Sakari

Sakari: SAR’s guidance is for FY12 ASP to be in the range of US$85-90/tonne with expectations for ASP to come in at the higher end of the range. In light of the 23% year-to-date decline in Newcastle benchmark prices and the sluggish outlook, expectations may need to be taken a notch lower, possibly towards the lower end of the range. Guidance on volumes could also be toned down. SAR was planning to ramp up on volumes in 2H12 in anticipation of higher coal prices in order to enjoy higher profit margins. However, coal prices have not quite lived up to expectations. With the market in a state of oversupply, miners will need to scale back on volumes. CIMB downgrades to sell, TP $1.01