CIMB Research downgraded Singapore-listed coal producer Sakari Resources to underperform from neutral and cut its target price to $1.01 from $1.96, citing prolonged coal price weakness.
Sakari shares were up 0.8% at $1.265 on Tuesday. The stock has fallen about 31% so far this year versus the 17% gain in the FT ST Midcap Index.
CIMB slashed its earnings per share estimates for Sakari’s 2012-2014 fiscal years by 16-51% on lower average selling price and volume assumptions.
It also trimmed its 2012-2013 volume projections by 3-4% as it expects Sakari to scale back on production amid weak market pricing.
“Today, the industry grapples not only with a cyclical pullback in demand but also a structural shift in energy consumption patterns given the emergence of cheap shale gas. A shift towards shale gas threatens to marginalise demand for thermal coal.”
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