China Coal Energy Company Limited

3rd Quarter Announcement I am John Ching, Board of Secretary of China Coal Energy. Welcome to today's announcement. Joining us at this meeting are Executive Director and President of the company, Gao Shiba, Ms. Zhan Yanjing, Independent Non-Executive Director, Chai Chaolin, CFO, as well as relevant heads and staff from the Securities Affairs Department, Planning Development Department, Finance Department, Coal Business Division, Chemical Business Division, Power Business Division, Marketing Management Office. I sincerely thank you all for your long-standing care and support for the company. Next, I will brief you on China Coal Energy's operation results for the first three quarters of 26 and major work arrangements for the fourth quarter. Unless otherwise stated, all figures below are calculated in accordance with the Chinese accounting standards for business enterprises. First, opening results and features of the first three quarters. In the first three quarters of 26, China Coal Energy resolutely implemented the decisions and arrangement of the Party Central Committee and State Council and work requirements of the SASAC, faithfully practiced development approach of improving efficiency from existing assets and driving transformation through incremental growth, actively responded to various risks, and coordinated production organization, maintaining a sound momentum in production and operations. So we realized the operating revenue of $115,636 billion up 4.6% year-on-year, total profit of $19 billion up by 4.9%. And for the Net profit attributable, it's 12.7 billion, up by 2.1%. And the basic earnings per share, 0.96, up by 2.1%. And net cash flow from operating activities amounted to 22.5 billion, an increase of 1.46 billion, 6.9% year-on-year. And In the first three quarters, profit attributable to shareholders of the listed company under IFRS was $12.884 billion, up by 15.26% year-on-year. And there are the following features. First, production operation maintained stable and orderly in the first three quarters, faced with factors such as relatively tight mining development continuity for some mines and changing underground geological conditions. The company... scientifically coordinated production and completed the production of 93.38 million tons and although we made a lot of effort still we faced some difficulties and we also tried to improve the marketing strategy and try to improve the efficiency and we finished the sales of 182 million tons of which sales of self-produced commercial coal reached 93.59 million tons. We maintained stable and efficient operation and we realized 4.62 million tons of major products. And we actively expanded the sales channels of chemical products and adhered to precise and categorized marketing and completed sales of 4.85 million tons. And second, prices of major products are rebounded. In the first three quarters, prices of the major products such as coal and chemicals rose somewhat following the market trend. Average selling price of commercial coal was $5.57 per tonne. up by 83 per ton, or 17.5%. Then for thermal coal, it was 514 ton, up RMB 76 ton, or 17.4%. And for coking coal, 1,192 ton, up by 271 per ton, or 29.4%. And for polyolefin, the sales price was $7,258, up by 10.9%. And for urea, $1,694, down 4.2%. And methanol, $1,963, up 11.7%. And then for ammonium nitrate, $1,795, down by 0.7%. Third, we have tapped into the potential and improved the quality efficiency. We optimized the product mix, and the average calorific value of thermal coal was up nearly 200 kcal year-on-year, and our comprehensive gross margin improved also year-on-year. Cost of commercial coal was $2.99 per tonne, up 41.41 tonne per tonne year-on-year. This is affected by other factors, such as decreased production and sales volume. For the PO, sales cost was $5,865 per tonne, down by $4,000. or 6.5% year-on-year, mainly because major overhauls were conducted in the same period last year, with no such impact in the current period. Affected by factors such as rising purchase prices of fee-star coal and fuel coal, the unit sales cost of urea was 1,323 per ton, up 6.1% year-on-year. And for methanol, 1,402 per ton, up 10.5%. And then, for ammonium nitrate, the selling cost was 1,546, up 8%. And Against the backdrop of declining coal output and rigidly rising costs, we took multiple measures to offset the pressure and achieved the profit of $1.98 billion. And the major increasing factors are, first, the higher selling price of self-produced commercial coal, which increased the profit by $7 billion. And second, the profit increase factor was chemical business, $1.2 billion. And then for the decreasing factors, for example, the unit selling cost and also the sales volume of self-produced coal was also down. And for the fourth quarter, it is the crucial stage for accomplishing the full-year targets and tasks. So we will lay a solid foundation for a good start of the 15 five-year plan. First, we will continue to deepen the production, sales, synergy, and make every effort to stabilize output and make up for the shortfall. Second, we will advance the construction of key projects and accelerate industrial transformation and upgrade. Third, we will strictly implement lean management and fully tap the space for cost reduction. Fourth, we will systematically strengthen the risk prevention and control and continue to improve the level of compliance. Fifth, we will make efforts to ensure safe production and ecological and environmental production and identify and examine problems. Distinguished Mr. Ellis, company's management, and all our colleagues will anchor our goals on proactively acting to firmly hold the bottom line of stress production. I'm honest and If you have a question, please press star 1 if you're on the phone. And if you're online, you can type your question in the chat box or you can raise your hand. Thank you. If you have any question, if you are on the phone, please press Start 1. And if you are online, in the chat box, you can type in your question or you can raise your hand. Thank you. 8014, please provide your name and affiliation. Thank you. Mr. Zhang, dear leaders, hi, can you hear me? Yes, please. Hi, Mr. Zhang. My name is Li Niao from Oriental Finance. So I looked at your third quarter report, especially for the Q3 alone. We saw this clear sign that our cost was rising a bit. and I looked at the detail the main rise came from the labor cost and people are very interested about the future guideline of the cost so first why was there a rise in the labor cost in Q3 and throughout the year and also into the future can you provide some guideline on the cost and second also related to cost the expense and tax So, in terms of the expense, we saw that in Q3, the financial expense and management expense also increased. And on the tax side, in the interim reports, we saw that there had been some previous, like, make-up for the tax and also the delayed cost or demurrage cost. So... The numbers were also rising there. So what is our future outlook for the tax? I think, can we say Q3 tax level is our future new norm? So the cost and tax. Thank you. Thank you for the question. So who from tax will answer? Ms. Wu. So thank you for the question. the labor costs actually had some increase quarter on quarter because for some of the production teams we transferred from outsource to self-employed and also there had been some withdrawal of the bonus and that caused the quarter on quarter increase of labor costs so for Q3 and Q4 labor costs in recent years we have been refining and standardizing the cost control and we have got some results but it's not so scientific to press down the cost all the way or continuously because for some of the cost the rigid part is over 60% and now in recent years the safety requirement is getting more stringent and that also pulled up our fixed cost and Since our production and sales were down a bit, that also dragged down our ratio. And in Q4, there are some uncertainties. And for the labor costs and maintenance costs towards the end of the year, they may also increase. But according to the budget in the beginning of the year, we will try in the fourth quarter and throughout the year to scientifically manage the cost within the reasonable range. and then for the financial expense and also the income tax in Q3 compared to Q2 the quarter-on-quarter management fee fluctuation was partly due to the labor cost and there had been some quarter-on-quarter changes and for the income tax due to the use of the funds. So in the current term, if it's withdrawn but not used, so we would increase the volume of the tax and if there is some... Because we are actually reducing the use of Coal Energy Company Limited Coal Energy Company Limited discounted and amortized, and that adds it to our tax, to our financial expense. So that is also related to the cost of finance. So in Q3, actually, the financial cost included both parts. Thank you. Thank you. Thank you, Mr. Jiang. Very detailed answer. I just want to have a follow-up. So it explained for the tax rate increase, it's related to the rule of the use of the safety and maintenance and patrol examination fee. So for that assessment that happened after interim reports, throughout the year, what is the impact of that on the overall tax rate or the percentage of the expense? so the special reserve was arranged according to the beginning of the year plan and we are used we use that within the range so for example the under well modification and safety loophole checks and so on so of course we would look at our beginning of the year plan while using it and also it's related to the production arrangement in q3 and q4 we expect that It would be around 20 to 25. Thank you. So maybe I wasn't clear about the question. I wasn't asking about the safety or maintenance check fees. So it's like the tax rate adjustments. For example, in the past, there has been some tax discounts. But with the new rules, things can be fluctuation. Of course, we do have a lot of subsidiaries and affiliated companies. So, according to the original tax rate, what is the overall change like for the company with the new rules? Did we calculate that? Hello? We expect that the influence would not be that significant on our report. So, is that clear? It seems that it's not that significant. Hello? So, I think maybe we can wait for the analyst to adjust the equipment. We can have the next one. 3783, please provide your name and affiliation. Thank you. Good afternoon. Can you hear me? Yes, please. Okay. So, I'm from Guosheng. My name is Zhang Xiaoya. I have two questions. First, for the first three quarters, what is, so where are the lagging behind in production? In which mines, like in which mines did we see the lagging behind of the production? And also, for the make-up production, what is the progress? And then for Dacheng mine, when can we see the recovery of production? Thank you. So for the coal production, Liu Xiangping from coal, and then I will answer about the . Hi, thank you for the question. So for, according to the feedback from January to September for the commercial coal production was down in our company. The main reason was the accident after May 2nd. And that, for some of the local authorities, they took over. And then for the distribution, the coal from Shanxi accounted for 65% of the commercial coal that we produced. Then, according to the authorities' requirements for the main production basis of coal, basically, we have seen more stringent production safety regulations and the limit on our production is pretty significant and that caused some production limits and the other issue is for the coal mines there are geological conditions at play down the well and also considering the attributes of coal and overlapped with the regulation that caused the production downfall. And for the following three months, the regulation is still very strong and the requirement is still very strict. So we need to guarantee the supplementary production while not sacrificing the safety. So I want to add something. So several aspects. So for Pingshuo, Huajing, and Shaanxi Company and Northwest Company, we had some gaps. And for the production gaps, on one hand, it's due to the geological changes of the mines. And on the other hand, it's also affected by the stricter regulations. So I just want to add something. So in the first half of the year, partly it's because of the geological conditions that caused some of the production gap. But, you know, if the policy would allow that, we would have made up for the gap. But now, due to the policy and regulations, our supplementary production gap was quite slow. So in Q4, we will try to actually make up. And of course, we also need to respond to the safety regulations. But whether we can catch up as planned previously, well, it depends on the actual situation of our work. So we will try, but things are still a bit uncertain. And secondly, for the renovated Dahai Ze, so according to Chinese authorities and also according to Seoul's Dahai Ze mine had serious loopholes, and we were instructed by local government to halt production for the accident. It's more due to the lack of management by Shanxi Company on the outsource teams, but the production halt is still unclear in terms of how long it is. But right now, it seems that the impact is limited. It's not a significant impact on the company. Thank you. Thank you, Mr. Liu, Mr. Zhang. Very clear. Nothing else from my side. Thank you. Next, 6999, please ask a question, but please provide your name and affiliation. Thank you. Dear leaders, can you hear me? Yes, please. I'm from Kaiyuan. So I also have a question about Da Hai Ze. So for Da Hai Ze, in the past, It has a reserved production capacity of like 400 or 400. So what was that like in the previous years? And in this year, how is Dahai Ze affecting the production volume? And I don't know about Dahai Ze 2. What is the progress of Dahai Ze 2? And I also have two other questions, but please answer this one first. Okay, so let me answer the first question. Yes, there is the emergency reserve production capacity, but right now the policy doesn't allow it to release that. And following this, we will consult with NDRC in terms of the production arrangement. So, of course, we would want to not release the reserve capacity of other companies. So that will be very favorable in terms of making up for the production gap. And then for the early phase of Dahai Ze, for the Dahai Ze number two, planning department, please. Yeah, we are arranging the early phase procedures. And now we're doing the overall planning and also the environmental impact assessment. According to the environmental authorities, Vueling and ERDOS, we are... evaluating the impact of the groundwater in those two places. And after that, we will start the next phase of the overall planning. Thank you. Okay, thank you. So, another question about Wang Jialing. So, due to the COVID changes, there had been some impact on the production. So right now, what is the annual production like? So Liu Xiangping from Coal, please. So for Wang Jialing Mine, thank you. Thank you for the question. For Wang Jialing Mine, the compliant production rate is 7.5 million tons. So from January to September, there have been some gaps. The main reasons are... at the time in 21 we actually did some recalculation for it to go from 6 million to 7.5 million and for several years the production was pretty high but Things got tighter after that, and also after May 2nd, the regulation was more stringent, and we had seen some production halts, and when we are trying to mine even deeper, there are some new requirements of shorter sessions and the time limit. And Right now, due to all the factors, there have been some production gaps. But in next year and the year after next, Wang Jialing will still arrange the production according to the 7.5 million capacity. Now, with the tension getting more eased, we will try to maintain stable production. Thank you. So, another question, also about Da Hai Ze and mine. Following this, for example, in terms of the regulation or the compliance, what will the cadence be like? So, do we have any, like, expectation for that? So, for Da Hai Ze number two, we are still progressing the work. But we don't have a clearly defined timeline yet. Sorry, I was actually asking about the Da Hai Zi Wan, the one in hot. And actually, we are consulting, but it's hard for us to judge. Of course, we want it to be as short as possible. Thank you. Thank you for the answer. Thank you for the answer. Next, the text question from third quarter report. How does the cost affect like which will go towards like amortization and The impact on finance by like transportation, logistics, and all the other factors. I'm sorry, can you repeat the question? It was pretty quick, like per ton margin. Can you go slower? Seeing from Q3, the per ton margin, price cost, and also the sub-cost items, like which are more amortization or like... Logistics or report and so on. What are the relevant impacts? Finance, Ms. Hu, please. Thank you for the self-produced commercial coal gross margin. So, the price was up and we had an increase of $7.7 billion. And the coal price was up in the first three quarters and we also tried to improve the quality and The price went up by $83 per ton. So the total was $7.7 billion. So then for the cost increase, there was a minus of $3.8 billion. So back then, the cost was $297, so up by 41%. And as we reported, the... Production volume was down a bit, so the impact was $1.3 billion. And in terms of the cost elements, most of the cost items are affected by the production volume decrease. So the unit cost was up. For example, for material cost, it's cut from mixed cost, labor cost, and also amortization and depreciation fixed cost. and transportation and port, that's variable cost. So for other costs, mostly it's the reduction of the use of the special funds. So for the first three quarters, the cost was up mainly due to the production volume decrease and also the reduction of the use of the special fund. So it was like 40 per ton. Apart from the two, not a lot of changes in the cost. Thank you. Thank you for the question and the answer. Next question. According to the first three quarters, in Q3, the self-produced commercial coal cost was more than 200. So up by 31 per ton for labor costs. went from 52 to 83. Basically, that covers the whole increase. And then, for the sales and sales volume, basically, it was breaking even. So, it was not just amortization. So, what is the reason? And also, will that go down in Q4? Thank you. In Q3, compared to Q2, there was a cost increase of 31%. and labor costs did go up so some of the companies they withdrew the bonus And that added to the cost. And also, there are some other costs. For example, the surplus of special fund was higher than before. In Q4, we will, of course, urge the companies to press down the cost and also make full use of the fund. But as we said, we have some uncertainty on this production and volume. And also, at the end of the year, labor costs and maintenance costs may see some increase. So, in Q4... There are serious tasks in trying to control our costs. So we will try to scientifically manage the cost throughout the year. Thank you. Thank you, Mr. Leader, for the question and for the answer. And next question. In the coal industry, we're trying to shift towards the supportive energy. And right now, there are smart mining companies Upgrade and so on. So independent director. So how do we view that kind of transition? So how will you try to supervise the company to try to utilize the financial toolbox and try to respond more responsibly to the small shareholders? So now if we look at the valuation, you can see that we went from the high place to Coal Energy Company Limited Coal Energy Company Limited Coal Energy Company Limited Coal Energy Company Limited In terms of the valuation management, we have done a lot. So, last year after the national NAND clauses, there was the valuation management method and also other methods like, for example, creating value to improve the performance and stabilizing the quality and also to support emerging industries. And in terms of reporting, For our dividend payout, we went from 30% to 35%. So, we think that's a very good level. And we also urge the management to make full use of the policies and the toolbox to also manage our valuation better and also return to our mid- and small-sized shareholders and stabilize our production to give them more certain expectations. Thank you for the answer. Next question. Q3 report showed the increase of R&D cost and a lot went to the coal-based new material. So for those proactive customers, Projects, how do we identify the capitalization rate or the KPEX? So when looking at the long-term return and the showholder return, how do we do risk management? Thank you. Thank you for the question. So according to the internal control and also the financial methods, our R&D cost is, of course, divided in the research and the development phase. according to the accounting standard. Only the ones that can get into Quebec will go into Quebec. And we have been increasing the research and development costs on the new quality productive force. So from the BOD perspective, for all of the projects, we need to go through the feasibility study and we need to go through the board approval. And the high investment or for the long-term projects, They are part of the transition of the company. And we can see that the production or the product structure of the company had always been improving. So from the BOD, we would look at the benefit, the return, efficiency, and risk to maintain sustainable growth of the company. Thank you. So just now for the R&D expense, let me add something. For the R&D expense, we can't say most went to We can't say that most of it went to coal-based new material. Actually, it went to our main business, like coal, coal chemical, and the coal mine equipment. So in that, of course, we had covered some in the coal-based new material, but we cannot say the majority went to that. And also, I think the data may be problematic. Because in Q3, we disclosed the R&D cost went up by 5.9%. So maybe finance department can also, if needed, finance department can communicate further. Thank you for the answer. Next question. for the first three quarters of 610 million non-operative expense, especially for the overdue cost. So did we conduct the compliance review and the finance report process, and is there any loopholes in terms of the controlling management? Okay, in Q2, I already explained the questions. If you need further explanation, the finance can further communicate. And then secondly, from the BOD perspective, we didn't find any loopholes in the compliance and efficiency and other areas. Let me add something on the non-operative expense. So you said that... 610 million. So it's mostly due to the tax special project to make up for the overdue fees. So that's because of the difference in terms of the implementation methods of the tax. Actually, there is no administrative punishment involved. And then for the depreciation And for the cost of asset retirement, it's already distributed in different departments. They have gone through the retirement process. Okay, the next question for Da Hai Ze, number two, what is the progress like and the commissioning date and mind of progress? Thank you. Thank you for the question. For Da Hai Ze number two, we've already answered that, so I can repeat that. So for Da Hai Ze two, we are actively progressing the overall planning and also the EIA, according to the Ministry of Environment and Resource Healing and ERDOS, is conducting the evaluation on its impact on the groundwater. And after the evaluation, we will further Progress, the overall planning. And for the progress, we still need to wait for further notice. And then for Ping Shuo, Ma Yingpu, and Feng Yu, Feng Yu, well, so they are in the south, Shonan, mine zone. We have conducted the geological survey already. And up to now, We have finished eight tons of well reservation, so it's valid towards October 2028. Since that mine zone is in the reserved water zone, so if we need to carry on, we need the approval of the water authority, and the local government is coordinating that process. Thank you. Thank you for the answer. Next question, Pingshuo's resource acquisition and the progress. So just to clarify, does it mean which part of the resource in Pingshuo? So let's talk about Antaibao zone. For the work there, we are actively progressing. We expect that in the near term or at the end of this year or the beginning of next year, there may be some breakthroughs. We can see some clear progress. And then for the other reserve zones in Pingshuo, I think the previous answer already covered that, Fengyuan Mayingbao, right? and we are also progressing the work. But of course, it involves different approvals, so we are progressing according to plan. Okay. Thank you for the answer. Then three small questions. The first question. In Q3, the cooking coal price had seen some rise. Then for the affiliated company, the return was down a bit. What was the reason of that and the outlook for Q4? Thank you. Hello. So for the affiliated companies, apart from coal investment, there are also some power plants. With the power price increase, increasing. Some of the power generation companies had a lower margin. Okay. The second small question was the outlook of dividend. And then the third question in Q4 and throughout the year, the outlook on the per ton coal of cost. Can you repeat the two questions? The second question was Outlook on Dividend Dividend Outlook In Q4 and throughout the year, the self-produced coal per ton cost. So for the dividend, so let me answer. So we're also balancing the return and the future development. We're still trying to maintain a stable dividend policy. So recently, well, since our IPO, our dividend payout had always been above 30%, and recently, to respond to the call on improving the quality of listed company finance and also to respond to the expectation of the shareholders. We took two measures. One, the annual dividend payout was raised from 30% to 35%. We also increased the frequency of the dividend payout. And for three years in a row, we had interim dividend payouts. and at the end of this year the dividend payout would be confirmed by the OD at the beginning of next year and also We expect very stable dividend payout, but as for the detailed ratio, it depends on our confirmation. But we are committed to providing stable feedback for the shareholders. And the third question, finance, please. So the cost in Q4, right? And throughout the year, the cost expectation is that we will maintain very scientific and reasonable management on the cost. So let me add something. For the cost, China Coal Energy had always been dedicated in managing the cost. But sometimes the cost has its rigid part. in Q4 for the company. At the end of the year, we are faced with the closure of finance. So, according to our previous years, sometimes there can be some fluctuation on the cost, but it depends on the production in Q4. For example, right now, we are trying to expand our production scale. but still there are uncertainties in the production and sales. So that can cause some impact on the cost. Thank you. Thank you. Next question. In the next three years, any planning for the production and sales? So coal division, please. So thank you for the question. So let me answer about coal, the trend in coal. So if we look at 26, we have 25 coal mines in production or being built. The total production capacity is 168 million. So we have 23 mines in production. with a capacity of 161 million tons for the coal mines being built, 7 million tons, two mines. And in the 15th of your plan, the company, according to the plan of production capacity increase verification method, we want to increase our capacity. We also want to phase out the old and lagging behind mines And we actually did a sort out. We expect that by 2030, the total production rate would be 1.8 trillion tons. So I want to add 180 million tons. So I want to add something. That is just our plan. And of course, there will be some uncertainties involved. So this is just a piece of information for your reference. And then, Mr. Xie, can you answer about the chemical? Okay, thank you. For chemical, according to the 15th of your plan, we expect... The production increased to be around like 4 million tons with the existing 6 million. So at the end of the 15th of your plan, we will reach the capacity of 10 million tons. Basically, that's the situation. Thank you. Thank you for the answer. Next question. As the end of the year is coming, the long-term... thermal coal or power coal contract will be negotiated. So we say that we have a 75% of the signing rate and 90% of the fulfillment rate. How is that progress going? So will you more timely and more transparently release the price changes and the production arrangement and the price changes for the long-term price and the spot price? So marketing and sales office, Mr. Lee, please. Okay, thank you for the question. For the, well, starting from the end of October, basically the coal power plants are initiating the long-term contract negotiation. And for our company, we also would adhere to that cadence and do the work. And internally, for our own resource and logistics resources we will try to orchestrate better and we would also look at the national policy and we will study the market situation in 27 and then accordingly we will make some marketing and sales decisions and then we will start the implementation on the the booking of the production of 27. So, things are actually earlier than the previous years. So, according to the requirements and also, as you mentioned, the 75% and 90%, we may see some minor adjustments on that. Recently, NDRC just released the mid-term, long-term contract productive methods, laying down some of the details. And also, for the fluctuation in 26... and also there's the deviation of the long-term contract and the spot price and there had been some impact by the international situation on the market so it seems that our national government will issue some policies but then for China Coal Energy first we need to do the work early and we need to further make our work more granular and then we would need to refer to the national policy but we don't foresee major changes But then for the actual numbers and the price structure changes, of course, we will use various channels to communicate and release the information. And if you are interested, please keep in touch. Thank you. So I want to add one thing about the information disclosure. So for the production and sales plan, in our annual report, We actually disclose that information. We disclose the annual production target for the main product. And for every month, we periodically disclose the completion rate and also for the sales and production numbers we release every month. And for the completion rate, of course we would have the in detail report every quarter and if you have any questions of course you can reach out to our IR department and of course we welcome your question at any time and every month we have the monthly IR communication mechanism So you can just communicate with our IR to get to know the monthly situation. Thank you. Thank you for the answer. Next question. How does the company balance the stability of long-term contract and the flexible actual return in the spot market. So, in the winter season, how do you organize the approach? Thank you. So, every year China Coal Energy would refer to NDRC's requirements as well as our own resource and make serious efforts in arranging the long-term contracts, the whereabouts, and also manage the price structures. So for the long-term contracts in this year, you see that there had been some fluctuation, and also we had run into difficulty in production. But as a central enterprise, this is our obligation. So of course, The long-term contracts would predate other business arrangements. So in terms of the fulfillment of the long-term contract, we had always been stable from January to September. Our fulfillment rate had always been higher than 90% as requested by NDRC. Then for the winter peak time, of course, every year the demand in winter is higher. And also in this winter, We may run into tighter supply and also difficult logistics. But, of course, we would tackle this head-on and try to guarantee our long-term contract. Because this year, we have made some preparations in the long-term contract negotiation and in terms of the fulfillment. So we won't foresee a lot of adjustments. Thank you. Thank you for the answer. Next question for P.O. Polyelephant. We've seen rise on both volume and price. The volume went up by 16.7% and the price went up by 17%. The cost went down by a lot as well. So I think behind the stage, it's because of the conflict in the Middle East that created the gap of price in coal and oil. So, if the oil price falls down, where is the safety margin on the coal chemical? So, how do we rely on the integrated or complex facility to maintain the stable cost? And also, for Renlin, P.O., For the liquid solar, we also have seen some production arrangement in the future. So in 27, how much will they contribute to the margin and revenue in 27? So Xue Wuzhou from Chemical, please. First question, for the international oil price increase or the potential falls and the impact on chemical, right? Currently speaking, the geopolitical tensions caused the oil price increase for chemical. With the rise, of course, proportionally, we have seen some price increases. But then for coal chemical, it's of course good news. And the overall margin is on the rise. But then you talked about the balance point or the safety margin according to the previous years of oil price. Basically, $70 is kind of like the balance point of oil and coal chemical. So, at $70, basically, they are very similar. And in the future, if there are potential oil price drops, then We still need to increase the production volume to reduce the unit cost, and also we need to reduce the energy and material consumption to realize the control of our margin. And the second question about the 900,000 ton coal to olefin, right now, We have been doing some pre-commissioning testing since that in November we can do a startup. And the other is the local solar, the startup. I think for the chemical part, we can do some commissioning at the end of the year and We can do some trial production, but then for the new energy part, things may delay a little bit. And for the full unit production, I think it will be in Q1 next year. And you talked about the Phase 2 of Yuling. After that's commissioned, what is the impact on the merger next year? I should say for Yuling Phase 2, for especially P.O., along with Yuling One and I think they are very different in their attributes in their products so of course we want to diversify and premiumize and that is our guiding principle when we organize our production so because in Yuling there's the HDPE and also the PP process so They are different. In terms of high added value, I think it will be reflected. And in Yuling 1, I think after Yuling 2 is in production, I think it will definitely contribute to more margin. Thank you for the answer. So since time is limited, we will have the last question. And please control it within one or two questions. Hi. So, good afternoon. So, my name is Jin Chen. Thank you for the opportunity. I have two small questions. First, so for the coal, the thermal coal, how high is the heat value, calorific value? And the second question is, in Q2 and Q3, for the commercial coal, The production was 31 million ton because you want to guarantee stable supply. So in Q4, can we recover to the level of 34 to 35 million ton? So we would only want to hear the guideline on that. Thank you. Sorry, let me repeat the question. Because some of it was not that clear. First, you are talking about the calorific value of the thermal coal. And can we sustain that product structure, right? Or in other words, the relative high calorific value coal, will we maintain stable production on that, right? Yes. And the second question is about... Q4 commercial coal production. Can that recover to the previous level? You mean to like 35 million? Yeah, 34, 35 million. Yeah. So you're comparing against the history, right? Okay, the two questions. Yes. about product structure and the calorific value and the second is about the production plan. So, Lu Xiangping from coal, please. Thank you for the question. To answer the first question, for the quality of coal in recent years, in 26, our salt production Coal was like 4,900. So compared to the previous years, it was stable. And we have different methods of improving the coal quality. For example, on the mining side, and also we reduced the mixture of dry and wet. And also we would look at the market and dynamically shift our structures of coal. and then for the future whether this can be sustained so if you look at the annual plan and our future arrangement first of course we want the quality to remain relatively stable and also we want to look at the market situation and improve our quality so basically that's in a certain way guaranteed second in terms of the following three months, the capacity and production arrangement according to the national and local policy on stabilizing supply. So, it stated that for the For every month, we can produce according to no more than one-twelfth of the annual production capacity. So that means in the following three months, we cannot do overproduction. So right now, especially in Shanxi, It's unlikely that we will see a big production release. So basically, we can maintain the level of full release of capacity. Thank you. So let me add something first for the coal quality and also the structure. So just now, Mr. Liu answered, and also the other thing is that our structure would, of course, fit the market demand. So we would determine the production according to the sales. And improving the quality of coal in a certain way will affect the total production. If the market has higher demand on the local horrific value of coals, we would also adjust accordingly to... Enlarge the low calorific value coal sales. The overall principle is to prioritize the efficiency of the company. And second, I think several questions are about the Q4 production. The overall principle is that we will try our best to make up for the gap. But affected by the policy compared to the previous. We may have some gap, but we will try to finish our goal of making up for the gap. But, of course, it's affected by policy. Thank you. Thank you. Thank you, Mr. Zhang. Thank you. Dear leaders, very clear. Okay, thank you for the answer, and thank you, investors, for the communication. That is the end for the Q&A. Any summary about the leaders? Okay, thank you. Dear analysts and investors, if you have any follow-up questions, please continue to reach out to our IR. Thank you. That is the end for today. Thank you. Thank you for your participation. That is Stanford Today. Goodbye.