Summary of China Shenhua's Conference Call Company Overview - **Company**: China Shenhua Energy Company Limited - **Date of Call**: February 27, 2026 Key Points Industry and Market Dynamics - In 2025, the commodity coal production decreased by 1.7% year-on-year, with coal sales down by 6.4% and power generation down by 3.8%. However, the second half of the year showed better performance due to quality improvement and cost reduction measures [2][3] - Regulatory bodies increased capacity checks and safety inspections in 2025, leading to a decline in monthly production from July onwards. The policy aims to ensure stable coal supply, with expectations for 2026 to maintain a steady operational attitude [2][5] - The price of thermal coal is expected to slightly increase in 2026 compared to 2025, with an optimistic peak around 750-800 RMB/ton, while strong support exists around 700 RMB/ton [2][6] Company Performance and Financials - For 2025, the company forecasts a net profit attributable to shareholders between 49.5 billion to 54.5 billion RMB, with a non-recurring net profit between 47.2 billion to 50.2 billion RMB, aligning with expectations [3] - The company’s coal production is projected at 332 million tons for 2025, with a 1.7% decrease year-on-year, and coal sales at 430.31 million tons, down 6.4% [3] - The self-owned railway transportation volume is expected to be 313.1 billion ton-kilometers, reflecting a 0.3% increase year-on-year [3] Regulatory Environment - The regulatory environment in 2025 has seen an increase in checks on production capacity and safety, impacting supply dynamics. The long-term goal is to balance supply and demand to stabilize prices [5] - The long-term contract signing policy introduced at the end of 2025 imposes stricter requirements for execution and compliance, although the proportion of contracts remains unchanged [5] Price Trends and Projections - The port coal prices are rising due to international coal price increases, while pit prices show mixed performance due to varying recovery rates among companies [4][10] - The current price range for thermal coal is around 710-720 RMB/ton, with strong support at approximately 700 RMB/ton. The long-term price is expected to stabilize around 670-680 RMB/ton [6][7] International Operations - The company has a low proportion of imported coal, primarily used as a supplementary source, which minimizes the impact of international coal price fluctuations. Changes in Indonesian policies are not expected to significantly affect the company's operations in Indonesia [2][11][12] - The company operates coal power plants in Indonesia, with good operational performance and high returns, contributing approximately 1 billion RMB to profits during high coal price periods [12] Future Outlook - The performance of Xinjiang Energy and Wuhai Energy is expected to show losses in 2026 due to temporary and one-time factors, with a recovery anticipated around 2027 as local demand increases and transportation channels improve [2][8] - The focus on cost control and production capacity management is expected to continue, with potential improvements in profit margins as market conditions stabilize [14] Additional Considerations - The company is in the process of restructuring and acquiring assets, with expectations for improved profitability in the second half of 2025 compared to the first half, although specific quantitative improvements are not yet available [4][13] - The focus on coal prices and market dynamics will continue, especially regarding the impact of external factors such as the real estate and steel industries on coking coal prices [15]

1. Report Industry Investment Rating - Not provided in the report 2. Core Views of the Report - In February, the spot market for coal and coke fluctuated narrowly, while futures prices oscillated downward with slight basis fluctuations. The domestic coking coal and coke market showed a pattern of weak supply and demand, with prices lacking a clear one - way driver and maintaining a weak oscillatory trend. After the Spring Festival, mines gradually resumed production, Mongolian coal customs clearance returned to normal, coke - producing enterprises maintained stable production, and hot metal output increased slightly compared to before the festival [2]. - In March, major coal - producing areas will fully resume production, significantly increasing supply. The Mongolian coal customs clearance volume is expected to remain high, further increasing domestic supply and putting pressure on coal mine inventory accumulation. On the demand side, steel mills will gradually resume production in March, driving up hot metal output and providing rigid support for coking coal and coke demand. However, due to doubts about the recovery strength of terminal steel demand, the resumption strength and inventory replenishment willingness of steel mills will be restricted, and there is still an expectation of coke price cuts. Overall, the coking coal and coke market in March will present a situation where "supply recovers faster than demand starts", suppressing prices. Key points to focus on include safety and environmental protection production - limit policies during the "Two Sessions", the deepening of anti - involution and energy - consumption control policies, and the impact of international crude oil price changes on energy prices [2]. - The recommended trend is that coal and coke futures prices will oscillate, and it is recommended to wait and see for arbitrage [3]. 3. Summary by Relevant Catalogs 3.1 Price and Valuation - **Coal Futures**: In February, coking coal futures prices were weakly oscillatory, and the basis fluctuated slightly [7]. - **Coal Spot**: The prices of main coking coal in major regions were stable, while the prices of blended coal fluctuated narrowly. The warehouse - receipt prices in major regions were stable with a weakening trend [10][13][16]. - **Coke Futures**: In February, coke futures prices fluctuated narrowly, and the basis fluctuated slightly [45]. - **Coke Spot**: Coke spot prices were stable [48]. 3.2 Supply and Demand 3.2.1 Coking Coal Supply - **Production**: In February, the coking coal mine start - up rate decreased seasonally, and daily output decreased. The start - up rate and daily output of coal washing plants also decreased. The average daily customs clearance of Mongolian coal decreased slightly [6][21]. - **Import**: In December, coking coal imports increased month - on - month, with increases in both Mongolian and Russian coal imports [27]. 3.2.2 Coking Coal Demand - In February, the daily consumption of independent coke - producing enterprises and steel - mill coke - producing enterprises increased slightly, and the total daily consumption increased [6]. 3.2.3 Coke Supply - In February, the capacity utilization rate of independent coke - producing enterprises increased, and the average daily coke output increased. The capacity utilization rate and daily output of steel - mill coke - producing enterprises were relatively stable [6][55]. 3.2.4 Coke Demand - In February, hot metal daily output increased slightly, and the blast furnace start - up rate increased [6]. 3.3 Inventory 3.3.1 Coking Coal Inventory - The total coking coal inventory decreased, and the inventories of mines, coal - washing plants, ports, independent coke - producing enterprises, and steel - mill coke - producing enterprises all decreased. The proportion of independent coke - producing enterprise inventory decreased, and the proportion of mine inventory increased. Port inventory decreased slightly [30][33][37]. 3.3.2 Coke Inventory - The total coke inventory increased. The inventory of independent coke - producing enterprises increased, while the inventories of steel mills and ports decreased. Steel - mill inventory decreased, the number of available days decreased, and hot metal output increased. Port inventory decreased [61][67][70]. 3.4 Profit - **Coke Profit**: The profit of coke - producing enterprises increased month - on - month but remained in a loss state, and the port - collection profit increased slightly [73]. 3.5 Arbitrage - The report provides tracking data on coal - coke arbitrage, including the spread between different coke contracts, the coal - coke ratio, the coke - steel ratio, and the coal - iron ratio, but recommends waiting and seeing for arbitrage [77]

Group 1 - The city leaders are conducting safety production inspections ahead of the Spring Festival to ensure public safety during the holiday season [1][2] - Emphasis is placed on preparing for increased foot traffic during the holiday, ensuring fire safety facilities are operational and evacuation routes are clear [1] - Inspections include various locations such as historical sites, hospitals, and hotels, focusing on emergency preparedness and safety personnel [2] Group 2 - The inspections aim to strengthen management of subsidiaries, partners, and suppliers, integrating their safety performance into a unified evaluation system [1] - Specific measures include optimizing evacuation plans during peak times and enhancing security measures to create a safe and orderly environment for citizens [2] - Leaders encourage companies to maintain innovation while adhering to safety standards for sustainable development [2]

Group 1 - The core viewpoint emphasizes the stability of essential goods supply in Loudi City during the 2026 Spring Festival, with a focus on ensuring basic needs, smooth circulation, market stability, and strong emergency response [1] - The overall supply of major commodity categories in the market is stable, with solid emergency reserves. Key data from major supply enterprises indicate sufficient inventory levels for various essential goods, such as rice (194 tons), flour (44.3 tons), cooking oil (98.24 tons), meat (135 tons), and drinking water (428,000 bottles) [2] - Market prices are generally stable, with only minor fluctuations observed in specific categories [2] Group 2 - The Loudi City Commerce Bureau has conducted safety inspections focusing on key commercial sectors, covering large commercial complexes, farmers' markets, gas stations, and dining establishments. A total of over 30 inspection personnel were deployed, inspecting 35 enterprises and identifying 17 general safety hazards [2]

Group 1 - The core issue highlighted is the need for effective safety production checks to prevent accidents, as recent incidents in various regions have raised alarms about safety risks [1][2] - There is a tendency in some areas to focus on the process of safety checks rather than the actual results, leading to incomplete rectifications and unresolved hazards [1][2] - The article emphasizes the importance of accountability and the need for stringent follow-up on identified risks to ensure genuine improvements in safety measures [2] Group 2 - Weak links in the safety production responsibility chain are identified, including a complacent mindset among some unit leaders who believe that passing initial checks is sufficient [2] - The management of problem rectification lacks a cohesive approach, with insufficient connection and strict standards between the stages of identification, reporting, and rectification [2] - Continuous supervision and effective deterrence are lacking, which allows issues to resurface, highlighting the need for more rigorous and random inspections [2]

Core Viewpoint - The article emphasizes the importance of genuine safety inspections in production, highlighting the need to eliminate risks rather than merely going through the motions of compliance [1][2] Group 1: Current Safety Inspection Issues - Recent safety incidents in regions such as Shandong, Shanxi, Heilongjiang, and Inner Mongolia have raised alarms about the complex and severe safety production situation [1] - There is a tendency in some areas to focus on the process of safety checks rather than the actual results, leading to superficial compliance [2] - Some units exhibit a mindset of complacency, believing that passing inspections is sufficient, which undermines the effectiveness of safety checks [2] Group 2: Recommendations for Improvement - To enhance the effectiveness of safety inspections, it is crucial to integrate the concept of "responsibility" throughout the process, ensuring strict follow-up and accountability for identified risks [2] - There is a need for continuous and random supervision, including follow-up checks and unannounced inspections, to prevent issues from resurfacing [2] - The article calls for a shift away from superficial compliance to a genuine focus on the safety of people's lives, ensuring that problems are thoroughly investigated and addressed [2]

Core Viewpoint - The article highlights the importance of ensuring safety in commercial operations through comprehensive inspections of fire safety, kitchen hygiene, and production safety in businesses within Yaxi Village, Nanjing [1][2]. Group 1: Fire Safety Inspections - Inspections focused on verifying the effectiveness and maintenance of fire safety equipment, including fire extinguishers and hydrants, ensuring they are in good condition and easily accessible [1]. - The checks also included ensuring that fire escape routes are clear and free from obstructions, preventing potential hazards [1]. Group 2: Kitchen Hygiene and Food Safety - The inspections emphasized the conditions for food storage, the disinfection processes for utensils, and the health certifications of staff, mandating strict adherence to food safety protocols [1]. - Merchants were instructed to separate raw and cooked food storage and to conduct daily cleaning and disinfection to avoid using expired or spoiled ingredients [1]. Group 3: Production Safety - The safety checks concentrated on the proper installation of electrical wiring and the correct usage of gas equipment, urging merchants to regularly maintain their equipment and follow operational guidelines to prevent accidents [1]. - Some merchants were found to have issues with timely maintenance of fire safety equipment and inadequate cleaning of kitchen hygiene corners, leading to requirements for rectification within a specified timeframe [2]. Group 4: Future Actions - Yaxi Village plans to enhance regular inspection efforts to ensure merchants fulfill their safety responsibilities, aiming to create a safe and compliant business environment [2].

Group 1 - The article discusses the comprehensive safety inspection initiative "Four Advances and Four Checks" launched by the Runzhou District Housing and Urban-Rural Development Bureau, focusing on various sectors including construction sites, gas supply stations, property communities, and dilapidated areas to ensure public safety and urban stability [1][2] - In construction sites, the bureau emphasizes the importance of safety measures, particularly in high-temperature conditions, by inspecting temporary electricity use, scaffolding, and lifting machinery, while also ensuring the health and safety of workers [1] - The gas supply stations are being monitored to enforce compliance with safety regulations, particularly for restaurants using non-compliant gas cylinders, with immediate corrective actions mandated [1][2] Group 2 - Property communities are being scrutinized for issues such as improper charging of electric vehicles and maintenance of facilities, with a focus on flood prevention measures, including the maintenance of drainage systems and 24-hour monitoring [2] - The bureau has established a task force to conduct thorough inspections of dilapidated buildings, ensuring that any structures with safety hazards are either reinforced or sealed off, thereby preventing occupancy in unsafe conditions [2] - Specific attention is given to areas prone to flooding, with a management mechanism in place to ensure that water accumulation is addressed promptly to maintain urban safety during adverse weather conditions [2]