三一国际(00631) 　　Coal prices rebounded significantly since July, YoY decline ofrelated fixed asset investment significantly narrowed. Ordersbegan to improve in October and this will be reflected in 2017Erevenue, at the earliest 　　2016E port machinery revenue to drop 30% due to capacityshortage of new plant. 2017E capacity to ramp up, but still belowprevious estimates 　　We believe current 0.45x 2016 P/B valuation has providedsufficient margin of safety, but financial results and potentialprovisions (could be significant) are still highly uncertain.Upgraded Sany to NEUTRAL with TP at HK$1.19Mixed readings of coal segment. Market shrinkingCutting excessive capacity is still the main theme of China's coalindustry in 2016. Sany's coal machinery sales continued to fall sharply,but coal prices bounced about 20% from 2015 low on decreased coalproduction. We cut Sany?s 2016-18E coal revenue by 35%/28%/28%.Capacity shortage in port machinery. 2017E to improveIn 2016E, annual revenue of port machinery segment dropped 30%YoY, hurt by insufficient capacity of new production base. Large portmachinery capacity will ramp up in 2017E, boosting revenue 15% YoY.We lowered 2016-18E port machinery revenue by 40%/29%/25%.Valuation at all-time low. Uncertainties remain highNet-net, we revised down 2016-18E earnings by 83%/69%/50%.Sany?s profit estimate is close to breakeven, and any small changeswill have significant impacts on the profit forecast. Although our newearnings forecast is higher than market consensus, we think itsreceivables quality and provision timing are more uncertain. Other coalmachinery counterparts are trading at 0.56x 2016E P/B, vs Sany?s0.43x PE. In our view, Sany will see improvement only until 1Q17E andits ROE is 16% lower than its peers?. Based on 0.45x 2016E P/B (16%discounted to its peers? 0.56x), we trimmed TP to HK$1.19, andupgrade the counter to NEUTRAL since its share price have slidsubstantially since our SELL report last time.