July 5, 2011 (Yosua Nainggolan) Looking back at Yanzhou Coal (NYSE: YZC) in 2007, they were already a promising prospect, but nowhere close to what they are right now. In our analysis, Yanzhou Coal (NYSE:YZC) started with only around RMB6.7 billion of net sales for the first half of 2007, and grew quite significantly into around RMB8.7 billion in the latter half of the year. Their sales continued to grow even more as they moved into the first half of 2008, moving up 37% to RMB11.9 billion. When the global recession took its start in the third quarter of 2008, Yanzhou Coal (NYSE:YZC) was also hit by the damaging ripples of demand fluctuations all over the world. This resulted in a lesser growth of only 11% into net sales of RMB13.3 billion. The effect of the recession was more evident in the significant decrease of their bottom line, dropping 34% from RMB3.9 billion the first half, to RMB2.5 in the second.
The effects of the recession grew deeper in the early stages of 2009. Sales dropped a staggering 31% to only RMB9.2 billion, even lower than the first half of the previous year. However, the company rebounded back to growth in the second half of the year, jumping up 24% to RMB11.4 billion close to their previous high. In 2010, Yanzhou Coal enjoyed phenomenal growth. In the first half of the year alone, Yanzhou Coal (NYSE:YZC) grew 33% to RMB15.2 billion net sales, only to be topped by an RMB18.7 billion in the second half of the year.
Throughout the years, Yanzhou Coal Mining (NYSE:YZC) continues to add to the variety of the coal types they sell. To better calculate the effect of coal price fluctuations, we decided to use the average price for all the coal types sold by Yanzhou.
As expected, the average coal price moved in correlation with the company’s sales level, this includes a significant drop from RMB640.24/ton to RMB529.16/ton following the 2008-2009 global recession. Throughout the four years, coal sales continue to compose 93%-97% of Yanzhou Coal’s total sales figure.