Yanzhou Coal to remain buoyant
Analysts are projecting better second-half profits at Yanzhou Coal Mining as higher export contract prices took effect in April.
Further price rises are possible as the government is now allowing undelivered contracts to be renegotiated.
The Hong Kong-listed firm, one of the mainland's largest coal producers, yesterday posted a 65.9 per cent year-on-year surge in interim net profit to 1.22 billion yuan, barely missing the mean estimate of 1.25 billion yuan of seven analysts polled by the South China Morning Post.
Turnover rose 27 per cent to 4.45 billion yuan.
Analysts are bullish on the company's second-half outlook in light of strong coal prices.
'We expect coal prices to continue hovering around the current high level,' DBS Vickers Securities analyst Helen Wang wrote in a research report.
'The probable rise in the thermal coal [used in power production] contract prices should warrant higher earnings, albeit at a limited pace.'
The central government has allowed coal producers to renegotiate the prices of one-year contracts signed in December last year, after some coal producers refused to deliver coal as the spot market price surged more than 30 per cent during the first half of the year.
The mainland is worried tight supplies of coal and power could disrupt economic growth.
The country's annual coal sale and purchase conference has been brought forward to November from the usual December, according to UBS analyst Joe Zhang Huaqiao.
Before the earnings announcement, Morgan Stanley estimated Yanzhou Coal's average first-half coal sales prices would have jumped 33 per cent to 336 yuan a tonne. Sales volume was expected to have dropped about 5 per cent to 19 million tonnes.
Analysts now expect Yanzhou Coal to record a 104.83 per cent rise in full-year net profit to 2.84 billion yuan, according to a consensus forecast by Thomson First Call.