2015 net losses range from RMB2.3bn to RMB2.8bn
China Coal just announced its 2015 full year profit warning after market closeon Jan 22. The company believes its net losses attribute to shareholders in2015 should range from RMB2.3bn to RMB2.8bn. The loss is much higher thanDB’s estimate at RMB2,268mn and Bloomberg consensus at RMB2,389mn.We believe this profit warning should be a negative catalyst to share price.
BV reduced at over 3% per annum; Sell re-iterated
This big loss implies that China Coal’s book value is reduced at a pace of over3% per annum and thus its PBx valuation might not be as cheap as it looks like.We gauge that the big losses also implies that China Coal’s coal-to-chemicalprojects failed to generate enough profits to offset the losses from ChinaCoal’s coal operations. With average coal price in 2016 even lower than whatin 2015, we believe challenge of decreasing book value remains for China Coal.Sell re-iterated.