Identify and Evaluate Major Coal Miners: China - dummies

Identify and Evaluate Major Coal Miners: China

By Nick Hodge, Jeff Siegel, Christian DeHaemer, Keith Kohl

Energy investors should know that China is slowly working off stockpiles of coal that it built up during the Great Recession. But longer-term expansion of coal-powered plants in China and India will boost demand over the next three or four years. China’s power consumption is expected to increase by 8.5 percent in 2013, and it’s expected to add 75 gigawatts of coal-fired production in the next two years.

Many Chinese coal companies are state-owned, and only a few are listed for public investment. The ones worthy of a closer look are

  • Yanzhou Coal Mining (NYSE: YZC) is China’s largest coal miner with a $7.2 billion market cap on $8.9 billion in revenue. The company saw revenue growth of 6.7 percent year-over-year from 2011 to 2012, and in early 2013 it had a forward price to earnings of 15.7.

    Yanzhou mines and sells coal in China, Japan, South Korea, and Australia. The company deals with both metallurgical coal and thermal coal, as well as their byproducts. Yanzhou runs six coal mines, including the Xinglongzhuang, Baodian, Nantun, Dongtan, Jining II, and Jining III. It’s not just a coal company, however, because it also generates revenue from methanol, electricity, railways, and acetic acid.

  • China Coal Energy Company Limited (OTC: CCOZY) is a subsidiary of China National Coal Group Corp., the third largest state-owned coal company in the world. It operates coal mines and coking plants and manufactures coal mining equipment. In 2012, it earned $1.3 billion on revenues of $13.6 billion.

  • China Shenhua Energy Co. Ltd. (OTC: CSUAY) is the largest coal-mining operation in the world with more than 15 billion tonnes of recoverable reserves. It also owns related businesses, including ports, shipping, railroads, and utilities. It also runs Mongolia’s largest coal project through a joint venture with a Russian syndicate and Peabody Energy. It earned $7.8 billion in 2012 on revenues of $39.9 billion.

  • Hidili Industry International Development Limited (OTC: HIIDY) operates in the coal-mining and washing sectors, operating more than 40 mines, 10 coal washing plants, and 6 rail yards. Its value has been dwindling since early 2012, as revenues fell by 62 percent and the company posted a $23.5 million annual loss.