Bloomberg Anywhere Remote Login Bloomberg Terminal Demo Request


Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the world.


Financial Products

Enterprise Products


Customer Support

  • Americas

    +1 212 318 2000

  • Europe, Middle East, & Africa

    +44 20 7330 7500

  • Asia Pacific

    +65 6212 1000


Industry Products

Media Services

Follow Us

Chinese Coal Companies’ Debt Concerns Sink the Shares

Feb. 11 (Bloomberg) -- Shares of China’s biggest listed coal producers have dropped to their lowest valuations on record as falling fuel prices make it harder to repay debt.

The CHART OF THE DAY tracks the price-to-book ratio of China Shenhua Energy Co., China Coal Energy Co. and Yanzhou Coal Mining Co. Both China Coal and Yanzhou Coal trade below the value of their net assets, while Shenhua Energy has fallen to about 1 times book. The lower panel shows the CSI 300 Index’s energy gauge traded at a record discount to the MSCI All-Country World Energy Index last month.

Slowing economic growth and efforts to boost use of alternative fuels have dragged down coal prices in China, the world’s biggest producer and consumer of the fuel. The nation’s banking regulator ordered its regional offices to increase scrutiny of credit risks in the coal-mining industry, two people with knowledge of the matter said last month, signaling government concern about possible defaults.

China’s coal industry is “dead,” said Laban Yu, a Jefferies Group LLC analyst in Hong Kong with an underperform rating on all three stocks. “There are 10,000 producers in China. A lot of them are taking on debt. It gets harder and harder to service debts when coal prices keep falling.”

China Coal warned Jan. 24 that 2013 net income will probably drop as much as 65 percent from a year earlier. The second-largest producer had 50 billion yuan ($8.3 billion) of net debt at the end of last year, from net cash of 6 billion yuan in 2011, according to a Barclays Plc note last month. The stock has tumbled 82 percent from its 2008 peak.

Declines in Shenhua, the listed unit of China’s No. 1 coal producer, have erased $178 billion of market value since the stock peaked in 2007 -- equivalent to the value of Bank of America Corp. Yanzhou Coal, the fourth largest, has dropped 80 percent from its 2011 high. Shaanxi Coal Industry Co., the third biggest, gained 6.3 percent since its first day of trading on Jan. 28, after the company cut the size of initial public offering by more than three quarters from a 2011 plan.

Yanzhou Coal spokesman Zhang Baocai said the company has sufficient liquidity for its assets. China Coal didn’t reply to an e-mail sent to its public relations department. Shenhua spokesman Meng Jian didn’t answer two calls to his office phone.

To contact the reporters on this story: Richard Frost in Hong Kong at; Weiyi Lim in Singapore at

To contact the editor responsible for this story: Michael Patterson at

Please upgrade your Browser

Your browser is out-of-date. Please download one of these excellent browsers:

Chrome, Firefox, Safari, Opera or Internet Explorer.