The company’s competitiveness in resource possession, cost control and sales mode far outstrips that of its peers. It not only possesses the largest top-quality coal reservation, its high-effective integration of coal, electric power, road and port transportation is also prominently advantageous in cost. Moreover, the company’s long-term contract coal is the cheapest.
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“Double engine” propels the coal sector growth: Present coal capacity expansion sustains the output growth, and assets injection will add to its coal business development. Two main coal concessions of Jungar and Wanli are potential growth points in the coming three years. The company’s capacity of coal in 2009 and 2010 is predicted to increase 18mn ton and 15mn ton. As its overall offering plan remains unchanged, future assets injection will be another propel to its performance growth.
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The company’s electric power business enjoys a speedy growth due to a running start and comparative light burden in history. Newly increased installation is predicted to maintain electric quantity trading increase at ~10% yoy in 2009.
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Five self-owned railways of the company bear a total capacity of 228mn ton. It is predicted that capacity of the Datong-Jungar banner is to reach 100mn ton up to 2010, which will satisfy the capacity expansion demand of the Jungar banner mine concession. According to the company’s plan, its future railway capacity is expected to attain 350mn ton. On the other hand, total capacity of the company’s wholly owned port is 125mn, which basically meets the demand of its coal shipment. By 2010, its port capacity is to reach 145mn ton.
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The company’s three main business of coal, electric power and transportation are expecting a full growth, and its business turnover in 2008-2010E is forecasted at Rmb101705mn, Rmb109387mn and Rmb118673mn (compound growth rate to be 5.28%); net profit is to be Rmb33993mn, Rmb37730mn and Rmb39183mn (compound growth rate to be 4.85%), and EPS to be Rmb1.51, Rmb1.67 and Rmb1.74. “Cautious” rating is hereby given.