Professional Documents
Culture Documents
2013 2013
GDP 15 14.6% 20.9%
2013 5.3% 4.4% 2.7 3.05
2013 4 1/4
6% 56%
2013 4 GDP 7% 2013 4
0.89
1997
1997-1998 19981999 19982001
2002
20132015 2013
-10%-17%
2013 -5%-17%
2013-2015 20.2%/34.0%/31.9% 12
28.7%
/
///
B /H
2013
EPS 23%
72
18.26
11.64
11.45
7.55
36.40
8.55
8.79
11.54
5.26
4.83
8.63
9.03
7.82
5.14
7.89
5.70
5.65
600123.SS
601699.SS
14.94
601918.SS
8.56
3948.HK
39.64
002128.SZ
9.29
600348.SS
9.39
600546.SS
12.25
000780.SZ
5.54
900948.SS
5.08
000937.SZ
8.73
600395.SS
8.84
601101.SS
7.45
601666.SS
4.83
000983.SZ
7.32
600997.SS
4.44
601001.SS
3.51
56.9%
30.5%
13.3%
8.9%
8.7%
6.8%
6.1%
5.3%
5.2%
1.2%
-2.1%
-4.8%
-6.0%
-7.2%
-22.1%
-37.8%
BH
*20137212
EV/EBITDA
DataStream
2013 2 1
2013
2012 12 4
2012 9 24
2012 7 6
2012 5 17
2013-2015 32%
*
, CFA : S1420511010001
+86(21)2401-8948 yong.han@ghsl.cn
: S1420512030001
+86(21)2401-8945 jefferson.zhang@ghsl.cn
2013 7 8
Table of contents
Multiple factors driving coal market weakness; financial tightening causing continued demand pressure
Path to coal industry stabilization must include lower coal prices, less investment, capacity elimination
13
18
24
26
30
33
Disclosure Appendix
37
Unless otherwise mentioned, all prices in this report are as of market close July 2, 2013.
The author would like to thank Rory Wang for her contribution to this report.
2013 7 8
Exhibit 1: Valuation summary for global coal companies under GS/GH coverage
Ticker
EPS
GS/GH
2-Jul-13
Rating
Price
Ccy
12M TP
P/E (X)
2013E
2014E
22.70
2.01
1.93
8.4
4.90
0.44
0.32
11.3
CNY
18.26
1.40
1.66
8.3
China-A/B share
Shenhua (A)
601088.SS
Buy
16.93
CNY
601898.SS
Neutral
4.93
CNY
Lanhua Sci-Tech
600123.SS
Buy*
11.64
2013E 2014E
P/B (X)
EV/EBITDA (X)
ROE
2013E
2014E
2013E
2014E
2013E
2014E
8.8
1.2
1.1
5.4
5.7
15%
13%
15.3
0.7
0.7
8.2
9.3
7%
5%
7.0
1.3
1.1
4.8
3.6
16%
17%
11%
Lu'an Energy
601699.SS
Buy
11.45
CNY
14.94
0.84
0.85
13.7
13.5
1.5
1.4
4.8
4.3
12%
SDIC Xinji
601918.SS
Buy
7.55
CNY
8.56
0.48
0.51
15.6
14.7
1.5
1.4
7.7
7.2
10%
10%
900948.SS
Neutral
4.83
USD
5.08
2.85
3.00
10.4
9.9
2.2
1.9
6.6
6.2
22%
20%
15%
Huolinhe Coal
002128.SZ
Neutral
8.55
CNY
9.29
0.89
0.77
9.6
11.1
1.7
1.5
7.0
7.3
19%
Yangquan Coal
600348.SS
Neutral
8.79
CNY
9.39
0.72
0.63
12.2
14.1
1.5
1.4
5.0
5.0
13%
10%
SCIE
600546.SS
Neutral
11.54
CNY
12.25
0.90
1.15
12.9
10.0
1.3
1.2
6.3
5.6
11%
13%
Pingzhuang Energy
000780.SZ
Neutral
5.26
CNY
5.54
0.23
0.15
23.1
34.5
1.1
1.1
5.5
6.1
5%
3%
Jizhong Energy
000937.SZ
Neutral
8.63
CNY
8.73
0.73
0.64
11.9
13.4
1.2
1.2
5.3
5.2
11%
9%
Panjiang
600395.SS
Neutral
9.03
CNY
8.84
0.52
0.62
17.3
14.7
1.9
1.8
9.2
8.2
11%
13%
Haohua Energy
601101.SS
Neutral
7.82
CNY
7.45
0.60
0.45
13.0
17.2
1.3
1.2
7.5
8.6
10%
7%
Pingdingshan Coal
601666.SS
Neutral
5.14
CNY
4.83
0.22
0.13
23.1
39.5
1.1
1.1
5.1
5.7
5%
3%
Xishan Coal
000983.SZ
Neutral
7.89
CNY
7.32
0.32
0.22
24.8
36.4
1.6
1.5
6.7
7.1
6%
4%
24.3
28.5
Kailuan Energy
600997.SS
Sell
5.70
CNY
4.44
0.23
0.20
Datong Coal
601001.SS
Sell
5.65
CNY
3.51
(0.26)
(0.39)
Yanzhou (A)
600188.SS
Sell
9.41
CNY
7.90
0.07
0.23
1.0
1.0
7.7
8.0
4%
3%
1.1
1.2
7.9
10.1
-5%
-8%
133.2
40.4
1.0
1.0
9.1
9.4
1%
2%
13.0
14.7
1.3
1.2
6.7
6.6
10%
9%
HK-H share
Shenhua (H)
1088.HK
Buy
19.56
HKD
23.90
2.53
2.44
7.7
8.0
1.1
1.0
5.0
5.3
15%
13%
3948.HK
Neutral
36.40
HKD
39.64
3.56
3.76
10.1
9.7
2.1
1.8
6.5
6.1
22%
20%
Shougang Resources
0639.HK
Neutral
2.82
HKD
2.30
0.19
0.16
15.0
17.1
0.8
0.8
6.3
6.8
5%
4%
7.1
9.8
5%
1898.HK
Neutral
3.95
HKD
4.10
0.55
0.40
0.5
0.4
6.6
7.8
7%
0975.HK
Sell
1.55
HKD
1.00
(0.19)
0.01
1.1
1.1
55.6
11.2
-13%
1%
Hidili
1393.HK
Sell
1.40
HKD
1.00
(0.11)
(0.11)
0.3
0.3
19.8
16.1
-2%
-3%
Yanzhou (H)
1171.HK
Sell*
5.55
HKD
4.40
0.09
0.30
CNX
Neutral
27.12
USD
37.00
1.46
2.19
Peabody Energy
BTU
Neutral
14.86
USD
22.00
(0.18)
0.96
ANR
Sell
5.33
USD
5.00
(2.23)
(1.68)
Arch Coal
ACI
Neutral
3.69
USD
5.00
(1.27)
(0.35)
Walter Energy
WLT
Sell
10.79
USD
13.00
(1.72)
0.49
61.9
18.8
0.5
0.5
6.4
6.7
1%
2%
10.1
9.8
0.8
0.8
6.5
6.8
0.1
0.0
11%
18.6
18.6
12.4
1.5
1.3
7.4
6.3
7%
15.5
0.8
0.8
7.6
5.5
-1%
5%
0.3
0.3
7.8
5.4
-11%
-9%
-3%
0.3
0.3
10.5
6.4
-10%
21.8
0.8
0.8
11.7
5.8
-13%
4%
15.5
0.8
0.8
7.8
5.8
-10%
4%
Indonesia
Banpu Public Company
BANP.BK
Buy
241
THB
410
1.09
1.28
7.1
6.1
0.8
0.7
5.9
5.2
11%
12%
Harum Energy
HRUM.JK
Buy
3,100
IDR
5,100
0.04
0.05
7.4
6.0
2.2
2.1
3.1
2.3
32%
36%
Bumi Resources
BUMI.JK
Sell*
520
IDR
480
0.00
0.01
12.8
7.2
4.8
3.1
6.9
6.0
45%
52%
PT Adaro Energy
ADRO.JK
Neutral
800
IDR
1,050
0.01
0.01
9.2
9.1
0.9
0.9
5.2
5.1
11%
10%
PTBA.JK
Sell
13,200
IDR
11,000
976.50
1,061.47
13.5
12.4
3.0
2.5
9.0
7.9
24%
22%
Australia
Rio Tinto plc
RIO.L
Sell*
2,694
GBP
2,715
5.18
4.74
7.9
8.6
1.4
1.3
5.8
6.2
19%
16%
India
Coal India Ltd.
COAL.BO
300
INR
375
29.17
34.30
10.3
8.7
3.9
3.3
5.5
4.5
37%
35%
Neutral
Source: Datastream, Goldman Sachs Research estimates, Gao Hua Securities Research estimates.
2013 7 8
CPI
China's PMI
65
10%
60
8%
55
6%
50
PPI
4%
45
2%
40
0%
May-13
Mar-13
Jan-13
Nov-12
Sep-12
Jul-12
May-12
Mar-12
Jan-12
Nov-11
Sep-11
Jul-11
May-11
Mar-11
Jan-11
Nov-10
Sep-10
Jul-10
Jun-13
Feb-13
Oct-12
Jun-12
Feb-12
Oct-11
Jun-11
Feb-11
Oct-10
Jun-10
Feb-10
Oct-09
Jun-09
Feb-09
Oct-08
Jun-08
Feb-08
Oct-07
Jun-07
Feb-07
-4%
May-10
30
Mar-10
-2%
Jan-10
35
-6%
Source: Bloomberg.
Source: CEIC.
Rapid hydropower growth has limited thermal power demand. Water has been relatively
abundant, leading to yoy Jan-May hydropower generation growth of 14.6% (1.4% in May), while
yoy thermal power generation growth was just 2.1% (3.7% in May). With thermal power
generation growth remaining low, pressure from hydropower substitution is putting pressure on
thermal coal demand.
Exhibit 4: Recent pressure on thermal power from hydropower should continue
40.0
32.9
30.0
23.2
20.0
14.6
13.9
6.8
10.0
0.0
May-13
Mar-13
Jan-13
Nov-12
Sep-12
Jul-12
May-12
-13.9
Mar-12
Jan-12
Nov-11
Sep-11
Jul-11
-20.0
May-11
Mar-11
-10.0
2.1
-0.2
-1.2
Source: CEIC.
2013 7 8
Thermal
Hydro
Wind
Natural gas
Nuclear
Solar
Others
100%
90%
300%
80%
250%
70%
200%
60%
50%
150%
40%
100%
30%
50%
20%
May-13
Mar-13
Jan-13
Nov-12
Sep-12
Jul-12
May-12
(100%)
Mar-12
2012
Jan-12
2011
Nov-11
2010
Sep-11
2009
Jul-11
2008
May-11
2007
Mar-11
2006
Jan-11
2005
Nov-10
0%
Sep-10
(50%)
Jul-10
10%
Power plant demand remains weak. As of June 20, 2013, inventory at major Chinese power
plants was 74.78mt (22 days, vs. 18 days in January). Average daily consumption had fallen to
3.3mt, a drop of 29.6% from Januarys 4.27mt. Even though the summer electricity consumption
peak is approaching, power plant purchasing remains weak (there were only 31 waiting ships at
Qinhuangdao port on July 1, 2013, vs. approximately 100 under normal conditions).
Exhibit 8: Coal consumption at major power producers
continued to decline
Coalinventoryinmajorpowerplants
100
days
35
Inventorydays(RHS)
30
80
mt
5
Coalconsumptionofmajorpower
plants
25
60
20
40
15
10
20
0
Jun09
5
0
Feb10
Source: SXCoal.
Oct10
Jun11
Feb12
Oct12
Jun13
1
0
Jun09
Feb10
Oct10
Jun11
Feb12
Oct12
Jun13
Source: SXCoal.
Significant increase in coal imports. In 2012, China imported 289mt of coal, +30% yoy. From
January-May of this year, China imported 136mt of coal, + 21% yoy, which had a severe impact
on the already-weak Chinese domestic coal market. We raise our 2013 coal import volume
estimate to 305mt from 270mt (assuming Jan-May average monthly imports of 27mt hold steady
in June and July, and fall by 4mt to 23mt starting in August due to weak demand and possible
import limit policies).
2013 7 8
Monthlycoalimport
mt
yoy
Rmb/t
Pricedifference(RHS)
DomesticcokingcoalCIF
QueenslandcokingcoalCIF
Rmb/t
250%
2900
200%
2600
900
150%
2300
700
100%
2000
500
14
50%
1700
0%
1400
34
29
24
19
4
Sep10
May11
Jan12
Sep12
50%
May13
Source: CEIC.
1100
300
100
100
300
1100
Jun11 Oct11 Feb12 Jun12 Oct12 Feb13 Jun13
Source: SXCoal, McCloskey.
Policies affecting coal imports remain uncertain. The Temporary Provisions on Salable
Coal Quality (Draft for Comments) issued by the National Energy Administration sets standards
for long-distance transported and imported coal: lignite must have sulfur content of less than 1%,
ash content of less than 20%, and calorific value of at least 3,941 kcal/kg; bituminous and
anthracite coal must have sulfur content of less than 2%, ash content of less than 30%, and
calorific value of at least 4,300 kcal/kg and 5,001kcal/kg respectively. This policy is still in the
comment phase, and it faces opposition from the five major power producers. Even if the policy is
enacted, we do not expect oversupply in the domestic coal market to fundamentally improve; only
gradual capacity reduction will help the long-term healthy development of the coal industry, in our
view.
mt
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Shanxidailyaveragecoalsalesviarailway
yoy(RHS)
1.5
90%
1.3
70%
1.1
50%
30%
0.9
10%
Source: CEIC.
Apr-13
Feb-13
Oct-12
Dec-12
Aug-12
Apr-12
Jun-12
Feb-12
Dec-11
Oct-11
Jun-11
Aug-11
Apr-11
Feb-11
Dec-10
0.7
0.5
Dec09 Aug10
10%
Apr11
Dec11 Aug12
30%
Apr13
Source: SXCoal
2013 7 8
Chinas macro economy continues to face downward pressure. On June 24, the Goldman
Sachs ECS team downgraded its China GDP growth estimates on signs of cyclical weakness and
recent financial tightening. Its current GDP growth estimates are 7.4% for 2013 (originally 7.8%),
and 7.7% for 2014 (originally 8.4%). GDP growth is estimated to fall to 7.0% in 4Q from 7.7% in
1Q, and industrial production growth is expected to fall to 8.6% from 9.6%.
Exhibit 13: China quarterly GDP growth is expected to
trend down (yoy)
China quarterly GDP growth
%
25.0
15.0
12.5
13.8
12.6
10.0
8.9
10.6
9.6
7.5
5.0
20.0
11.9
14.4
14.8
7.3
13.8
13.3
10.0 9.4
10.0
7.0
6.5
15.9
15.0
7.9
19.6
18.2
9.1
0.0
8.6
5.1
5.0
2.5
0.0
AUD depreciation could also lead to lower costs for international coal suppliers.
According to Goldman Sachs ECS estimates, the AUD/USD exchange rate will fall from the
current 0.92 to 0.89 in 4Q13, and may fall further, reaching 0.80 by 2015.
Exhibit 15: We expect AUD to continue to depreciate
1.06
1.00
0.94
0.90
0.80
1.04
1.01
0.91
0.88
0.89
0.74
0.70
0.66
0.60
0.50
0.40
2013 7 8
Capacity under
construction this year
2004
436
270
116
320
2005
757
410
184
573
2006
953
394
226
726
2007
1,097
433
270
828
2008
895
340
231
664
2009
1,010
482
320
690
2010
1,377
574
387
990
2011
1,314
607
413
901
2013 7 8
CAGR
6.6%
6.6%
2.1%
14.0%
Non-fossil energy
Primary energy - consumption
Power generation - installed capacity
Hydro
Thermal
Nuclear
Wind
11.8%
6.6%
13.3%
12.9%
12.7%
9.6%
89.8%
mn TCE
bn TCE
mn kw
mn kw
mn kw
mn kw
mn kw
160
2.36
520
120
390
6.85
1.26
280
3.25
970
220
710
10.82
31.00
Primary energy
bn TCE
Energy:
% non-fossil
%
Demand and
Power consumption trn kwh
efficiency
GDP energy intensity TCE per mn Rmb
Primary energy
bn TCE
Coal
bn tonne
Energy: Supply
Crude oil
mn tonne
Natural gas
bn m3
Installed capacity
mn kw
Power generation
Coal-fired
mn kw
Hydro
mn kw
Environment
Unit GDP carbon
protection
emission
2015
4.00
11.4
6.15
68
3.66
4.10
200
156.5
1,490
960
290
CAGR
4.3%
{2.8}
8.0%
{-16%}
4.3%
4.8%
0.0%
10.5%
9.0%
7.8%
5.7%
{-17%}
380
620
10.3%
Coal
Petroleum
Natural gas
Hydro/wind/nuclear
2.0
Average elasticity
100%
90%
1.5
80%
70%
1.0
60%
50%
0.5
40%
30%
20%
0.0
2013E
2011
2009
2007
2005
2003
2001
1999
1997
1995
1993
1991
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
1989
1988
1987
1986
1985
Source: IEA.
-0.5
1989
0%
1987
10%
2013 7 8
Natural gas
Petroleum
Nuclear
Renewable
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Coal
Natural gas
Nuclear
Renewable
Petroleum
60%
50%
40%
30%
20%
10%
0%
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
Source: IEA.
Source: IEA.
Learning from the 1997 financial crisis: Painful adjustments must be made,
including lower coal prices, lower profits, and decreased investment
Coal prices continue to fall. During the 1997 Asian financial crisis, coal prices remained at a
low level before finally starting to recover in 2001. During the 2008 financial crisis, China was
more severely impacted, and coal prices fell sharply. Qinhuangdao 5,500 kcal/kg coal fell 44%
from Rmb1,010/t in July 2008 to Rmb565/t in 2009. Liulin #4 coking coal prices fell from
Rmb1,605/t in September 2008 to Rmb765/t in December 2008, a 52% drop. In November 2011,
coal prices began to move downwards. Qinhuangdao 5,500 kcal/kg coal prices fell from a high of
Rmb860/t to Rmb585/t currently, a 32% drop.
Exhibit 23: Qinhuangdao 5,500 kcal/kg coal prices
continued to decline
Rmb/t
1200
Rmb/t
1800
1600
1400
1200
1000
800
600
400
200
0
1000
800
600
400
200
Jul-13
Nov-12
Mar-12
Jul-11
Nov-10
Mar-10
Jul-09
Nov-08
Mar-08
Jul-07
Nov-06
Mar-06
Jul-05
Nov-04
Mar-04
Jul-03
Nov-02
Mar-02
Jul-01
Nov-00
Mar-00
Jul-99
Nov-98
Source: SXCoal.
Jul-13
Nov-12
Mar-12
Jul-11
Nov-10
Mar-10
Jul-09
Nov-08
Mar-08
Jul-07
Nov-06
Mar-06
Jul-05
Nov-04
Mar-04
Jul-03
Nov-02
Mar-02
Jul-01
Nov-00
Mar-00
Jul-99
Nov-98
Source: SXCoal.
Coal production and sales volume declined. In 2012, Chinas raw coal production and
consumption yoy growth fell from 8.7%/9.8% to 4%/4.1%. The same happened during the 1997
financial crisis, with raw coal production yoy growth falling -0.7% in 1997 and -4.0% in 1998
before climbing back to 2.4% in 1999. Coal production recovered to above the 1996 level after
2001.
10
2013 7 8
mt
yoy(RHS)
4,000
mt
20.0%
3,500
15.0%
Coal consumption
yoy(RHS)
4,000
20.0%
3,500
15.0%
3,000
3,000
10.0%
2,500
2,000
5.0%
1,500
0.0%
2,500
10.0%
2,000
5.0%
1,500
1,000
1,000
-5.0%
500
-10.0%
Source: Wind.
0.0%
500
-5.0%
Source: Wind.
Earnings and balance sheet of coal firms raise concerns. Coal industry profits fell sharply
in 2012 with year-on-year profit growth contracting 22%, the only negative reading in the last ten
years (except for the 6% decline in 2009). Meanwhile, the industry debt-to-asset ratio moved
higher, climbing from 59% in March 2012 to 62% in April 2013. Following the 1997 Asian financial
crisis, the coal industry suffered losses from 1998 to 1999 consecutively before turning into large
profit in 2002. The whole industry has been mired in trouble for more than four years.
Exhibit 27: China coal industry suffered losses in 19981999
Rmb bn
500
400
300
200
100
ROE(RHS)
35.0%
62%
30.0%
61%
25.0%
60%
20.0%
59%
15.0%
58%
10.0%
5.0%
0
-100
Source: CEIC.
57%
56%
0.0%
-5.0%
Source: CEIC.
FAI in coal industry dropped sharply. Chinas FAI fell sharply following the 1997 Asian
financial crisis before recovering at end-1999; however, FAI in coal industry suffered a four-year
low in 1998-2001 before finally surpassing the pre-crisis level in 2003. Chinas FAI has been
steady since 2012, but FAI in coal industry plummeted with accumulated yoy growth falling to a
historical low of -13% in March 2013. As the negative impact of Rmb4 trillion worth of investment
in 2008 starts to emerge, which further complicated structural problems and lead to oversupply in
certain industries, thus a new version of Rmb4 trillion investment may not be made. We believe
coal industry needs to see its FAI declining before the industry reaches a new balance.
11
2013 7 8
70%
300
yoy(RHS)
60%
250
50%
200
40%
30%
150
20%
100
10%
50
Apr-97
Dec-97
Aug-98
Apr-99
Dec-99
Aug-00
Apr-01
Dec-01
Aug-02
Apr-03
Dec-03
Aug-04
Apr-05
Dec-05
Aug-06
Apr-07
Dec-07
Aug-08
Apr-09
Dec-09
Aug-10
Apr-11
Dec-11
Aug-12
Apr-13
0%
Source: Wind.
350%
300%
250%
200%
150%
100%
50%
0%
-50%
-100%
12
2013 7 8
2007
2008
2009
2010
2011
2012
2013E
2014E
2015E
2,692
6.4%
(15)
38
53
2,802
4.1%
(5)
40
45
2,975
6.2%
103
126
22
3,240
8.9%
166
185
19
3,520
8.6%
208
222
15
3,650
3.7%
280
289
9
3,862
5.8%
296
305
9
3,995
3.5%
281
290
9
4,110
2.9%
281
290
9
55
2,732
55
2,853
4.4%
(158)
2,920
2.4%
(229)
3,176
8.8%
(191)
3,536
11.3%
(385)
3,545
0.2%
(402)
3,755
5.9%
(418)
3,857
2.7%
(432)
3,959
2.6%
Coal Demand
yoy growth
2,727
6.9%
2,811
3.1%
2,958
5.2%
3,122
5.5%
3,430
9.8%
3,511
2.4%
3,666
4.4%
3,812
4.0%
3,938
3.3%
149
20
191
25
153
19
206
24
313
33
347
36
436
43
482
46
503
47
466
9%
725
56%
460
600
-17%
540
17%
745
24%
570
6%
819
10%
570
0%
704
-14%
599
5%
585
-17%
585
-2%
555
-5%
555
-5%
555
0%
555
0%
Import
Export
Coal Inventory
Days of Inventory
Rmb/t, VAT incl.
Spot thermal Coal at QHD(5500kcal/ kg)
yoy growth
Shenhua Contract Price at QHD (5500kcal/ kg)
yoy growth
(2)=(3)-(4)
(3)
(4)
2008
452
-1.1%
3
7
3
2009
449
-0.6%
34
34
1
2010
498
11.0%
46
47
1
2011
556
11.6%
44
45
1
2012
572
3.0%
53
54
1
2013E
595
4.0%
69
70
1
2014E
619
4.0%
69
70
1
2015E
634
2.5%
69
70
1
(5)=(1)+2)
455
483
6.1%
544
12.8%
599
10.1%
625
4.3%
664
6.3%
688
3.6%
703
2.2%
(6)
324
-1.6%
12.1
311
500
2.3%
255
85%
299
12
345
6.6%
0.5
344
568
13.5%
272
85%
318
26
388
12.3%
3.4
384
637
12.2%
294
87%
337
47
428
10.4%
3.3
424
685
7.5%
329
86%
382
43
443
3.6%
1.0
442
717
4.7%
341
86%
395
47
467
5.4%
3.0
464
760
6.0%
358
86%
415
49
485
3.9%
3.0
482
798
5.0%
372
86%
431
51
504
3.9%
3.0
501
838
5.0%
387
86%
448
53
453
-1.6%
483
6.6%
543
12.3%
599
10.4%
621
3.6%
654
5.4%
680
3.9%
706
3.9%
1,556
1,202
-23%
1,436
19%
1,522
6%
1,456
-4%
1,209
-17%
1,148
-5%
1,183
3%
(1)
Import
Export
Coking Coal Supply
yoy growth
Coke production
yoy growth
Coke export
Coke supply
Iron and steel
yoy growth
Coke consumption in steel
Coke consumption
Coke balance
Coking Coal Demand
yoy growth
HCC in Taiyuan, Shanxi (Rmb/ t, VAT incl.)
yoy growth
(7)
(8)=(6)-(7)
(9)
(10)
(11)
(12)=(10)/(11)
(13)=(8)-(12)
(14)=1.4* (6)
Source: Wind, SXCoal, Goldman Sachs Research estimates, Gao Hua Securities Research estimates.
We adjust our 2013-2015E coal price estimates. For 2013, we lower our thermal coal spot
price growth estimate from -10% to -17%, and coking coal price growth from -5% to -17%. For
thermal coal, the cut is mainly due to its slow and weaker-than-expected demand recovery. And
we lower the price estimates for coking coal as domestic supply remains loose -- the capacity of
consolidated coal mines in Shanxi will gradually come on line in 2013-14E -- and coking coal
imports grow fast thanks to abundant coking coal supply from Australia. Thus, we lower our
2013/14E coking coal price growth estimates to -17%/-5%; we maintain a price growth estimate of
3% beyond 2015E as coking coal supply will slow down sharply following capacity release by
consolidated coal mines in Shanxi.
13
2013 7 8
250.0%
20.00%
200.0%
15.00%
150.0%
10.00%
100.0%
5.00%
50.0%
0.00%
4/1/2013
0.0%
5/2013
3/2013
1/2013
11/2012
9/2012
7/2012
5/2012
3/2012
1/2012
11/2011
9/2011
7/2011
5/2011
3/2011
Source: SXCoal.
1/2011
-100.0%
11/2010
9/2010
7/2010
-15.00%
5/2010
-50.0%
3/2010
2/1/2013
12/1/2012
10/1/2012
8/1/2012
6/1/2012
4/1/2012
2/1/2012
12/1/2011
10/1/2011
8/1/2011
6/1/2011
-10.00%
4/1/2011
-5.00%
Source: CEIC.
We update our coal price estimates of listed coal companies based on our adjusted coal price
estimates for different coal types.
Exhibit 35: We adjust our 2013-15E domestic coal price estimates
2013
Thermal
Spot
Contract
Coking coal
Hard coking coal
Soft coking coal
Anthracite
Lump coal
PCI
2014
2015
Prev.
New
Prev.
New
Prev.
New
-10%
4%
-17%
-2%
0%
0%
-5%
-5%
-2%
-2%
0%
0%
-5%
-5%
-17%
-17%
3%
3%
-5%
-5%
3%
3%
3%
3%
-2%
-5%
-10%
-15%
3%
3%
-3%
-3%
3%
3%
3%
3%
We update earnings estimates and target prices based on our coal price adjustments,
and lower our 2013/14/15 EPS estimates by 20.2%/34.0%/31.9% and our 12-month
target prices by 28.7% on average.
Exhibit 36: Adjustments to earnings estimates for coal companies under our coverage
Company
Lanhua
Lu'an
SDIC Xinji
Yitai (H)
Huolinhe
Yangquan
SCIE
Pingzhuang
Yitai (B)
Jizhong
Panjiang
Haohua
Pingdingshan
Xishan
Kailuan
Datong
Average
Ticker
600123.SS
601699.SS
601918.SS
3948.HK
002128.SZ
600348.SS
600546.SS
000780.SZ
900948.SS
000937.SZ
600395.SS
601101.SS
601666.SS
000983.SZ
600997.SS
601001.SS
Rating
Prev.
New
Buy*
Buy*
Buy
Buy
Buy
Buy
Buy
Neutral
Neutral Neutral
Neutral Neutral
Neutral Neutral
Neutral Neutral
Buy
Neutral
Buy
Neutral
Neutral Neutral
Neutral Neutral
Sell
Neutral
Neutral Neutral
Neutral
Sell
Sell
Sell
Prev.
1.61
1.10
0.59
3.71
0.95
0.82
1.11
0.31
3.71
0.90
0.69
0.67
0.31
0.48
0.30
-0.01
2013E EPS
New
1.40
0.84
0.48
2.85
0.89
0.72
0.90
0.23
2.85
0.73
0.52
0.60
0.22
0.32
0.23
-0.26
% chg
-12.7%
-23.9%
-17.7%
-23.2%
-6.4%
-12.2%
-19.5%
-27.5%
-23.2%
-19.2%
-24.3%
-9.6%
-29.0%
-33.5%
-21.5%
n/m
-20.2%
Prev.
1.99
1.28
0.66
4.16
0.94
0.82
1.64
0.29
4.16
0.98
0.96
0.66
0.31
0.50
0.37
0.02
2014E EPS
New
1.66
0.85
0.51
3.00
0.77
0.63
1.15
0.15
3.00
0.64
0.62
0.45
0.13
0.22
0.20
-0.39
% chg
-16.9%
-34.0%
-22.2%
-27.7%
-17.6%
-23.6%
-29.7%
-47.5%
-27.7%
-34.0%
-35.9%
-31.2%
-57.9%
-56.7%
-46.7%
n/m
-34.0%
Prev.
2.33
1.48
0.67
4.58
0.83
0.79
1.70
0.27
4.58
1.01
1.30
0.66
0.21
0.54
0.45
-0.02
2015E EPS
New
1.96
1.02
0.58
3.29
0.75
0.67
1.26
0.11
3.29
0.70
0.79
0.45
0.10
0.25
0.26
-0.35
% chg
-16.0%
-31.2%
-13.7%
-28.2%
-9.5%
-15.1%
-25.9%
-60.2%
-28.2%
-31.3%
-39.3%
-30.7%
-53.8%
-54.2%
-40.9%
n/m
-31.9%
Prev.
26.23
23.42
10.22
50.59
11.83
14.36
18.60
8.00
6.49
16.71
15.13
8.56
4.99
9.99
9.31
4.83
12M TP
New
18.26
14.94
8.56
39.64
9.29
9.39
12.25
5.54
5.08
8.73
8.84
7.45
4.83
7.32
4.44
3.51
% chg
-30.4%
-36.2%
-16.2%
-21.6%
-21.5%
-34.6%
-34.2%
-30.7%
-21.6%
-47.7%
-41.6%
-13.0%
-3.2%
-26.7%
-52.3%
-27.2%
-28.7%
2-Jul
11.64
11.45
7.55
36.40
8.55
8.79
11.54
5.26
4.83
8.63
9.03
7.82
5.14
7.89
5.70
5.65
Price
pot. up/dow n
56.9%
30.5%
13.3%
8.9%
8.7%
6.8%
6.1%
5.3%
5.2%
1.2%
-2.1%
-4.8%
-6.0%
-7.2%
-22.1%
-37.8%
Note: Yitai Bs TP in US$, Yitai Hs in HK$, all others in Rmb. All EPS figures in Rmb.
Source: Gao Hua Securities Research estimates.
14
2013 7 8
Jizhong
Lanhua
Pingzhuang
Lu'an
Panjiang
Xishan
Yangquan
0.73
0.86
-15%
0.64
0.94
-32%
1.40
1.63
-14%
1.66
1.90
-13%
0.23
0.38
-40%
0.15
0.43
-65%
0.84
1.17
-29%
0.85
1.35
-37%
0.52
0.64
-19%
0.62
0.80
-23%
0.32
0.54
-41%
0.22
0.66
-67%
0.72
0.89
-19%
0.63
1.00
-38%
Kailuan
Haohua
Pingdingshan
SCIE
Huolinhe
Yitai
SDIC Xinji
0.23
0.31
-25%
0.20
0.38
-48%
0.60
0.64
-6%
0.45
0.65
-30%
0.22
0.37
-40%
0.13
0.38
-66%
0.90
1.20
-25%
1.15
1.62
-29%
0.89
1.04
-15%
0.77
1.09
-29%
2.85
3.94
-28%
3.00
4.50
-33%
0.48
0.51
-4%
0.51
0.61
-15%
2013E
50.6
47.3
375
93
209
110
2013E
42.0
46.0
144
97
100
28
2013E
10.2
10.2
254
193
189
23
2013E
21.1
18.3
454
331
333
49
2013E
37.2
27.7
439
231
382
11
2014E
57.0
53.5
364
93
210
101
2014E
44.0
48.0
138
97
100
23
2014E
10.7
10.7
244
193
189
14
2014E
24.1
20.9
435
325
325
45
2014E
40.7
31.2
408
230
366
3
2015E
62.8
59.2
364
93
212
99
2015E
46.0
50.0
138
99
102
22
2015E
10.7
10.7
244
196
193
10
2015E
28.0
24.3
435
331
333
44
2015E
44.7
35.2
403
229
355
8
Exhibit 38: Operating data comparison of thermal coal firms under our coverage
Yitai Coal
Production volume (mt)
Sales volume (mt)
ASP (Rmb/t)
Unit production cost (Rmb/t)
Unit cash cost (Rmb/t)
NP/t (Rmb/t)
Huolinhe Opencut Coal
Production volume (mt)
Sales volume (mt)
ASP (Rmb/t)
Unit production cost (Rmb/t)
Unit cash cost (Rmb/t)
NP/t (Rmb/t)
Pingzhuang Energy
Production volume (mt)
Sales volume (mt)
ASP (Rmb/t)
Unit production cost (Rmb/t)
Unit cash cost (Rmb/t)
NP/t (Rmb/t)
SDIC Xinji
Production volume (mt)
Sales volume (mt)
ASP (Rmb/t)
Unit production cost (Rmb/t)
Unit cash cost (Rmb/t)
NP/t (Rmb/t)
Datong Coal
Production volume (mt)
Sales volume (mt)
ASP (Rmb/t)
Unit production cost (Rmb/t)
Unit cash cost (Rmb/t)
NP/t (Rmb/t)
2006
2006
2007
13.7
13.6
281
56
124
122
2007
25.3
27.3
94
59
65
19
2007
7.3
7.3
180
85
107
27
2007
2006
13.3
11.7
334
129
254
45
2007
17.5
15.3
333
130
234
59
2006
18.6
20.6
2006
5.6
5.6
2008
18.2
17.9
429
61
196
171
2008
34.8
36.8
103
69
74
19
2008
9.2
9.2
237
136
130
56
2008
11.8
10.9
458
262
277
99
2008
20.3
17.3
481
198
311
111
2009
26.0
24.7
362
66
176
132
2009
40.3
42.3
108
70
70
26
2009
10.0
10.0
219
137
136
47
2009
12.5
11.0
426
281
267
76
2009
25.8
21.8
433
177
286
92
2010
38.4
36.1
376
81
185
148
2010
40.0
42.5
131
75
77
38
2010
9.8
9.6
278
165
168
67
2010
15.1
13.3
498
321
320
93
2010
29.3
22.5
457
189
307
93
2011
53.8
53.8
400
99
196
154
2011
41.0
44.0
147
88
88
40
2011
10.6
10.7
302
164
171
83
2011
15.3
13.8
534
347
349
96
2011
30.9
23.8
513
212
359
80
2012
53.1
49.8
418
95
211
147
2012
41.0
45.0
151
92
94
38
2012
9.9
9.9
291
193
192
42
2012
19.0
16.4
510
338
344
81
2012
37.1
27.1
480
225
389
35
15
2013 7 8
Exhibit 39: Operating data comparison of coking coal firms under our coverage
Jizhong Energy Resources
Production volume (mt)
Sales volume (mt)
ASP (Rmb/t)
Unit production cost (Rmb/t)
Unit cash cost (Rmb/t)
NP/t (Rmb/t)
Lu'an Environment Energy
Production volume (mt)
Sales volume (mt)
ASP (Rmb/t)
Unit production cost (Rmb/t)
Unit cash cost (Rmb/t)
NP/t (Rmb/t)
SCIE
Production volume (mt)
Sales volume (mt)
ASP (Rmb/t)
Unit production cost (Rmb/t)
Unit cash cost (Rmb/t)
NP/t (Rmb/t)
Panjiang Refined Coal
Production volume (mt)
Sales volume (mt)
ASP (Rmb/t)
Unit production cost (Rmb/t)
Unit cash cost (Rmb/t)
NP/t (Rmb/t)
Kailuan Energy Chemical
Production volume (mt)
Sales volume (mt)
ASP (Rmb/t)
Unit production cost (Rmb/t)
Unit cash cost (Rmb/t)
NP/t (Rmb/t)
Xishan Coal and Energy Power
Production volume (mt)
Sales volume (mt)
ASP (Rmb/t)
Unit production cost (Rmb/t)
Unit cash cost (Rmb/t)
NP/t (Rmb/t)
Pingdingshan Tianan Coal
Production volume (mt)
Sales volume (mt)
ASP (Rmb/t)
Unit production cost (Rmb/t)
Unit cash cost (Rmb/t)
NP/t (Rmb/t)
2006
8.6
2007
11.4
2008
23.2
2006
19.7
18.6
383
235
263
47
2006
2007
20.4
19.5
422
232
260
76
2007
2.7
2.8
350
2008
25.8
23.2
567
253
388
97
2008
3.3
3.6
494
2007
1.7
4.5
526
296
205
120
2007
7.5
4.9
471
172
315
95
2007
16.1
16.3
407
186
250
80
2007
26.7
26.7
370
273
274
41
165
199
2008
2.4
4.8
837
293
280
386
2008
7.5
4.0
862
243
598
149
2008
16.2
16.2
740
272
362
228
2008
28.7
33.8
540
361
388
81
2006
2006
7.5
4.7
459
145
294
97
2006
15.2
14.7
400
178
236
82
2006
22.8
22.4
331
234
258
38
2009
25.9
27.1
611
217
433
85
2009
30.0
26.7
541
288
379
82
2009
4.6
4.4
502
152
139
217
2009
9.3
7.1
631
283
424
140
2009
7.7
4.5
839
301
582
133
2009
18.6
17.8
609
256
339
153
2009
37.4
35.6
422
324
339
40
2010
31.0
34.4
719
310
534
95
2010
33.2
29.6
614
291
407
113
2010
6.1
5.9
707
277
328
228
2010
11.4
7.5
717
262
452
179
2010
8.3
6.2
829
394
609
106
2010
25.8
21.8
689
247
401
149
2010
39.8
37.3
488
363
377
49
2011
34.2
39.7
777
387
585
101
2011
34.2
30.5
689
319
454
109
2011
7.4
7.4
696
297
297
226
2011
12.3
9.9
769
344
515
174
2011
8.4
6.4
883
457
676
88
2011
29.4
21.3
809
247
445
152
2011
38.6
37.2
550
411
423
48
2012
36.4
38.0
668
369
516
69
2012
33.3
28.7
666
322
456
71
2012
11.4
11.4
647
261
374
131
2012
13.6
10.1
778
345
552
151
2012
8.9
6.5
738
378
586
50
2012
27.9
25.4
705
309
467
85
2012
38.4
35.7
532
414
439
33
2013E
35.9
37.5
587
355
456
53
2013E
35.9
31.0
604
316
436
54
2013E
15.1
14.9
539
303
308
113
2013E
12.5
9.5
708
352
533
96
2013E
8.9
6.6
649
374
545
26
2013E
30.1
28.2
583
310
412
48
2013E
38.7
36.0
494
407
422
16
2014E
36.5
38.1
564
347
440
46
2014E
42.0
36.2
580
309
426
50
2014E
20.2
20.0
502
299
311
96
2014E
17.9
13.2
684
345
541
82
2014E
9.9
7.2
634
372
541
20
2014E
33.6
31.3
544
310
406
32
2014E
42.5
39.5
475
398
416
9
2015E
36.5
38.1
576
354
445
50
2015E
48.9
42.2
588
316
437
52
2015E
21.1
20.9
507
302
314
98
2015E
22.4
16.7
696
359
558
84
2015E
10.9
7.9
654
378
553
26
2015E
34.1
31.5
554
313
411
35
2015E
46.0
42.8
480
406
429
7
16
2013 7 8
Exhibit 40: Operating data comparison of anthracite coal firms under our coverage
Shanxi Lanhua Sci Tech
Production volume (mt)
Sales volume (mt)
ASP (Rmb/t)
Unit production cost (Rmb/t)
Unit cash cost (Rmb/t)
NP/t (Rmb/t)
Haohua Energy
Production volume (mt)
Sales volume (mt)
ASP (Rmb/t)
Unit production cost (Rmb/t)
Unit cash cost (Rmb/t)
NP/t (Rmb/t)
Yangquan Coal
Production volume (mt)
Sales volume (mt)
ASP (Rmb/t)
Unit production cost (Rmb/t)
Unit cash cost (Rmb/t)
NP/t (Rmb/t)
2006
2007
2006
2007
5.0
5.9
426
213
329
59
2007
12.9
29.7
322
218
189
66
2006
14.7
25.5
327
162
219
61
2008
5.5
5.4
614
237
295
195
2008
4.6
5.6
733
359
544
133
2008
17.7
36.3
439
274
316
55
2009
5.6
5.8
619
251
286
195
2009
5.1
5.4
561
307
429
89
2009
21.0
39.5
440
259
271
92
2010
6.0
5.7
635
197
265
205
2010
7.1
7.1
566
312
381
126
2010
26.2
45.4
489
296
303
95
2011
6.0
5.3
832
198
375
270
2011
8.8
10.9
630
439
450
121
2011
27.6
51.1
548
352
350
100
2012
5.8
6.3
741
279
332
233
2012
10.3
13.6
504
411
394
70
2012
30.4
56.5
513
396
328
80
2013E
6.7
6.4
665
245
292
194
2013E
11.5
14.7
442
402
353
53
2013E
30.5
59.1
475
392
324
59
2014E
10.3
10.0
618
248
315
164
2014E
12.0
15.2
412
402
341
38
2014E
31.5
62.0
461
392
320
50
2015E
13.4
12.9
629
253
333
165
2015E
12.5
15.7
410
410
341
37
2015E
32.2
64.8
467
400
319
52
Forw ard P/ E
Historical M ax
Historical M in
Historical average
Historical median
Historical Stdev
Current (2013.6.28)
Lanhua
36.8
5.0
15.0
14.1
5.1
8.3
Haohua
34.9
14.6
23.4
22.2
4.7
15.0
SDIC Xinji
38.6
9.9
20.0
19.0
4.6
15.2
Huolinhe
67.0
6.7
21.4
17.9
12.0
10.5
Lu'an
30.0
5.1
17.0
17.8
6.0
14.2
Kailuan
48.4
6.2
26.2
30.2
11.6
26.2
Jizhong
27.6
7.0
15.5
15.0
4.4
11.4
Pingdingshan
44.0
6.5
21.4
21.1
7.9
29.4
Panjiang
49.6
15.2
30.2
29.9
6.5
16.1
Xishan
47.9
6.5
24.8
27.0
10.3
30.4
Pingzhuang
45.6
8.3
24.7
23.8
9.0
28.2
SCIE
55.2
11.3
28.1
29.0
6.9
11.6
Yangquan
40.3
4.8
16.6
17.5
6.7
13.4
M edian
44.0
6.7
21.4
21.1
6.7
15.0
Forw ard P/ B
Historical Max
Historical Min
Historical average
Historical median
Historical Stdev
Current (2013.6.28)
Lanhua
8.1
1.3
3.3
2.8
1.3
1.3
Haohua
7.7
1.2
3.5
3.6
1.2
1.3
Jizhong
Pingzhuang
7.0
7.6
1.2
1.1
3.0
3.3
2.9
3.0
1.1
1.3
1.2
1.1
Pingdingshan
SCIE
8.0
13.1
1.1
1.3
3.3
3.2
3.0
2.9
1.4
1.5
1.1
1.3
Lu'an
8.3
1.2
3.7
3.7
1.4
1.5
Huolinhe
17.5
1.7
6.1
6.0
3.3
1.7
Panjiang
10.4
1.9
5.8
6.0
1.8
1.9
SDIC Xinji
6.2
1.4
3.1
2.9
1.0
1.4
Xishan
11.1
1.2
4.4
4.2
2.2
1.6
Shenhua
12.6
1.1
3.0
2.3
2.0
1.2
Datong
6.2
1.1
2.8
2.7
1.1
1.1
ChinaCoal
5.5
0.7
1.9
1.6
0.9
0.7
Yangquan
8.5
1.2
3.5
3.5
1.6
1.5
Yanzhou
5.2
1.0
2.6
2.4
0.8
1.0
Kailuan
8.2
1.0
3.2
2.9
1.6
1.0
M edian
8.2
1.2
3.2
2.9
1.5
1.3
17
2013 7 8
Director's Cut
17%
19%
38%
PB vs ROE
24%
23%
50%
PE
30%
18%
53%
EV/EBITDA
32%
15%
49%
2009 - 2012
long stocks
short stocks
long+short
Director's Cut
17%
18%
38%
PB vs ROE
17%
8%
25%
PE
20%
17%
39%
EV/EBITDA
30%
15%
47%
2010 - 2012
long stocks
short stocks
long+short
Director's Cut
7%
10%
18%
PB vs ROE
15%
13%
29%
PE
15%
13%
30%
EV/EBITDA
26%
14%
43%
Director's Cut
15%
18%
35%
PB vs ROE
22%
21%
46%
PE
28%
17%
49%
EV/EBITDA
30%
14%
46%
Director's Cut
14%
16%
32%
PB vs ROE
14%
7%
21%
PE
17%
14%
33%
EV/EBITDA
25%
13%
40%
Director's Cut
5%
9%
15%
PB vs ROE
12%
10%
23%
PE
12%
11%
24%
EV/EBITDA
21%
11%
35%
We use the EV/EBITDA valuation methodology as follows: we set a premium or discount for
different companies based on the industrys current EV/EBITDA level; while the target
premium/discounted is derived from each companys average premium/discount relative to the
industry in 2005-2013, with the companys overall return on asset (EBITDA/assets) in the next
few years serving as a reference for further adjustments.
18
EBITDA/Asset
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2005-2012 avg
Quartile
2013-2015 avg
Quartile
Lanhua
20.1%
24.7%
28.1%
19.7%
19.0%
20.1%
15.8%
16.0%
18.7%
12.4%
11.7%
13.1%
14.8%
18.7%
3
13.2%
2
Lu'an
39.0%
24.0%
21.0%
27.3%
20.5%
22.0%
21.5%
16.3%
14.5%
14.4%
13.8%
23.9%
2
14.2%
1
Yitai
PanjiangPingzhuangYangquan Xishan
12.0%
8.6%
4.8%
13.1%
11.4%
22.3%
10.1%
4.6%
18.6%
14.1%
32.1%
13.9%
-13.4%
21.0%
20.4%
23.0%
12.5%
-3.7%
21.6%
20.3%
14.0%
13.7%
11.6%
19.2%
18.5%
24.8%
30.5%
28.0%
23.8%
30.9%
21.6%
20.5%
18.4%
20.5%
18.1%
27.8%
24.2%
20.0%
22.8%
19.8%
26.0%
20.8%
25.5%
20.0%
19.7%
24.6%
17.2%
17.2%
16.7%
13.8%
18.4%
13.2%
11.4%
13.5%
11.7%
17.3%
12.9%
9.8%
12.7%
10.5%
16.9%
13.4%
8.9%
12.9%
10.5%
24.2%
19.2%
12.9%
20.7%
20.2%
2
3
4
2
2
17.5%
13.1%
10.1%
13.0%
10.9%
1
2
3
2
3
SCIE
Kailuan Haohua Huolinhe Datong Pingdingshan
6.5%
20.1%
25.0%
8.0%
16.3%
16.4%
32.1%
4.9%
15.2%
28.1%
15.3%
34.5%
3.2%
14.8%
35.1%
21.1%
13.8%
19.8%
2.9%
16.3%
30.5%
21.1%
18.8%
21.6%
12.9%
14.4%
37.9%
25.8%
24.2%
36.0%
11.7%
13.8%
20.8%
19.6%
21.7%
18.8%
11.6%
12.9%
14.9%
27.8%
20.3%
22.8%
10.6%
11.3%
18.7%
28.4%
20.7%
25.0%
8.9%
9.3%
12.8%
26.2%
11.8%
16.2%
9.7%
7.2%
10.8%
18.4%
7.5%
12.9%
10.1%
7.2%
9.0%
15.4%
6.2%
11.3%
9.9%
7.8%
8.8%
14.0%
7.6%
10.3%
8.3%
13.5%
24.4%
24.8%
18.3%
24.3%
4
4
1
1
3
1
9.9%
7.4%
9.5%
15.9%
7.1%
11.5%
4
4
4
1
4
2
2013 7 8
Lanhua
6.55
-8.7%
-28.3%
-10%
5.90
3,376
19,904
(1,821)
868
20,858
1,142
18.26
11.64
56.9%
Huolinhe Yangquan
6.55
6.55
56.4%
-23.9%
11.3%
-20.1%
20%
-20%
7.86
5.24
1,723
4,417
13,545
23,148
1,161
(954)
58
1,515
12,326
22,587
1,327
2,405
9.29
9.39
8.55
8.79
8.7%
6.8%
Kailuan
6.55
13.7%
11.2%
0%
6.55
1,576
10,325
3,016
1,829
5,481
1,235
4.44
5.70
-22.1%
Datong
6.55
-9.2%
44.9%
-5%
6.22
1,588
9,884
(1,891)
5,893
5,881
1,674
3.51
5.65
-37.8%
19
Yitai B
6.55
-25.5%
-0.4%
0%
6.55
8,494
55,640
1,519
3,015
51,106
1,627
$5.08
4.83
5.2%
2013 7 8
20
2013 7 8
21
2013 7 8
22
2013 7 8
We apply a 20% valuation premium and maintain our Neutral rating. We update our model based
on our latest coal price estimates, and lower our 2013E/14E/15E EPS by 9.6%/31.2%/30.7% to
Rmb0.60/0.45/0.45. Our new EV/EBITDA-based 12-month target price is Rmb7.45 vs. our
previous Directors Cut-based 12-month target price of Rmb8.56. Upside risks: better-thanexpected production and profitability at the Gaojialiang mine. Downside risks: a slowdown in
demand from the steel industry impacts the firms anthracite business.
Huolinhe: Maintain Neutral
We apply a 20% valuation premium and maintain our Neutral rating. We lower our
2013E/14E/15E EPS by 6.4%/17.6%/9.5% to Rmb0.89/0.77/0.75. Our new EV/EBITDA-based
12-month target price is Rmb9.29 vs. our previous Directors Cut-based 12-month target price of
Rmb11.83. Upside risks: faster-than-expected progress on asset injections. Downside risks:
significantly lower ASP.
23
2013 7 8
Investment Profile
Low
High
Growth
Growth
Returns *
Returns *
Catalyst
Under pressure from downside in coal and coke prices. Since the
beginning of the year, fat clean coal prices have fallen 20.0% to Rmb983/t
from Rmb1,228/t in Tangshan, where Kailuan is located, and coke prices
have declined 16.9% to Rmb1,280/t from Rmb1,540/t. Given the loose
domestic supply (the capacity of consolidated coal mines in Shanxi will
gradually come on line in 2013-14E) and growing imports, we believe coking
coal prices will not improve significantly in the near term.
Valuation
Kailuan is trading at a 2013E EV/EBITDA of 7.7X, above the industry average
of 6.7X.
Multiple
Multiple
Volatility
Volatility
Percentile
40th
60th
80th
100th
Key data
Current
Price (Rmb)
12 month price target (Rmb)
Market cap (Rmb mn / US$ mn)
Foreign ownership (%)
EPS (Rmb)
EPS growth (%)
EPS (diluted) (Rmb)
EPS (basic pre-ex) (Rmb)
P/E (X)
P/B (X)
EV/EBITDA (X)
Dividend yield (%)
ROE (%)
CROCI (%)
5.70
4.44
7,037.5 / 1,147.5
--
12/12
0.40
(37.9)
0.40
0.40
27.8
2.0
8.6
0.9
7.3
16.9
12/13E
0.23
(40.6)
0.23
0.23
24.3
1.0
7.7
0.6
4.2
7.1
12/14E
0.20
(14.9)
0.20
0.20
28.5
1.0
8.0
0.6
3.5
6.5
12/15E
0.26
32.6
0.26
0.26
21.5
0.9
7.6
0.7
4.4
6.6
2,800
11
2,700
10
2,600
2,500
2,400
2,300
2,200
5
Jul-12
Key risks
20th
2,100
Oct-12
Jan-13
Apr-13
Shanghai - Shenzhen 300 (R)
Upside risks are restarting acquisition of coal assets from the parent company
or better-than-expected coking coal prices.
Share price performance (%)
Absolute
Rel. to Shanghai - Shenzhen 300
3 month
(47.2)
(40.9)
6 month
(44.2)
(36.7)
12 month
(45.7)
(39.8)
Source: Company data, Goldman Sachs Research estimates, FactSet. Price as of 7/02/2013 close.
24
2013 7 8
12/12
12/13E
12/14E
12/15E
19,091.3
(16,795.4)
(1,045.5)
-(129.8)
1,960.4
(839.8)
1,120.6
22.8
(451.7)
20.0
(0.4)
711.3
(199.4)
(24.0)
17,197.1
(15,473.1)
(941.7)
-(89.2)
1,517.4
(824.4)
693.1
21.3
(292.5)
0.0
(0.4)
421.4
(105.4)
(26.1)
16,849.3
(15,196.8)
(922.7)
-(87.4)
1,521.9
(879.6)
642.4
13.6
(292.5)
0.0
(0.4)
363.0
(90.8)
(25.6)
17,513.9
(15,709.9)
(959.1)
-(90.8)
1,689.6
(935.4)
754.1
10.3
(292.5)
0.0
(0.4)
471.5
(117.9)
(26.6)
487.9
0.0
487.9
0.0
487.9
289.9
0.0
289.9
0.0
289.9
246.6
0.0
246.6
0.0
246.6
327.0
0.0
327.0
0.0
327.0
0.40
0.40
0.40
0.10
25.3
(4.2)
0.23
0.23
0.23
0.04
15.7
(12.3)
0.20
0.20
0.20
0.03
15.7
(5.2)
0.26
0.26
0.26
0.04
15.7
(6.1)
12/12
(2.3)
(10.9)
(17.8)
(37.9)
(37.9)
12.0
10.3
5.9
12/13E
(9.9)
(22.6)
(38.2)
(40.6)
(40.6)
10.0
8.8
4.0
12/14E
(2.0)
0.3
(7.3)
(14.9)
(14.9)
9.8
9.0
3.8
12/15E
3.9
11.0
17.4
32.6
32.6
10.3
9.6
4.3
12/12
487.9
839.8
24.0
(886.6)
1,105.9
1,571.0
12/13E
289.9
824.4
26.1
(334.9)
0.0
805.6
12/14E
246.6
879.6
25.6
52.7
0.0
1,204.5
12/15E
327.0
935.4
26.6
(102.5)
0.0
1,186.6
(2,221.0)
0.0
0.1
0.0
(2,220.8)
(1,891.7)
0.0
0.0
0.0
(1,891.7)
(1,668.1)
0.0
0.0
0.0
(1,668.1)
(1,733.9)
0.0
0.0
0.0
(1,733.9)
(123.5)
1,772.9
0.0
(383.4)
1,266.1
616.2
(123.5)
0.0
0.0
0.0
(123.5)
(1,209.6)
(45.6)
0.0
0.0
0.0
(45.6)
(509.1)
(38.8)
0.0
0.0
0.0
(38.8)
(586.0)
12/12
12/13E
12/14E
12/15E
3,346.4
4,294.5
1,609.9
0.0
9,250.8
10,663.6
795.0
223.3
113.8
21,046.6
2,136.8
4,240.4
1,695.7
0.0
8,072.9
11,770.6
755.3
223.3
113.8
20,936.0
1,627.7
4,154.6
1,665.4
0.0
7,447.7
12,598.8
715.7
223.3
113.8
21,099.3
1,041.7
4,318.5
1,721.6
0.0
7,081.9
13,436.8
676.0
223.3
113.8
21,531.9
Accounts payable
Short-term debt
Other current liabilities
Total current liabilities
Long-term debt
Other long-term liabilities
Total long-term liabilities
Total liabilities
3,851.3
3,356.4
0.0
7,207.7
1,551.7
3,623.4
5,175.2
12,382.9
3,548.1
3,356.4
0.0
6,904.5
1,551.7
3,623.4
5,175.2
12,079.7
3,484.8
3,356.4
0.0
6,841.2
1,551.7
3,623.4
5,175.2
12,016.4
3,602.4
3,356.4
0.0
6,958.8
1,551.7
3,623.4
5,175.2
12,134.0
0.0
6,873.6
1,790.0
0.0
7,040.1
1,816.2
0.0
7,241.2
1,841.8
0.0
7,529.4
1,868.4
21,046.6
20,936.0
21,099.3
21,531.9
5.57
5.70
5.86
6.10
Ratios
CROCI (%)
ROE (%)
ROA (%)
ROACE (%)
Inventory days
Receivables days
Payable days
Net debt/equity (%)
Interest cover - EBIT (X)
12/12
16.9
7.3
2.4
8.1
37.0
82.2
92.7
18.0
2.6
12/13E
7.1
4.2
1.4
4.8
39.0
90.6
87.3
31.3
2.6
12/14E
6.5
3.5
1.2
4.0
40.4
90.9
84.5
36.1
2.3
12/15E
6.6
4.4
1.5
4.4
39.3
88.3
82.3
41.1
2.7
Valuation
12/12
12/13E
12/14E
12/15E
27.8
2.0
8.6
0.9
0.9
24.3
1.0
7.7
0.6
0.6
28.5
1.0
8.0
0.6
0.6
21.5
0.9
7.6
0.5
0.7
Preferred shares
Total common equity
Minority interest
Total liabilities & equity
BVPS (Rmb)
Note: Last actual year may include reported and estimated data.
Source: Company data, Goldman Sachs Research estimates.
25
2013 7 8
Investment Profile
We downgrade Yitai B/H to Neutral from Buy. Based on our latest coal price
estimates, we lower our 2013E/14E/15E EPS by 23.2%/27.7%/28.2% to
Rmb2.85/3.00/3.29. Our new EV/EBITDA-based 12-month target prices are
US$5.08/HK$39.64, implying 5.2%/8.9% upside potential (our previous
Directors Cut-based 12-month target prices were US$6.49/HK$50.59). Since
we added Yitai B/H to our Buy list on October 30, 2012, the stock
performance has been -0.2%/1.6% vs. -2.8%/-12% for the Shanghai
Composite Index/Hang Seng China Enterprises Index.
Low
High
Growth
Growth
Returns *
Returns *
Current view
Weak demand to have an impact on the Inner Mongolia market. Inner
Mongolias coal output was 386mt in January-May, down 9.95% yoy vs. a
2.8% fall in nationwide output. This is mainly due to the relatively longer
distance to transport coal from Inner Mongolia and the lower calorific value at
some mines. We lower Yitais 2013 raw coal output forecast by 5.4% to
50.60mn tons.
Multiple
Multiple
Volatility
Volatility
Percentile
20th
40th
60th
80th
100th
Key data
Current
Price ($)
12 month price target ($)
Market cap ($ mn / US$ mn)
Foreign ownership (%)
EPS (Rmb)
EPS growth (%)
EPS (diluted) (Rmb)
EPS (basic pre-ex) (Rmb)
P/E (X)
P/B (X)
EV/EBITDA (X)
Dividend yield (%)
ROE (%)
CROCI (%)
4.83
5.08
7,861.7 / 7,861.7
--
12/12
4.30
14.5
4.30
4.30
8.0
2.9
5.7
3.6
36.2
34.3
12/13E
2.85
(33.6)
2.85
2.85
10.4
2.2
6.6
3.0
22.1
24.1
12/14E
3.00
5.4
3.00
3.00
9.9
1.9
6.2
3.1
20.3
22.2
12/15E
3.29
9.4
3.29
3.29
9.0
1.6
5.6
3.4
19.3
21.3
3,000
Yitais coal production costs are at the low end of the industry and
are, thus, defensive when coal prices are weak. Yitais production costs
5.8
2,900
5.6
2,800
5.4
2,700
5.2
2,600
5.0
2,500
4.8
2,400
4.6
2,300
4.4
2,200
There are still new mines to come onstream in the future. The NDRC
approved Yitais 6mt Talahao mine in September 2012 and its parent
companys 15mt Hongqinghe mine in February 2013. In our view, these
projects could provide momentum for Yitais future development.
4.2
4.0
Jul-12
2,100
2,000
Oct-12
Jan-13
Apr-13
Key risks
Upside/downside risks are better/worse-than-expected thermal coal prices.
3 month
(16.4)
(7.1)
6 month
(15.1)
(3.9)
12 month
(14.8)
(5.4)
Source: Company data, Goldman Sachs Research estimates, FactSet. Price as of 7/02/2013 close.
26
2013 7 8
12/12
12/13E
12/14E
12/15E
32,463.3
(20,238.0)
(2,825.6)
-(813.2)
10,185.9
(1,599.4)
8,586.5
35.0
(468.8)
0.0
565.6
8,718.3
(1,399.4)
(697.0)
27,163.2
(17,695.9)
(2,364.3)
-(757.4)
8,035.9
(1,690.2)
6,345.7
49.6
(563.1)
0.0
334.1
6,166.3
(989.8)
(536.8)
28,858.8
(18,999.9)
(2,511.8)
-(804.7)
8,378.1
(1,835.7)
6,542.4
54.4
(516.2)
0.0
334.1
6,414.8
(1,029.7)
(496.3)
30,935.5
(20,308.7)
(2,692.6)
-(862.6)
9,068.7
(1,997.0)
7,071.6
69.1
(516.2)
0.0
334.1
6,958.7
(1,117.0)
(494.6)
6,621.9
0.0
6,621.9
0.0
6,621.9
4,639.7
0.0
4,639.7
0.0
4,639.7
4,888.8
0.0
4,888.8
0.0
4,888.8
5,347.1
0.0
5,347.1
0.0
5,347.1
4.30
4.30
4.30
1.25
29.1
6.3
2.85
2.85
2.85
0.88
30.7
5.2
3.00
3.00
3.00
0.92
30.7
6.4
3.29
3.29
3.29
1.01
30.7
6.6
12/12
86.4
31.1
24.8
20.5
14.5
37.7
31.4
26.4
12/13E
(16.3)
(21.1)
(26.1)
(29.9)
(33.6)
34.9
29.6
23.4
12/14E
6.2
4.3
3.1
5.4
5.4
34.2
29.0
22.7
12/12
6,621.9
1,599.4
697.0
(791.1)
214.1
8,341.3
12/13E
4,639.7
1,690.2
536.8
(452.0)
240.8
6,655.6
Capital expenditures
Acquisitions
Divestitures
Others
Cash flow from investments
(4,856.6)
0.0
225.4
(910.5)
(5,541.7)
(2,196.0)
2,078.1
5,609.5
(6,415.9)
(924.3)
1,875.3
Total revenue
Cost of goods sold
SG&A
R&D
Other operating profit/(expense)
EBITDA
Depreciation & amortization
EBIT
Interest income
Interest expense
Income/(loss) from uncons. subs.
Others
Pretax profits
Income tax
Minorities
Net income pre-preferred dividends
Preferred dividends
Net income (pre-exceptionals)
Post-tax exceptionals
Net income
EPS (basic, pre-except) (Rmb)
EPS (basic, post-except) (Rmb)
EPS (diluted, post-except) (Rmb)
DPS (Rmb)
Dividend payout ratio (%)
Free cash flow yield (%)
Growth & margins (%)
Sales growth
EBITDA growth
EBIT growth
Net income growth
EPS growth
Gross margin
EBITDA margin
EBIT margin
12/12
12/13E
12/14E
12/15E
6,344.4
3,954.6
873.4
0.0
11,172.4
23,603.1
728.8
4,184.9
1,678.0
41,367.1
6,966.2
3,348.9
824.2
0.0
11,139.3
26,375.5
266.2
4,184.9
1,678.0
43,643.8
8,836.7
3,557.9
884.9
0.0
13,279.5
29,502.3
(196.5)
4,184.9
1,678.0
48,448.3
10,747.2
3,814.0
945.9
0.0
15,507.1
32,967.9
(659.1)
4,184.9
1,678.0
53,678.8
Accounts payable
Short-term debt
Other current liabilities
Total current liabilities
Long-term debt
Other long-term liabilities
Total long-term liabilities
Total liabilities
8,812.3
1,582.4
0.0
10,394.7
7,802.5
1,231.1
9,033.6
19,428.3
7,705.3
1,582.4
0.0
9,287.8
7,802.5
1,471.9
9,274.4
18,562.2
8,273.2
1,582.4
0.0
9,855.6
7,802.5
1,748.5
9,551.0
19,406.6
8,843.1
1,582.4
0.0
10,425.5
7,802.5
2,068.9
9,871.4
20,296.9
Preferred shares
Total common equity
Minority interest
0.0
19,699.4
2,239.5
0.0
22,305.4
2,776.2
0.0
25,769.2
3,272.6
0.0
29,614.8
3,767.1
41,367.1
43,643.8
48,448.3
53,678.8
BVPS (Rmb)
12.11
13.71
15.84
18.20
12/15E
7.2
8.2
8.1
9.4
9.4
34.4
29.3
22.9
Ratios
CROCI (%)
ROE (%)
ROA (%)
ROACE (%)
Inventory days
Receivables days
Payable days
Net debt/equity (%)
Interest cover - EBIT (X)
12/12
34.3
36.2
18.6
31.8
14.0
31.1
102.8
13.9
19.8
12/13E
24.1
22.1
10.9
21.4
17.5
49.1
170.3
9.6
12.4
12/14E
22.2
20.3
10.6
20.2
16.4
43.7
153.5
1.9
14.2
12/15E
21.3
19.3
10.5
20.2
16.5
43.5
153.8
(4.1)
15.8
12/14E
4,888.8
1,835.7
496.3
298.0
276.6
7,795.5
12/15E
5,347.1
1,997.0
494.6
252.9
320.4
8,412.0
Valuation
12/12
12/13E
12/14E
12/15E
8.0
2.9
5.7
2.0
3.6
10.4
2.2
6.6
1.6
3.0
9.9
1.9
6.2
1.4
3.1
9.0
1.6
5.6
1.2
3.4
(4,000.0)
0.0
0.0
0.0
(4,000.0)
(4,500.0)
0.0
0.0
0.0
(4,500.0)
(5,000.0)
0.0
0.0
0.0
(5,000.0)
(2,033.8)
0.0
0.0
0.0
(2,033.8)
621.8
(1,425.0)
0.0
0.0
0.0
(1,425.0)
1,870.5
(1,501.5)
0.0
0.0
0.0
(1,501.5)
1,910.5
Note: Last actual year may include reported and estimated data.
Source: Company data, Goldman Sachs Research estimates.
27
2013 7 8
Ticker
Primary Analyst
Price
currency
Price as of
07/02/13
Price performance
since 10/30/12
3 month price
performance
6 month price
performance
12 month price
performance
HK$
Rmb
HK$
Rp
Rmb
HK$
Rmb
HK$
Bt
Rmb
Rmb
HK$
Rmb
Rp
Rmb
HK$
HK$
HK$
HK$
HK$
Rmb
HK$
$
NT$
Rs
Rmb
W
Rmb
HK$
Rmb
W
Rmb
HK$
Rmb
Rmb
W
RM
Rmb
HK$
HK$
Rmb
Rmb
W
$
Rp
Rp
Rp
Rp
Rp
Rmb
W
Rp
Rmb
Rmb
Rmb
Rmb
Rmb
Rmb
HK$
Bt
Bt
Rmb
Rmb
Rmb
HK$
$
Rmb
Rmb
HK$
Rmb
Rmb
HK$
43.40
4.57
3.25
1,230.00
3.35
4.93
15.71
25.00
398.00
4.66
5.47
6.44
10.23
570.00
6.74
7.73
3.18
9.78
4.71
5.13
21.69
31.40
18.03
26.25
368.90
8.04
13,350.00
13.10
1.96
12.26
81,300.00
19.92
19.42
8.63
8.75
441,000.00
10.26
1.90
2.09
3.92
7.56
8.35
319,500.00
74.23
1,350.00
2,650.00
40,000.00
22,500.00
14,300.00
7.92
25,850.00
17,050.00
36.47
15.38
16.96
15.85
11.23
7.38
2.89
390.00
390.00
16.21
12.23
16.02
11.82
4.83
12.22
13.06
13.04
14.64
3.58
3.08
1.6%
-5.4%
-3.8%
-4.7%
-2.3%
12.0%
-2.9%
-4.0%
1.5%
1.1%
-3.2%
-0.5%
-18.4%
-14.9%
-3.0%
2.9%
-1.5%
1.3%
-8.2%
-11.1%
-4.8%
-2.3%
4.9%
3.8%
5.1%
-11.9%
-2.6%
-13.6%
3.7%
-3.4%
4.0%
-4.5%
-2.4%
-26.0%
-6.8%
-0.5%
3.1%
-2.1%
10.0%
4.8%
-6.8%
-17.2%
-6.7%
-5.2%
-2.2%
-16.5%
-2.0%
3.9%
-9.8%
-20.8%
1.4%
14.8%
-4.4%
-15.7%
-10.2%
-5.8%
-10.4%
-1.3%
8.2%
-5.8%
-5.8%
-6.3%
-11.8%
-9.6%
2.6%
-10.3%
0.9%
-13.7%
1.9%
-7.9%
-6.0%
-1.3%
3.8%
-16.3%
5.9%
-1.6%
-6.4%
29.7%
18.2%
27.4%
-10.8%
6.9%
1.7%
35.6%
-14.2%
-14.9%
-1.2%
18.9%
9.7%
33.2%
35.0%
24.8%
1.2%
9.0%
3.9%
1.0%
2.6%
-12.6%
-17.3%
-5.6%
11.4%
-2.7%
-5.0%
-0.4%
13.6%
-30.2%
-6.6%
3.0%
3.6%
0.5%
34.8%
17.7%
-7.6%
-13.4%
-15.0%
-9.8%
-0.7%
-28.4%
6.5%
-3.2%
-2.1%
-29.2%
-26.2%
-6.1%
4.9%
-17.2%
-1.6%
-6.4%
-11.8%
-6.0%
39.6%
-19.4%
-19.4%
-5.8%
-13.8%
-8.5%
5.5%
-16.4%
-7.7%
-20.4%
25.6%
-0.7%
-4.3%
23.2%
NA
-34.1%
-4.1%
-7.5%
-21.9%
6.7%
-11.4%
1.6%
-16.0%
-4.9%
-35.6%
2.2%
-40.6%
-66.1%
-27.1%
5.5%
2.9%
0.0%
-18.7%
-12.3%
-18.7%
8.7%
-4.0%
-5.7%
14.6%
-37.8%
-19.6%
-43.1%
-21.6%
-27.7%
-7.0%
-24.5%
14.4%
-37.6%
-31.2%
21.5%
7.5%
-24.0%
5.0%
-27.4%
-35.9%
-40.4%
-10.9%
-2.7%
-16.1%
-2.8%
16.4%
2.7%
-12.3%
-47.9%
-34.6%
6.9%
6.0%
-45.9%
-32.4%
-42.6%
-40.1%
-22.1%
8.6%
-10.1%
-10.1%
-28.1%
-37.8%
-31.2%
-11.5%
-15.1%
-24.0%
-34.8%
35.1%
-5.7%
-13.5%
21.7%
NA
-42.9%
-12.2%
-23.6%
-33.3%
0.6%
-8.7%
0.4%
-27.4%
-7.0%
-44.1%
12.6%
-44.0%
-71.5%
-29.9%
-13.2%
-9.4%
5.4%
-20.2%
-7.4%
-17.1%
-5.6%
-4.6%
-8.6%
14.5%
-47.2%
-41.6%
-22.2%
-22.5%
-23.0%
-16.0%
-23.1%
8.4%
-44.1%
-37.7%
27.5%
39.4%
-33.1%
-7.9%
-35.1%
-41.8%
-36.5%
-14.1%
-7.8%
-28.9%
6.0%
5.0%
24.0%
-14.9%
-39.1%
-54.6%
44.5%
-2.8%
-39.9%
-17.9%
-36.2%
-40.6%
-24.7%
-1.4%
18.5%
18.5%
-17.2%
-36.5%
-40.7%
-35.1%
-14.8%
-25.0%
-29.6%
-5.0%
0.5%
-19.4%
-7.5%
9,204
-12.0%
-14.9%
-22.6%
-3.9%
Note: Prices as of most recent available close, which could vary from the price date indicated above.
This table shows movement in absolute share price and not total shareholder return. Results presented should not and cannot be viewed as an indicator of future performance.
28
2013 7 8
Ticker
Primary Analyst
Price
currency
Price as of
07/02/13
Price performance
since 10/30/12
3 month price
performance
6 month price
performance
12 month price
performance
$
Rmb
HK$
Rp
Rmb
HK$
Rmb
HK$
Bt
Rmb
Rmb
HK$
Rmb
Rp
Rmb
HK$
HK$
HK$
HK$
HK$
Rmb
HK$
$
NT$
Rs
Rmb
W
Rmb
HK$
Rmb
W
HK$
Rmb
HK$
Rmb
Rmb
W
RM
Rmb
HK$
HK$
Rmb
Rmb
W
$
Rp
Rp
Rp
Rp
Rp
Rmb
W
Rp
Rmb
Rmb
Rmb
Rmb
Rmb
Rmb
HK$
Bt
Bt
Rmb
Rmb
Rmb
HK$
Rmb
Rmb
HK$
Rmb
Rmb
HK$
5.37
4.57
3.25
1,230.00
3.35
4.93
15.71
25.00
398.00
4.66
5.47
6.44
10.23
570.00
6.74
7.73
3.18
9.78
4.71
5.13
21.69
31.40
18.03
26.25
368.90
8.04
13,350.00
13.10
1.96
12.26
81,300.00
43.40
19.92
19.42
8.63
8.75
441,000.00
10.26
1.90
2.09
3.92
7.56
8.35
319,500.00
74.23
1,350.00
2,650.00
40,000.00
22,500.00
14,300.00
7.92
25,850.00
17,050.00
36.47
15.38
16.96
15.85
11.23
7.38
2.89
390.00
390.00
16.21
12.23
16.02
11.82
12.22
13.06
13.04
14.64
3.58
3.08
-0.2%
-5.4%
-3.8%
-4.7%
-2.3%
12.0%
-2.9%
-4.0%
1.5%
1.1%
-3.2%
-0.5%
-18.4%
-14.9%
-3.0%
2.9%
-1.5%
1.3%
-8.2%
-11.1%
-4.8%
-2.3%
4.9%
3.8%
5.1%
-11.9%
-2.6%
-13.6%
3.7%
-3.4%
4.0%
1.6%
-4.5%
-2.4%
-26.0%
-6.8%
-0.5%
3.1%
-2.1%
10.0%
4.8%
-6.8%
-17.2%
-6.7%
-5.2%
-2.2%
-16.5%
-2.0%
3.9%
-9.8%
-20.8%
1.4%
14.8%
-4.4%
-15.7%
-10.2%
-5.8%
-10.4%
-1.3%
8.2%
-5.8%
-5.8%
-6.3%
-11.8%
-9.6%
2.6%
0.9%
-13.7%
1.9%
-7.9%
-6.0%
-1.3%
-1.1%
-16.3%
5.9%
-1.6%
-6.4%
29.7%
18.2%
27.4%
-10.8%
6.9%
1.7%
35.6%
-14.2%
-14.9%
-1.2%
18.9%
9.7%
33.2%
35.0%
24.8%
1.2%
9.0%
3.9%
1.0%
2.6%
-12.6%
-17.3%
-5.6%
11.4%
-2.7%
-5.0%
3.8%
-0.4%
13.6%
-30.2%
-6.6%
3.0%
3.6%
0.5%
34.8%
17.7%
-7.6%
-13.4%
-15.0%
-9.8%
-0.7%
-28.4%
6.5%
-3.2%
-2.1%
-29.2%
-26.2%
-6.1%
4.9%
-17.2%
-1.6%
-6.4%
-11.8%
-6.0%
39.6%
-19.4%
-19.4%
-5.8%
-13.8%
-8.5%
5.5%
-7.7%
-20.4%
25.6%
-0.7%
-4.3%
23.2%
2.2%
-34.1%
-4.1%
-7.5%
-21.9%
6.7%
-11.4%
1.6%
-16.0%
-4.9%
-35.6%
2.2%
-40.6%
-66.1%
-27.1%
5.5%
2.9%
0.0%
-18.7%
-12.3%
-18.7%
8.7%
-4.0%
-5.7%
14.6%
-37.8%
-19.6%
-43.1%
-21.6%
-27.7%
-7.0%
NA
-24.5%
14.4%
-37.6%
-31.2%
21.5%
7.5%
-24.0%
5.0%
-27.4%
-35.9%
-40.4%
-10.9%
-2.7%
-16.1%
-2.8%
16.4%
2.7%
-12.3%
-47.9%
-34.6%
6.9%
6.0%
-45.9%
-32.4%
-42.6%
-40.1%
-22.1%
8.6%
-10.1%
-10.1%
-28.1%
-37.8%
-31.2%
-11.5%
-24.0%
-34.8%
35.1%
-5.7%
-13.5%
21.7%
-2.2%
-42.9%
-12.2%
-23.6%
-33.3%
0.6%
-8.7%
0.4%
-27.4%
-7.0%
-44.1%
12.6%
-44.0%
-71.5%
-29.9%
-13.2%
-9.4%
5.4%
-20.2%
-7.4%
-17.1%
-5.6%
-4.6%
-8.6%
14.5%
-47.2%
-41.6%
-22.2%
-22.5%
-23.0%
-16.0%
NA
-23.1%
8.4%
-44.1%
-37.7%
27.5%
39.4%
-33.1%
-7.9%
-35.1%
-41.8%
-36.5%
-14.1%
-7.8%
-28.9%
6.0%
5.0%
24.0%
-14.9%
-39.1%
-54.6%
44.5%
-2.8%
-39.9%
-17.9%
-36.2%
-40.6%
-24.7%
-1.4%
18.5%
18.5%
-17.2%
-36.5%
-40.7%
-35.1%
-25.0%
-29.6%
-5.0%
0.5%
-19.4%
-7.5%
2,100
-2.8%
-9.9%
-11.6%
-9.9%
Note: Prices as of most recent available close, which could vary from the price date indicated above.
This table shows movement in absolute share price and not total shareholder return. Results presented should not and cannot be viewed as an indicator of future performance.
29
2013 7 8
Investment Profile
We downgrade Jizhong to Neutral from Buy. Based on our latest coal price
estimates, we lower our 2013E/14E/15E EPS by 19.2%/34.0%/31.3% to
Rmb0.73/0.64/0.70. Our new EV/EBITDA-based 12-month target price is
Rmb8.73, implying 1.2% upside potential (our previous Directors Cut-based
12-month target price was Rmb16.71). Since we added Jizhong to our Buy
list on December 4, 2012, the shares have fallen 14.6% vs. a 4.2% rise for
the Shanghai - Shenzhen 300 index given the weak coking coal price.
Low
High
Growth
Growth
Returns *
Returns *
Current view
Weakened coking coal prices to impact earnings. With the impact from
tighter real estate regulatory policies and concerns over a slowdown in
economic recovery after the Chinese New Year, coke prices have been
trending down amid lukewarm purchasing demand from steelmakers. Since
the beginning of the year, coking coal prices in Xingtai, where Jizhong is
located, have declined 13.4% to Rmb970/t from Rmb1120/t.
Key risks
Upside/downside risks are better/worse-than-expected coking coal prices.
Multiple
Multiple
Volatility
Volatility
Percentile
20th
40th
60th
80th
100th
Key data
Current
Price (Rmb)
12 month price target (Rmb)
Market cap (Rmb mn / US$ mn)
Foreign ownership (%)
EPS (Rmb)
EPS growth (%)
EPS (diluted) (Rmb)
EPS (basic pre-ex) (Rmb)
P/E (X)
P/B (X)
EV/EBITDA (X)
Dividend yield (%)
ROE (%)
CROCI (%)
8.63
8.73
19,960.2 / 3,254.6
--
12/12
0.97
(26.2)
0.97
0.97
16.3
2.4
7.8
1.6
15.4
15.8
12/13E
0.73
(25.2)
0.73
0.73
11.9
1.2
5.3
2.2
10.8
12.8
12/14E
0.64
(11.5)
0.64
0.64
13.4
1.2
5.2
1.9
9.0
11.9
12/15E
0.70
8.0
0.70
0.70
12.4
1.1
4.6
2.1
9.1
11.7
3,100
17
3,000
16
2,900
15
2,800
14
2,700
13
2,600
12
2,500
11
2,400
10
2,300
9
8
Jul-12
2,200
2,100
Oct-12
Jan-13
Apr-13
Shanghai - Shenzhen 300 (R)
3 month
(30.2)
(21.9)
6 month
(37.6)
(29.1)
12 month
(44.1)
(38.0)
Source: Company data, Goldman Sachs Research estimates, FactSet. Price as of 7/02/2013 close.
30
2013 7 8
12/12
12/13E
12/14E
12/15E
30,072.4
(21,644.6)
(4,251.7)
-(562.8)
5,519.2
(1,905.9)
3,613.3
126.7
(797.6)
53.1
184.6
3,180.1
(865.4)
(64.2)
27,227.4
(20,551.3)
(3,539.6)
-(304.2)
4,814.7
(1,982.4)
2,832.3
99.8
(819.2)
30.0
184.6
2,327.6
(574.4)
(69.8)
26,815.9
(20,492.6)
(3,486.1)
-(299.6)
4,620.6
(2,083.0)
2,537.6
130.5
(819.2)
33.0
184.6
2,066.6
(508.4)
(68.7)
27,509.0
(20,970.6)
(3,576.2)
-(307.3)
4,822.2
(2,167.4)
2,654.8
169.5
(819.2)
36.3
184.6
2,226.1
(547.4)
(70.5)
2,250.6
0.0
2,250.6
0.0
2,250.6
1,683.4
0.0
1,683.4
0.0
1,683.4
1,489.5
0.0
1,489.5
0.0
1,489.5
1,608.1
0.0
1,608.1
0.0
1,608.1
0.97
0.97
0.97
0.25
25.7
(2.1)
0.73
0.73
0.73
0.19
25.7
8.0
0.64
0.64
0.64
0.17
25.7
8.8
0.70
0.70
0.70
0.18
25.7
9.3
12/12
(20.0)
(10.1)
(20.6)
(26.2)
(26.2)
28.0
18.4
12.0
12/13E
(9.5)
(12.8)
(21.6)
(25.2)
(25.2)
24.5
17.7
10.4
12/14E
(1.5)
(4.0)
(10.4)
(11.5)
(11.5)
23.6
17.2
9.5
12/15E
2.6
4.4
4.6
8.0
8.0
23.8
17.5
9.7
12/12
2,250.6
1,905.9
64.2
(2,762.2)
1,003.1
2,461.5
12/13E
1,683.4
1,982.4
69.8
117.6
996.5
4,849.8
12/14E
1,489.5
2,083.0
68.7
126.2
1,090.4
4,857.8
12/15E
1,608.1
2,167.4
70.5
(80.9)
1,145.2
4,910.3
Capital expenditures
Acquisitions
Divestitures
Others
Cash flow from investments
(3,294.9)
0.0
141.8
512.1
(2,641.0)
(2,983.1)
0.0
0.0
0.0
(2,983.1)
(2,791.2)
0.0
0.0
0.0
(2,791.2)
(2,720.1)
0.0
0.0
0.0
(2,720.1)
(578.2)
311.3
0.0
(818.2)
(1,085.0)
(1,264.4)
(578.2)
0.0
0.0
0.0
(578.2)
1,288.4
(432.5)
0.0
0.0
0.0
(432.5)
1,634.2
(382.7)
0.0
0.0
0.0
(382.7)
1,807.5
Total revenue
Cost of goods sold
SG&A
R&D
Other operating profit/(expense)
EBITDA
Depreciation & amortization
EBIT
Interest income
Interest expense
Income/(loss) from uncons. subs.
Others
Pretax profits
Income tax
Minorities
Net income pre-preferred dividends
Preferred dividends
Net income (pre-exceptionals)
Post-tax exceptionals
Net income
EPS (basic, pre-except) (Rmb)
EPS (basic, post-except) (Rmb)
EPS (diluted, post-except) (Rmb)
DPS (Rmb)
Dividend payout ratio (%)
Free cash flow yield (%)
Growth & margins (%)
Sales growth
EBITDA growth
EBIT growth
Net income growth
EPS growth
Gross margin
EBITDA margin
EBIT margin
12/12
12/13E
12/14E
12/15E
4,186.7
10,243.7
1,018.4
707.7
16,156.4
15,303.1
6,924.4
636.3
1,087.3
40,107.5
5,475.1
9,697.4
1,013.5
707.7
16,893.7
16,560.9
6,667.3
666.3
1,087.3
41,875.5
7,109.3
9,550.9
1,010.6
707.7
18,378.4
17,526.2
6,410.2
699.3
1,087.3
44,101.3
8,916.8
9,797.7
1,034.2
707.7
20,456.3
18,336.0
6,153.1
735.6
1,087.3
46,768.3
Accounts payable
Short-term debt
Other current liabilities
Total current liabilities
Long-term debt
Other long-term liabilities
Total long-term liabilities
Total liabilities
8,583.4
5,269.3
53.1
13,905.8
2,335.1
5,640.7
7,975.8
21,881.6
8,149.8
5,269.3
53.1
13,472.3
2,335.1
6,667.2
9,002.3
22,474.6
8,126.6
5,269.3
53.1
13,449.0
2,335.1
7,790.6
10,125.8
23,574.8
8,316.1
5,269.3
53.1
13,638.6
2,335.1
8,972.1
11,307.2
24,945.8
Preferred shares
Total common equity
Minority interest
0.0
14,968.9
3,257.0
0.0
16,074.0
3,326.8
0.0
17,131.0
3,395.5
0.0
18,356.5
3,466.0
40,107.5
41,875.5
44,101.3
46,768.3
6.47
6.95
7.41
7.94
Ratios
CROCI (%)
ROE (%)
ROA (%)
ROACE (%)
Inventory days
Receivables days
Payable days
Net debt/equity (%)
Interest cover - EBIT (X)
12/12
15.8
15.4
5.8
14.1
18.7
120.4
154.4
18.8
5.4
12/13E
12.8
10.8
4.1
10.6
18.0
133.7
148.6
11.0
3.9
12/14E
11.9
9.0
3.5
9.8
18.0
131.0
145.0
2.4
3.7
12/15E
11.7
9.1
3.5
10.4
17.8
128.4
143.1
(6.0)
4.1
Valuation
12/12
12/13E
12/14E
12/15E
16.3
2.4
7.8
1.1
1.6
11.9
1.2
5.3
0.6
2.2
13.4
1.2
5.2
0.5
1.9
12.4
1.1
4.6
0.5
2.1
BVPS (Rmb)
Note: Last actual year may include reported and estimated data.
Source: Company data, Goldman Sachs Research estimates.
31
2013 7 8
Ticker
Primary Analyst
Price
currency
Price as of
07/02/13
Price performance
since 12/04/12
3 month price
performance
6 month price
performance
12 month price
performance
Rmb
Rmb
HK$
Rp
Rmb
HK$
Rmb
HK$
Bt
Rmb
Rmb
HK$
Rmb
Rp
Rmb
HK$
HK$
HK$
HK$
HK$
Rmb
HK$
$
NT$
Rs
Rmb
W
Rmb
HK$
Rmb
W
HK$
Rmb
HK$
Rmb
W
RM
Rmb
HK$
HK$
Rmb
Rmb
W
$
Rp
Rp
Rp
Rp
Rp
Rmb
W
Rp
Rmb
Rmb
Rmb
Rmb
Rmb
Rmb
HK$
Bt
Bt
Rmb
Rmb
Rmb
HK$
$
Rmb
Rmb
HK$
Rmb
Rmb
HK$
8.63
4.57
3.25
1,230.00
3.35
4.93
15.71
25.00
398.00
4.66
5.47
6.44
10.23
570.00
6.74
7.73
3.18
9.78
4.71
5.13
21.69
31.40
18.03
26.25
368.90
8.04
13,350.00
13.10
1.96
12.26
81,300.00
36.40
19.92
19.42
8.75
441,000.00
10.26
1.90
2.09
3.92
7.56
8.35
319,500.00
74.23
1,350.00
2,650.00
40,000.00
22,500.00
14,300.00
7.92
25,850.00
17,050.00
36.47
15.38
16.96
15.85
11.23
7.38
2.89
390.00
390.00
16.21
12.23
16.02
11.82
4.83
12.22
13.06
13.04
14.64
3.58
3.08
-14.6%
-1.9%
-1.2%
-3.9%
-2.0%
2.5%
-5.4%
-3.8%
2.8%
0.6%
-4.7%
-2.0%
-0.5%
1.8%
-0.7%
2.8%
-0.6%
-3.9%
-1.9%
-3.6%
0.6%
2.1%
0.0%
0.2%
1.4%
2.7%
3.1%
2.1%
2.6%
4.2%
3.6%
-15.5%
-1.8%
-1.6%
2.6%
1.6%
8.5%
1.1%
3.0%
4.5%
2.3%
2.6%
0.3%
0.6%
0.7%
-25.4%
3.8%
-2.6%
2.5%
3.9%
2.0%
13.7%
4.2%
2.6%
2.7%
1.6%
5.8%
0.1%
0.0%
-7.1%
-7.1%
-2.2%
7.5%
3.2%
0.7%
-12.4%
1.4%
-0.5%
-1.5%
0.5%
1.4%
0.7%
-30.2%
-16.3%
5.9%
-1.6%
-6.4%
29.7%
18.2%
27.4%
-10.8%
6.9%
1.7%
35.6%
-14.2%
-14.9%
-1.2%
18.9%
9.7%
33.2%
35.0%
24.8%
1.2%
9.0%
3.9%
1.0%
2.6%
-12.6%
-17.3%
-5.6%
11.4%
-2.7%
-5.0%
-16.2%
-0.4%
13.6%
-6.6%
3.0%
3.6%
0.5%
34.8%
17.7%
-7.6%
-13.4%
-15.0%
-9.8%
-0.7%
-28.4%
6.5%
-3.2%
-2.1%
-29.2%
-26.2%
-6.1%
4.9%
-17.2%
-1.6%
-6.4%
-11.8%
-6.0%
39.6%
-19.4%
-19.4%
-5.8%
-13.8%
-8.5%
5.5%
-16.4%
-7.7%
-20.4%
25.6%
-0.7%
-4.3%
23.2%
-37.6%
-34.1%
-4.1%
-7.5%
-21.9%
6.7%
-11.4%
1.6%
-16.0%
-4.9%
-35.6%
2.2%
-40.6%
-66.1%
-27.1%
5.5%
2.9%
0.0%
-18.7%
-12.3%
-18.7%
8.7%
-4.0%
-5.7%
14.6%
-37.8%
-19.6%
-43.1%
-21.6%
-27.7%
-7.0%
-18.3%
-24.5%
14.4%
-31.2%
21.5%
7.5%
-24.0%
5.0%
-27.4%
-35.9%
-40.4%
-10.9%
-2.7%
-16.1%
-2.8%
16.4%
2.7%
-12.3%
-47.9%
-34.6%
6.9%
6.0%
-45.9%
-32.4%
-42.6%
-40.1%
-22.1%
8.6%
-10.1%
-10.1%
-28.1%
-37.8%
-31.2%
-11.5%
-15.1%
-24.0%
-34.8%
35.1%
-5.7%
-13.5%
21.7%
-44.1%
-42.9%
-12.2%
-23.6%
-33.3%
0.6%
-8.7%
0.4%
-27.4%
-7.0%
-44.1%
12.6%
-44.0%
-71.5%
-29.9%
-13.2%
-9.4%
5.4%
-20.2%
-7.4%
-17.1%
-5.6%
-4.6%
-8.6%
14.5%
-47.2%
-41.6%
-22.2%
-22.5%
-23.0%
-16.0%
NA
-23.1%
8.4%
-37.7%
27.5%
39.4%
-33.1%
-7.9%
-35.1%
-41.8%
-36.5%
-14.1%
-7.8%
-28.9%
6.0%
5.0%
24.0%
-14.9%
-39.1%
-54.6%
44.5%
-2.8%
-39.9%
-17.9%
-36.2%
-40.6%
-24.7%
-1.4%
18.5%
18.5%
-17.2%
-36.5%
-40.7%
-35.1%
-14.8%
-25.0%
-29.6%
-5.0%
0.5%
-19.4%
-7.5%
2,222
4.2%
-10.6%
-11.9%
-9.9%
Note: Prices as of most recent available close, which could vary from the price date indicated above.
This table shows movement in absolute share price and not total shareholder return. Results presented should not and cannot be viewed as an indicator of future performance.
32
2013 7 8
33
2013 7 8
What happened
Investment Profile
We upgrade Pingdingshan to Neutral from Sell. Based on our latest coal price
estimates, we lower our 2013E/14E/15E EPS by 29.0%/57.9%/53.8% to
Rmb0.22/0.13/0.10. Our new EV/EBITDA-based 12-month target price is
Rmb4.83, implying 6.0% downside potential (our previous Directors Cutbased 12-month target price was Rmb4.99). Since we added Pingdingshan to
our Sell list on December 4, 2012, the stock has risen 2.3% vs. a 4.2% rise
for the Shanghai - Shenzhen 300 index.
Low
High
Growth
Growth
Returns *
Returns *
Current view
Falling coking coal prices to weigh on earnings. With the impact from
tighter real estate regulatory policies and concerns over a slowdown in
economic recovery after the Chinese New Year, coke prices have been
trending down amid lukewarm purchasing demand from steelmakers. Since
the beginning of the year, coking coal prices in Pingdingshan, where the firm
is located, have declined 10.8% to Rmb1160/t from Rmb1,320/t.
Multiple
Multiple
Volatility
Volatility
Percentile
20th
40th
60th
80th
100th
Key data
Current
Price (Rmb)
12 month price target (Rmb)
Market cap (Rmb mn / US$ mn)
Foreign ownership (%)
EPS (Rmb)
EPS growth (%)
EPS (diluted) (Rmb)
EPS (basic pre-ex) (Rmb)
P/E (X)
P/B (X)
EV/EBITDA (X)
Dividend yield (%)
ROE (%)
CROCI (%)
5.14
4.83
12,136.4 / 1,978.9
--
12/12
0.47
(39.2)
0.47
0.47
21.3
2.1
7.4
1.4
10.4
14.0
12/13E
0.22
(53.1)
0.22
0.22
23.1
1.1
5.1
1.3
4.7
10.3
12/14E
0.13
(41.5)
0.13
0.13
39.5
1.1
5.7
0.8
2.7
8.6
12/15E
0.10
(25.7)
0.10
0.10
53.1
1.0
5.8
0.6
2.0
7.7
3,300
10
3,100
2,900
2,700
Key risks
2,500
2,300
5
Jul-12
2,100
Oct-12
Jan-13
Apr-13
Shanghai - Shenzhen 300 (R)
3 month
(31.8)
(23.7)
6 month
(39.8)
(31.7)
12 month
(49.0)
(43.4)
Source: Company data, Goldman Sachs Research estimates, FactSet. Price as of 7/02/2013 close.
34
2013 7 8
12/12
12/13E
12/14E
12/15E
22,169.4
(17,891.6)
(2,397.4)
-(402.3)
3,377.0
(1,899.0)
1,478.1
48.9
(108.5)
2.2
21.0
1,441.6
(271.3)
(48.9)
20,870.2
(17,649.2)
(2,087.0)
-(345.6)
2,673.9
(1,885.5)
788.4
34.0
(123.2)
0.0
21.0
720.2
(135.7)
(58.6)
21,837.3
(18,765.7)
(2,183.7)
-(361.6)
2,380.6
(1,854.3)
526.3
30.4
(123.2)
0.0
21.0
454.5
(85.7)
(61.3)
23,655.0
(20,465.3)
(2,365.5)
-(391.7)
2,254.7
(1,822.1)
432.6
33.1
(123.2)
0.0
21.0
363.5
(68.5)
(66.4)
1,121.4
0.0
1,121.4
0.0
1,121.4
525.9
0.0
525.9
0.0
525.9
307.5
0.0
307.5
0.0
307.5
228.5
0.0
228.5
0.0
228.5
0.47
0.47
0.47
0.14
30.1
(3.2)
0.22
0.22
0.22
0.07
30.1
1.2
0.13
0.13
0.13
0.04
30.1
2.3
0.10
0.10
0.10
0.03
30.1
3.5
12/12
(11.6)
(31.3)
(40.6)
(39.3)
(39.2)
19.3
15.2
6.7
12/13E
(5.9)
(20.8)
(46.7)
(53.1)
(53.1)
15.4
12.8
3.8
12/14E
4.6
(11.0)
(33.3)
(41.5)
(41.5)
14.1
10.9
2.4
12/15E
8.3
(5.3)
(17.8)
(25.7)
(25.7)
13.5
9.5
1.8
12/12
1,121.4
1,899.0
48.9
(3,295.4)
(66.4)
(292.4)
12/13E
525.9
1,885.5
58.6
(651.1)
0.0
1,818.9
12/14E
307.5
1,854.3
61.3
(352.2)
0.0
1,871.0
12/15E
228.5
1,822.1
66.4
(130.7)
0.0
1,986.4
(480.6)
0.0
3.7
(434.4)
(911.3)
(1,669.6)
0.0
0.0
0.0
(1,669.6)
(1,572.3)
0.0
0.0
0.0
(1,572.3)
(1,532.8)
0.0
0.0
0.0
(1,532.8)
(472.2)
580.0
6.5
(5.0)
109.2
(1,094.5)
(337.6)
0.0
0.0
0.0
(337.6)
(188.4)
(158.3)
0.0
0.0
0.0
(158.3)
140.4
(92.6)
0.0
0.0
0.0
(92.6)
361.0
12/12
12/13E
12/14E
12/15E
1,811.0
2,743.3
819.5
0.0
5,373.9
13,739.6
849.4
11.0
887.8
20,861.8
1,622.7
2,858.9
967.1
0.0
5,448.7
13,574.8
798.3
11.0
887.8
20,720.6
1,763.0
3,290.5
1,028.3
0.0
6,081.9
13,343.8
747.2
11.0
887.8
21,071.8
2,124.0
3,838.4
1,214.5
0.0
7,176.9
13,105.6
696.1
11.0
887.8
21,877.5
6,674.0
1,345.0
19.2
8,038.2
1,086.0
52.9
1,138.9
9,177.1
6,286.0
1,345.0
19.2
7,650.2
1,086.0
52.9
1,138.9
8,789.2
6,426.6
1,345.0
19.2
7,790.8
1,086.0
52.9
1,138.9
8,929.8
7,030.0
1,345.0
19.2
8,394.2
1,086.0
52.9
1,138.9
9,533.2
Preferred shares
Total common equity
Minority interest
0.0
11,156.5
528.1
0.0
11,344.7
586.7
0.0
11,493.9
648.1
0.0
11,629.9
714.5
20,861.8
20,720.6
21,071.8
21,877.5
4.73
4.80
4.87
4.93
Ratios
CROCI (%)
ROE (%)
ROA (%)
ROACE (%)
Inventory days
Receivables days
Payable days
Net debt/equity (%)
Interest cover - EBIT (X)
12/12
14.0
10.4
5.5
10.8
14.5
48.7
138.0
5.3
24.8
12/13E
10.3
4.7
2.5
5.2
18.5
49.0
134.0
6.8
8.8
12/14E
8.6
2.7
1.5
3.5
19.4
51.4
123.6
5.5
5.7
12/15E
7.7
2.0
1.1
2.9
20.0
55.0
120.0
2.5
4.8
Valuation
12/12
12/13E
12/14E
12/15E
21.3
2.1
7.4
1.1
1.4
23.1
1.1
5.1
0.5
1.3
39.5
1.1
5.7
0.5
0.8
53.1
1.0
5.8
0.4
0.6
BVPS (Rmb)
Note: Last actual year may include reported and estimated data.
Source: Company data, Goldman Sachs Research estimates.
35
2013 7 8
Ticker
Primary Analyst
Price
currency
Price as of
07/02/13
Price performance
since 12/04/12
3 month price
performance
6 month price
performance
12 month price
performance
Rmb
Rmb
HK$
Rp
Rmb
HK$
Rmb
HK$
Bt
Rmb
Rmb
HK$
Rmb
Rp
Rmb
HK$
HK$
HK$
HK$
HK$
Rmb
HK$
$
NT$
Rs
Rmb
W
Rmb
HK$
Rmb
W
HK$
Rmb
HK$
Rmb
Rmb
W
RM
Rmb
HK$
HK$
Rmb
W
$
Rp
Rp
Rp
Rp
Rp
Rmb
W
Rp
Rmb
Rmb
Rmb
Rmb
Rmb
Rmb
HK$
Bt
Bt
Rmb
Rmb
Rmb
HK$
$
Rmb
Rmb
HK$
Rmb
Rmb
HK$
7.56
4.57
3.25
1,230.00
3.35
4.93
15.71
25.00
398.00
4.66
5.47
6.44
10.23
570.00
6.74
7.73
3.18
9.78
4.71
5.13
21.69
31.40
18.03
26.25
368.90
8.04
13,350.00
13.10
1.96
12.26
81,300.00
36.40
19.92
19.42
8.63
8.75
441,000.00
10.26
1.90
2.09
3.92
8.35
319,500.00
74.23
1,350.00
2,650.00
40,000.00
22,500.00
14,300.00
7.92
25,850.00
17,050.00
36.47
15.38
16.96
15.85
11.23
7.38
2.89
390.00
390.00
16.21
12.23
16.02
11.82
4.83
12.22
13.06
13.04
14.64
3.58
3.08
2.3%
-1.9%
-1.2%
-3.9%
-2.0%
2.5%
-5.4%
-3.8%
2.8%
0.6%
-4.7%
-2.0%
-0.5%
1.8%
-0.7%
2.8%
-0.6%
-3.9%
-1.9%
-3.6%
0.6%
2.1%
0.0%
0.2%
1.4%
2.7%
3.1%
2.1%
2.6%
4.2%
3.6%
-15.5%
-1.8%
-1.6%
-14.6%
2.6%
1.6%
8.5%
1.1%
3.0%
4.5%
2.6%
0.3%
0.6%
0.7%
-25.4%
3.8%
-2.6%
2.5%
3.9%
2.0%
13.7%
4.2%
2.6%
2.7%
1.6%
5.8%
0.1%
0.0%
-7.1%
-7.1%
-2.2%
7.5%
3.2%
0.7%
-12.4%
1.4%
-0.5%
-1.5%
0.5%
1.4%
0.7%
-7.6%
-16.3%
5.9%
-1.6%
-6.4%
29.7%
18.2%
27.4%
-10.8%
6.9%
1.7%
35.6%
-14.2%
-14.9%
-1.2%
18.9%
9.7%
33.2%
35.0%
24.8%
1.2%
9.0%
3.9%
1.0%
2.6%
-12.6%
-17.3%
-5.6%
11.4%
-2.7%
-5.0%
-16.2%
-0.4%
13.6%
-30.2%
-6.6%
3.0%
3.6%
0.5%
34.8%
17.7%
-13.4%
-15.0%
-9.8%
-0.7%
-28.4%
6.5%
-3.2%
-2.1%
-29.2%
-26.2%
-6.1%
4.9%
-17.2%
-1.6%
-6.4%
-11.8%
-6.0%
39.6%
-19.4%
-19.4%
-5.8%
-13.8%
-8.5%
5.5%
-16.4%
-7.7%
-20.4%
25.6%
-0.7%
-4.3%
23.2%
-35.9%
-34.1%
-4.1%
-7.5%
-21.9%
6.7%
-11.4%
1.6%
-16.0%
-4.9%
-35.6%
2.2%
-40.6%
-66.1%
-27.1%
5.5%
2.9%
0.0%
-18.7%
-12.3%
-18.7%
8.7%
-4.0%
-5.7%
14.6%
-37.8%
-19.6%
-43.1%
-21.6%
-27.7%
-7.0%
-18.3%
-24.5%
14.4%
-37.6%
-31.2%
21.5%
7.5%
-24.0%
5.0%
-27.4%
-40.4%
-10.9%
-2.7%
-16.1%
-2.8%
16.4%
2.7%
-12.3%
-47.9%
-34.6%
6.9%
6.0%
-45.9%
-32.4%
-42.6%
-40.1%
-22.1%
8.6%
-10.1%
-10.1%
-28.1%
-37.8%
-31.2%
-11.5%
-15.1%
-24.0%
-34.8%
35.1%
-5.7%
-13.5%
21.7%
-41.8%
-42.9%
-12.2%
-23.6%
-33.3%
0.6%
-8.7%
0.4%
-27.4%
-7.0%
-44.1%
12.6%
-44.0%
-71.5%
-29.9%
-13.2%
-9.4%
5.4%
-20.2%
-7.4%
-17.1%
-5.6%
-4.6%
-8.6%
14.5%
-47.2%
-41.6%
-22.2%
-22.5%
-23.0%
-16.0%
NA
-23.1%
8.4%
-44.1%
-37.7%
27.5%
39.4%
-33.1%
-7.9%
-35.1%
-36.5%
-14.1%
-7.8%
-28.9%
6.0%
5.0%
24.0%
-14.9%
-39.1%
-54.6%
44.5%
-2.8%
-39.9%
-17.9%
-36.2%
-40.6%
-24.7%
-1.4%
18.5%
18.5%
-17.2%
-36.5%
-40.7%
-35.1%
-14.8%
-25.0%
-29.6%
-5.0%
0.5%
-19.4%
-7.5%
2,222
4.2%
-10.6%
-11.9%
-9.9%
Note: Prices as of most recent available close, which could vary from the price date indicated above.
This table shows movement in absolute share price and not total shareholder return. Results presented should not and cannot be viewed as an indicator of future performance.
36
2013 7 8
, CFA
EBITDA CROCI
EV/FCFEV/EBITDAEV/DACF 12
Quantum
Quantum
GS SUSTAIN
GS SUSTAIN GS SUSTAIN
, CFA
ACC(A)(H)Ambuja Cements(A)(H)(A)(H)Asia CementAsia Cement China
Holdings(A)(H)Banpu Public CompanyBumi Resources(H)
(A)(H)China Steel (GDR)China Steel CorporationCoal India Ltd.Grasim IndustriesHarum Energy Tbk PTIndia
Cements(A)(H)Korea Zinc(A)(H)Mongolian Mining Corp.PT Adaro Energy TbkPT Indo Tambangraya MegahPT
Tambang Batubara Bukit AsamShree Cement LtdTCC International HoldingsTaiwan CementUltratech
Cement(A)(H)(A)(H)
(H)
B
25-35%10-15%
(A) 12
(N) 12 (C) 12
(NR)
(RS)
() (CS)
(NC) (NA) (NM)
37
2013 7 8
()
http://www.theocc.com/about/publications/character-risks.jsp
2013
(i)(ii)
38