1Q20 in line with our forecast
　　Yanzhou Coal Mining announced its 1Q20 results: Revenue fell 5.5%YoY to Rmb45.6bn （down 8.9% QoQ）， net profit attributable toshareholders dropped 34% YoY to Rmb1.53bn （Rmb0.31/sh）， andrecurring net profit attributable to shareholders fell 35% YoY toRmb1.45bn, in line with our expectations. The firm’s earningsdropped YoY in 1Q20, as ASP of coal declined YoY. According to 2019financial statements released on April 23, the final dividend wasRmb0.58/sh （incl. tax）。 Coupled with the interim dividend, weestimate the full-year dividend at Rmb1.58/sh for 2019, implying adividend yield of 19% for A-shares and 30% for H-shares.
　　See page 3 for details.
　　Trends to watch
　　We expect loose supply of coal in the near term. Coal productionvolume and imports recently stayed high. In addition, growth ofthermal power demand is slowing, and 2Q is typically a slack seasonfor coal consumption. Six major power groups now have 61-day coalinventories. As such, we think that coal supply will remain loose inthe near term. Due to low oil prices, we think that the firm’s coalchemical segment will face challenges in the near term.
　　Financials and valuation
　　Given market conditions, we cut assumptions for the firm’s Australiancoal prices and washed coal prices, and lower our 2020 and 2021earnings forecasts 12% each to Rmb5.86bn and Rmb6.03bn forA-shares and lower our forecasts 11% and 10% to Rmb6.26bn andRmb6.61bn for H-shares. A-shares are trading at 0.7x 2020e and 0.6x2021e P/B, and H-shares are trading at 0.4x 2020e and 0.4x 2021eP/B. We maintain NEUTRAL for A-shares, but cut our TP 10% to Rmb9（0.7x 2020e P/B） offering 9% upside. We maintain NEUTRAL forH-shares, but lower our TP 7% to HK$6.5 （0.5x 2020e P/B）， offering11% upside.
　　Risks
　　Coal prices decline more than expected.