China Coal announced 3Q17 PRC-GAAP profit alert
China Coal announced 3Q17 PRC-GAAP profit alert after market close on 10October 2017. According to the announcement, 9M17 PRC-GAAP NPATenjoyed a 150%-190% YoY increase, implying 9M17 bottom line in the rangeof Rmb2.2bn-Rmb2.6bn. This indicates 3Q17 PRC-GAAP NPAT achievedRmb538m to Rmb895m.
PRC-GAAP results look low but IFRS might end up in line
During 1Q17 and 2Q17, PRC-GAAP NPATs were RMB300m lower than IFRSNPATs, due to different accounting treatment for special provisions andassociated deferred tax. As such, the range of IFRS 9M17 NPAT could beRmb31.2bn to Rmb34.8bn, implying 66% to 74% of 2017 full year DBe or 71%to 80% of consensus. That means China Coal's 3Q17 results might be in linewith DBe but ahead of Bloomberg consensus.
Current coal price might suggest strong 4Q17 results
3Q17 average QHD 5500 at RMB630/t and 4Q17 QTD average is RMB710/t.Likely, China Coal's 4Q17 results will be even stronger than 3Q17. As such,consensus still looks too low. For 2018, as we mentioned in our note "Higherfor longer, reiterate Buy on coal sector"（published in 2 August）， we believe lackof capital expenditure for coal sector might keep QHD coal price high into2018. Thus, we maintain our Buy rating for China Coal.