China’s Shenhua Energy surges after special dividend

Bloomberg

China Shenhua Energy Co., the biggest coal miner in the world’s largest producer, jumped the most since 2008 after rewarding investors with a special dividend as it posted its first profit growth in four years. Shares in Hong Kong closed 16 percent higher at HK$19.14, paring earlier gains of more than 20 percent. The city’s benchmark Hang Seng Index added 0.8 percent.
The company proposed a final dividend of 0.46 yuan per share for 2016, as well as a special dividend of 2.51 yuan per share, it said in a statement.
“The scale of the special payout is startling and could be a bellwether for China’s state-owned enterprises,” Laban Yu, head of Asia oil and gas equity research at Jefferies Group LLC in Hong Kong, wrote in a note to clients Monday. “We believe initial market reaction will be overwhelmingly positive, although this does signal a lack of investment opportunity in China’s coal industry.”
Net income rose 41 percent to 24.9 billion yuan ($3.6 billion) last year, the Beijing-based company said in a separate filing to the Hong Kong stock exchange. Shenhua, which also owns power plants and railroads, flagged the profit increase in January. Revenue expanded 3.4 percent to 183 billion yuan, with about half from coal and more than one-third from power.
Coal prices in China surged last year, snapping four years of declines, after the government ordered miners to reduce output as part of its effort to revitalize the industry and curb industrial overcapacity. That helped bump up the nation’s benchmark power-station coal prices more than 70 percent, even as the measures were relaxed near the end of the year.