Nomura downgraded Yanzhou Coal (ADR: YZC, Hong Kong code 01171) from “buy” to “reduce”, and lowered its target price to HK$17.1 from HK$27.7. It said Yanzhou’s bigger exposure in the spot market (75%, versus Shenhua at 55% and China Coal at 44%), regional market (19%, versus Shenhua at 2% and China Coal’s nil) and coking coal market (40%, versus Shenhua’s nil and China Coal’s 2%) is unfavourable amid a weakening thermal/coking coal price trend and RMB appreciation against the AUD. Yanzhou appears to have insufficient resources for growth; however, Nomura thinks its latest acquisitions of Xintai in China, Potash in Canada and Premier/Syntech/GCL in Australia are expensive and with back-end loaded growth. Yanzhou Coal is down 1.94% at HK$18.24 (ADR $23.51)