool down the overheated coal market with easing supply pressures from domestic mines and imports. Maintain MARKET WEIGHT. Downgrade Yanzhou Coal to SELL.
The NDRC expects coal prices to trend downwards starting Jul 21 with increasing supply. Besides, the potential release of coal reserves and rising power generation from hydro and solar sources are expected to ease coal supplies in the peak demand season. We think domestic coal prices peaked in 1H21 with regulators stepping in. Thus, we are cautious on the performance of coal stocks in 2H21. Maintain MARKET WEIGHT but with lower target prices.
Coal prices continued to trend up in 2Q21, rising 59% yoy and 14% qoq, marking a new high. Coal production reported an 11% yoy growth in 4M21, while coal supply has been capped by shrinking coal imports (down 25% in 5M21) and strict safety checks. Coal prices are likely to remain strong, as we expect strong fundamentals to outpace policy headwinds in the coming summer peak season. Valuation recovery will continue for the leading coal names. Maintain MARKET WEIGHT. Top picks: China Shenhua, China...
Domestic thermal coal price has rebounded by 33% to Rmb752/tonne and coking coal futures has also risen 11% respectively since end-Feb 21. The spike in domestic coal prices was due to the recent coal mine accident in Xinjiang, which is expected to trigger another round of mine safety inspections. QHD inventory level is 35% lower yoy partly due to stricter safety and environment policies post heating season. 1Q21 coal imports fell 28.5% yoy with around 69% sourced from Indonesia. Maintain MARKET ...
Domestic thermal coal prices have been normalising since mid-Jan 21 (-40% as of 5 Mar 21), but port inventory has declined 3.2% since end-Feb 21 with the recovery of downstream demand post-CNY. The coking coal and coke markets have been strong ytd on tight supply-demand support, and will likely outperform thermal coal in the near term. We remain cautious on the China coal sector in the long term. The share price rally was supported by a valuation recovery. Maintain UNDERWEIGHT. Buy Shenhua on va...
Domestic thermal coal prices further edged up by 6% in the past two weeks to Rmb663/tonne, on: a) La Nina weather phenomenon which boosted domestic power demand for heating purposes; b) recent coal mine accidents triggering a new round of mine safety checks and operational suspensions; and c) coal imports reporting a 48.8% yoy decline in Nov 20. We expect the overheated domestic coal market to soon trigger a step-in by regulators. Maintain UNDERWEIGHT. BUY Shenhua on valuation grounds.
Domestic thermal coal price is currently at a 19-month high of Rmb623/tonne. The strong domestic coal market will persist through the year-end, supported by the current low port inventory level and the peak demand season ahead. Total coal import as of end-Oct 20 was down 8.3% yoy while domestic raw coal production was up 0.1% yoy. The new round of safety checks following two mine accidents in Shanxi are crimping domestic coal output. Maintain UNDERWEIGHT. Top pick is China Shenhua.
Yanzhou Coal Mining reported 1H20 net profit of Rmb4,549m, down 21.7% yoy. The sharp decline in operating profit was partly alleviated by one-off valuation gains of Rmb3,183m following the acquisition of another 10% in Moolarben JV. A 12% yoy decline in ASP and a spike in cost of coal sales dragged gross margin by 13.9ppt yoy to 22.0% (1H19: 35.9%). Maintain HOLD and target price of HK$6.55. Entry price: HK$6.00.
Domestic thermal coal prices have rebounded by 17% since 10 May 20 to Rmb542/tonne currently. Coal inventory levels at ports remain on a downtrend due to supply side limitations; stocks at the QHD port are now 42% below the average in May. IPPs’ daily consumption is back to pre-COVID-19 levels, pointing to recovering economic activities. However, the strong uptrend may be unsustainable, given the recovery in domestic coal supply. Maintain UNDERWEIGHT on the coal sector.
China’s coal sector posted a mixed bag of results for 2019. Revenue growth was mainly supported by sales volumes, while margins were further compressed by sluggish ASPs and rising unit production cost. The decent dividend policy revision of Shenhua is an upside. Maintain UNDERWEIGHT on China’s coal sector; we foresee a sharp decline in coal mine earnings in 2020 given the gloomy outlook on coal prices and mines’ margin contraction. We prefer Shenhua on its undemanding valuation and rich di...
In 2019, China’s raw coal production grew 4.2% yoy and imports rose 6.3% yoy to a record 300m tonnes. Coal prices fell in 2019. Looking ahead, we maintain our cautious view on China’s coal market as we foresee easing supply and softer demand in 2020. Coal prices are expected to continue to drop towards the “Green Zone†level. Downgrade the sector to UNDERWEIGHT. Downgrade Shenhua to HOLD.
We observed a continuous downward trend in domestic coal prices throughout 2019 while current high inventory levels at key IPPs would largely cap potential price hikes as we enter the winter season. For 2020, we suggest staying cautious on the coal sector as we foresee mounting coal production from big miners and softening downstream demand from both the steel and cement industries. Coal prices will continue its downtrend towards the “Green Zone†level. Maintain MARKET WEIGHT.
China domestic coal prices held up well during the low-demand season. In August, raw coal production growth slowed while thermal power generation stabilised. We believe more stringent safety checks at coal mines before the national holiday and the 25-day Daqin Railway maintenance work should support coal prices in the short term before triggering a valuation recovery. Maintain MARKET WEIGHT on the coal sector. We have BUY ratings for China Shenhua, China Coal and Yanzhou Coal.
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