Goldman Sachs: Raises profit forecasts for mainland coal stocks, raises target price for China Coal Energy (01898) to HK$16.

Goldman Sachs released a research report stating that in the mainland China commodity sector last year, most cement stocks recorded year-on-year growth in recurring profits, generally better than expected. Unit cement profits were roughly in line with or slightly lower than expected. Coal stock profits declined year-on-year, but unit coal profits basically met expectations. Steel companies continued to show low performance but saw some improvement year-on-year, and paper packaging companies also performed better than expected. The bank raised its profit forecast for the coal stocks it covers by 3% to 15%, reflecting a more optimistic outlook for coal and coal chemical product prices. It lowered its profit forecast for cement stocks by 7% to 53%, reflecting weak construction market conditions and a weaker profit outlook for the first half of this year. Meanwhile, the profit margin situation for steel companies remained low, with profit forecast adjustments ranging from an 8% decrease to a 51% increase on a low base. The bank maintained its "buy" rating for China Coal Energy (01898), Anhui Conch Cement (00914), and CNBM (03323), with target prices raised from HK$11.5 to HK$16, lowered from HK$31 to HK$28, and lowered from HK$6.5 to HK$6, respectively. At the same time, the rating for MAANSHAN IRON (00323) was upgraded from "sell" to "neutral", with the target price raised from HK$1.9 to HK$2.5, as the valuation is now close to a fair level.