Global coal-price slide triggers 9% fall in Banpu

Analysts, however, remained bullish on Banpu's business prospects, saying the decline in coal prices would be a short-lived phenomenon, due to prevailing strong demand. In addition, the price of the major portion of Banpu's coal output is locked.

The stock opened yesterday at Bt500, lower than Wednesday's close of Bt532. It then headed even further south to the day's trough of Bt476 before retreating to end the market at Bt484.

Other coal-mining stocks elsewhere in the world faced the same fate as Banpu after coal for delivery to Amsterdam, Rotterdam or Antwerp with next-year settlement was US$190 (Bt6,300) per metric tonne in London, down $27.50, or 13 per cent.

The Stock Exchange of Thailand Index yesterday lost 2.35 per cent to 742.15 points. Foreign investors sold Thai shares with a net worth of Bt4.1 billion.

Kasem Prunratanamala, head of research at CIMB-GK Securities (Thailand), said Banpu's stock correction could be attributed to profit-taking by foreign investors after the shares had outperformed the bourse and other blue-chip stocks.

The sharp drop in Banpu shares will be short term, because the follow-up oil price will boost the coal price, he said.

He said his research house was maintaining its "buy" recommendation on Banpu shares, with a year-end target price of Bt600 apiece.

Finansa Securities said in a note that short-term profit-taking was blamed for the significant decline in Banpu's share price.

The Barlow Junker Index, a benchmark for coal prices, has surged 88 per cent year to date to $168.40 per metric tonne.

The spikes in the coal price will continue on the back of strong demand in China and tight supply, it said. The "BP Statistical Review of World Energy" said there was a surplus of only 42 million tonnes last year.

In addition, 81 per cent of Banpu's sales, estimated at 20 million tonnes this year, has been locked at $63 a metric tonne this year, up 57 per cent year on year from $40 per tonne last year, the broker said.

Thus, the company's earnings will not be hurt in the worst-case scenario of a coal-price drop.

However, the broker recommended that investors accumulate Banpu shares gradually, because the price has tended to slide further to around Bt450.

It has maintained a fair value of Bt612 apiece for Banpu shares on anticipation that company earnings over the next two years will jump 50 per cent on average.