Earnings Call: H1 2026

Aug 28, 2026

Summary

H1 revenue rose 15.4% and attributable net income climbed 57.2% YoY, supported by higher coal prices, increased output and disciplined costs. Capacity additions and project execution underpin growth plans, while market volatility and tighter safety constraints remain key risks.

Ladies and gentlemen, old and new friends, good morning. On behalf of Yankuang Energy, I would like to extend a warm welcome to all the investors and friends attending this meeting and express my sincere gratitude for your long-term care and support for the group. This year, the global energy landscape has undergone profound adjustments. Geopolitical conflicts have continued to disrupt the energy market, and industry regulatory constraints have been continuously strengthened. Faced with severe challenges, the group has remained steadfast in its confidence and risen to the occasion, coordinating development and security, optimizing production organization to stabilize output and increase efficiency, accelerating project construction to build momentum, revitalizing existing assets to improve quality and profitability, and deepening capital operations to empower upgrades. All operational measures have been implemented effectively, resulting in continuous improvement in profitability and a shift towards high-quality development. The following is a report on the relevant situation divided into three parts. Part one, operations. In the first half of the year, one performance overview. In the first half of the year, we seized market opportunities, comprehensively managed volume, cost, and profit, achieved quarter-on-quarter increases in the output of our main products, maintained strong cost control, and benefited from year-on-year increase in market prices, resulting in significant and continued improvement in operating performance. Key operating indicators in accordance with IFRS are as follows. One, sales revenue reached CNY 70.23 billion, up CNY 7.37 billion, or 15.4% year-on-year. Two, net income attributable to shareholders for the period was CNY 7.87 billion, up CNY 2.87 billion, or 57.2% year-on-year. Three, output of sellable coal, 88.02 million tons. Four, chemical production reached 5.03 million tons. The chemical sector achieved stable, full capacity, and high-quality operation with significant synergistic effects from the main business, contributing net revenue of CNY 1.14 billion. Five, total assets, CNY 464 billion. Shareholders' equity attributable to shareholders, CNY 76.1 billion. Return on net assets, 10.3%. Six, declaring an interim cash dividend of CNY 0.2 per share to share the fruits of development with investors. Two, strengthen leading industries, optimize layout and structure, and significantly enhance counter-cyclical capabilities. Closely following the new national energy security strategy, we will continue to optimize industrial layouts and build an integrated development pattern of the entire industrial chain of coal, electricity, chemicals, oil, transportation, and new energy. One, mining. Stabilizing quantity and improving quality and strengthening the foundation. Coal sector maintains stable production and achieves excellence. We firmly uphold the bottom line of safety, scientifically coordinate mining succession and capacity release, ensure stable and efficient production in core backbone mines. The group's output has been recovering and improving quarter-on-quarter. In Q2, output of sellable coal was 46.47 million tons, up 4.91 million tons or 11.8% compared with the previous quarter. The Shandong base has achieved stable and high-quality production through intensive and green mining practices. Sellable coal output, 18.16 million tons. The Shaanxi-Inner Mongolia base has achieved steady production and outstanding efficiency, with sellable coal output of 22.58 million tons, becoming a core growth pole for profitability and development. Xibei Mining Group maintained strong production growth. Sellable coal output, 17.94 million tons, up 1.67 million tons year-on-year or 10%. The Xinjiang base produced 7.53 million tons of sellable coal. Wucaiwan No. 4 Open-pit Mine produced 5.28 million tons of coal, exceeding the planned target and laying a solid foundation for formal production. Australian base produced 21.82 million tons of sellable coal, the best performance in nearly six years. We are actively pursuing acquisition and approval process for the Hongshun Coal Mine, which will add 410 million tons of high-quality coking coal resources, continuously optimizing product structure and strengthening resource reserves and the foundation for sustainable development. We continue to strengthen quality of our existing assets and promote allocation of advantageous resources to high-quality projects. We have maintained a high net profit of CNY 2.84 billion from public transfer of Xintai Coal Company. Two, accelerated progress on key projects. We concentrated our superior resources on key projects and made crucial breakthrough in handling procedures and project construction. The Shaanxi-Inner Mongolia base, Bolancai Coal Company, Liusangedan Coal Mine received approval from NDRC for increasing annual production capacity from 8 million tons to 10 million tons. The National Energy Administration approved the capacity replacement commitment letter for Huolinhe No. 1 Coal Mine, which was to adjust annual production capacity from 7 million tons to 10 million tons. Large-scale molybdenum mine project with an annual ore production of 16.5 million tons and molybdenum concentrate of 30,800 tons successfully obtained mining license, achieving successful transition from exploration to mining. The procedures for increasing annual production capacity of Wucaiwan No. 4 Open-pit Mine, Liuhuanggou Coal Mine, 3 million tons per year and Yili No. 4 Coal Mine, 12 million tons per year in Xinjiang are being expedited. Xibei Mining's Youfanghao 7 million tons per year and Yangjiaping 5 million tons per year mine projects are accelerating construction. Demonstration and guidance of scientific and technological innovation. We participated in the completion of two research projects, key technologies and engineering applications for green and efficient mining, beneficiation and replenishment in underground coal mines, and key technologies and engineering release for high quality construction and utilization of coal mining subsidence areas, which won second prize in National Science and Technology Progress Award. We also completed eight core research projects in kilometer deep mine engineering experiment. The innovative and promoted dense filling new type of forward moving integrated mechanized mining method has been included in the new version of the Coal Mine Safety Regulations implementation instructions and successfully applied in our mines. This has effectively improved the level of disaster management, reduced mining costs, opened up a revolutionary new path for safe, green and efficient mining, and effectively enhanced resource recycling and utilization of the whole industry. The team won the first prize in comprehensive skills category, the third prize in firefighting and rescue category, and third prize in technician category at the 14th International Mine Rescue Competition, achieving the best results in the history of Chinese participating teams and demonstrating our comprehensive strength in mine emergency rescue. Two, high-end chemical new materials industry. Simultaneous improvement in quantity and efficiency. Coal chemical linkage and synergistic efficiency enhancement. Seizing favorable opportunity of market upturn, leveraging advantages of technological innovation, lean management, and flexible production, the chemical sector has achieved high yield and high-quality production with both volume and efficiency increasing. Lunan Chemicals world's first 3,000 ton OMB pulverized coal pressurized gasifier has achieved long-term safe and stable operation. Rongxin Chemicals' profit is nearly CNY 900 million. Yulin Energy's methanol unit and Future Energy's coal to oil unit have achieved record-breaking operation. Ten chemical products, including methanol, ethylene glycol, and caprolactam, have broken record for highest production in same period. Rongxin Chemicals' 800,000 ton olefin project and Lunan Chemicals' 60,000 ton polyformaldehyde project have entered final construction phase, aiming to start operation in Q4. Xinjiang Energy and Chemical's 800,000 ton olefin project has fully commenced construction. Future Energy's 500,000 ton high temperature Fischer-Tropsch project has achieved substantial breakthrough in key procedures such as land approval, is expected to be ready for construction with the end of 2026. With orderly implementation of projects under construction and plan, the group maintains leading position in the clean, low carbon and efficient utilization of coal, injecting strong momentum into continued performance growth. Based on overall situation of energy transformation, we seize major opportunities of national new energy system construction and two joint ventures and strategically acquired high-quality power and new energy assets from its controlling shareholder. We successfully built a multi-energy complementary system of thermal power as the safety net, wind and solar power for growth, energy storage for regulation, electricity sales integration, which effectively enhanced regional energy supply capacity and resilience of operations through economic cycles. We achieved significant leap in installed capacity with acquired assets encompassing rare and high-quality resources, such as ultra-high voltage power stations supporting Inner Mongolia to Shandong and Gansu to Shandong power transmission projects, offshore wind power in Bohai Bay and large scale wind and solar power base in Inner Mongolia, Gansu desert region. We added 12 million kilowatts of installed power capacity and 21st year of listed coal-fired power companies. Of this, 8.8 million kilowatts are already in operation, including 5.2 million kilowatts of high efficiency clean thermal power and 3.6 million kilowatts of wind and solar energy. 3.2 million kilowatts are under construction and will be put into operation gradually from second half of 2026 to 2027. Annual increase in power generation is 22.9 billion kilowatt hour, electricity sales 21.3 billion kilowatt hour, up 306% and 352% respectively compared to 2025. Steady growth in asset profitability. Target asset achieved a net profit attributable to parent company of CNY 840 million in the first half, up 89.5% year on year, relying on multiple revenue streams such as capacity pricing, green electricity trading, and peak shaving support, and possessing high-quality reserve projects such as 4 million kilowatt of offshore wind power. The power sector has brought prospects for profit improvement and outstanding industrial synergy, which will strongly support our group stable performance growth. Coal mining equipment has efficiently expanded domestic market with hydraulic support projects undertaken for leading domestic energy companies. Passing safety standard tests, significant breakthroughs have been achieved in overseas markets, with high-end hydraulic supports being exported in batches to Australia and successfully entering the Indonesian market. Collaboration has been undertaken with industry leaders such as Caterpillar and Komatsu Mining to develop complete sets of equipment and technologies for high yield and high efficiency longwall single phase coal seams. The Luxi smart manufacturing plant has passed authoritative review of the China Industrial Energy Conservation and Cleaner Production Association and has been recognized as leading zero carbon plant. The European R&D platform and domestic intelligent manufacturing base are working in tandem, accelerating integration of talent, technology, market and foreign resources. The lithium-ion battery-powered monorail crane, independently developed by the German company Scharf, has obtained EU certification and ATEX explosion-proof certification, successfully entering South Africa Polish markets. Lithium-ion battery-powered trackless rubber-wheeled vehicle is about to obtain MA certification and be launched in domestic market. CFH sand's industrial dust removal equipment and other products have secured large equipment orders from Germany, Kazakhstan and Australia. The integrated operation system encompassing railways, highways, ports, shipping, industrial parks, and platforms has deepened, resulting in freight volume of 190 million tons in the first half, up 40%. Among them, the port and shipping sector saw year-on-year increase of 36%, while highway sector saw year-on-year increase of 61%. Yankuang Tai'an Port has been operating 10,000 ton trains regularly, strengthening coordination of road, rail, water, intermodal transport, and linkage of collection and distribution, and actively expanding new business models such as logistics, general contracting, and Xinjiang coal to Shandong in the first half of the year. The shipment volume exceeded 9 million tons, up 21% year-on-year, and the park supply chain integration and resource integration continue to be enhanced. Wubo Technology has deeply integrated physical logistics plus digital intelligence platform to promote implementation of vehicle cargo matching, heavy load return, and route optimization, effectively reducing total logistics cost, achieving a freight volume of 140 million tons and a profit of over CNY 100 million. It formally submitted an application for its share listing to HKEX, taking a key step in process of capital internationalization. Taking market-oriented and lean six refinements and six improvements as the starting point, we carried out the practice, thrift, and strictly control cost campaign in depth and implemented lean management measures such as 10 enhancements, 10 efficiency improvements, and 10 cost reductions. In the first half, we reduced cost and increased efficiency by a total of RMB 820 million. We strengthened lean management of cost and expenses and strictly implement cost calculation and decomposition and rigid assessment. We are strictly controlling procurement cost and consumption. The coal sector is deepening the three reductions and three improvements and two optimizations and three reductions policies. Reduction refers to optimization of production organization and promoting advanced processes. In chemical sector, efforts were focused on operation of two furnaces and strengthening the management of waste reduction and shutdown. Material consumption per unit down 3.2% year-on-year. We reduced non-productive expenditure. We standardize bidding and tendering management, and streamline and reduce outsourced business. We reduced controllable cost by RMB 130 million. Implementing the six-fixed management system for human resources resulted in efficiency improvement of CNY 220 million. Implementation of six major synergies involving industry, market, and resources generated CNY 160 million in benefits. We will intensify efforts to revitalize existing assets, promote inventory clearance and savings, and reduce expenses by CNY 100 million. A series of decisive and pragmatic measures effectively offset some of the impact of production adjustments and rising costs of bulk commodities and raw coal. Sales cost per ton of self-produced coal was CNY 340 per ton. Unit sales cost of methanol, CNY 1,239 per ton, year-on-year decrease of CNY 26 per ton, and unit sales cost of acetic acid was CNY 1,935 per ton, down CNY 46 per ton year-on-year. Coal sector optimized pricing products, customers, and distribution channels, seized the opportunity to increase revenue and profit during market recovery. Average price of self-produced coal reached CNY 553.3 per ton, up CNY 47 per ton or 9.3% year-on-year. On pricing side, we scientifically assess market trends, implement leading price increase followed by gradual decrease strategy, closely monitor market changes, and adjust sales prices in timely manner to achieve a price for the same quality coal that is higher than that of surrounding markets. Strengthening coal quality control throughout the entire product process ensures profitability, attracts customers, and expands markets through credit, and continuously amplifies premium effects of the Yankuang coal brand. Deepening the winning with refined coal strategy, domestic refined coal sales accounted for 65% of total sales, while sales share of customized clean coal and Shaanxi-Inner Mongolia chemical raw material refined coal steadily increased. The client has improved long-term contract plus direct supply layouts with long-term contract sales within the province, accounting for 88% in the Shaanxi-Inner Mongolia. The strategy of stabilizing building materials, increasing chemical industry, and expanding metallurgy has been implemented with direct supply sales accounting for over 90%. On distribution channel, we implemented port front sales to open up logistics channel of southward via canal and northward via sea. We actively sought railway policies to reduce logistics cost. We coordinated cross-mine washing and distribution to flexibly adapt to diverse market demands. The coal chemical sector adhered to principles of increasing scale, expanding cooperation, increasing direct supply, and controlling fragmented supply, actively exploring emerging markets such as South China and Southwest China, continuously increasing proportion of high-quality customers. Focusing on peak market conditions, the sector concentrated shipments and led price increases, achieving 100% sales rate for core products. ASP of major chemical products outperformed other market indices, generating premium of CNY 150 million. We broadened diversified and low cost financing channels, implemented low interest rate replacement of high interest rate financing, carried out bill financing when the opportunity arose. Average financing rate dropped to a record low of 2.4%, saving CNY 160 million in interest expenses. We strengthened investment justification, implemented five controls for project construction, and completed CapEx of RMB 5.68 billion, with expenditure in core coal and chemical industries accounting for over 95%. Net cash flow from operating activities, 12.1 billion, which is sufficient to guarantee project construction, shareholder return, and daily operational needs. The 3-year action plan for asset liability ratio control was implemented in depth and asset liability ratio dropped to 61%, a new low in nearly three years. Adhering to the principle of shareholder first and value sharing, we have comprehensively implemented diversified return measures such as dividend, shareholder increases, and share buyback, achieving peak market cap of nearly RMB 220 billion, up 90% from beginning of the year. From 2023 to 2025, we distributed a total of RMB 24.3 billion in dividend, representing 66% of distributable profit during the same period. We also released our profit distribution policy for 2026 to 2028, establishing a normalized interim dividend mechanism and taking multiple measures to enhance investor satisfaction and gain. Adhering to ESG strategic principles of green and low-carbon compliance and transparent and sustainable development, we have achieved highest ESG rating in China, ranking first among our peers in the MSCI ESG rankings. Our CDP, Carbon Disclosure Project, has ranked first in the industry for five consecutive years. Practicing the concept that lucid waters and lush mountains are invaluable assets, we accumulatively treated 410,000 mu of subsidence land, achieving 100% comprehensive treatment rate for stable coal mining subsidence land, and 100% comprehensive utilization rate of mine water and coal gangue. Its overall energy efficiency and industrial output is among the best in the industry. The brand value of Yankuang Energy has exceeded 100 billion CNY for the first time, and its brand influence and market reputation continue to improve. Part two, market analysis of major products. Coal market in the first half, safety supervision in major domestic coal producing areas was tightened. Raw coal production declined year-on-year, coal market supply tightened and price fluctuated upwards. It is expected that in the second half, coal supply and demand will be generally stable with tight balance in certain periods, and price will fluctuate narrowly at a medium to high level. Overall price level for the year is more certain than last year. On supply, domestic coal supply capacity remains stable. With gradual improvement of regulatory mechanisms such as ensuring supply of coal for power generation and coal reserves, coal price is expected to remain stable in the long term. Safety supervision across the industry is being strengthened, and rigidly constrained production capacity is being released in an orderly manner. Domestic supply has contracted temporarily. From January to July, domestic coal production reached 2.7 billion tons, down 2.9% year-on-year, with 10.1% year-on-year decrease in July alone. On demand, government fiscal spending and bond issuance are accelerating. Infrastructure investment and consumption-stimulating measures such as two major projects, two new projects, and six networks are being implemented more quickly. The China Electricity Council predicts that total electricity consumption will increase by 5%-6% year-on-year for the whole year, with rapid growth in energy consumption from big data and computing power industries. Continued high growth in coal consumption for chemical industries. The continued prominence of coal's role as a safety net, resulting in stable overall demand. International markets. Geopolitical conflicts have kept oil and gas prices high, highlighting the substitution effect of coal. In the second half of the year, major coal producing countries will have limited coal production increase. Factors such as strong uncertainty in Indonesia export supply, rising shipping costs, and ongoing geopolitical conflicts are expected to keep international coal price fluctuating at a medium to high level. Two, chemical market. Based on our country's resource endowment of abundant coal, scarce oil, and limited gas, modern coal chemical industry has demonstrated significant economic value amidst sharp fluctuations in international energy price since 2026. Our country's coal to oil, coal to gas, and coal to olefin technologies have undergone iterative upgrades, significantly enhancing industry strength, effectively reducing dependence on imports, and playing increasing important role in ensuring national energy security and self-sufficiency of basic industrial products. It is expected that in the second half, geopolitical conflicts will continue to disrupt stable supply of international chemical market and price trends of chemical products will diverge. Our main chemical products can still maintain a good profit margin. On supply side, domestic production capacity was released steadily, and the industry entered a concentrated maintenance period in Q3, resulting in temporary tightening of supply. The volatile overseas geopolitical situation weakened imports, further easing oversupply pressures. On demand side, policies to stabilize growth were implemented. Manufacturing demand gradually recovered, and demand in high-end chemicals and raw materials steadily expanded, leading to overall structural improvement in demand. Part three, measures for the second half of the year. During the 14th Five-Year Plan period, our group proactively analyzed industry transformation trends, closely aligned with national energy strategies and industrial policies, continuously optimized industrial structure, actively deployed key projects, and orderly phased out outdated capacity, thus solidifying development foundation. Currently, the 15th Five-Year Plan for coal industry development clearly states the principle of replacing small and large enterprises with large ones, and increasing superior enterprises while eliminating inferior ones. Our direction is highly aligned with the national plan, achieving breakthrough in some areas and continuously seizing opportunities and gaining initiative in industry transformation. Our group will seize opportunities and ride momentum to vigorously tackle industrial upgrading, increase production and expand output, reduce cost and improve efficiency and construct projects so as to steadfastly strengthen our industry, increase profits, and create value. Safety is the cornerstone of all development achievements. Our group has consistently upheld concept that ensuring safety means ensuring production, efficiency, stability, and development, and have deepened special campaigns such as five checks, five strict measures, and one guarantee, and fundamental solutions for safe production, building unbreakable safety barrier for our high-quality development. On the basis of ensuring safe production, we'll coordinate and complement the five major industries to improve efficiency and scale, increase development speed, and improve operation efficiency. Increase mining production and output with both expansion and contraction. We'll adhere to safe, green, intelligent, and efficient mining practices, focus on project construction, and accelerate release of advantageous production capacity. We'll also orderly promote improvement of existing resources and revitalization of existing resources so as to make a good start and take a good first step in achieving the goals of the 15th Five-Year Plan. Shaanxi-Inner Mongolia base will ensure commencement of construction on Bokentai Coal Company and Xinghe Molybdenum Industry. In Q4, strive to commence construction on Huolinhe No. 1 Coal Mine and expedite processing of key procedures for mines such as Galutu. Xibei Mining is accelerating construction of the Youfanghao Coal Mine, striving for joint trial operation in first half of 2027. It's also steadily advancing construction of Yangjiaping Coal Mine and expediting the procedures for adjusting overall mining area plans for Mafuchuan Coal Mine and Maojiachuan Coal Mine, 7 million tons per year. Xinjiang base is making every effort to promote commissioning and operation of Wucaiwan No. 4 Open-pit Mine. It strives to obtain approval for second phase of the 23 million tons per year project before end of the year and complete all approval procedures by capacity expansion by end of 2027. Following a phased approach of putting a batch into production, a batch under construction, and a batch planned, a number of high quality, efficient, incremental projects will be implemented and four large scale, high yield, high efficiency, green and intelligent coal industry bases with capacity of 80 million tons each will be successfully built in Australia, Inner Mongolia, Xinjiang, Shaanxi and Gansu. From 2026 to 2028, the Wucaiwan No. 4 Open-pit Mine and Youfanghao Coal Mine will be completed and Australian Kestrel Coal Mine will be added overseas. The new production capacity will be more than 36 million tons. From 2029 to 2031, Yangjiaping, Huolinhe No. Bolangtai Coal, Mafuchuan, Maojiachuan and Galutu Coal Mines will be completed, adding more than 48 million tons of capacity. By the end of the 15th Five-Year Plan period, the newly added high-quality commercial coal production capacity will exceed 80 million tons and raw coal output will exceed 300 million tons. Revitalize existing assets. Adhering to principle of selective support and restraint, selective advancement and retreat will promote four optimizations of location, coal type, resource endowment and disaster management. Resolutely and orderly withdraw a number of mines with low production capacity, severe disasters and poor efficiency. Resolutely divest non-advantageous business and inefficient and ineffective assets and improve quality of existing assets. Focusing on high-end diversified and low-carbon development, we will accelerate extension, supplementation and strengthening of the industrial chain, promote transformation of efficient industrial clusters. In Q4, Rongxin Chemicals 800,000 ton olefin project and Lunan Chemicals 60,000 ton polyformaldehyde project were completed and put into operation. The Lunan Chemical Methanol Ageing Unit Renovation and Capacity Integration Project was put into trial operation, further reducing cost of acetic acid and polyformaldehyde through large scale replacement of small scale units. We will accelerate construction of Xinjiang 800,000 ton olefin project, striving to complete and put into operation by end 2027. Seizing opportunities presented by National Strategic Reserve Policy for coal to oil and gas, we will accelerate development of Future Energy's 500,000 ton high temperature Fischer-Tropsch Project, aiming to obtain land approval for the project by the end of the year and expedite commencement. Leveraging national strategies, our geographical location and resource endowment and our own advantages, we will actively seek national level oil and gas and fine chemical projects as well as supporting high-quality coal resources. We strive to achieve a chemical production capacity exceeding 12 million tons by the end of the 15th Five-Year Plan period, with high-end chemical products accounting for over 70%. Focusing on clean and efficient development, we will make every effort to strengthen and optimize existing projects, actively acquire high-quality reserve projects and resources, and enhance empowerment of coal conversion and synergistic effect of the industry. We are making great strides in the construction of large-scale coal-fired power units with Tai'an 2 times 600 megawatt and Liaocheng 2 times 660 megawatt thermal power projects completed and put into operation in Q4. Our annual power generation will reach 45 billion kilowatt hour and electricity sales will reach 42 billion kilowatt hour, placing us among the top listed coal-fired power companies in terms of electricity sales volume. Actively participate in bidding process for Bohai Bay offshore wind power project in Shandong Province and expedite approval of 936 megawatt project, expand offshore wind power operation and maintenance business, build synergistic development of offshore wind power, green electricity direct connection and computing power business, develop onshore wind power, ensuring grid connection of the 180 megawatt wind power project in Liaocheng. Commence construction of 180 megawatt wind power projects in Jining and 140 megawatt wind power projects in Ulanqab. Accelerate development and construction of 210 megawatt wind and solar powers in Zaozhuang and 140 MW wind power projects in Qingdao, 450 MW wind and solar projects in Binzhou, focus on high-quality mature targets and promote acquisition of high-quality new energy projects as appropriate. Accelerate iterative upgrading of high-end equipment, strengthen core products of high-end hydraulic supports, actively meet complete equipment needs of large domestic energy companies. Vigorously expand Australian, Southeast Asia and Africa markets to build strong international competitiveness. Strive to achieve annual external market revenue exceeding CNY 1 billion, accounting for over 20% of total revenue and profit exceeding CNY 100 million. Integrating European platform technology, brand and market channel resources, Scharf focuses on becoming a leading service provider of mining transport auxiliary equipment, deeply cultivating core product of lithium-ion battery monorail crane, expanding into categories such as lithium-ion battery, trackless rubber tired vehicles, and accelerating the development of the South Africa Polish markets. CFH is building a high standard domestic production base and accelerating its export to the Australian, Canadian markets. Deepen integration of resources across the entire chain and innovation of business models, promote deep synergy among goods, trade, sales and storage and enhance profitability of all sector. Railway sector will solidify internal transport guarantees and vigorously expand external operation and maintenance service market within the province and Shaanxi-Inner Mongolia region. Ensuring an annual transport volume of over 32 million tons. We expand west to east coal transport logistics channel, accelerate construction of Caojiahuochang, new Xialang railway project, and strive to fully leverage synergistic advantages of Yankuang Tiánhe Port, Jilin Port, and Yankuang Shipping. By the end of the year, we'll actively expand multimodal transport such as road to rail, road to water, and develop high value added businesses such as container intermodal transport, aiming to achieve annual transport volume exceeding 18 million tons. We'll deepen effort in physical logistics plus digital platform model, solidify integrated supply chain ecosystem, empower development of the real economy with digital credit, expand international ocean shipping routes to Australia, Southeast Asia, South Africa and other countries, and strive to achieve annual international freight volume of over 100 million tons. Strengthen internal management and vigorously improve quality and efficiency. We'll adhere to quality-oriented development and management improvement, implement lean management measures such as six refinement and six enhancements, ten strengthenings and ten efficiency increases, and ensure that we reduce costs and increase efficiency by more than CNY 1.7 billion throughout the year. Strictly reduce cost and control measures. Make good use of subsidized loans, new policy-based financial instruments, and other low-cost financing methods. For funding costs, the overall financing cost was reduced by 10% throughout the year, saving over CNY 300 million in interest expenses. Comprehensive budget management and benchmarking management was strengthened, resulting in reduction of controllable expenses of over CNY 300 million. Explore operational potential. Measures resulted in cost reductions of over CNY 200 million in procurement. Asset verification and inventory clearance were conducted, and idle materials were disposed. Three, focus on effective marketing and revenue generation, proactively plan annual contract negotiations, and precisely implement three focuses strategy. The two guarantee strategy, focusing on long-term contract strategic clients and new markets, guaranteeing coal quality and cash flow, aims to strategically increase scale and sales proportion of long-term contracts, ensuring contract fulfillment rate of over 80% throughout the year. We also strengthen production and sales coordination, implementing integrated sales. We enhance coal quality control across the entire supply chain and deepen implementation of the Three Zeros project to ensure quality-driven success and improved efficiency. Deepen reform and improve efficiency. Closely align with state-owned enterprise reform plan and the 15th Five-Year Plan industrial development layout, focusing on core responsibilities and main businesses to adjust structure and optimize layout, promoting concentration of advantageous resources, technology, capital towards high profit projects such as intelligent mine with capacity of tens of millions of tons, high-end chemicals, non-ferrous metals. Improve market-oriented operating mechanism. Deepen the reform of the three systems. Implement mechanism for adjusting the lowest performing employees and removing those who are incompetent, saving more than CNY 400 million in labor costs throughout the year. Implement the requirement to increase investment in scientific and technology, innovation, tackling key technologies such as intelligent digital mining in deep wells. Strengthen support and guarantee for talent development, build a well-structured and high-quality talent team system, and fully stimulate innovation and creativity. Investors and friends, as one of the most promising energy companies with the best asset quality in the industry, our group has a clear and determined development path, orderly capacity release, lean and efficient management and operation, strong resilience and high certainty in performance growth, and is steadily moving towards a period of concentrated growth in capacity and efficiency. In the second half, the group will deeply integrate into overall construction of national new energy system, strengthen confidence in development and determination to win, adhere to the principle of giving equal importance to optimizing existing assets and rising new growth, steadily optimize structure, increase production, control cost, and increase efficiency, and ensure that we forge ahead and make breakthroughs in the wave of energy transformation, creating greater value and more returns for shareholders and stakeholders with outstanding performance. Thank you all.