Yankuang Energy Group Company Limited

Now I will defer to Chairman Li to start the presentation, please. Ladies and gentlemen, good morning. On behalf of Yan Kuang Energy, I would like to extend a warm welcome to all investors and friends attending this meeting. I would like to express my heartfelt gratitude for the care, understanding and support you have long given to the group. In recent years, the world's century-long changes have accelerated. The macroeconomy has been complicated and volatile, and the energy industry has accelerated its transformation. In the face of many pressures and challenges, Yan Kuang Energy has firmly believed in development, maintained our strategic strength, decisively launched the second venture of external development, and we resolved to strengthen our five industry segments, continuously rewarded our shareholders and strengthened the foundation and guarantee of sustainable development. In 2024, the coal market was in a downward spiral and our group focused on the three. Thank you very much. Thank you. The following is a four-part report on our group. First, the first part is a review of our operating results. In 2024, for coal production, it is 142 million tonnes, a year-on-year increase of 10.39 million tonnes, or 7.9%, exceeding the annual production plan. Chemical production of 8.702 million tonnes, a year-on-year increase of 115,000 tonnes or 1.3%, hitting the best level in history. Sales revenue, 124.53 billion, a year-on-year decrease of 8.21 billion or 6.2%. Net income 14.06 billion, a year-on-year decrease of 5.17 billion or 26.9%. Five total assets, 356.35 billion. Shareholder's equity, 58.61 billion. Return on net assets, 23.98%. Scale equivalence and asset quality continued to improve. Six annual dividend of 0.77 RMB per share, tax included. So for our core industry, mining industry, Advantageous production capacity to accelerate release. Shanmeng Base, commercial coal or saleable coal production, 43.12 million tons, up 666 tons. Strict volume, management, income, profits have become our group's contribution to our core growth pole. Breakthrough progress was made in the strategy of focusing on Shaanxi and Mongolia. The coal mines of Qilongwan and Shilao Wushu successively cracked the policy constraints of double-phase production. An Yingpan Chuan coal mine built the first ultra-long comprehensively released phase in China. and abroad under the complicated conditions of large burial depths of more than 700 metres. Australian-based commercial or saleable co-production, 42.29 million tonnes, up 3.43 million tonnes year on year, with production and operation core competitiveness and future development potential fully enhanced, and continue to rank as the largest franchise co-producer in Australia. Shandong Wanfu Coal Mine was successfully completed and put into operation, with annual production capacity of 1.8 million tons of high-quality cooking coal. The first phase of the 10 million ton Wu Taiwan No. 4 open pit mine in Xinjiang is under construction and will be stripped of coal in the third quarter of 2025. The second phase of the mine, which will increase production capacity to 23 million tons per annum, has been approved. In Inner Mongolia, the planning of Holinhe No. 1 coal mine was adjusted to 7 million tons per year. The planning of Lusanghe Dan coal mine was adjusted to 10 million tons per year, and the mining license was obtained. The exploration of Garutu Coal Mine was completed and the land use of Chaoxiantan Molybdenum Mine was completed and other preliminary approvals were granted. Science and technology innovation empowers upgrading. 21 pairs of mines in the country have reached National Standard of Intelligent Mining and proportion of intelligent mining has reached 94%. The project of Deep Coal Digital Intelligent Jaffas Weed Mining Complete Set of Technology and Engineering Application was awarded National Scientific and Technological Progress First Prize. The Thin Coal Seam Digital Intelligent Unmanned Control Technology and Equipment Industry Leader successfully held the National Coal Mine Thin Coal Seam Intelligent Mining Experience Exchange Site. Tiny Tan and other coal mines received special award of the National Coal Mining Workers Connect Phase Innovation Competition. Our group has successfully developed international leading mine output model to enhance safety, production efficiency, resource optimization intelligence. 2. High-end new chemical materials, improving quality and profitability. One, effectiveness of lean management and control is outstanding. Strong implementation of lean management, subordinate chemical production units, all reach full production capacity. Year-on-year profit of 1.5 billion RMB. Two, industry chain extension and expansion. Construction of two 800,000 tonne olefin projects of Inner Mongolia, Rongxin Chemical and Xinjiang Nengcheng started. Shaanxi Future Energy Group made a breakthrough in the formalities of 500,000-ton high-temperature synthesis project. The 60,000-ton melamine project of Xinjiang Coal Chemical Industry was completed and put into operation. The world's first 3,000-ton multi-nozzle opposing-type pulverized coal pressurized gasification furnace in the world of Lunan Chemical Industry operated stably. And 600,000-ton formaldehyde project was accelerated. High-end equipment manufacturing, upgrading, moving towards internationalization. The intelligent manufacturing part has been built to a high standard, realizing objectives of green, high-end, intelligent and zero carbon. The first six JVs have been put into full operation, with revenue exceeding $1 billion. Products such as intelligent electro-hydraulic control system for hydraulic support have reached international advanced level, and the world's largest 12,000-ton crusher has been researched and produced. to successfully expanding international market. The company acquired and operated Germany shop company, accelerated the integration of technology, market and industrial chain resources, and set up a production and R&D platform and talent attraction base in the global high-end equipment manufacturing center. Sets of high-end hydraulic supports were exported to Australia, realizing new breakthrough in the international export of mining equipment. We took part in the exhibition, US International Mining Exhibition, and lean manufacturing quality was recognised internationally. For intelligent logistics, 5-in-1, capacity leap, railway, highway, port and navigation park, Thank you very much. are all integrated service providers with competitiveness. We will gradually form an intelligent and efficient logistics ecosystem linking the cargo owner side, transport side and client side and accelerate the establishment of an international bulk commodity supply chain service provider with core competitiveness. We successfully merged and acquired the Head Logistics Enterprise Park, realizing integration of physical logistics and digital intelligence platform. completed second phase of Tai'an Port Logistics Park, forming a static coal storage capacity of 2 million tonnes and cargo throughput capacity of 60 million tonnes. Integration of assets of Lushi Railway was completed efficiently, reaching 4,000 kilometres in capacity. 5. New energy. According to local conditions, steadily expanded coordinate promotion of target acquisition and project construction, and orderly promoted new energy projects such as JV in Inner Mongolia and wetland service PV project in collapsed area of Shandong Province, actively carried out demonstration of the project for the channel of external power into Lu to promote optimization and upgrading. Third, lean management broadened quality and profit space, strengthened management, reduced cost and increased efficiency. We continuously carried out two increases, three decreases and four enhancement activities. The strict implementation of the eight hard measures to reduce cost and increase efficiency and achieved cost of sales of tonnes of coal down 5.4% of control target. Strict control of production costs. We continue to optimise production succession. Thank you very much. and others. Third, revitalize the stock of materials. We'll increase clearing of warehouses, repairing and utilizing waste, strengthen the inventory of equipment and materials and dispose of inefficient and ineffective assets. In FY 2024, the group's cost of sales of self-produced coal amounted to 345.4 RMB per ton, down 5.4% year-on-year. Unit cost of sales of methanol, and major chemical amounted to 1,454 RMB per tonne, year-on-year decrease of 14.6%, while unit cost of sales of acetic acid amounted to 2,147 per tonne, down 6.8% year-on-year. We optimized debt and reduced fees and burdens, make scientific use of government policies to promote economic growth and obtain low-cost development funds through multiple channels. Average financing interest rate was reduced to a historical low of 2.98%. This is 0.6 percentage point lower than the previous year. RMB 4.5 billion was raised from issuance of additional H shares. Comprehensive measures saved about 830 million in finance costs and gearing ratio was reduced from 66.7% to 63%. 3. Adjustment of structure and creation of efficiency through marketing. We flexibly implemented the sales strategy of withholding and deferred reduction and premium for refined coal. We dynamically optimised product structure, customer structure, sales channels and market layout. And we did in-depth exploration of regional markets with high value, high demand and excellent logistics. For 2024, average price of our group's Self-produced coal was 656.2 RMB per ton. Average price of methanol, 1,819 per ton, down 0.6% year-on-year. Average price of acetic acid, 2,594 per ton, down 6.9% year-on-year. Fourth, build a win-win situation and set up a model of value creation. So there were two dividends, and we are sincere. We adhere to the concept of shareholders first, value sharing, and we increase frequency of dividend distribution following the interim dividend of 0.23 per share, the proposed final dividend of 0.54 RMB per share, totaling 7.73 billion RMB in dividend distribution, accounting for 60% of net income after deducting the legal reserve. We firmly believe in growth with two increase in shareholding. Controlling shareholder invested 300 million to increase shareholding and the company senior management collectively increased their shareholdings to convey the company's value through practical actions and to achieve common growth through joint construction and sharing. ESG promotion work, we demonstrated commitment and we implemented ESG strategy of green, low carbon compliance and transparency and sustainable development. We adhere to green development and strengthen production safety and security and actively fulfill social responsibility. Our comprehensive energy consumption of industrial output value has reached advanced level in the industry. And then in terms of our product MSCI, well we are awarded the highest grade of ESG rating of Chinese coal companies by MSCI. Next we'll report on the second part. Situation and Market Analysis In 2025, the internal and external environment will further test our ability to analyze and judge, make decisions, and be flexible and adaptive. One, macroeconomic performance is stable with both opportunities and challenges. The international economic environment has become more complicated and severe, with protectionism hindering international economic cycle. Geopolitical tension remains high, and the momentum of world economic growth is insufficient. IMF forecasts that global economic growth will be around 3% in 2025, the same as in 2024. China economy will continue to maintain the basic trend of long-term improvement. and its development resilience will continue to increase. In 2025, the Chinese government will insist on seeking progress amidst stability and promoting stability through progress, implement more proactive macro policies and strengthen counter-cyclical adjustments and introduce special incremental policies to boost consumption and improve efficiency of investment so as to expand domestic demand on all fronts and push the economy forward in a sustained upturn. GDP growth target is clearly set at around 5%. Supply of major products in the market is loose and the price pivot is limited to move downward. In 2024, supply and demand relationship between domestic and overseas coal markets was loose and the price of coal oscillated downwards. Despite multiple challenges of renewable energy and environmental protection policies, coal as one of the world's most important sources of energy continued to play a key role in guaranteeing bottom line. The IEA forecasts that global coal demand will continue to grow until 2027. In 2025, the coal market is expected to continue the pattern of loose supply. Price pivot will move downward in a limited way. In the second half of the year, supply-demand relationship will improve. Average annual price will still be in the mid-to-long cycle of better profitability. In 2025, domestic coal supply increment is limited, and imported coal will fall from the high level. As the Chinese government's economic promotion policies take effect, coal consumption will maintain a high level of rigid demand. Kinetic coal consumption will keep growing, chemical industry coal consumption will stabilize at a high level, and coal consumption in iron and steel and building material industries will remain basically flat or decline slightly. Thank you very much. Next, I will report to you on the third part, the 2025 business objectives. One, production volume plan. Sailable coal, 155 to 160 million tons, striving to increase more than 13 million tons year on year. Chemicals, 8.6 to 9 million tons, generally stable. Two, CAPEX plan. CAPEX is stable. are planned to be 19.5 billion RMB focusing on capacity expansion, chain extension, equipment upgrading and other incremental efficiency projects. Among them, 9.74 billion RMB will be spent on maintaining simple reproduction, 3.32 billion RMB on mine infrastructure projects, 3.19 billion on high-end new chemical materials projects. For cost control, we strive to reduce cost of sales of tonnes of coal by 3%, reduce cost of sales of methanol by 60 RMB per tonne, and cost of sales of acetic acid will not increase. 4. Asset Liability Ratio There will be double control of scale and asset liability ratio and we will make every effort to reduce leverage and liabilities under the condition of meeting expenditure for production and operation, cash dividend, investment and M&A. After deducting the impact of non-operating investment, we strive to control gearing ratio below 60%. Next, Part 4 Business Initiatives for 2025. Investors, old and new friends, looking back at the development history of Yan Kuang Energy in the past 30 years, we have crossed many energy market cycles. And in every market downturn, we have always been able to advance against the trend and turn the market crisis into an opportunity for self-improvement and cross-development. Now in face of the severe situation that coal prices have been declining for three consecutive years, the core competitiveness we have built up and the rich experience we have accumulated have given us enough confidence to take the challenge with ease. We are not only confident to meet and overcome the challenge, but also more confident to strengthen the foundation and accumulate potential energy for sustainable development of our company. will release superior production capacity and control corporate costs. These are the core keys to cope with decline of coal price to ensure profitability and to expand our comparative advantages. In 2025, we will emphasize both change of stock and use of incremental or rise of incremental capacity. And we'll work hard on the ground with a pragmatic approach to management and do our utmost to achieve the goal of sustainable development. We will strive for efficiency, firmly ensure safety, increase production, reduce cost and grasp projects, make the industry stronger, quality better and more efficient, and ensure that we can win the first opportunity and take initiative in the complicated situation. We will increase quantity and quality key breakthroughs and do fine and strong core industries. We'll focus on core industries of mining and high-end new chemical materials, optimize the layout, increase quantity and expand efficiency to ensure the development of better quality and efficiency. In the mining industry, we will attack the whole region, we'll forge a strong industrial engine, adhere to the planning goal of 300 million tons of raw coal production, and accelerate building of three 100 million ton coal bases in Shanxi and Mongolia, Xinjiang and Australia. We'll maintain a stable, efficient base in Shandong and support the transformation and development. First, we'll optimize regional layout and unleash potential of high quality. in 2025 will place top priority in volume increase and maximize production. The Shandong base will have fine mining, balanced and stable production, and saleable coal output will be stabilized at 37 to 40 million tons. We have efficiently organized the one full coal mine to reach production and push forward the pilot project of 1,000 meter deep well resource mining in the Lushi mining area, fully release the potential of high quality cooking coal to generate efficiency. The Shanxi and Mongolia bays will gather advantages, reach production capacity and achieve efficiency, and saleable coal production will reach 44 to 46 million tonnes. The Xinjiang bays will accelerate and release production capacity with output of saleable coal reaching over 30 million tonnes, will ensure completion and commissioning of the first phase of the Wu Taiwan No. 4 Open Pit Mine Project. The Australian bays will improve production organisation and management, and saleable coal output will reach 40 to 44 million tonnes. We will accumulate development momentum with full speed and high efficiency to promote construction of incremental projects. Construction of Houlinhe No. 1 coal mine in 2025. Within three years, construction of Liushan Autumn Coal Mine and Garuto Coal Mine will start successfully. And after completion of the three mines, the coal production capacity will increase by more than 25 million tons per year. We strive to start the construction of Chaoxian Molybdenum Mine by the end of 2025 and open up a source of multi-mining efficiency growth. Third, acquiring external resources and expanding industrial map. We'll firmly adhere to the concept of resources are king of energy enterprises. We'll accelerate implementation of quality asset injection of controlling shareholders by region and batch, integrate into development plan of national energy strategic basis in Shanxi, Meng Guang and Xin Jiang and actively acquiring quality coal resources of the coal production areas. and we'll focus on M&A opportunities of cooking coal and non-ferrous metal assets. We'll focus on international market and M&A opportunities. High-end chemical and new material industry will extend the chain and promote high-end development of cluster, vigorously implement technological upgrades and reconstruction of production equipment, pay strict attention to the management of wave reduction and stoppage and ensure safe, stable, long-full and excellent operation. will increase proportion of high-value added products, strive to exceed 9 million tonnes of chemical products in the year and ensure total profit will increase by more than 50% year-on-year, accelerate promotion of 800,000-tonne olefin project in Xinjiang, Zhundong, give full play to the advantages of coal conversion, enhance synergistic effect of coal and chemical products and expand the value-added space, efficiently construct 800,000-tonne olefin project in Rongxin Chemical in Mongolia to promote are all involved in the expansion of basic chemicals to the high end of the value chain, promote 500,000-ton high-temperature fissure-charged project of future energy. So we'll strengthen guarantee of resource elements and push forward the integration project of low-carbon and high-efficiency new energy materials of Lunan chemical in a comprehensive manner. The investment in projects in Yulin, Inner Mongolia and Xinjiang will drive acquisition of high-quality coal and new energy indices. We will seize the track and collaborate and support, accelerate growth of emerging industries. We'll actively integrate into new industry formats, accelerate... Consolidation of new track, promote scale, increment development growth rate and operation efficiency of emerging industries. High-end equipment manufacturing industry will seize the strategic opportunity of major technological transformation and upgrading of manufacturing industry and large-scale equipment renewal project implemented by the state and anchor the strategic goal of 3812, integrate equipment manufacturing resources and create the number of medium and high-end products with international competitiveness. Thank you very much. Thank you very much. and Enhanced International Competitiveness of Products, Intelligent Logistics, will actively grasp the national reduced social logistics costs and other policy opportunities to accelerate creation of new economic growth posts, benefits and profit sources. Operating income to reach $18 billion, total profit exceed $200 million, focus on West Coast East, North Coast South, transportation key logistics node, will build Xiamen... Kangcheng Tang, Niu Mengding Mining Area Railroad, speed up the construction of Xinjiang, Zhundong Mining Area and Railroad, actively participate in the Wuyulin Railway construction project, and effectively enhance capacity of Shaanxi, Mongolia, Xinjiang and other regions, strengthen and optimize Tai'an Port Logistics Parks and Genie, and Shi Hekou Port and strive to exceed 10 million tons of port capacity. We'll give full play to advantages of logistics technology platform, create new logistics business model of physical logistics plus digital intelligence platform with high starting point and high quality and expand import and export business at the right time. New energy industry will focus on the landing of large projects and acquisition of large targets. We'll continue to expand regional distribution of advantageous resources in Inner Mongolia and Xinjiang. relying on existing industries and new projects, will actively participate in construction of power transmission channels such as power from outside China to Lu and power from Xinjiang to outside China. Lean management, digging deep into internal potential and making every effort to realize cost reduction and efficiency enhancement, will implement lean management and value creation actions, deepen management efficiency and asset quality enhancement, and rigidly implement 10 enhancements and 10 efficiency enhancements on the basis of continuing to implement the eight hard measures for cost reduction and efficiency enhancement. On the basis of continuing to implement cost reduction measures, we originally implemented the ten efficiency enhancement measures. We will optimize process flow and production organization to improve production efficiency, increase control of whole process of production operations, analyze unit consumption of production units, and focus on reducing costs and materials, repair and equipment leasing. will deepen management cost reduction, give full play to the rigid control function of financial sharing platform, formulate cost measure by industry and unit, and strictly prohibit extra budgetary expenditures, striving to reduce controllable cost by 5%. We'll continue to deepen six management rules and optimize allocation of human resources. We'll strengthen fund management and strengthen centralized management of funds and improve efficiency of fund utilization, make good use of national special loans, preferential interest rates, and other funding policies, Thank you very much. Revitalize stock assets. We'll increase liquidation of warehouses and libraries, repair old assets and revitalize idle assets, strengthen integrated management of equipment, and ensure that the stock of materials will be reduced by 10%. Sixth, strict control of procurement costs. We have controlled source of procurement expenditure, increased centralized procurement, and unified negotiation and subcontracting and price comparison procurement, and ensure that procurement cost reduction is more than 220 million yuan. and more. Fourth, intelligent marketing and fully promote revenue generation, scientific research and evaluation of the market. We will do precise planning of marketing strategies and on the basis of continuing to carry out the four optimizations, we'll originally implement the three grasp and two guarantees. We'll go out to increase revenue and create efficiency Thank you very much. Thank you. We will carry out customized service to ensure more than 85% of customers are directly supplied. We will grasp new market development, expand potential high-value market users, intervene ahead of time, and actively strive for customers of large-scale thermal power projects under construction. will ensure coal quality and cash flow. We have strengthened coal quality management with all staff in all aspects and in all process so as to polish the brand of Yan Kuang Coal with excellent quality and corporate credit and to win the trust of customers. We'll adhere to the principle of payment before delivery, strictly control increase of receivables and inventory. and create more profitable income and cash flow profit. Integrate, adjust and optimize. We'll continue to enhance sustainable development capacity, integrate fully into national energy strategy, fully integrate enterprise resources and elements and plan for the long term in line with the trend instead of focusing on temporary gains and losses. Based on our existing advantages, we'll continue to adjust our industry layout, firmly optimize our industrial structure and accelerate product upgrading. will consolidate and develop the core area of energy supply for the triple term for energy supply, will continue to enhance our location advantages, comply with national energy strategy base and gather resources in Shaanxi and Inner Mongolia where the return on investment is high, will consolidate and expand our industrial map in overseas core resource areas such as Australia so as to realize sustainable development and ensure long-term investment returns. We will firmly grasp the power of change in the clean conversion of coal. We will strengthen our advantages in clean and efficient utilization of coal, combine our group's high-quality coal with our resource endowment, and transform wherever appropriate to give full play to the group's industrial, technological, and management advantages in the field of high-end chemicals, and to continue to enhance coal conversion capacity and industrial synergy. We will adopt various cooperation methods such as investment and reconstruction in order to seize the first opportunity in the corridor change from coal transmission to power transmission. We will accelerate the driving force of product upgrading in the silver manufacturing industry, strengthen the complementary advantages of coal molybdenum, Potash and other mines promote value of resources to the low-carbon and high-value-added fields and forge and enhance core capacity of multi-mineral, full-chain and multi-dimensional energy solutions. Courage is only revealed when the sea flows. In face of wind and waves, our group will ride on the wave of energy change and transformation, and we know how to carry heavy loads and rise to the challenge. We'll dig out potentials internally with the determination of turning the blade inward and expanding externally with the spirit of opening up new horizons and expanding territories. to strengthen the traditional industries to accelerate conversion of kinetic energy and we will activate new race track to develop new quality productivity to push the layout structure, operation quality and efficiency and international influence. We will strengthen traditional industries to accelerate conversion and will open a new situation in the midst of changes and build a high ground in the midst of storms and waves so as to make the development more stable, our engines stronger and the space broader to demonstrate our corporate responsibility with historically proven performance and to create higher value and more return for our shareholders and stakeholders with outstanding achievements. Thank you.