Core Viewpoint - The company reported a significant loss in the first half of 2025, primarily due to the termination of operations in certain coal mines in Shanxi and foreign exchange losses, but plans to divest non-performing assets to improve financial health and focus on Indonesian coal mining operations [1][2]. Group 1: Financial Performance - In H1 2025, the company achieved operating revenue of 1.089 billion yuan, an increase of 596 million yuan year-on-year, but reported a net loss of 163 million yuan compared to a profit of 60.8 million yuan in the same period last year [1]. - The loss was mainly attributed to the termination of operations in certain Shanxi mines, which resulted in a loss of 194 million yuan, while continuing operations generated a profit of 31 million yuan [1]. - Foreign exchange losses due to the depreciation of the Indonesian rupiah against the yuan and US dollar amounted to approximately 70.8 million yuan [1]. Group 2: Asset Divestiture and Strategy - On June 5, the company announced the sale of 100% equity in Perpetual Goodluck Limited to its controlling shareholder for 30 million yuan, which includes five coal mines in Shanxi [1]. - The divestiture is expected to yield approximately 196 million yuan in gains, as the target company's net assets were negative 169 million yuan, thus removing liabilities from the balance sheet [1]. - The company aims to optimize financial metrics by eliminating losses from the terminated business and will focus on developing its Indonesian coal mines [1]. Group 3: Indonesian Operations and Growth - As of June 30, 2025, the company acquired 100% equity in WM for approximately 61.273 million yuan, which holds a 15% coal sales interest in the SDE mine, and 100% equity in TBM for about 48.58 million yuan, which owns 70% of the TSE mine [2]. - The company also acquired 100% equity in TMI for approximately 24.2 million yuan, which holds a 30% stake in the TSE mine, further increasing its production capacity and profitability [2]. - SDE coal mine's raw coal production reached 2.05 million tons in H1 2025, a significant increase from 755,000 tons in the same period last year, with plans for further capacity expansion [2]. Group 4: Future Outlook - The company expects to recover its performance in the second half of 2025 and anticipates significant contributions from the SDE Phase II project in 2026 [3]. - Projected net profits for 2025-2027 are estimated at 160 million yuan, 680 million yuan, and 1.15 billion yuan, with corresponding price-to-earnings ratios of 36.2X, 8.3X, and 4.9X [3].

Investment Rating - The investment rating for the company is "Buy" (maintained) [5] Core Views - The company reported a revenue of 1.089 billion RMB for the first half of 2025, an increase of 596 million RMB year-on-year, but incurred a net loss of 163 million RMB compared to a profit of 60.8 million RMB in the same period last year. The loss is primarily due to the cessation of operations at certain mines in Shanxi due to resource depletion, which will no longer negatively impact the company's performance as these will be divested [1][2] - The company is optimizing its financial metrics by removing loss-making operations from its consolidated financial statements, allowing it to focus on coal mining development in Indonesia [2] - The production from the SDE coal mine continues to grow, and the company is deepening its business in Indonesia [3] Financial Projections - The company is expected to recover its performance in the second half of the year, with projected net profits for 2025-2027 being 160 million RMB, 680 million RMB, and 1.15 billion RMB respectively, corresponding to P/E ratios of 36.2X, 8.3X, and 4.9X [4] - The company has made several acquisitions to increase its stake in Indonesian coal mines, enhancing its profitability [9] - The SDE coal mine's raw coal production reached 2.05 million tons in the first half of 2025, significantly up from 755,000 tons in the same period last year, with a daily production peak of 27,000 tons [9] Financial Metrics - The company’s total revenue for 2025 is projected to be 2.134 billion RMB, with a year-on-year decline of 17.9%, followed by a recovery in 2026 with a projected revenue of 3.087 billion RMB, and 5.198 billion RMB in 2027 [10] - The net profit for 2025 is expected to be 156 million RMB, with a significant increase to 684 million RMB in 2026 and 1.152 billion RMB in 2027 [10] - The company’s asset-liability ratio is projected to improve, with a decrease from 95.9% in 2023 to 55.3% in 2025 [11]