2012 estimates lifted on Daning mine output resumption

CRP reported 10M12 total coal output of 13.9mn tons, up 5.6% YoY. CRP’s Octmonthly coal output of 1.3mn tons is down 20.9% YoY, but better than Sep’s1.1mn tons (which was down 21.3% YoY). The coal output volume rebound ismainly a result of the production resumption at the Daning coal mine, which hadbeen suspended for 12 days in Sep for safety reasons (see our report “9M12 coaloutput in line with FY12 revised forecast”, dated 12 Oct 2012). Several of CRP’scoal mines in CR Liansheng suspended production due to the 18th PeoplesCongress being held from 8 Nov till 14 Nov, to avoid any coal mine accidents prioror during the meeting. CR Liansheng has not received notification yet on when itcould resume production. We believe the production suspension at the Lianshengmine may cause CRP to miss its 2012 output guidance of 18.5mt, but the Daningresumption will help beat our 2012 output estimate of 15.5mt. Assuming thatCRP’s Nov-Dec monthly coal production remains the same as Oct, we lift our2012 coal output volume estimate from 15.5mt to 16.5mt.

Coking coal price forecast revise up; ASP raised

After our coal team raised its PRC coking coal price forecasts for 2012-13 (seeour report titled “Mongolia miners; treasure hunter in recovering China market”,dated Nov 12, 2012), we also raise our 2012-13 coking coal ASP assumptions forCRP. Coking coal accounts for about 50% of CRP’s coal output. CRP alsoannounced a 1.9% YoY drop in 10M12 net power generation, in line with our 2012estimate, and a better than 2.6% YoY drop in 9M12. Same-plant sales in 10M12dropped by 4.0% (9M12: 8.1% YoY drop). We believe the MoM recovery is mainlya result of the end of flood season. With IPPs’ average coal inventory staying over20 days (Huadian: 35 days), we believe 4Q unit fuel cost will be lower QoQ.

2012 EPS revised up, PO and BUY rating maintained

We raise our 2012 EPS estimate by 3%, but maintain our 2013 EPS estimate. Wealso maintain our DCF-based PO of HK$19.2 and our Buy rating. Our PO implies a1.7-1.5x 2012-13E PB multiple vs. the company’s current PB, at 1.4-1.3x 2012-13 PB.

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