Summary of Shaanxi Coal Industry Conference Call Company Overview - **Company**: Shaanxi Coal Industry - **Period**: First half of 2025 Financial Performance - **Net Profit**: Achieved a net profit attributable to shareholders of 76.4 billion yuan in the first half of 2025, with a non-recurring net profit of 72.2 billion yuan, reflecting a significant impact from fair value fluctuations [2][3] - **Quarterly Breakdown**: - Q1: 48.12 billion yuan - Q2: Decreased to 28.3 billion yuan due to falling coal prices and a deferred income tax expense of approximately 5.7 billion yuan from the liquidation of the Zhuque New Materials Phase II asset management plan [2][3] - **Non-recurring Gains**: The liquidation resulted in a non-recurring gain of 3.5 billion yuan, but the tax reversal negatively impacted profits [3] Production and Cost - **Total Production**: 87.4 million tons in the first half of 2025, with July and August production exceeding 14 million tons each month [2][5] - **Cost per Ton**: - Average cost was 280 yuan per ton, with Q1 at 284 yuan and Q2 dropping to 276 yuan [5][12] - **Future Cost Stability**: Costs are expected to remain stable over the next 1-2 years, with fixed costs like wages and depreciation not subject to further reduction [12] Coal Price Trends - **Price Decline**: - Q1 coal price: 449 yuan per ton - Q2 price: 389 yuan per ton - Recovery in Q3: July at 387 yuan, August rising to over 420 yuan, still below the long-term contract ceiling of 520 yuan [2][6] - **Market Strategy**: During Q2, when market prices fell below contract prices, the company offered discounts to long-term contract users [6] Power Generation Performance - **Acquisition Impact**: Following the acquisition of thermal power assets, the company generated 17.7 billion kWh of electricity and sold 16.6 billion kWh, achieving a net profit of 618 million yuan, averaging over 100 million yuan monthly [2][7] - **Cost Efficiency**: The cost per kWh was approximately 3.4 cents, with a profit margin of about 0.07 yuan per kWh [7] Year-on-Year Comparisons - **Sales Volume Decline**: A 5-6% year-on-year decline in sales and generation volumes attributed to changes in statistical criteria rather than actual performance [8] - **Future Outlook**: The worst financial performance is believed to have occurred in Q2, with expectations for improved results in the second half of 2025 [8] Regulatory Environment - **Production Oversight**: The company received a notice regarding production checks, but the impact is minimal as all production capacity of 164 million tons has been approved [9] Future Price Predictions - **Coal Price Outlook**: Uncertainty in predicting coal prices for 2026, but expectations for stability and slight increases due to policy adjustments [10] Cost Control Measures - **Safety Investments**: The company prioritizes safety investments over extreme cost-cutting measures, ensuring long-term operational stability [11] - **Cost Management**: Current cost levels are deemed reasonable, with expectations for stability in the coming years [12] Capital Expenditure Plans - **Investment Projects**: Plans for several projects, including thermal power expansions, with a total capital expenditure of over 30 billion yuan, primarily funded through loans [16][17] Dividend Policy - **Dividend Strategy**: Mid-term dividend plans are aligned with regulatory requirements, with a focus on maintaining a high overall dividend rate for 2025 [18] Financial Investment Exits - **Exit Strategy**: Ongoing efforts to exit financial equity investments, with plans to complete the liquidation of remaining asset management plans by the end of 2025 [19]