1H17 positive profit alert demonstrates consensus way behind
Shenhua H announced its preliminary 1H17 profit alert after market close on28 July 2017. The Company expected to deliver 1H17 NPAT of c.RMB26.3bnunder IFRS. The result is a strong beat by reaching 75% FY17 DBe and 79%Bloomberg 2017 full year consensus, respectively. We believe the strong 1H17upside surprise should be very positive to investors.
　　Awaiting for details but Shenhua we note is surely a Buy
Recent coal price momentum has been strong and let our full year coal priceforecast （QHD5500Kal, FOB） at RMB610/t enjoy upside potential. Meanwhile,recent power surcharge adjustment might imply that Shenhua will be able toimprove its ASP for power generation business. Thus, even before this 1H17upside surprise, Shenhua is already a company generating stable 10%-12%ROAE and 14%+ FCF yield. We believe the company currently trading at 1x PBis undemanding. Buy-reiterated.