Yankuang Energy Group Company Limited

Now we'll invite Chairman Lee to kick off, please. Ladies and gentlemen, Old and new friends, good morning. On behalf of Yan Kuang 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 1. Operations in the first half of the year. Thank you for joining us. Net income attributable to shareholders for the period was RMB7.87 billion, up RMB2.87 billion or 57.2% year-on-year. 3. Output of saleable coal, 88.02 million tonnes. 4. Chemical production reached 5.03 million tonnes. The chemical sector achieved stable full capacity and high quality operation with significant synergistic effects from the main business contributing net revenue of RMB1.14 billion. 5. Total assets, RMB464 billion. shareholder's equity attributable to shareholders, 76.1 billion, return on net assets, 10.3%, six declaring an interim cash dividend of 0.2 RMB per share to share the fruits of development with investors. The two strengthened leading industries, optimized layout and structure, and significantly enhanced counter-cyclical capabilities. Closely following, the new National Energy Security Strategy will continue to optimize industrial layout and build an integrated development pattern of the entire industrial chain of coal, electricity, chemicals, oil, transportation and new energy. Thank you for your attention. and the group's output has been recovering and improving quarter on quarter. In Q2, output of saleable coal was 46.47 million tonnes, up 4.91 million tonnes or 11.8% compared with the previous quarter. The Shandong base has achieved stable and high-quality production through intensive and green mining practices. are all in the industry. Seabay Mining Group maintained strong production growth. Saleable coal output 17.94 million tonnes, up 1.67 million tonnes year-on-year, or 10%. The Xinjiang base produced 7.53 million tonnes of saleable coal. Wucaiwan No. 4 open pit mine produced 5.28 million tonnes of coal, exceeding the planned target and laying a solid foundation for formal production. Australian-based produced 21.82 million tonnes of saleable 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 tonnes of high-quality cooking coal resources, continuously optimising 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 $2.84 billion from public transfer of Xintai Coal Company to accelerate the progress on key projects. We concentrated our superior resources on key projects and made crucial breakthroughs in handling procedures and project construction. The Shanxi Inner Mongolia-based Bolang Tai Coal Company, Liu San Ge Dan Coal Mine, received approval from NDRC for increasing annual production capacity from 8 million tonnes to 10 million tonnes. 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 silver concentrate of 30,800 tons successfully obtained mining license, achieving successful transition from exploration to mining. The procedures for increasing annual production capacity of Wu Taiwan No. 4 open pit mine, Liu Huanggou coal mine 3 million tons per year and Yili No. 4 mine 12 million tons per year in Xinjiang are being expedited. Seabay Minings, Youfang Hao, 7 million tonnes per year, and Yangjia Ping, 5 million tonnes 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, Thank you for watching. 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. 2. High-end chemical new materials industry Simultaneous improvement in quantity and efficiency Co-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 production are all working together to improve the energy efficiency. Rongxin Chemicals' 800,000-ton olefin project and Lunon Chemicals' 60,000-ton polyformaldehyde project have entered final construction phase aiming to start operation in Q4. Xinjiang Energy and Chemicals' 800,000-ton olefin project has fully commenced construction. Thank you for joining us. Based on overall situation of energy transformation, we seized 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 a 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. Thank you for your attention. We added 12 million kilowatts of installed power capacity entering first 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 thin... are all part of the company. up 306% and 352% respectively compared to 2025. Steady growth in asset profitability. Target asset achieved a net profit attributable to parent company of 840 million RMB 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 broad prospects for profit improvement and outstanding industrial synergy, which will strongly support our group's stable performance growth. Corco 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 Kata Miller, and Komatsu Mining to develop complete sets of equipment and technologies for high-yield and high-efficiency long-wall single-phase coal seams. The Lucy Smart Manufacturing Park has passed authoritative review of the China Industrial Energy Conservation and Cleaner Production Association and has been recognized as leading zero-carbon park. The European R&D Platform and Domestic Intelligent Manufacturing Base are working in tandem, accelerating integration of talent, technology, market and 4-chain resources. The lithium-ion battery-powered monorail are all registered in China. The crane, independently developed by the German company Schwab, has obtained EU certification and ATEX explosion-proof certification, successfully entering South African and Polish markets. Lithium-ion battery-powered trackless rubber-wheeled vehicle is about to obtain MA certification and be launched in domestic market. CFH fans, 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 tonnes in the first half of 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%. Yan Kuangcai Anpot 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 code to Shandong in the first half of the year. The shipment volume exceeded 9 million tons. Thank you for joining us. and a profit of over 100 million yuan and formally submitted an application for X share listing to Hong Kong X, 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 820 million RMB. and many more. In chemical sector, efforts were focused on operation of two furnaces and strengthening the management of wave reduction and shutdown, material consumption per unit down 3.2% year-on-year, reduce non-productive expenditures, standardize bidding and tendering management and streamline and reduce outsourced business, reduce controllable costs by RMB 130 million. Implementing the six fixed management systems for human resources resulted in efficiency improvement of RMB 220 million. Implementation of six major synergies involving industry, market and resources generated 160 million yuan in benefits will intensify efforts to revitalise existing assets, promote inventory clearance and savings and reduce expenses by 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 tonne of self-produced coal was 340 yuan per tonne. Junming Qi, Lei Zhang, Li Su, Xiaolong Wang, Junming Qi, Lei Zhang, Li Su, Xiaolong Wang, Junming Qi, Lei Zhang, Li Su, Thank you for your attention. Strengthening coal quality control throughout the entire product process, ensures profitability, attracts customers and expands market through credit, and continuously amplifies premium effects of the Yan Kuang 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 Shanxi Inner Mongolia chemical raw material refined coal steadily increased. The client has improved long-term contract plus direct supply layout with long-term contract sales within the province accounting for 8% in the Shanxi in the Mongolia. And 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 costs. Thank you for joining us. Thank you very much. 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 shelter return and daily operational needs. The three-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 by bank, achieving peak market cap of nearly 220 billion RMB, up 90% from beginning of the year. From 2023 to 2025, we distributed a total of 24.3 billion RMB in dividend, representing 66% of distributable profit during the same period. We also released... are 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, compliant and transparent and sustainable development, we have achieved highest ESG rating in China, ranking first among our peers in the MSCI ESG rankings. And our CDP carbon disclosure program 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 gang. Its overall energy efficiency in industrial output is among the best in the industry. The brand value of Yan Kuang Energy has exceeded 100 billion yen for the first time, and its brand influence and market reputation continue to improve. Part 2. 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. Thank you for watching. safety supervision across the industry is being strengthened and richly constrained production capacity is being released in an orderly manner. Domestic supply has contracted temporarily. From January to July, domestical production reached 2.7 billion tonnes, 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. To 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. are all involved 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 3, the measures for the second half of the year. During the 14th five-year plan period, our group proactively analysed industry transformation trends closely aligned with national energy strategies and industrial policies, continuously optimised 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 costs and improve efficiency and construct projects, so as to steadfastly strengthen our industry, increase profits and create value. Thank you very much. Thank you. increased mining production and output with both expansion and contraction, will adhere to safe, green, intelligent and efficient mining practices, focus on project construction and accelerate release of advantageous production capacity, will 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. Shanxi Inner Mongolia Base will ensure commencement of construction on Boyingcai Coal Company and Xinghe Molybdenum Industry in Q4's drive to commence construction on Huolinhe No. 1 Coal Mine and expedite processing of key procedures for mines such as Galutu. Seabay Mining is accelerating construction of the Yufanghao 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 Mafutuan Coal Mine. and Mao Jiachuan coal mine 7 million tonnes per year. Xinjiang Base is making every effort to promote commissioning and operation of Wu Taiwan No. 4 open pit mine. It strives to obtain approval for second phase of the 23 million tonnes per year project before end of the year and complete all approval procedures by capacity expansion by end of 2027. Thank you very much. Thank you very much. Thank you very much. Thank you. The newly added high-quality commercial coal production capacity will exceed 80 million tonnes and raw coal output will exceed 300 million tonnes. Revitalise existing assets. Adhering to the principle of selective support and restraint, selective advancement and retreat will promote full optimisations of location, coal-type resource and dominant 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. The Lunon Chemical Methanol Aging Unit Renovation and Capacity Integration Project was put into trial operation, further reducing costs of acetic acid and polyformaldehyde through large-scale replacement of small-scale units, 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 will accelerate development of Future Energy's 500,000-ton high-temperature fissure-trop 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 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 will make every effort to strengthen and optimize existing projects, actively acquire high-quality reserve projects and resources, and enhance the 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 2x600MW and Liaocheng 2x660MW thermal power projects completed and put into operation in Q4. Our annual power generation will reach 45 billion kWh. and Electricity Sales will reach 42 billion kWh, 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, an expedited approval of 936 MW 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 MW Thank you for your attention. and many more. Integrating European platform technology brand and market channel resources, Shaw 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-tied 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 and 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 Shanxi in the Mongolia region. ensuring an annual transport volume of over 32 million tonnes. We expand west to ease coal transport logistics channel, accelerate construction of Caojia Huochang, New Zia Liang railway project and strive to fully leverage synergistic advantages of Yan Kuang, Tai An Port, Jinan Port and Yan Kuang Shipping. will 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 tonnes, will deepen effort in physical logistics plus digital platform model. Solidify, integrate a 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 tonnes. Strengthen internal management and vigorously improve quality and efficiency. will adhere to quality-oriented development and management improvement, implement lean management measures such as six refinements and six enhancements, ten strengthenings and ten efficiency increases, and ensure that we reduce cost and increase efficiency by more than 1.7 billion yuan 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. The overall financing cost was reduced by 10% throughout the year, saving over 300 million yuan in interest expenses. Comprehensive budget management and benchmarking management were strengthened, resulting in reduction of controllable expenses of over 300 million yuan. Explore operational potential. Measures resulted in cost reductions of over 200 million yuan 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 focus strategy. The two guarantee strategy, focusing on long-term contract strategic clients and new markets, guaranteeing cold 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 aligned 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, Thank you for watching. More than 400 million yuan in labour 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... Thank you for joining us. 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 costs 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.