Shenhuo Company: coal output expands while electrolytic aluminium output shrinks

There are two major reasons for stock fall of Q3: 1. mid term decline of coal price which adjusted the stock related to around 10x; 2. August profit of aluminium industry was sliding down, extending to loss in September.

Anthracite of Yongcheng continued to fall in October to the present, 18% lower than the peak. Shenhuo Company, in the earnings estimate of 2009, adjusted the average sales prices 15% down and output 56% than 2008.

October aluminium price in China fell to 13000 yuan/ton, under the average cost level in the industry. Electrolytic aluminium cut in Shenhuo Company has been decided for Q4, and the plan will also be adopted in 2009. 

The company adjusted the sales achievements, according to the prices changes of coal and aluminium, to 2.86, 2.34 and 3.28 yuan for 2008, 2009 and 2010. A target price of 24 yuan has been set based on the 10x earnings ratio valuation of 2009. 

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