Shares of China Shenhua Energy, the listed unit of the nation’s largest coal miner Shenhua Group, dropped up to 3.8 per cent after giving a bearish projection of its revenue and sales volume for this year. It closed the morning trading session down 1.68 per cent at HK$20.55. In a statement on Monday night, the company said it is looking at a 15.4 per cent fall in revenue to 210 billion yuan for this year, after a 12.5 per cent decline last year to 248.4 billion yuan. It expects coal sales to fall 10.4 per cent to 404.2 million tonnes, after a 12.4 per cent drop last year to 451.1 million tonnes. The sharper fall in likely revenue decline compared to sales volume suggests the company is expecting further decline in coal prices this year, after falling over 40 per cent since mid-2011. The sharper decline in revenue relative to cost of sales means China Shenhua expects gross profit to fall to 27 per cent to 53.7 billion yuan this year CLSA head of resources research Andrew Driscoll said China Shenhua’s sales targets are conservative relative to his forecasts of flat sales volume and a low-single percentage rise in average coal price for this year. “Shenhua has a track of record of giving conservative guidances,” he said. It expects total cost of sales to fall 10.6 per cent to 156.3 billion yuan this year, while selling, general and administrative expense and net finance costs is expected to rise 15.8 per cent to 15 billion yuan. The sharper decline in revenue relative to cost of sales means China Shenhua expects gross profit to fall to 27 per cent to 53.7 billion yuan this year from 73.5 billion yuan last year. It has budgeted 36.9 billion yuan of capital expenditure for this year, down from 50.4 billion yuan budgeted for last year. Some 40 per cent of the spending is for expanding power generation capacity, and 41.9 per cent for coal transportation infrastructure. Only 13.1 per cent is earmarked for coal mining output expansion, amid the mainland’s economic slowdown and a shift in growth focus to less energy-intensive manufacturing and services. The coal mining sector is in oversupply after years of rapid capacity expansion.