Theme 1: well-positioned coal mines profit from rising coal costs. We
like CRP (Buy, CL) for its 2010 upside earnings risk to its Shanxi coal
mines. Contrarily, we worry about downside risks to Datang’s (Neutral)
coal/ chemical projects as they lack clarity in terms of execution progress.
Theme 2: higher non-coal fuel mix lessens earnings sensitivity to coal
costs. We like Guodian (Buy) and Yangtze Power (Buy) as their higher
non-coal fuel mix results in lower earnings sensitivity to rising coal costs.
Besides this, we think their hydro plants may benefit from the long-term
trend of rising hydro power tariffs.