YZC: ML Research Comments below (note that their price target of HK$4.60 per share is equivalent to about US$5.93 per ADS)
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FY13 results down 87% YoY; 24% below consensus
YZC reported FY13 results: Revenue fell by 3% YoY to RMB56.4bn and net profit
fell by 87% YoY to RMB777mn (EPS RMB 16cents). The company declared
dividend of RMB 2cents per share.
Coal revenue fell by 3% YoY to RMB54.4bn, mainly due to
weak coal price
Salable coal sales volume rose by 11.8% YoY to 104mt. However, ASP for the
company fell by 14.7% YoY to RMB535/t; ASP for Shanxi/Heze/Ordos fell by
19.3%/16.1%/20.6% YoY to RMB282/609/188/t, respectively. ASP for Yancoal
Australia and Yancoal International fell by 11.5% and 9.2% YoY, respectively.
Overall, ASP fell by 13.4% YoY to RMB524/t.
Cost control: a positive surprise
Total cost of sales from the coal business only increased by 1% YoY to RMB42.2bn.
Unit cost for the company declined by 16.1% to RMB264/t. Unit cost for
Shanxi/Heze/Ordos declined by 26.3%/15.4%/6.3% to RMB229/464/158/t,
respectively. Thanks to the great cost control, gross profit only fell by 15% YoY to
RMB10.7bn.
One-time item hurt the bottom line
The company recorded RMB1.7bn exchange losses (vs. FY12: 714mn gain) and
RMB2.1bn impairment loss on intangible assets (vs. FY12: 417mn loss).
Guided stable sales and Capex target for 2014
The company plans to sell 105mt coal in 2014, stable compared to that in 2013. In
2014, the company plans to spend RMB9.4bn on Capex, slightly higher than
RMB91.4bn in 2013.
Price objective basis & risk Yanzhou Coal (YZCHF)
Our price objective of HK$4.6 is based on 0.6x 2013E P/NPV, implying 52x
2013E P/E and 7.7x 2013E EV/EBITDA.
