Analysts confident in Yanzhou Coal's growth potentials

Yanzhou Coal (600188.sh; 1171.hk; NYSE: YZC) Monday announced an 18.4 percent net profit decrease to 1.11 billion yuan in the first half year of 2007, due to higher growth in cost than in revenue.

The cost growth was mainly triggered by increase of salaries and welfare expenses, which soared from 540 million yuan for 2006 to 1 billion yuan by June this year.

However, without incidental expenses, the company's revenue will stably increase with new coal mines coming into operation in the future, analysts said.

Yanzhou Coal is predicted to reach 36 million tons of annual output in 2007, 39.5 million tons in 2008, 42.5 million tons in 2009 respectively.

Adding predicted 10 percent and 5 percent coal price rise in 2008 and 2009, the company is predicted to net 2.6 billion, 3.46 billion and 3.99 billion yuan respectively in 2007-2009, rising 49 percent, 33 percent and 15 percent respectively.

Some investment banks including Goldman Sachs newly gave "buy" rating on the coal producer.