[ET Net News Agency, 18 January 2019] Deutsche Bank lowered its target price for China
Shenhua Energy (01088) to HK$24.3 from HK$30.5 and maintained its "buy" rating.
The research house said last year was a strong year for thermal coal imports, with
average monthly thermal coal imports of 18mt+ between January and November (or 15% YoY),
until the China government reiterated its import control guidance in October 2018. DB
envisioned the import quota system continuing this year, and likely in a more flexible
form. It thus expects thermal coal net import volume to decline to the level of 2017.
As a result, DB envisioned Shenhua delivering decent ROE of 13%. It lowered its 2019/20
earnings forecasts by 5% and 13% respectively to factor in lower coal price forecasts and
lower price realization. (KL)