MARKET TALK: Coal & Allied Cut To Neutral On Output, Costs-CS

26th Jul 2010 01:56

0056 GMT [Dow Jones] STOCK CALL: Credit Suisse sees Coal & Allied Industries (CNA.AU) at Neutral vs previous Outperform but maintains price target at A$115 vs last up 0.5% at A$99.12. Sees story of "short-term pain for longer term gain": decreasing FY10 forecasts by 18% but FY2011 earnings up 5%, FY2012 up 1%. 1H volumes came in 7% below forecast, CS sees FY production at 26.5 million tons vs 27 million tons guidance, production costs up 20% this year and next due to higher strip ratios, although moderated by thermal coal price increase of 11% in 2011 to US$100/ton, above long-term estimate of US$80/ton. Site tour of Hunter Valley operations suggests tangible changes underway to raise production over coming years but unblocking rail bottlenecks still key uncertainty; CNA 76% owned by Rio Tinto (RIO.AU). ([email protected]) Contact us in Singapore. 65 64154 140; [email protected] (END) Dow Jones Newswires July 25, 2010 20:56 ET (00:56 GMT)