About a year ago KGI Asia lowered its earnings forecast on H-share Yanzhou Coal for the full year by 3 per cent to 1.2 billion yuan (HK$1.12 billion) and maintained its 'neutral'' stance on the counter.
Yanzhou, which deals mainly in the mining and screening of coal, sales of coal products and coal transport, had just announced its third-quarter results, which showed an increase in profit for the year so far of 46 per cent compared with the period of 2001 to 842.6 million yuan. KGI said the result was due to an increase in domestic coal prices and production volume.
'However, if we compare Yanzhou Coal's earnings on a quarter-to-quarter basis, the net profit for the third quarter was 258 million yuan, which was below 312 million yuan in the first quarter and 273 million yuan in the second quarter,'' said KGI.
Without a price stimulus, KGI said it expected the average coal price to continue its softness in the fourth quarter.
In April this year Yanzhou announced a lower than expected net profit for last year, a 25.9 per cent rise to 1.22 billion yuan. The main reason was a 53.4 per cent year-on-year increase in selling, general and administrative expenses, compared with a 30.4 per cent gain in net sales to 6.35 billion yuan.
In August Yanzhou said net profit rose slightly in the first half of this year, with a jump in sales more than offsetting lower coal prices. Net profit grew 5.97 per cent to 737.96 million yuan.