Distinguished guests, dear shareholders, dear investors, good afternoon. This is Jiang Qun, Board Secretary of China Coal Energy. Welcome to our First Quarter Results Announcement for 2025, and thank you for your long-term support and commitment to our company. In attendance today, we have Zhao Rongzhe , Executive Director and President of the company; Ms. Zhan Yanjing , Independent Non-Executive Director; Mr. Chai Qiaolin, Chief Financial Officer; and representatives from Department of Securities Affairs, Planning Development, Finance, Coal Business, Coal Chemical, Power and New Energy, and Marketing Office.
Now, let me move on to introduce to you Q1 results, and all following figures are calculated under Chinese accounting rules. In the first quarter, despite declining prices for coal and coal chemical products, the company achieved a stable operation start by scientifically organizing production and sales, strengthening safety management, and intensifying efforts to enhance quality and efficiency. Key financial data: in terms of coal, facing a challenging market, the company strengthened production coordination, optimized supply-demand synergy. For commercial coal production, 33.35 million tons, up 620,000 tons, or 1.9% year-on-year.
Commercial coal sales volume, 64.14 million tons, up 270,000 tons, or 0.4% year-on-year. Self-produced commercial coal sales, 32.68 million tons, up 370,000 tons, or 1.1% year-on-year. Proprietary coal trading, 31.2 million tons, up 1.47 million tons. Import-export domestic agency coal sales, 260,000 tons, down 1.57 million tons, or 85.8% year-on-year. ASP, ASP of self-produced commercial coal, RMB 492 per ton, down RMB 160 per ton. ASP proprietary coal trading, RMB 486 per ton, down RMB 125 per ton. Coal production costs, in Q1, the company optimized production planning and strengthened cost management.
For unit sales cost of self-produced commercial coal, it's RMB 269.82 per ton, down RMB 21.15 per ton, mainly because we lowered material costs, reduced overburden removal volume at open-pit mines and tunneling footage at underground mines year-on-year, and decreased maintenance expenses, efficient use of special funds. For coal chemical products, polyolefins production, 378,000 tons, down 3.6%; sales, 355,000 tons, down 4.8%; urea production, 528,000 tons, up 11.2%; sales, 600,000 tons, up 8.9%; methanol production, 514,000 tons, up 24.8%; sales, 529,000 tons, up 33.6%; ammonium nitrate production, 139,000 tons, up 6.9%; sales, 141,000 tons, up 8.5%.
Key coal chemical products selling prices, polyolefin ASP, RMB 6,876 per ton, up RMB 28; urea ASP, RMB 1,702 per ton, down RMB 535 per ton; methanol, RMB 1,794 per ton, up RMB 119; ammonium nitrate, RMB 1,861 per ton, down RMB 390 per ton. Production costs of major coal chemical products, polyolefins, unit cost RMB 5,775, down RMB 124; urea unit cost RMB 1,342 per ton, down RMB 219; methanol unit cost RMB 1,414 per ton, down RMB 327; ammonium nitrate unit cost RMB 1,475 per ton, down RMB 40 per ton. Coal mining equipment operations performance, output value RMB 2.42 billion, down 16.6% year-on-year.
Financial operations performance, net profit RMB 324 million, down RMB 54 million year-on-year. Now let me move on to key financial indicators. In the first quarter, we recorded operating revenue RMB 38.4 billion, down 15.4%. Total profit RMB 6.2 billion, down 28.4% year-on-year. Net attributable profit RMB 4.0 billion, down by 20%. Basic earnings per share RMB 3, down 18.9%. Weighted average ROE 2.58%.
Debt-to-asset ratio 44.8%. Key factors affecting profit changes, profit increasing factors include decrease in the unit sales cost of self-produced commercial coal, contributing an additional profit of RMB 690 million; reduction in tax by RMB 160 million; decrease in financial expenses by RMB 130 million; and increased sales volume of self-produced commercial coal, contributing an additional profit of RMB 110 million; year-on-year reduction in management and sales expenses by RMB 20 million.
Profit decreasing factors include decline in the price of self-produced commercial coal, reducing profit by RMB 3.46 billion; also decrease in profit from major coal chemical enterprises by RMB 60 million; and reduction in profit from financial operations by RMB 54 million, largely due to declining market interest rates and year-on-year decrease in deposit absorption volume. That is the factors affecting our profit. Now let me move on to talk about key work plan for Q2. Despite the challenging coal market environment and increasing operational pressure this year, the macroeconomic landscape is showing signs of improvement with favorable factors gradually emerging.
We must accurately assess the current situation, maintain a clear-headed approach to address the challenges. We are going to do the following. First, strengthen marketing efforts to consolidate and expand market share, ensure safe production to steadily increase profitable output, enhance production sales coordination to continuously optimize product mix, intensify cost reduction and efficiency improvement, improve operational quality by strictly controlling business risks, and then deepen enterprise reform to sustainably stimulate vitality. That is all for the performance of the company. Now let's open the floor for questions. Thank you.
Hello everyone. If you would like to ask questions from participants, please press the star key followed by number one. Online participants, you may submit your questions in the chat box or click the raise hand button. Thank you. Once again, hello everyone. If you have any questions from participants, please press the star key followed by the number one. Online participants, you can use the chat box or click the raise hand button. Thank you. First investor, please go ahead.
Hello everyone, g ood afternoon. Thank you for organizing this. This is Jiang Chunlin. I have two questions to ask the management. The first question is about the cost of self-produced commercial coal. It is down by RMB 21 . This cost, the reduction in coal cost. I would like to understand, are there any other factors resulting in the reduction of the cost? What is the cost outlook for the whole year 2025? For net operating cash in Q1, it is down to RMB 376 million. Maybe this is because of the impact of account payables. We would like to understand the reasons behind the reduction of the net operational cash. Thank you.
Ms. Xu, would you like to answer the question?
Sure. About your first question, other costs, let me see. We have coordinated the use of funds, like a safety coal production fund. It is very well used to reduce the cost. Going forward, there will be further cost management measures. First, we are going to increase the production in order to make sure the cost will be amortized. We are going to improve the production efficiency to reduce the cost systematically. We are going to do fine management to reduce the cost. We will also make use of the procurement platform to do centralized procurement in order to reduce the procurement cost.
That is to answer your first question. Second question about operational cash. It's down quite a lot in the first quarter this year for several reasons. First, the net profit of our company in Q1 went down quite significantly. That's the first reason. The second reason is the settlement account payables. Because in the middle of March and by the end of March, we sold more. The payments are not made yet, t hey will be paid in the second quarter. This resulted in the reduced cash in Q1. Also, depreciation and amortization will also have some additional impact on the cash position of the company. Thank you, m ainly three reasons.
Thank you very much. I would like to ask a follow-up question. I remember when you published your 2024 annual results, the special funds went down by RMB 1.1 billion, more or less. In Q1 this year, I think the special fund utilization was also quite active. They are the same, right?
Yes, they are the same. The utilization of special funds, y our special fund reserve or balance is quite stable by the end of Q1. We make a provision. We make a provision, and then we utilize the fund, t hat is why the balance is rather stable.
I see, I see. Thank you very much.
Let me add a few words for you. This is a year-on-year comparison. We made use of more specialty funds than last year. In terms of the balance, it is stable compared to the end of last year because we are making provision on a rolling basis. One is the utilization of the fund, and the other one is the balance of the special funds. I think this can answer your question. It's just that the utilization of the special fund this year is more active than last year, i t's more.
About the cost, in terms of the cost trend, to be honest, I think our company has been working very well to manage the cost in order to address the price declining trend on the market. This is the challenge of our company. We are working hard on it, but we cannot make a promise to our investors by how much it can go down. I can assure you that we have been doing cost control work in the past several years, and it's also one of the highlights of our company compared to our peers. You can stay tuned to see how much we can achieve out of this, t hank you.
Thank you very much for your answer, i t's very clear, t hank you, I have no further questions.
Thank you very much. Now let's move on to the second question. Please identify yourself first before asking questions.
Thank you very much for your time in the afternoon. Congratulations on the very good performance in Q1, t his is from Guosheng Securities, m y name is Liu Yueyue. In terms of the sales of coal as the coking coal, coking coal price has been fluctuating quite a lot. The flexibility, it's very big. I would like to ask you about the ASP in April for coking coal and also the inventory level, I would like to ask you further whether you have plans to do asset injection or M&A, t hank you.
I will ask our General Manager, Mr. Li, from marketing office to answer your first question.
Sure. About coking coal, our coking coal, it's priced against the market. Our production, it's also market-oriented. Coking coal price has been going down for some time. In Q1 this year, the price has been quite stable. Our production, sales, and inventory are managed against the market conditions. The price fluctuation did not have any big impact on our sales and inventory.
The inventory level is more or less the same as before. We see the coking coal price is stabilizing. For long-term contract thermal coal price, it went down by 2% from the end of last year to the end of March. It went down by 2%, c oking coal price went down by 6%, c oking coal price is not going down a lot more than thermal coal, unlike last year. That is why our production, sales, and inventory are quite stable, t hank you.
The second question about M&A plans. I will answer your question. China Coal Group does have some coal assets. They are also doing the investment of coal power plants. In the long term, it's possible that the controlling shareholders will inject coal-related assets in China Coal Energy. But so far, we do not have a clear plan to do that. In the future, if the plan is formulated, we are going to do the approval procedures following China's laws and regulations and disclose to our investors. Thank you.
Thank you very much. I still have one question. I would like to ask you about long-term contract fulfillment in Q1. What was the fulfillment of the long-term contract? The industry introduced some policies to promote the fulfillment of long-term contract. What is the performance in your company in terms of the fulfillment of long-term contract coal?
Thank you for your question. Last year, the social inventory of coal went up quite a lot. And coal used in power generation reduced a lot. The impact on long-term contract coal was very big. In 2025, our contracted volume this year optimized. The total amount contracted reduced a little bit after negotiation with our customers. We signed a lot of contracts with central SOEs and key enterprises of some cities.
The fulfillment of the contract has been very good so far. The long-term contract price, it's not deviating a lot from the market price. The gap is like RMB 16, less than RMB 20. It's quite okay. That is why the fulfillment in Q1, it's also okay. From January to April, the fulfillment rate of the long-term contract coal no less than 90% for the whole quarter. It's compliant with the requirements of NDRC.
Just now, you mentioned you did some optimization of the long-term contracts. In 2025, long-term contract coal will also be more than 80% as required by the government?
NDRC also made some adjustment for producers no less than 75%. Before, it was 80%, no less than 75%. That is the adjustment made by NDRC. We are meeting the requirement. We reduced only a little bit, n ow we are compliant with 75% of NDRC, t hank you.
Thank you very much, I have no further questions, t hank you.
Thank you. Let's move on to the next investor. Please also identify yourself before asking questions.
Hello, Mr. Zhao. Hello, everyone. This is Jimmy from HSBC. Congratulations on the performance of Q1. Thank you very much for organizing this conference call for us. I have several questions. I will go one by one. The first question is about cost. The cost is actually beyond our expectation. You explained the reasons behind. What will be the cost outlook in Q2, Q3, and Q4? How does it compare to Q1? What is the trend? I would like to ask this first question.
Ms. Xu from Financial Department, would you take the question?
Sure. Just now, Mr. Jiang already introduced our cost management has always been science-based. We have a lot of rigid cost items in our cost structure. Each quarter, it can be quite stable. By the end of Q4, we will do centralized settlement, things like that. It may change a little bit, but I think it is basically stable from quarter to quarter.
A follow-up question, c ost went down in Q1. What would be the outlook for the whole year 2025 compared to 2024?
I think what we can say now is we can try our best to maintain the very good momentum. I cannot assure you it will definitely go down for the whole year 2025. We are working very hard on cost control, but we cannot say for sure how much the cost can go down in the year 2025.
Sure, sure. Of course, I totally understand. My second question is about coal chemical in Q1. GP margin went up, quote unquote, and year- on- year. Of course, coal cost went down, t hat's the major reason. Going forward, what would be your outlook on the GP margin of coal chemical business?
Mr. Jiang from Coal Chemical Department, would you like to take the question?
Sure. I think in the past two years, the GP margin has been relatively stable. In terms of commodities like polyolefins, the price went down. Market price went down, t he coal price also went down. We have coal and coal chemical integration. We benefit from the cost reduction of coal, that is why the GP margin of polyolefins is very stable.
For urea, especially natural gas-based urea, cost was quite high in the past several years due to the geopolitics. The profitability was also affected. Now, the international landscape stabilized a little bit. The urea price went down a little bit. We do enjoy decent margin for urea, w e are still positive on the GP margin of coal chemical business going forward, overall speaking, t hank you.
Thank you very much. It is very clear. My last question is about the projects under construction. Do you have any update for coal and also coal chemical? Do you have any update on, for example, the timetable of the projects?
Colleagues from Planning Department, would you take the question?
Everything is progressing very well, w e do not have any update on the timetable. Would you like us to repeat the timetable? Coal chemical phase II, that project. Yulin Coal Chemical phase II started last year in June 2024. Next year, by the end, production will be operational. At this moment, everything is on track, e verything is progressing very well, w e are doing the civil engineering work.
We are doing the construction, s ome facilities are being installed at this moment. Overall speaking, Yulin Coal Chemical phase II construction period will be the same as what we have disclosed. We have no update of the timetable. For Liquid Sunshine project, the construction period is 24 months. At this moment, it is still civil engineering period. Everything is progressing very well. Also, no update on the timetable, t hank you.
Thank you very much, t hank you for your answer. Very clear, I have no further questions, t hank you.
Thank you. Let's move on to the next investor. Please also identify yourself first. Thank you.
Hello, Mr. Jiang. Hello, everyone. This is Chen Chen from Guotai Junan Securities . I have some questions to ask you. The first one is about the special fund. It is RMB 5.6 billion, a nd we also have 140 million tons commercial coal production. What would be the minimum special fund balance required? For investment income, I understand you have some invested projects also related to coal. Your investment income increased a little bit in Q1. How do you explain that? What is the reason behind? I would like to understand a little bit more what are the changes in Q1.
Let me repeat your questions. You have several questions. The first one, it's about the special funds, the balance, right?
Yes, indeed. If it can be reduced, what would be the minimum required? The second question is about investment return, investment income, positive growth. What is the reason?
Okay, I see. About the special fund, what is the minimum requirement? We always make the provision based on the requirements. We do the utilization planning based on the requirements. It is very hard for us to answer the question what would be the minimum. We always do it according to the rules and requirements based on the provision requirements and utilization requirements and also the production. We do the planning every year, w e will also consider the investment required in upgrade and also safety improvement, things like that. It is very difficult to say, it is affected by many different factors.
Second question, about investment income. We invested in some very good companies. In Shaanxi Province, we have Yulin Energy. The investment income increased, t he other company we invested also increased. That is why our investment income increased as a whole. What's the third question about the shipment of coal, shipment and production of coal in Q1?
Yes.
Let me answer the question, t he coal market is still in downward trend. Coal producers will have to respond to that. We are also doing the same, w e ask the coal mines to improve the unit energy production per ton. We have to optimize the product mix. For example, we will try to reduce the low calorific value coal and sell more high CV coal production and shipment. That is the management of the mix. In the current market conditions, it is a better solution. We can always make the changes in a flexible way according to the market conditions, a t this moment, high CV coal more than low CV coal.
I see. I see. It's very clear, t hank you very much.
Next question from an internet participant.
Would like to ask you whether you will increase the dividend payout ratio to 45%?
Thank you very much for your question. We attach great importance to shareholder return, w e try to strike a balance between long-term development of the company and also return to investors. In the past two years, in order to return more to the shareholders, we arranged special dividend payout and also interim dividends last year. In 2025, I think we already announced before that the board has decided to be 35% payout ratio for the year 2024. That's already determined by the board.
We made it very clear that we are going to do interim dividend this year in 2025. I think this is also in line with the expectation of the shareholders for more cash dividend. That is the decision made already by the company last year, 35% dividend payout ratio, and there will be interim dividend this year. We are also taking the suggestions from the investors. We will make sure the management of the company will hear you, t hank you.
Next question, also a question from the internet.
About the administrative penalty by Ordos government, what is the current situation in Inner Mongolia in terms of production?
Coal Department, would you like to take the question?
Yes. In Inner Mongolia, our coal production is rather stable. We are responding to the market to do very good arrangement of the production. As far as I know, there is no change on the production, i t's very stable.
Thank you very much for the answer. Once again, if you would like to ask any questions for phone participants, please press the star key followed by number one. Online participants, you can use the chat box in the live streaming box or click the raise hand button next to you. Thank you. If you have any questions, phone participants, please press the star key followed by number one. Online participants, you may submit your questions in the chat box or click the raise hand button. Thank you.
Once again, if you have any questions, phone participants, please press the star key followed by number one. Online participants, you may submit your questions in the chat box or click the raise hand button. Thank you. Once again, if you have any questions, phone participants, please press the star key followed by number one. Online participants, please use the chat box or click the raise hand button. Thank you. One more question online.
Would like to ask you the business target, operational target of the company this year. Any adjustment on that?
We disclosed our targets and no update so far. We will actively respond to the market changes and attain the targets set, t hank you.
Thank you very much for your answer. Let me ask once more if there are any questions online. If not, we will wrap up. If you have any questions, phone participants, please press the star key followed by number one. Online participants, you may submit your questions in the chat box or click the raise hand button. Thank you. Online question.
Would like to ask the management of the company, what is your view on the outlook of the industry?
Market has been fluctuating, and it's the result of the change of macroeconomics. I think coal is the basic energy source in China. In a rather long period of time, it will still be the mainstay for China. At this moment, the energy mix, it's still with coal as the mainstay. If you look at the production, the production, it's 4 billion tons, and consumption, it's more than 5 billion tons, including some input. The demand, it's rather big.
I think coal will still be the primary energy source in China. It will be the mainstay in the future for some time. We have confidence in our business, w e are being very positive. It is always reasonable to see fluctuation of coal price because it's a commodity. We can always respond to the market changes. The government in the past several years has been improving the supply-demand mix of coal. At this moment, I think coal required by power generation will be stable going forward. Not sure if my answer is satisfying to you.
All right. Next question. Would like to ask you the major drivers of profit growth of the company? Thank you.
At this moment, we are focusing very much on our core business. That's coal business. We are making investments in coal mines in Shaanxi Province, in Xinjiang Province. We are also promoting some other coal-related projects. In the long term, we are still committed in expanding coal capacity. For coal chemical business, we are dedicating to developing advanced coal chemical business to facilitate the clean and efficient use of coal. We have Yulin Coal Chemical phase II under construction at this moment.
We are also considering developing coal chemical projects in some other coal production areas. We are also doing exploration in producing high-end coal chemical products in the future. For coal power, we have Coal Plus Coal Power. We are a subsidiary of China Coal Group, w e are developing projects next to the pits of China Coal in order to be more efficient and offset the declining coal price impact on us. We are still very much focused on our core business and look for more opportunities to sustain the business development of the company in the long run.
Thank you. Next question from a phone participant. Please go ahead.
This is He Tinghua. I have several questions to ask you about cost. You mentioned this special fund. What is the mechanism? How much will be provided on an annual basis to this fund? How do you make the provision?
Ms. Xu, would you like to introduce this?
Yes. We have a safety fee. We have a maintenance fee in the special fund. We have standards for coal producers to do the provision. You can search for coal industry safety fee, provision methodology, utilization methodology. The same is also true for maintenance fee. You can search for the keywords online, and you can see the methods. It is published by the government very clearly.
Let me add a few words on that. Provision is always separated from utilization. We are doing the provision according to the requirements, and we follow the accounting rules to do the provision, to do the booking of the provision. Utilization, it's separated. The utilization will follow the rules of utilization against conditions like how many mines you have and what is the production. It could be the case that we made a lot of provision, but we utilized very little or the other way around, t hank you.
Thank you very much. One more question about cost, I would like to understand further. You are taking some cost control measures, and the efforts are being paid off, as we can see in Q1. I would like to ask you, how many more instruments can you use to control the cost, and what is the room for the cost to go down further?
We are working very hard, trying everything to control the cost. We do not have anything left in our toolkit. Cost control, it is a constant work. I cannot say to you by how much the cost will go down this year. I can only assure you that we will keep doing this. There will be fluctuation of the price of raw materials, like steel, power, electricity, oil, t he price can go down, can go up.
There is a rigid item that is labor cost, which is always on the rise. We have a lot of rigid cost items, w e are trying everything at this moment to control the cost, to manage the cost, to reduce the cost. In operating a business, we have a statement saying that you can always try to squeeze harder in order to get one more liquid out of the sand, w e are doing this kind of thing.
I also see Q1 production, it's bigger than sales. Is it normal for Q1? Do you think other players are expanding production at this moment in order to control the cost?
Sorry, could you repeat your question?
I see that our Q1 production is bigger than Q1 sales. In some other players, I also see Q1 production positive growth, sales negative growth. Is it normal because of seasonality in Q1? Is it a reflection that everyone is trying to expand the production in order to reduce the unit cost?
Let me repeat your question. Some players have a bigger production than sales in Q1, and some bigger sales than production?
No. All the players have bigger production in Q1 than sales. What is the reason? Is it seasonality? Or it's one of the ways for all the players to expand the production in order to lower the unit cost? Seasonality or cost control?
I see, I see. I get your question. Let me ask our marketing office to take the question.
There are special conditions this year in 2025, but normally in Q1, no matter if it's thermal coal, metal coal, the consumption would be less. It's the off-season. There will be more social inventory in Q1. Last year, the production in Shaanxi Province was very low because of the protection of Yellow River and environmental regulations. A lot of companies ordered more in Q1 this year. That is why the production in Q1 in Shaanxi Province increased quite a lot.
I don't think anyone is trying to expand the production in order to reduce the unit cost because coal production, it's controlled. They have to follow the requirements to do the production. The price is going down. The market demand, it's not so good. If they expand the production, it will become inventory. I think we are just in the process of balancing production, sales, and inventory. There is nothing in this showing that everyone is increasing the production to lower the cost, nothing like that.
I see. Thank you very much.
Next question, online participant.
The question is about Antaibao expansion approval. What is the current status?
Colleagues from planning department, would you like to take the question?
Yes. At this moment, we are promoting the approving procedures. At this moment, we are following the laws and the regulations to do the submission of paperwork. We are also doing the coordination of provincial government departments to do the review of the paperwork. Hopefully, by the end of this year, the approval can be cleared.
Next question. What are the different ways for you to sell coal at this moment? And what's the proportion, what's the breakdown in terms of revenue contribution? Thank you.
We have several different ways to sell coal. We have sales on the pit, and we do export. We use truck transportation. The mix of different ways to sell coal has been very stable in the past several years. In terms of the breakdown, it's also very stable. Maybe we do some manual adjustment based on market conditions to make sure we can achieve the most through sales of coal or coal sales business, t hank you.
I see. Thank you very much. Next question, would like to ask you the outlook of stable production?
In the coming five years, it will be very stable, I think. That's our understanding. It will be very stable in the coming five years, t hank you.
Next question about Pingshuo, 5,500 coal, what is the current production volume and sales volume? Pingshuo, mine, t hank you.
Thank you very much for the question about Pingshuo mine. In Q1, commercial coal production, 19 million tons for 5,500 [Foreign language]. They are about 20% of the total production. It's my personal estimate because there is this feature in Pingshuo mine. The CV, it's rather low, so not much above 5,500, so only 20%.
I see. Thank you. Next investor, what is the performance of Q1 in your company compared to our peers?
Let me put it this way. We are minding our own business, and we are doing very well. We delivered very good results for Q1. Our performance is in line with market expectation, b ut compared to advanced players, of course, there is room for us to make improvement.
Thank you very much for your answer. In the interest of time, we are going to conclude the Q&A session. I will hand over to the management to wrap up. Thank you.
Thank you very much to all the shareholders, investors, and analysts for your participation. Maybe you have some more questions to ask us, but in the interest of time, we have to stop over here. But do feel free to get in touch with our investor relations department. We are always here for you to answer your question, t hank you very much once again.
Thank you to the management, and thank you to all the investors. The call concludes over here. Thank you. Wish you a happy day. Thank you very much. Bye.