Yanzhou Coal Mining Co, a unit of China's fourth-biggest coal producer, had its share-price target and profit forecasts increased by JPMorgan Chase & Co because of rising demand and prices in the nation's coal sector.
JPMorgan raised the target for Yanzhou Coal by 14 percent to HK$7.30 (81 US cents) a share from HK$6.40, Hong Kong-based analysts Feng Zhang and Emily Zhang wrote in a research note on Wednesday. Earnings estimates were raised by four percent, five percent and 12 percent for the three years to 2008, they said.
The coal producer, based in the eastern province of Shandong, is accelerating mine development and is acquiring companies on the Chinese mainland and overseas to meet rising demand in the world's fastest-growing major economy. China, the world's largest coal producer and consumer, uses the fuel to generate two-thirds of the country's power, Bloomberg News said.
"China's spot thermal coal prices have risen strongly in the recent months, up 12 percent from the lows in July 2006," they wrote. "We continue to expect strong coal prices in 2007 on the back of robust demand growth, closure of small coal mines and rising mine production costs."
Yanzhou Coal shares rose as much as 4.2 percent to HK$6.90 and traded at HK$6.72 by the close on the Hong Kong market. The stock has advanced 29 percent in the past year, compared with the 34 percent gain in the benchmark Hang Seng Index.