Yanzhou Coal Surges After Annual Profit Jumps Fourfold on Sales

(Bloomberg) -- Yanzhou Coal Mining Co. gained after its 2017 net income rose more than fourfold.

Shares in Hong Kong surged as much as 7.1 percent to HK$9.85 on Monday, the biggest gain in more than a month. Profit last year jumped to 7.36 billion yuan ($1.16 billion) from 1.65 billion yuan. Sales rose 29 percent to 96.8 million tons after new mines in Inner Mongolia started operation, and on the acquisition of Coal & Allied Industries Ltd. in Australia, the Shandong-based miner said in a filing to the Hong Kong Stock Exchange.

The company traded at HK$9.54 at 2:10 p.m. local time, compared with a 0.3 percent drop in the benchmark Hang Seng Index.

Net income was also helped by unit Yancoal Australia Ltd., which swung to a record profit from a loss the previous year, Yanzhou Coal said. Profit climbed despite impairments of more than 2.2 billion yuan, including bad debts and depreciation of inventory. A company statement showed the bulk of the writedowns came from almost 1.5 billion yuan in assets held by Inner Mongolia Xintai Coal Mining Co., without providing further details.

“Yanzhou Coal’s annual results are much better than the guidance it gave,” said Snowy Yao, an analyst at China Securities International Finance Holding Co.

Profit at China Shenhua Energy Co., the country’s biggest coal miner, also jumped to the highest since 2012 as robust demand and government efforts to rein in overcapacity helped bolster prices.

Net income climbed to 47.8 billion yuan from 24.9 billion yuan a year ago, the Beijing-based miner said in a statement Friday to the Hong Kong Stock Exchange. Revenue rose 36 percent to 248.7 billion yuan. The company, which also runs power stations and railroads, had flagged the profit jump in January.

Coal Price

Shenhua said its output this year may fall to 290 million tons from 295.4 million tons in 2017. Coal sales will also likely slide to 430 million tons, from almost 444 million tons last year. That performance is in contrast to the nation’s overall coal output, which may increase as China starts new “advanced” capacity mines this year. Imports will remain steady, the company said. The company’s shares in Hong Kong slid 4.5 percent.

Shenhua proposed a final dividend of 0.91 yuan per share for 2017, compared with a 2.51 yuan special dividend in 2016.

Coal prices were boosted last year by China’s efforts to cut overcapacity by shuttering some mines and restricting imports. Demand was also underpinned by robust economic growth. Spot coal at the Chinese port of Qinhuangdao averaged 36 percent higher last year and hit 751 yuan in January, the most since 2012, according to China Coal Resource.

Separately, China Coal Energy Co., the country’s largest listed miner after Shenhua, reported its net income doubled to 3.49 billion yuan last year. While the producer said China may face coal shortages from time to time, it warned the nation’s consumption will slow.

To contact Bloomberg News staff for this story: Jing Yang in Shanghai at jyang251@bloomberg.net.

To contact the editors responsible for this story: Ramsey Al-Rikabi at ralrikabi@bloomberg.net, Abhay Singh, Jasmine Ng

©2018 Bloomberg L.P.

With assistance from Jing Yang