Shenhua warns of a massive 36% y/y decline in 2015 earnings

Coal seems to be a significant factor.

China Shenhua Energy Co., Ltd.'s guidance, which for the first time has been released ahead of full year results, implies a 36% y/y decline in earnings for 2015, compared with a 3% y/y decline in Barclays' forecasts.

According to a research note from Barclays, the coal segment appears to be the key drag with a 10% y/y decline in production, while power dispatched is expected to increase 6.6% y/y.

Although Barclays believes the guidance is conservative, it could weaken sentiment around the share price in the near term, in its view.

Here's more from Barclays:

However, investors could find comfort in the fact that 2014 guidance from Shenhua had implied a y/y decline of 26% in earnings, against an actual decline of only 12%.

Moreover, the guidance reflects Shenhua's strategy to prioritise the power and logistics segments over coal, where we estimate the EBITDA from coal for the first time could be lower than other segments individually.

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