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UBS Upgrades CHINA SHENHUA to Buy with Target Lifted to $16.9

 UBS issued a report, saying that the market outlook on coal prices is too pessimistic and believed that CHINA SHENHUA (01088.HK)  +0.480 (+3.279%)    Short selling $101.45M; Ratio 19.122%   's share price has factored in Qinhuangdao (QHD) benchmark coal price of RMB450 per ton. The research house said that the benchmark price for this year's coal contracts is RMB535 per ton and QHD coal price is forecast to be RMB480. UBS believed that Shenhua's value has emerged, thus upgraded the company from Sell to Buy with target price lifted from HK$16.50 to HK$16.90. 

The report pointed out that investors used thermal coal futures in May as an indicator. The futures price dropped from RMB600 per ton in November last year to about RMB500. The research house believed that there will be further downside and that the stable futures prices will support Shenhua's share price.

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