China Coal Energy Co-h Aktie

Dear investors and analysts, good afternoon. I'm Jiang Qun, Board Secretary of China Coal Energy. Welcome to our results presentation. Present at today's meeting are Mr. Gao Shigang, Deputy Secretary of the Party Committee; Executive Director and President of the company, Mr. Zhan Yanjing; Independent Non-Executive Director, Mr. Chai Qiaolin, Chief Financial Officer; as well as responsible Head of relevant staff from the Securities Affairs Department, Planning and Development Department, Finance Department, Coal Business Department, Chemical Business Department, Power Business Department and Marketing Management office.

We would like to express our heartfelt thanks for your long-term care and support for the company.

Now I will present China Coal Energy's operating results for the first half of 2026 and our key work arrangement for the second half. Unless otherwise specified, all figures below are calculated on the Chinese Accounting Standards for Business Enterprises.

Number one, operating results and key features for the first half. In the first half, China Coal Energy resolutely implemented the decisions and arrangements of the Party Central Committee and the State Council deeply pursued the development philosophy of enhancing efficiency for existing assets and transitioning to incremental grid, actively responded to various risks, challenges and multiple operating pressures. Our production and operations maintained a sound momentum. Under the Chinese accounting standards, we achieved operating revenue of CNY 73.13 billion, profit of CNY 12.46 billion, up 4.4% year-on-year. Net profit attributable to shareholders was CNY 8.14 billion, up 5.8%. Basic earnings per share were CNY 0.61, up 0.2%. Net cash flows from operating activities were CNY 9.86 billion, an increase of CNY 2.19 billion or 28.6% year-on-year growth, continuing to maintain a sound profitability level and cash generation capability.

Under International Financial Reporting Standards, we achieved operating revenue of CNY 73.13 billion and profit before tax, CNY 12.42 billion, up 7.1%. Profit attributable to shareholders was CNY 8.19 billion, up 11.8%. Basic earnings per share were CNY 0.62, up 12.7%.

The company's production operations in the first half featured the following: first, stable and orderly production and operations. In the first half, our core business overcame challenges such as changing geological conditions and greater production organizational difficulties in some mining areas. We have achieved a commercial coal production of 61.95 million tonnes. We further strengthened the production sales coordination mechanism and seized the window of rising coal prices, different product segmentation and market segmentation and made every effort to increase sales and create value, achieving commercial coal sales of 119.7 million tonnes, of which self-produced commercial coal sales amounted to 61.4 million tonnes.

Our coal chemical business strengthened facility operation and maintenance management focused on a lean production and product differentiation and achieved production of major coal chemical products of 3.01 million tonnes. We actively expanded sales channels, strengthened production sales coordination, carried out targeted marketing by category and achieved sales of major coal chemical of 3.235 million tonnes with efficiency and profitability remaining industry-leading.

Number two, steady recovery in prices of major products. In the first half, the prices of our major products, including coal and chemicals, rose with market trends. The average selling price of self-produced commercial coal was CNY 524 per tonne, up CNY 54 per tonne or 11.5%. Among these, the selling price of thermal coal was CNY 494 per tonne, up CNY 58 per tonne or 13.3%. The selling price of coking coal was CNY 1,017 per tonne, up CNY 132 per tonne or 14.9%. The selling price of bulk trading coal was CNY 549 per tonne, up CNY 77 per tonne or 16.3% year-on-year. The selling price of polyolefins was CNY 7,017 per tonne, up CNY 336 per tonne or 5%. The selling price of urea was CNY 1,828 per tonne, up CNY 76 per tonne or 4.2%. The selling price of methanol was CNY 1,868 per tonne, up CNY 98 per tonne or 5.5% year-on-year. The selling price of ammonium nitrate was CNY 1,902 per tonne, up CNY 19 per tonne, basically flat.

Number three, tapping potential improving quality and efficiency. In the first half, we dynamically adjusted our product mix in response to market demand, increasing the average calorific value of the thermal coal by nearly 200 Kcal per tonne. We continuously improved our refined management level and steadily enhanced the overall quality and efficiency. The unit sales cost of self-produced commercial coal was CNY 285.69 per tonne, up CNY 22.72 per tonne or 8.6%, mainly due to higher fixed costs from lower output, higher labor costs from converting some outsourced teams to self-operated teams.

Our core chemical business remains focused on the goal of a safe, stable and long-cycle full load and excellent operation. We have strengthened equipment management, optimized the facility operations and reasonably controlled cost expenditures, keeping unit sales cost of major coal chemical products within a reasonable range. Among them, the unit sales cost of polyolefins was CNY 5,674 per tonne, down CNY 757 per tonne or 11.8%, mainly because the polyolefin facility underwent planned major maintenance in the same period last year.

The unit sales cost of urea was CNY 1,280 per tonne, up CNY 17 per tonne or 1.3%, mainly affected by higher purchase prices of raw coal and fuel coal. The unit sales cost of methanol was CNY 1,370 per tonne, up CNY 66 per tonne or 5.1%, mainly affected by higher purchase prices of raw coal and fuel coal. The unit sales cost of ammonium nitrate was CNY 1,893 per tonne, up CNY 509 per tonne or 36.8%, mainly affected by the planned major maintenance of the ammonium nitrate facility in this period.

Number four, steady and sound operating performance. Against the backdrop of lower coal output and rigid cost increases, we adopted multiple measures to hedge against the cost pressures and achieved total profit of CNY 12.46 billion. The main profit change factors were as follows: first, major profit increasing factors, higher selling prices of self-produced commercial coal increased profit by CNY 3.3 billion. Second, chemical business increased profit by CNY 878 million. Third, the power business increased profit by CNY 172 million. Fourth, investment income and other income increased by CNY 60 million.

The profit reducing factors: first, higher unit sales cost of self-produced commercial coal by CNY 1.36 billion; second, lower sales volume of self-produced commercial coal reduced profit by CNY 1.17 billion. Third, nonoperating income expenses reduced profit by CNY 483 million. Fourth, higher taxes surcharges and period expenses reduced profit by CNY 459 million. Fifth, the equipment and financial business reduced profit by CNY 425 million.

Number five, accelerated construction of the key projects. In the first half, all process units of the second phase coal chemical project in Yulin, Shaanxi, with annual polyolefin capacity of 900,000 tonnes have been mechanically completed. The Liquid Sunshine demonstration project of Ejin Horo Energy Chemical has entered the trial operation stage. The 2,660-mega coal power integration project in Wuxuan has fully moved into the equipment installation stage. The 100-megawatt wind power project in Yuyang, Shaanxi, undertaken by Shaanxi Company has commenced construction and Shanghai Energy Company completed the 100% equity acquisition of a 400-megawatt fishery solar complementary PV project in Leizhou Sea area of Qigong.

Number six, interim dividend to reward shareholders. Since our listing, the company's total cash dividends have exceeded CNY 46 billion, striking the best possible balance between interest of shareholders and the company's sustainable development. We have implemented interim dividends for 3 years in a row for 2026 interim period, we plan to distribute cash dividend of CNY 2.44 billion or CNY 0.184 per share. The above dividends are expected to be distributed before the end of October 2026.

Two, key work arrangement for the second half. The company will thoroughly implement the decisions and arrangement of the CPC and the Council adhere to the general principle of pursuing progress while ensuring stability and leverage implementation of the 15th Five-Year plan to deepen and state-owned enterprise reforms as key drivers of high-quality growth. First, we will adhere to the coal power, chemical, new energy multi-industry coupled development pathway, coordinate intelligent, green and integrated development. Second, we will continue benchmarking against the world-class standards, strengthen present decision-making, deepen production sales coordination all out to improve quality and efficiency.

Third, we will persist in driving development through reform and innovation, actively carry out reforms of management and operating mechanisms, deeply advance key core technology breakthroughs and build a high-level innovation system. Fourth, we will uphold the systematic thinking and bottom line thinking, give full play to the penetrating supervision role of the intelligent control platform and strengthen work safety as well as environmental protection and energy conservation. Number five, we'll continue to deepen market value management and continuously improve corporate governance and information disclosure quality.

Dear investors and analysts, the company's management and all colleagues will stay focused on our goals, remain confident, take proactive actions and forge ahead with determination. We'll continue to advance high-quality development and strive to deliver better results. That's all for my presentation.

Now opening the floor for Q&A. Thank you.

[Operator Instructions] We are taking the question from investor with the phone number ending in 0151, please provide your name and institution.

I'm an analyst from Guosen Securities. I'm Zhang Jinming. I have 2 questions. First, as mentioned earlier by Mr. Jiang, in Gansu Province, there were some in-depth cooperation. And in July, you have also signed a provincial level cooperation with the provincial government involving a large-scale investment. So in terms of the collaboration with Gansu Province, what's the specific plan for the future? And also what tasks and missions will be carried out by the joint stock company?

I'd like to ask our strategic planning department colleague to answer the question.

Thank you for the question. In July, the group has signed a strategic cooperation agreement with the Gansu Province and planning to build the energy base of China Coal Yudong, which are the Tangshan coal mine and Nanzhuang coal mine have obtained a geological reserves of about 1.75 billion tonnes with an annual production capacity of 9 million tonnes. At present, the company has established a wholly owned subsidiary, the China Coal Gansu Energy to advance the preliminary work of the project. Currently, we have not reached the stage of actual investment, and we will disclose further information later. Thank you.

I have a follow-up question in the first half regarding all the cost items. In the first half, the expenses the non-operating expenses are CNY 500 million more than same period last year. There may be some specific projects involved, including the payment of the late fees and as well as the taxes and surcharges and also the resource tax and land use tax, I think these costs has increased compared with last year. So I just wanted to know the reasons behind them and the outlook for the expenses in the future.

I'll ask our finance colleague to respond to the question.

Thank you. In the first half, for well-known reasons and also according to the requirements of the state taxation administration, we carried out a special tax work. So it's true that the nonoperating expenses and taxes and surcharges have increased. This tax payment is a result of previous practical standards and its differences against the current practice. For example, the identification of high-tech and also there are some differences caused by the division of raw coal and washed coal and these led to the increased tax items. And we have paid these taxes according to the requirement of the tax bureau. And all of these expenses have been disclosed in the interim results. Thank you.

Next question, investor with the phone number ending in 6322. Please provide your name and institution.

I'm Jingshan Feng Jimmy from Citi. I have several questions to go through. The first one is about our production capacity. Our capacity in H1 is down a little bit. And of course, there is the Shanxi incident to consider. But -- my question is, of course, if any accidents happen to other manufacturers, does that affect our production? Has it recovered? We have heard that post the accident, the security inspection is stricter than before and more to come in the future. So my question is that do you think the production volume can go back to the pre-incident level? And how is the recovery going?

Do you want to go through all your questions? Or is it one by one? One by one, thank you. Okay. My understanding of your first question is that it comes in 2 parts. The first one is the regulatory policy for the whole sector and also the prospect of all the main coal manufacturing provinces and their capacity. Okay. I will give the floor to our marketing office colleague and also how the safety inspection policy is going.

Okay. Thank you for your question. In H1 2026, especially in the second half of May, the Shanxi coal mines incident has affected the production of the entire sector. And after that, the competent authorities have initiated the security checks and the inspection on the overproduction conditions and also modifications and rectifications are underway. Based on the current trend, I don't think it will ease up this year. And this year for the entire coal sector, the impact on the production and overall volume is quite clear.

And if you consider the numbers from January to June, the total volume was down by 1.7% or it's 40 million tonne less. And from January to May, the imported coal was down by 10 million tonnes. But after the lower production in June, more imported coal, about 3.8 million tonnes more. And we have much of our production area in Shanxi as well. So it's a huge impact on us. But the upside is that for China coal, we are sticking to our overall production schedule, and we're trying to make adjustments according to our whole year's production plan. From Mr. Jiang Qun, about our company's production volume in H1, it's down by 3.39 million tonnes year-over-year, down by 8%.

As Mr. Li has said, it's affected by the tightening rules about safety inspection. And also for some of the mining areas, we have complicated geological conditions and it's harder to organize production. So that also played a part. And in the second half, we plan to stick to our original production plan and try to catch up here. But frankly speaking, since the inspection for safety has tightened, and we are strictly compliant with the safe production for each month. So while we try to meet our annual production target set at the beginning of this year, but for the actual result at the end of the year, it comes down to our actual execution. That's what I wanted to add. Do you have any other questions?

Okay. I have 2 more questions. I will cover them both. So our in-house product selling price was up to almost the market average, and it grew more than the LTA products. I wonder why that is. And then about our costs, what's your outlook for the H2 costs because costs were up a little bit for the first half of the year. And I wonder how the cost would be in second half of the year on a year-over-year basis.

Okay. For our self-developed coal selling price changes, from Ms. Xu from Finance Department. Okay. The price is at RMB 524, up by RMB 54 per tonne for the power for the fuel coal up by RMB 58 per ton, and it's because we have optimized the Pingshuo product mix. The average calorific value is up by 200 kilo calories and also the LTA pricing in the market has gone up, also lifting our selling price. And thirdly, Shanghai Datun is also a part of the fuel coal and it is also sold in combo with the coking coal. The price has gone up by RMB 82 per tonne. Those are so much for the reasons. As for the cost trend in the second half of the year, it goes to our Chief Finance Officer, Mr. Chai.

Okay. It's a good question. We have covered this question before. We have already told our investors that it's normal to have about minus plus 10% of the cost fluctuations. And we are a modernized, highly efficient mining-based production type of manufacturer. And since we have strengthened the unified procurement, better management there, and we have introduced the digitalized intelligent technology, and we have got more of the innovative operational cost control and better management there, yielding good results.

And in H1, our cost was up by RMB 22, up by 8.6%. Well, for various reasons, our overall production volume was down. And of course, that affects our costs. For example, RMB 6 that went into depreciation and amortization. But for the operational expenses, it has a lot to do with the sales method. Some of the cost we have to pay for the shipping fee. If it comes in a larger volume, then it affects the overall cost. And also, it has a lot to do with how we spend our dedicated funds. We have a timetable for it. And in H1, the production volume was down. So this year, we have to use less of the dedicated fund.

And relative to the same period last year, we spent RMB 470 million more. And so that means the cost would be higher than before. Well, it has a lot to do with the coordinated production schedule and the changing production volume. And also, you have the remuneration and social security payment for our employees. And since we have reduced the outsourced labor and we have more in-house labor use, that has increased our costs, too. So those are all normal.

As for H2, I would say the costs are all controllable. We are looking at some of the improvement and also production volume in H2 would be better than H1 because we're trying to catch up with better utilization of the regulations. And for our own management and administration, it will only be more optimized. But as for the whole year's cost, is it really on par with last year or even better than last year? Not necessarily because we want to prioritize the profitability, not the overall expenses. I hope that answers your question.

Chai and Jiang, I have no other questions.

The floor goes to the participant whose phone number ending 2948. Please name yourself and your institution.

I am from Changjiang Securities. Congratulations on your good interim results. I have only one question. Because in H1 this year, the profitability of chemicals has been improved. For example, for urea and polyolefin, what's the outlook for H2 and for the next year because we are also onboarding some new projects, right? Are we looking at a better margin profile?

Sorry, your question -- well, your voice was a bit choppy. So let me check with you. You are asking about -- okay, let me clarify. I'm putting on a head piece. Okay. Would you mind repeating your question?

Of course, of course. I'm from Changjiang Securities, I'm Sun Chu. First, congratulations on your excellent interim results. And in H1, the chemical sector has received a lot of attention and your business here has grown on a year-over-year basis. So for second half of the year and also for next year, what's your outlook of your chemicals business? And what's your expectation for the costs and profitability?

Okay. The floor is yours, Mr. Xu from the Chemical department.

Okay. Thank you for your question. For the chemicals business in H2 and next year, let's first talk about our production. In H2, we're not looking at much growth. The only growth is coming from Phase 2 of Yulin. It will go online in H2, but it will only contribute incremental volume in next year. And next year, we're looking at 900,000 tonnes more of polyolefin because if it goes online this year, next year, it will start producing more. As for our other businesses, other capacity, they are staying at the current level, no incremental growth.

Secondly, for the profitability, the overall chemical sector is -- keeps a good margin, especially for the polyolefin business. We can -- we do not have a clear read on the market now, but I would say for second half of the year, polyolefin would fluctuate within a band at the higher level at a elevated level. And the overall margin in H2 would be on par with H1. And next year, with more incremental growth, we are looking at a higher margin. Thank you.

The floor goes to the participant whose phone number ends in 8130. Please name yourself and your institution.

I'm analyst from Orient Securities. I have a question regarding the coal mines in Weizigou and Libi. It seems that there are some delay. Can you share more details about that?

I would address this question. So for these 2 coal mine construction project, one in Libi and one in Weizigou. So we have adjusted the timing and interim report, and there are 2 reasons for that. At the beginning of this year, during the construction process, there were some incidents, one for each leading to the shutdown. As you know, now the safety supervision is very strict. So that has affected the project schedule. For the Libi coal mine, the incident was due to the exploration of gas. So the gas that's explored is quite different from the actual gas content, and this has also led to the delay.

At present, one could expect a 1-year delay roughly for each coal mine. So for the Libi mine, the production is likely to start in 2028. And for the Weizigou coal mine, the production will start to the end of '27. We would update you on any further progress of the project.

I have another question. So in the first half, the proportion of self-produced coal borne by railway transportation and the port handling expenses has increased. So I'd like to know -- from a sales structure point of view, what is the company's current idea? Is this structure sustainable?

Okay. I would engage colleagues from marketing office to address this question.

Thank you for the question. The sales mix for the joint stock company has not changed much. But in our daily operation and management, we will make some minor adjustment corresponding to the market prices to the stock market. So the amount of the water-borne coal in the first half is slightly higher, including some logistic costs are slightly higher. Because of that, the sales of the water-borne coal has also increased. And also the contractual volume for the water-borne coal has also increased. But this change in the sales mix was not that much. Looking onward, I think the overall mix will remain stable. That's all.

Next, the floor goes to investor with the phone number ending in 6402. Please provide your name and institution first.

Dear investment -- dear management, I am from Guohai Mingxing Securities. I'm an analyst, Ma Xuanshuang. I also have a question about taxation. Regarding the tax payment in the first half, are they done? Are there any additional taxes to be paid later, including the land tax as part of the tax surcharges? Or will this proportion stay the same?

And my second question is about the selling price of the company's thermal coal -- so the thermal coal prices increased by 90% year-on-year and the price of the thermal coal in the company increased by 58% year-on-year. So considering that the proportion of the company is relatively high in long run. So what's the reason behind this?

Okay. I would engage Ms. Tao to answer the question about tax.

In the first half, the tax work has been basically completed. As to whether there will be additional tax work in response to state taxation administration requirement, this is still to be seen.

And your second question is about the land use tax, correct? That's right. We would follow the laws and regulations to pay our due. And this tax -- the tax paid this time is mainly about the different definitions of urban land. Coming forward, we will follow the relevant requirements of tax laws to pay our due. Regarding the pricing issue, actually, it has been addressed by Mr. Xu from finance, but I would give you a brief answer to it as well.

So on one hand, we have increased the proportion of self-produced commercial coal in the first half, I mean, high calorific value coals. So there are more high-value coals are produced in the first half. As responded by our marketing colleague, in the first half, the water-borne coal, the sales mix has also been adjusted with more water-borne coal sales, which is also counted as a thermal coal or coking coal. So because of these 3 reasons, in the first half, the pricing for the self-produced thermal coal has increased a lot.

Next, the floor goes to investor with the phone number ending in 1683. Please don't forget to leave a name and institution.

Dear management, I am Henry Cheung from Shandong Railway Development Fund. I have a question regarding the JV business. In Q1 and Q2, the investment income is roughly the same. Even though that in the second quarter, be it the coal price or the coking coal price or the price of polyolefins, they have increased month-on-month or quarter-on-quarter. So why the profit level across Q1 and Q2 is similar? Is it because of production reduction or other reasons?

Okay. I would engage our finance team to address this question. Okay. Let me do it. For the JV business, the China Energy Conservation, the JV business has both coal business and coal chemical business, right? In these 2 quarters, the cadence of the production are -- there will definitely be some changes. Also in the Q2, Huaxin was under the inspection from Shanxi Provincial Authority. So there were some limitations in the production. So that's the situation.

Okay. Let me add something. This is for the Huaxin coking coal company. We have 49% of the shares in China coal and coking. And very soon, the Shanxi coking coal will also have their interim results announcement, and you can see more statistics from their report. Okay. What about looking forward to Q3 or in the second half, what's going to happen because now the coking coal prices increased. Again, I am particularly interested in Zhongtian Hechuang and particularly the coal chemical business. The coal chemical business started production quite early, even though the cost control measures has to be higher than the new coal chemical project. So what will be the guidance and prospect for the coal business?

Firstly, regarding the Huajin Coking coal and also the production plan for the second half, please refer to the data disclosed by Shanxi Coking coal because it's also a listed company, and it's not appropriate for us to make comments on their performance. Regarding the Zhongtian Hechuang Company Limited, the production or the output scale, to be frank, it's about 1.32 million tonnes. And as mentioned by Mr. Xu, the coking coal pricing remains high, and it's going to likely to fluctuate at a high level. So I think that the economy of scale is still there, and I believe it's going to maintain a relatively good profit level. But the ultimate results depend on the price fluctuations.

Next question is from online in text. The Chairman mentioned in his previous speech that the company is accelerating the building of a new coal electricity chemical industry chain. And in the first half, Shaanxi Yulin Coal Chemical Phase 2 with an annual upgrade of 900,000 tonnes for the polyolefin project, all process equipment has been delivered to the demonstration project, which has entered the trial operation stage. So can you share with us like when will the facility start production? And how does the company ensure the profitability of the new production facilities?

Okay. We'll have Mr. Xue from the Chemical Business, you need to answer the question.

Regarding these 2 projects, firstly, for the Shaanxi Yulin Phase 2, it has entered into a comprehensive handover period. And some of the devices have started debugging and commissioning. And judging by current progress, starting from November, the facility will start -- will enter the start-up period. And that is to say from this year, starting from December, the production or the output will start to be up and running. But that excludes the EVA installation because EVA will start production next year. It's 1 year later than the other devices. Regarding CATL, it also started at the debugging stage, commissioning stage with a plan to start production after December. That's the first question, right?

The second question is about the Phase 2 of Yulin project. It's mostly polyolefin for the Yulin Phase 2 project, but it's different from the existing polyolefin Phase 2 is different from Phase 1. We have a high-density polyolefin for Phase 2. Regarding the polyolefin, it's also using a different processes. We are currently adopting the cutting-edge processes for the polyolefin. So after Phase 2, our products will be more premium and also differentiated against the competition. So the profitability for Phase 2 is likely to be better than Phase 1. That's all.

The next question is twofold. First, when the safety inspection is becoming stricter and many of the miners are using less of the outsourced labor. And can you quantify the cost differential between in-house labor versus outsourced labor? And once that reaches economy of scale, do you think that your unit cost could come down?

And second question is about the raising prices of coking coal. And if -- and how will your selling price go up? And how much of the profit flexibility do you have there?

Okay. The marketing office would take the second question about the pricing of coking coal first.

Thank you for your question. The pricing of coking coal comes with -- it's based on 2 prices. Well, for the raw materials of coking coal, it's priced on a seasonal basis. If there are some violent fluctuations, adjustments could be made. So it could trend from quarterly pricing to monthly pricing, and it's quite stable. There are some gap with -- there is some gap to the market average, but the gap is not huge. And the second system is just spot price, and it accounts for a very small proportion of our own coking coal.

And so our pricing of the coking coal is following the market price. And since our coking coal business is scaling up and we have a stabler pool of clients, and our price is well received by the market. We have got a proven track record here. And in this sense, when the coking coal price was poor earlier this year, our pricing was very robust. And now the pricing -- market pricing is trending up, and we are also following the upward trend. And for the overall year, our coking coal price would follow the market trend. It's well synchronized.

Okay. The first question goes to Ms. Tao from Finance Department.

Okay. If we shift from outsourced to in-house labor, first, it doesn't affect our costs a lot because previously, the cost to the outsourced labor is factored as other expenses. And now since we have shifted to in-house labor, then the cost items are broken into raw materials, human labor. So in this sense, it doesn't really affect our costs here.

Okay. I am Chai Qiaolin. So for your question, the 2 costs are not really from the same -- they're not the same metric here. And once we have shifted to the in-house labor, it's, of course, being displayed along with all other costs because here, you also have the social security investments and management. And of course, if you use the outsourced labor, there on the paper, it seems cheaper, but there is some discrete compliance risks. And if there are any issues, penalties is to be paid. So you don't consider the procurement cost only. You need to consider the comprehensive cost of the whole life cycle, right? So along the same line, we -- when we are shifting to in-house labor, it's conducible to the high-quality, healthy, sustainable operation.

And of course, for the shifting to the in-house labor the -- well, based on the industry released data, if you shipped to in-house labor, the cost is up by RMB 30 to RMB 80 for SOE. And for a private player, unlike the SOEs, they would use the cheaper outsourced labor. So for them, the increased cost would be between RMB 100 to RMB 200.

The next question is that in H1, we were also affected by the mining incidents from other manufacturers and our production was on hold. And also, we are actively pursuing safety inspection and doing the correctional measures. And how do you measure the effects here and the results here? And how do you make sure that we're always compliant?

Okay. I will give this question to our independent executive, Ms. Zhang.

Okay. In this process, our team of independent executive directors have been closely following the safety and environmental compliance issues, and we have been monitoring and nudging for more corrections and the company has been putting in more dollars into safety, especially for the digitalization, higher digitalized monitoring system being put into use in our operation will bring the positive effects.

As for the bottom line and also for the compliance in environmental and compliance as an SOE, we will fulfill our responsibility. And in terms of our investment supervision, we will follow closely what happens to all our subsidiaries and our associated companies, making sure that if there is anything, we would nip it in the bud.

Okay. The next question is about our import and export coal volume has been growing a lot in H1. What are the reasons behind this?

This one goes to you, Ms. Xu.

It grew much because we have been following the 10 rules about the trading of coals. And for the coal trading businesses, what's the terms here? Well, for the weekly controlled coal, we are shifting to the distributed coal. So we are shifting the procurement structure. And from Mr. [ Zhengjun ], okay. In our report, we have disclosed the import and export and also domestic distribution. The main change mainly comes from our domestic distributors. Not much change is from the trading.

Okay. From Chai Qiaolin, the adjustments are like this. since last year, there has been a lot of pricing changes in coal. And although we have been controlling who we sell to and of course, if we have to store coal for a longer time before sales and to prevent such risks in the contract, we try to pass on such risks to the end clients. And in this case, through making adjustments to our contracts, we -- there is some compliance risk before we can fully recognize the revenue here. In this case, we are converting such business to domestic distributors. But even if it's done through distributors, we have full control of the source and the flow of the products.

Okay. Next question. In the financial statement, our nonoperational expenses was RMB 551 million, up by 788% and dragging down the profit attributable to our shareholders. And for the management team, what's your take with such write-downs for the large value assets and also the nonrecurring expenses like the late fees? And do you have any improvements here?

Well, in our statement, we have seen major changes to the nonoperational expenses. The main reason is paying the taxes and the late fees. It's based on how the tax policies in execution, there might be some differences between the understanding of the actual rules and the execution. For us, we are always a compliant taxpayer. And internally, we use the refined and digitalized measures to make sure we have refined management of our taxes. And as an independent director, the administration and governance of the company is well in control.

And for the Board to supervise the asset life cycle of the company and also to prevent the write-down of the assets and compliance risks on a quarterly basis. And for our internal audit reports, we would pay close attention to those items. And in this process, we have also been asking questions about how to get a better read of the regulations and how to better communicate with the competent authorities in taxes and the regulators so that we can narrow the gap between our read of the policy and the actual policy.

Next question is in H1, the profit attributable to shareholders was up by 5.8%, but because you had more of the nonoperating expenses, it was dragged down overall. So what's your specific measures to give better shareholder returns from? Mr. Zheng Jun. Okay.

About the change of the nonoperational expenses, as we have established, it's mainly because of the -- in H1, the tax authorities, they had the tax inspection Ms. Tao has already given very specific answers and overview here. And personally, my understanding is that the impact has already been fully absorbed in our P&L of this period and the nonoperational expenses for this period will no longer be a negative drag to our long-term result.

As for our market cap management, China Coal has always set store by the shareholder return, and we have robust communication with our investors and we have taken multiple measures to give better returns to our shareholders. For example, we have just announced we will continue to deliver the interim payout dividend. And in H1, China Coal as the controlling shareholder of China Coal Energy, we have increased our shareholding of China Coal Energy, showing our confidence in China Coal Energy and strengthening the stock price.

And we have the confidence to continue to improve our operations in the future and to guarantee the strengthened value of the company, and we'll keep communicating with our investors, and we hope that you will keep in touch with us so that we can altogether maintain the market value of China Coal Energy. Okay.

One last question. For renewable energy installation target in the longer term and in the next 1 year or 2, what is the revenue contribution expected from renewable energy? Okay.

The question goes to you.

Thank you. During the 15th 5-year plan, China Coal Group's long-term target is to reach 50 million kilowatt of installation. So for each year, it's 8 million kilowatts a year. And with policy #136, we want long-term healthy sustainable development. And for China Coal Group, we are present in the source grid load storage business and with the more utilization of renewable energy with a better presence of the business with better management, renewable energy will be a positive lift to our operational results.

From Mr. Zhang, we have mentioned that we want 50 million of installation for renewable energy. That's for China Coal as a group. As for China Coal Energy's 15th 5-year plan, it is being revealed by the Board as we speak. Once that has been approved, we will disclose that. Thank you.

Thank you all. And that's the end for the Q&A session, and let's see if the management has any other sharings. Okay. We don't have any additional sharings. Thank all investors for joining this session. If you have further questions, feel free to approach our IR team. We're more than happy to answer any questions you may have. Thank you. The meeting is adjourned.

[Statements in English on this transcript were spoken by an interpreter present on the live call]

Hello, everyone. Welcome to China Coal Energy First Quarter Results Announcement. Welcome to all participants at the meeting begins now. After the presentation, there will be a Q&A session. Now please join me to welcome the management.

Thank you dear investors and analysts, good afternoon. I am Jiang Qun, Board Secretary of China Coal Energy. Welcome to our results presentation.

Attending today's meetings are Deputy Secretary of the Porte Company, Executive Director and President, Mr. Gao Shigang; Mr. Jing Fengru, Independent Executive Director; Mr. Chai Qiaolin, Chief Financial Officer; as well as the head and staff from Securities of Finance Department, Planning and Development Department, Corporate Finance department, Coal -- business Department and Chemical Business Department, Power Business Department and Marketing Management Office.

We sincerely thank you all for your long-term care and support of the company.

Now I will brief you on China Coal Energy's operating results for the first quarter in '26 and the main work arrangements for the second quarter. Unless otherwise specified, the following data are calculated on the Chinese accounting standards.

In Q1, the company resolutely implemented the decisions and deployments of the CPC Central Committee and as they consult deeply pursue the development philosophy of improving efficiency from existing assets and transforming through incremental growth and fully advance the various measures to stabilize production and sales despite challenges such as change in geological conditions in some mines, we strengthened production sales coordination, enhanced refined management, ensuring smooth and stable operations.

Under Chinese accounting standards, the company achieved operating revenue of CNY 34,189 million, total profit of CNY 5,641 million. Net profit attributable to shareholders of CNY 3,844 million, and basic earnings per share is CNY 0.29. The main features of the company's operation and production in Q1 are as follows: Firstly, with the full efforts to stabilize production and sales with scientific approach.

The company worked hard to overcome challenges such as change in geological conditions and increased difficulty in production, achieving commercial coal production of 30.17 million tonnes, a decrease of 3.18 million tonnes year-on-year. we step up efforts to sublet sales and ensure supply with commercial coal sales of 36.02 million tonnes, of which self-produced to commercial co-sales were 29.7 million tonnes, down 2.98 million tonnes year-on-year.

For the core chemical business, we coordinate safe production and plant operation, completing output of major coal chemical products of 1.554 million tonnes, including 373,000 tons of polyolefins. 537,000 tonnes of urea and 524,000 tonnes for methanol, roughly flat year-on-year. Sales volume was 1.703 million tonnes, up 4.8% year-on-year.

Second, simply in quality improvement and cost initiatives the company dynamically optimized the production and cost control for logistics and sales. Unit selling costs of self-operated commercial coal was 278.76 tonnes, up 3.3% year-on-year, mainly due to higher labor costs from converting outsourced production teams to in-house operation with a higher social security lower production sales volume led to higher unit material costs and depreciation and amortization costs.

Other costs decreased year-on-year due to increased conversion of outsourcing to in-house operation and reduce the outsourced stripping volume in open pit mines, benefiting from lower purchase prices of feed coal and fuel coal the coal chemical business saw unit selling cost of polyolefins at CNY 5,545 per tonne, down 4%.

Urea unit selling cost at CNY 1,318 per tonne, down 1.8%, and methanol unit selling cost at CNY 1,354 per tonne, down 4.2%; three, major product prices stabilized with coal prices up slightly year-on-year. The company's comprehensive selling price of sale produced to commercial coal was 496 tonnes, up by RMB 4 per tonne year-on-year. Among that thermal coal price with CNY 465 per tonne, up CNY 11 per tonne. And coking coal price was CNY 991 per tonne, up by CNY 69 per tonne.

Coal chemical products prices continue to show diverging trends. Although polyolefin prices rose in March, the average selling price of the polyolefins in January to March was CNY 6,274 per tonne, down 8.8% year-on-year due to a significant decline in the January to February. Urea price was CNY 1,793 per tonne, up 9.3%. Ammonium nitrate price was CNY 1,813 per tonne, down 2.6%.

Fourth, resilient operating performance and continued optimization of financial structure against the backdrop of lower coal production and rigid cost increases, the company adopted multiple measures to offset cost pressures and achieved a total profit of CNY 5,641 million, down 9.2%.

Key factors include profit increasing factors including an increase in investment income of CNY 169 million, a profit increase of CNY 158 million from the power business. And the profit increase of CNY 119 million from higher coal prices and a profit increase of CNY 108 million from reduced taxes and surcharges.

Profit reducing factors included a profit decrease of CNY 661 million from lower sales produced commercial coal sales volume, a profit decrease of CNY 254 million from higher unit selling cost of self-produced commercial coal. A profit decrease of CNY 67 million from the financial business, a profit decrease of CNY 52 million from the coal chemical business and a profit decrease of CNY 41 million from higher period expenses.

The company continued to strengthen lean management and maintain good levels of our overall labor productivity and operating cash to sales ratio. Second, key work arrangement for Q2. Since the beginning of this year, China's macro policies have been coordinated and intensify major project construction has accelerated.

Investment growth has turned positive. The domestic demand market has steadily recovered. Export growth has exceeded expectations and positive factors in economic operations have continued to increase. is a critical transitional period. The company will further strengthen production organization, refine measures to tap potential and increase efficiency, ensure that all operating indicators achieve all the milestone targets.

Firstly, we will continue to strengthen production sales coordination to go all out to promote output and quality; second, deepen lean management and cost control, tapping the potential for cost reduction and thirdly, steadily advanced key project construction accelerate implementation and effectiveness of the 2 integrations.

Fourthly, continuously improve our corporate governance and information disclosure quality, deepen communication with investors and maintain good image in the capital market.

And going forward, the company will adhere to the bottom line of a safe development and unswervingly pursue high color development. Thank you all. Now we are opening the floor for questions.

[Operator Instructions]

Thank all management.

I am Sun Shuo, analyst from Changjiang Securities. I have 2 questions. Firstly, in Q1 for the thermal mines and also for the coking coal prices have increased. So what is the reason behind that? And what is the continuity for these 2 products? Is it going to be consistent?

Okay. We'll try to address the answers one by one. We will ask Mr. Lee from our marketing office to address these 2 questions.

Thank you for your question. In 2026, China Coal Group and also China Coal Energy. Our overall sales structure and marketing system remains consistent with 2025, but the pricing has registered some changes -- so from January to March, the price has increased from less than CNY 700 to CNY 780 and by the end of March, I think it's around CNY 750 million.

And the long-term agreement prices is about RMB 8 lower than Q1 last year. And for the spot market price, last year, it was trending down, but this year, it is trending up. So the spot market price is like RMB 13 higher than same period last year.

And in 2026, there were some changes in the sales structure in terms of the launch and agreement sales and also the product structure, the product mix has also changed. So because we have a lower sales proportion from our long-term agreements and also the long-term agreement pricing is different from last year by the difference of RMB 8.

And for the spot market, the price is RMB 13 higher. So that's why the overall pricing is better. And also in 2026. Again, because of the lower long-term agreement volume and higher spot market pricing, normally in Q1, the market was not very good and the price should go up or is something that we could look forward to by optimizing the management or by optimizing the contractual structures.

So it's going to be sustainable.

For my second question, it's about the coal chemicals. In the single quarter, the quarterly pricing has turned down. But for methanol and also for polyolefins, actually, the overall prices have increased a lot.

So what's your take on the magnitude of profitability increase for March. So any guidance on the profitability improvement. And also, are there any guidance for the annual profitability improvement for the chemicals. Can you help us to break it down?

Sorry, let me repeat your question. You mean that our expectations of the profitability generated by the coal chemical business. Is that the question?

Yes. I mean, like a quarter-on-quarter basis, how much will it be improved?

Okay. Let me address this question. So in the previous presentation, it's been mentioned that in March, the coal chemical price has come down, mostly because of the coal chemical price was at a low level from January to February. But for well-known reasons, in March, the chemical price has increased because of the new market landscape. So that's why the company's coal chemical product prices have increased.

However, in average, the overall pricing from January to March was not as high as expected. And later on, I could ask the finance people to break down the profitability for the coal chemicals for Q1 and also for March.

And regarding the future outlook, but especially from this moment to end year and like the trend of profitability for coal chemical. It's fair to say that it's highly subject to the market environment and also the international landscape. So it's really hard to say.

And regarding the -- how the coal chemical price would trend, I could also ask our colleagues from marketing office to share more about it.

Okay. So I would ask our colleague from the marketing office to share his views about the pricing trend for coal chemical.

Okay. Thank you for the question. In the 2025 annual results announcement, we have made some comments regarding the supply and demand landscape and dynamics in '26. The overall impression is that the supply and demand for coal chemical in China, there's oversupply.

And also, the energy pricing would have a short-lived impact or unsustainable impact on the coal chemical business. So there are different opinions regarding the international conflict. And some say that it will be in within 3 months, some say we did 6 months, something down 6 months. So all of these will affect the crude oil price.

So if the conflict will last for over 3 months and the crude oil price maintain like over CNY 80 million, then that means the energy pricing system would be relatively strong, and that will also affect the demand for the coal chemical products.

So from March to April, the coal chemical pricing has increased by like up to 40%. And this week, it has go down by a few hundred. So down by 3% to 5%, which is aligned with market expectations.

That is why we expect the pricing to be kept at an elevated level. That's the trend. Having said that, we do not expect a high pricing level to be sustained for very long. So higher pricing, it's a trend, but it won't be extremely high. And -- about the profit margin for the coal chemical business in March. I will give the floor to Ms. Shu. Total margin is about RMB 300 million for coal chemical. For urea polyolefin each accounted for RMB 100 million.

You're telling me the gross margin, is that correct?

Okay. Thank you. Well, so much from my questions, I wish China Coal to achieve even better performance.

[Operator Instructions] Thank you. While we're waiting for this participant. Let's give the floor to another one.

Thank you for this opportunity. First, I want to say congratulations to China Coal Energy for your excellent performance. I have 2 questions. It's more of a follow-up question. Previously, you said that in Q1, in our thermal call and you had higher sales in a more premium variety and in the annual report, if I remember correctly, in 2025, your calorific value in 2025 is up by [ CNY 200 ]. And in Q1, the thermal coal's pricing in general is going down. So do you expect even more improvement in your quality of coal or a high calorific coal. Do you give a higher weight? Do you expect that to happen?

Question number two, since we have the coal chemical business, and many other players, they also do this and they need to have some maintenance and repair sessions. And for now, the margin of coal chemical business is buoyant. And in the coming quarters, do you expect some maintenance or impairing sessions that could affect -- that could drag down the scheduling and manufacturing for some products? That's my question.

Okay. About the pricing of our coal, yes, it's true, we have been improving the coal quality. In Q1, the average calorific value of our coal was improved by RMB 100, giving us RMB 27 more per tonne and that raised the average selling price of our coal by RMB 16.

And based on what Mr. Li has said about how the general pricing is going down and how we have a different portfolio lower in LTA and the change in price. That is why you see the price we got. And in the future, we will continue to improve the quality of our coal.

We will such a higher price for the more premium coal -- as for the quality of the coal and its boost to our profit margin, how sustained will it be it depends because we have started this measure starting from last year. We already saw the improvement in quality, but the longer it is in place. There will be less of the marginal, in fact, margin improvement to our margin. And about the coal-chemical maintenance and repair session. I will give it to my colleagues.

Thank you. for the repair and maintenance session for coal chemical, we don't have a lot of that sessions scheduled. So the main task is about the ammonium nitrate. And it only took place in April, and it was back in operation in May 8. So it's totally had a reduction of the manufacturing for 30,000 tonnes but no other repair sessions for either urea or the other products.

I wish China Coal Energy to have better results to show for.

We will give the floor to the participant whose phone number ends in 5907.

Thank you for this opportunity. I am from Citic Securities . I am Bolin Zhao. I have 2 questions. The first one is about coal costs in our Q1 report for the in-house coal. You have reduced the health of the outsourced work. That is why there is less of the expenses there. But we don't see other expenses being affected. So I wonder, will it also affect -- will it still affect your cost in the future? And what's the magnitude of the impact from this outsourcing alone for this year?

Mr. Xu from the finance department.

So in our other costs, the Q1 specialty fund use is lower than last year. The specialty funds and the use of it, it's based on the rules and regulations strictly. So about the mine underground safety, infrastructure and the improvement, those requirements, those actual needs on the ground would determine how much we use those specialty funds.

Question about coal chemical costs. I've seen how the units cost in Q1 for polyolefin has been trending down. And for the raw material cost and also the selling price of the coal, it has been trending up. So I want to know more about your lower production cost. How can you cut the cost like this? And how will the feedstock expenses change in the future?

Thank you. Mr. Zhang has said already for our price, higher selling price of coal, we have improved the product mix, and we have better coordination of production and sales, and we improved the coal quality. That's how we are charging a higher price. But for the spot price it's in line with the market trend. As for the chemical feedstock procurement price, it's also reflected in there, too.

Question, so you have higher selling price because you have a more premium coal? And as for the chemical pricing, you fluctuate with the market trend, is that correct? And Mr. [indiscernible] saying, we have said explicitly our in-house coal has a higher price. It is affected more by the Pingshuo coal because the Pingshuo coal accounts for a very big chunk of our sold coals, the coals that we sell to the others. And for the coal chemical raw material, we source it from Yulin and Ordos, it's different from the Pingshuo coal.

So we use the coal sourced locally from Inner Mongolia, Ordos and Yulin. So part of the coal we use for the coal chemical business, it is -- part of it is from our own in-house production and the other is from the third party that we procure from other vendors. And whether it's in-house coal or procurement from third parties is all market based. So that is why the pricing trend deviates from the -- with our selling price.

Investor whose number ends with 6406.

Greetings, everyone. I am from Minsheng Securities. I am [ Wang Shanshan ]. I have 3 questions for the management team. Our Q1 coal production is down on a quarter-over-quarter basis. So I want to know the factors reducing our production. Is it -- has it blown over yet? Can we recover the loss production here so that we can have flattish production on a year-over-year basis?

And question number two, what is the situation with our long-term agreement here? For some of the coal manufacturers in Shaanxi and Inner Mongolia, they're pricing their products based on the NDRC. But others, they are pricing their products based on each pit with the clients. So for the long-term agreement for some pits, how do you price your products?

Question number three, for the investment return, you have gained more than RMB 100 million. It's different from the general market trend. And in Q1, your pricing for coal has also grown. So my question is that for the investment companies, for the companies that you have invested in, have they got better quality in yield? And is that why you have better investment yield?

For your first question about the production and whether we can recover the lost ground. I will give the floor to Mr. Ding.

Okay. Thank you for your question. In Q1, because of the geopolitical -- because of the geological environment changing of Pingshuo and also since we have more of the outsourced labor to in-house because of these changes, we had some production reduction. For Pingshuo and [ Shibi ] companies, their working environment has gone back to normal.

And for the other location, it is still being affected. And for the next step, we will do what we can to make sure we can have the normal production and repair to try to produce even more than our numbers last year. Mr. [indiscernible] is saying we have disclosed to the market, our production plan for commercial coal, and we will try to go by our plan and even overshoot our plan. But still for your investment, please base your calculations on our production plan for your model making. As for the pit level LTA pricing, I'll give the floor to Mr. Li.

Okay. Thank you for your questions. Thank you for the question. In 2026, the NDRC has a very clear guidelines about the long-term pricing. It's going to be consisting of a benchmark price plus dynamic pricing, but this is also subject to supply-demand dynamics based on their willingness and their consent. So we have also followed this model, long-term price and benchmark pricing plus the dynamic pricing. So from January to March, basically, we are using the upper limit of the guide price. And also, we have to take reference of some pricing indicators without major adjustment.

And compared with 2025, in 2025, the long-term pricing, the pricing has been quite volatile, which has led to the difficulties in executing these long-term prices. And this year, based on the existing long-term pricing system, we have established some additional mechanisms and special pricing depending on the market situation and also in certain regions. I -- that's all. Okay. That's very clear.

Yes, the third question is about the. I would ask our finance colleague, [ Mr. Xi ] to address the question.

Okay. The investment income has increased by 169 million, and this is mostly because of the profit gains of the companies that China Coal Energy is a shareholder of. For example, the [ Pingshuo ] [ Shibi ] company, the sales and production volume has increased by 68 million and also one of the other companies watching coking coal in Q1, the production sales volume also increased by 40%. So the overall investment income of the company has increased as a result of it.

Investor with number with 6322.

Dear management, I am from Citi, raw material analyst. My name is [indiscernible]. Thank you for organizing this earnings call. I have a few questions. Firstly, previously the management has talked about the Q1 Projections, it might go down. So what is the proportion of the thermal coal out of the total coal sales? And whether that proportion will fluctuate throughout the year? Or will there be any seasonal changes? This is my first question.

Okay. I would ask Mr. Li from our marketing office to address the question.

Thank you for this question about the long-term contract signing. So the NDRC has a strict stimulations about the signing of long-term agreements in 2026. The principles remain the same with '25. So the cap is at 75% of the production volume. But considering the demand in 2026 for thermal coal and also in 2025, the actual signed volume has not reached the designated volume.

So NDRC has made some adjustment about the volume and proportion. And I can't disclose the exact numbers because it's related to the state plan, but it has go down a little bit. And also for the fulfillment of a long-term contract, NDRC has also very clear requirements. It's going to be delivered in a balanced manner from January to March, facing such a supply pressure, our long-term fulfillment has also surpassed 90%. And throughout the year, the fulfillment rate will be over 90%. Maybe there could be monthly fluctuations, but nothing major. Because China Coal Group has very strict execution plans about these long-term contracts and also with a very stable supply-demand relationship. So there won't be any major changes in that regard.

Okay. Thank you for the answer that's very clear. Second question is about cost. And just now, the management has explained the changes in cost. So for the overall production cost, what would be the projection going forward? And also in 2026, how will the cost be different from 2025? And also, are there any guidance, any guidance as for -- and breakdown for the quarterly prices?

Okay. Regarding the cost, this year, the cost has increased by 3.3% year-on-year, mostly because of the volume changes. And also 60% to 70% of the asset-based costs are rigid. So it's not very scientific to expect it to go down all the way.

So we're also implementing cost initiatives. We are strengthening the control of the production process and to empower the production with technology as well as strengthening the cost control for equipment and also the company is stepping up the investment in safe and environmental protection as well as some smart and intelligent features.

Currently, the company's cost is at a relatively low level. And in 2026, we will continuously implement the reasonable cost initiatives.

Understood. Can I ask a follow-up question? So in 2026, the annual cost, maybe it will be like similar to the Q1 level, but it will be higher year-on-year, right?

We can't give a very precise forecast about the overall cost in 2026. But just now [ Mr. Xu ] has explained the projection. Compared with 2025, the cost is at a lower level. So it's unlikely for the cost to continuously go down because some costs are rigid and it's really hard to reduce it further.

Next investor with the number 1791.

Dear management I am [ Wang Tao ] from Oriental Wealth Securities. I have 2 questions. Firstly, just now Mr. [ Zhang ] has mentioned that the thermal value of some coal mine area has increased by 100 calories. So what is the current calorific value of these mines? And whether this calorific increase is going to be normalized or not? I will ask a question one by one.

Okay. So for the -- our main product, the calorific value is about like 4,500 give and take. And based on the market demand and also based on the geological conditions, it will fluctuate. So the 100 calories is an increase on a year-on-year basis. As mentioned earlier, within this year, that number is likely to change because we are strengthening the quality management, and these measures have been implemented since last year.

So as time goes by, in other words, in the second half last year, there were some good outcomes. And when we disclosed last year's annual financial statement, we have pointed out that the core quality has improved last year. And also, we have improved the results. And we have also produced the high-grade coals like for the 5,000 or 5,500 coal. So that's why the overall quality and coal grades have improved.

And for this year, particularly for the second half, whether the year-on-year increase will maintain such a magnitude, that's unlikely because in Q1, the year-on-year increase would -- could still be quite significant. But after Q1, I think that trend will be moderated. But again, this is subject to the market landscape.

So the coal quality changes is related to the geological conditions and also it's related to the product mix. So we are prioritizing the calls with a high calorific value, but that means that the overall production volume might go down slightly. So we are looking for the sweet spot based on the market dynamics.

Okay. That's very clear. So you mentioned that these measures started to be implemented in the second half last year. It's from Q2 last year or from what date?

Okay. Let me put it this way. We started to formulate measures like early last year. But as time goes by, there are the results becomes more significant.

Okay. That's clear. My second question is also about cost. The cost of variations in Q1, the cost remains relatively high. And as we release more capacity, there are some room for cost to go down further. That's normally, what could happen? Do you think that this pattern will remain this year? Or will this year's cost breakdown be more evenly distributed throughout the year?

Thank you for the question. In Q1, the cost was high because of lower production volume. So the unit cost has increased. And the cost fluctuation pattern is quite consistent throughout the years. We're also striving to balance the quarterly cost. Let me add some additional comments. In Q1, the costs tend to be higher because in the onset of year, we have put up some efforts to organize our production. But it's also possible that in the Q4, the cost could rebound. And we are striving to balance the cost throughout the quarters, but it's nothing definitive.

Thank you, Mr. Zhang. I want to ask a follow-up question about the industry about the coal chemical and also for the potentially newly approved projects, any hints about the progress of these new projects? Is it going to be more relax.

Are you talking about the Pingshuo coal chemical project? I didn't get that. Yes, it's the new coal chemical project not the Yulin Phase II project. Okay. I would ask my colleague from the coal chemical BU to address the question.

Okay. So for the inshore project, we are still actively driving this project forward. And based on the latest requirement from NDRC, we are very active to optimize our plan and also to refile the materials. We'll try to submit the third declaration materials to NDRC in June.

This question has been typed in. So the company has raised the concept of improving efficiency for existing capacity. And for the Liquid Sunshine project in Yulin with the progress and what is expected efficiency. And for the capacity expansion plan, how far have we gone? And what is the CapEx spend here?

For the Liquid Sunshine project, we are carrying it forward. So the original plan was to put it into operation by the end of this year, and it looks like we can get it done. As for Phase I of lean, it is being built as we speak. We -- our schedule is to again put it into operation by the end of this year. But aside from the EVA equipment, it will be used. It will be put into operation in 2027. But for the rest of the installations, it could go online at the end of this year. And about the renewable energy development, I give the floor to Mr. Wang from the electricity department.

As for the 7 million renewable energy plan, the group level and the different departments, we are carrying out the project and through the restructuring, M&A and through our own building, we have confidence to complete the 7 million target this year.

The next question is that in Q1 our thermal coal sales was down by 2.96 million tonnes, but we have more better improvement in margin? And what is your Q2 target? And what's the progress for trading coal?

Would you mind repeating the question? Are you asking more about the trading coal? Okay. Here it goes. In Q1, the in-house coal sales was down by 2.9 million, and less revenue from the trading coal, but you have better margin in Q1.

So next -- what's your plan for cost control and sales improvement? And what's your product mix plan and what's your target for Q2?

My understanding is that you're asking about the trading coal. If that is correct, then the sales of trading coal changes is the topic here. Okay. Let me address the sales expectation for trading coal in the coming quarters. And then about -- well, for cost control, we have already covered that, but I will ask my colleague to repeat the answer.

Okay. Thank you for the question about our trading coal. Over the years, for the trading business of coal, we have stepped up our management especially after the policy measures about the trading call we have beefed up our procurement and risk control. So although the volume for trading coal has gone down a little, just for the margin and for the best -- for the risk control, we have done better, and we are sourcing more directly and we have made good progress here.

So for trading coal in 2025, it has -- the volume has shrunk a little. And after a year's adjustment this year, the trading coal's structure and margin has more stabilized, and we expect that trend to hold.

About cost control. Commercial coal cost has gone up in Q1, that's because we had less production.

For the in-house coal production, 60% to 70% of that is inelastic. So for the more variable controllable costs, we could further do cost down. And we could better control the cost from the sources and also the cost during the manufacturing process, we would have strict control of all expenses, and we would use more advanced technologies to improve efficiency. That's how we intend to do cost down.

For now, our cost is already capped at a very low level. And if there is any cost of changes, it must be aligned with our manufacturing demand. And in 2026, we plan to continue our very scientific and strict cost optimization.

The next question for the management is, what's your plan for the capacity addition during the 15th Five-year plan for coal production?

From Strategy Department, Mr. [indiscernible]. During the 15th Five-year plan, we expect a smooth capacity addition pattern in mid 15th Five-year plan for the newly build coal mines that they will have the full year ramp up. And by then, we will have a very smooth, and then based on the market conditions based on the government requirements and LTAs, we will schedule our production. And by year, in 2027, we expect 130 million; 2028, 135 million; by 2029, 140 million; by 2030 150 million.

Mr. [indiscernible], let me add that these plans are only based on the designated capacity of our mines being built that the estimation is based on that. It doesn't represent the actual production plan. So I ask all the investors to base your calculations on the numbers that we disclose from each period.

Okay. Next question is about the utilization rate of our coal chemical business, how high can it be?

Answer, Well, over the years, our utilization rate has been 100%, it has never gone above 100%. And the maximum level could be at 110% of the designated capacity.

Next question is about the -- how the CapEx of the company has gone up, you are doing industry upgrade and renewable development was your CapEx for the year? And how do you make -- strike the right balance between the liquidity and shareholder payback. And do you expect higher payout ratio in the future?

Two aspects to this question, I will give the floor to Mr. [ Tao ] from the Strategy Department to walk you through our CapEx and our plan for the future. And I will answer your question about the cash dividends.

In 2026, our we have planned this RMB 21.3 billion of CapEx for coal, electricity and coal chemical. We have some of the projects being built and some other new projects. And if we make key progress in the polyolefin projects, we would disclose it in a timely manner. For the 15th Five-year plan, we are making the high-level plan here. If there is anything new here, we will disclose it as soon as possible. And we have about, again, RMB 20 billion of CapEx planned for the 15th Five-year plan.

And about the future payout, China Coal Energy has set store by the shareholder return. We have always had a payout ratio of above 30%. And based on capital market expectations in the recent years. We increased the payout ratio from 30% to 35%, and we have more frequent payouts. We have not just the annual payout and of the year payout, we also have the midterm payout so that we can better answer the expectations from investors for a shareholder return. And considering our long-term development means since we want to expand further and make us an even stronger manufacturers.

So in the recent terms, we want to -- we are very highly likely to keep the payout ratio at the current level.

Next question. Our coal chemical business in Xinjiang and also coal coproduction. And do you have any new plans to produce coal and to do coal chemical in Inner Mongolia?

About the Xinjiang Coal Chemical business. We are now studying the feasibility of conducting coal chemical especially coal to synthetic natural gas business. We are doing a feasibility study here in Xinjiang. Mr. [indiscernible] saying our coal chemical study is being conducted. The feasibility report is being conducted. As for whether it will receive the green light or not, please refer to our final disclosure. So whether it's a coal to olefin or cold to synthetic natural gas we haven't really made the final call.

And then Mr. [indiscernible] from the Strategy Department. So whether it's for Xinjiang or Inner Mongolia, we have got the coal reserves, coal resources. The development of those reserves, it will go through the SOP. We will get the approval and we will go through the review process. The review process is ongoing, and we are -- after getting the review and the approval from the local authorities, we will make the disclosure. And aside from our existing resources being developed, we are also planning to source other resources from the market. And all the resources even the government-related resources will go through the market-based tendering process and the decision will be made by our Board. And if there's any progress, we will report to the capital market.

Next question. So what is the year-over-year production volume change for Dahaize?

So the Dahaize coal mine, the scheduling of production is based on the number of 60 million tonnes. That's the plan.

Thank you for the answer. Let's wrap up the Q&A session here. Any final remarks from the management team.

Well, thank you for your participation, dear investors and analysts. In the interest of time, let's wrap up here. If you have further questions for us, please reach out to our IR department. We're happy to have further communications with you. Thank you. Thank you for your time, dear investors and analysts. Take care. Bye.

[Statements in English on this transcript were spoken by an interpreter present on the live call]

[Audio Gap] I'm honored to become the host and to brief you on the performance of China Coal Energy, Shanghai Energy and Xinji Energy. We have this consolidated earnings briefing and to do the reports and outlook. We want to express our gratitude for the Shanghai Stock Exchange, Roadshow Center and all the live streaming platforms, and we appreciate your support for our group.

Those attending our meetings, we have Mr. Gao Shigang, China Coal's Party Secretary, Board member; Ms. [indiscernible], China Coal's Independent Executive Director and CFO, Chai Qiaolin, [indiscernible] General Manager for the Chemicals Department; Vice Director for Marketing Department, Mr. Li Ping; China Energy's Chairman, Mr. Zhang Futao; Independent Executive Director, Mr. [indiscernible]; General Accountant, Mr. Zhang Chengbin, Energy General Manager, Mr. Sun Kai; Independent Executive Director, Mr. Yao Zhishu; Vice President, Guoxiu Zhang, General Accountant, Mr. [indiscernible], Board Secretary, Mr. Dai Fei and all the business heads for the 3 subsidiaries.

We have 5 items on the agenda. First is the basics about China Coal Group, our performance in the 14th Five-Year Plan, our outlook for the next Five-Year Plan outlook. And then the 3 listed subsidiaries will brief you on our performance, our tasks completed and our work tasks for the 2026, and then we will have the Q&A session.

Let's give the floor to Mr. Gao Shigang to give you a briefing about the China Coal Group, our achievements in the 14th Five-Year Plan and the outlook for 2026 and the next 5-year period.

Distinguished Investors, ladies and gentlemen, good afternoon. Welcome to the 2025 Collective Performance Briefing for China National Coal Group's listed subsidiaries. I would like to express my sincere gratitude for your continued attention and support for China Coal. I will provide a brief overview from 4 aspects; the basic profile for China Coal and its listed subsidiaries, key achievements during the 14th Five-Year Plan and the development plan for the 15th Five-Year Plan and analysis of industry trends, outlook for 2026.

First, overview of China Coal. China Coal is a key state-owned backbone enterprise under the supervision of SASAC as a central enterprise, covering the entire coal industry chain shoulders' important mission of ensuring national energy security. Our core businesses include coal development utilization and trading, electricity and heat production and supply, coal-based new materials and related chemical product development, equipment manufacturing and engineering and technical services.

We have controlled proven coal resources reserves exceeding 70 billion tonnes with a total capacity of 310 million tonnes and annual trading volume of 400 million tonnes. We operate and construct 11 chemical projects with a total capacity exceeding 20 million tonnes we have an installed capacity of over 47 gigawatts for thermal power in operation and under construction and renewable installed capacity of 7 gigawatts.

We hold controlling stakes in 3 listed subsidiaries, China Coal Energy, Shanghai Energy and Xinji Energy. By the end of 2025, the group's managed total assets exceeded RMB 650 billion with 120,000 employees. We have received an A rating from SASAC for operational performance for 6 consecutive years and have been listed in the Fortune Global 500 for 6 consecutive years.

China Coal Energy, the core listed subsidiary of China Coal Group. It's a large-scale energy enterprise integrating coal production and trading, coal chemicals, power generation and coal mining equipment manufacturing. It was listed in Hong Kong in December 2006, and we returned to Asia market in February 2008. Shanghai Energy was listed on the Asia market in August 2001, primarily engaged in coal electricity, railway operations and integrated energy services. Xinji Energy was listed on the Asia market in December 2007 and became a holding subsidiary of China Coal in 2016, mainly involved in coal electricity and renewable.

Second, the key achievements during the 14th Five-Year Plan period and development plan for the 15th Five-Year Plan. During the 14th Five-Year Plan period, China Coal and its listed subsidiaries diligently implemented the requirements from SASAC. We adhered to the general principle of pursuing progress while ensuring stability, enhancing efficiency from existing assets and driving growth through new businesses pursued 2 integrated business models, established and refined governance systems, innovative information disclosure, strengthened IR management, took measures to enhance market cap and promptly conveyed confidence while stabilizing expectations. We delivered remarkable achievements characterized by steady growth, structural optimization.

The key features are: first, focusing on core businesses with enhanced core competitiveness with the mission of ensuring national energy security. During the 14th Five-year plan period, we fulfilled medium- and long-term coal contracts of 730 million tonnes, reserved 160,000 tonnes of fertilizers and supplied nearly 10 million tonnes of urea, and provided over RMB 110 billion in benefits to society. We completed investments exceeding RMB 200 billion and paid total taxes with over RMB 180 billion contributing to local economies.

We optimized our industrial structure. Total coal production capacity reached 310 million tonnes per year, up by 22% versus 2020. Installed capacity of thermal power in operation and under construction exceeded 47 gigawatts, quadrupling versus 2020. Installed capacity of renewable in operation and under construction surpassed 7 gigawatts, achieving leapfrog development. Significant progress was made in the 2 integrated business models. Through coordinated efforts in resource and marketing, we leveraged the synergies of the full coal-based industrial chain. Distinctive integrated coal electricity chemicals, renewable industrial chain with China Coal characteristics has gradually taken shape.

Second, we focused on strengthening our business, achieving improvements in scale and efficiency. The enterprise has grown rapidly with total assets increasing from CNY 400 billion in 2020 to over RMB 600 billion. Production volumes of major products achieved substantial growth. Since 2023, coal production has remained above 240 million tonnes. Power generation went up by over 80% and the output of coal chemical was above 10 million tonnes, maintaining a safe, stable, long-term full capacity and optimal operating status. The average annual operating revenue during the 14th Five-Year Plan period was up by 80% compared with the previous period. Profitability was enhanced with average annual total profit exceeding CNY 40 billion.

Thirdly, we focused on value creation, achieving quality improvement for listed subsidiaries. During the 14th Five-Year period, China Coal achieved an average annual total profit of CNY 30 billion, up by 253% versus 13th 5-year period with market cap growing by approximately 200%. We consistently ranked among the top of the China Top 100 listed companies and received the Shanghai Stock Exchange's A rating for information disclosure for 16 consecutive years.

Shanghai Energy focused on strengthening its fundamentals, making efforts in areas such as system optimization, lean management, policy utilization and bidding procurement, achieving cost reduction and efficiency improvement. Its average annual profit grew substantially, while its assets, market cap and stock price all maintained a stable upward trend.

Xinji Energy promoted transformation and upgrading, advancing the integrated development of coal and power during the 14th Five-Year Plan. Its installed thermal power capacity went up by 298% from 2 gigawatts at the end of the 13th Five-year period to 7.96 gigawatts at the end of the 14th Five-Year Plan period, proving the effectiveness of the 2 integrated business models. Its average annual operating revenue increased with both average annual profit and asset growing. During the 14th Five-year period, the 3 listed subsidiaries cumulatively paid out dividends of CNY 30.9 billion, up by 360% versus the previous Five-year period. By the end of the 14th Five-Year Plan period, the combined market cap of the 3 listed subsidiaries reached CNY 176 billion.

Fourth, we focused on problem-oriented approaches, achieving significant improvements in risk prevention and control capabilities. Safety supervision responsibilities were strengthened, safety awareness among all employees was enhanced, system support capabilities were reinforced. Overall safety production remained stable. We continue to strengthen pollution prevention and control, promoted application of clean production and energy saving emission reduction technologies, carried out mine ecological restoration, land reclamation, biodiversity protection and improved ecological environment in mining areas. Each listed subsidiary improved its ESG governance system, advancing specialized work such as climate change and double materiality analysis.

Fifth, we focused on innovation-driven development, gaining momentum for transformation and development. The group refined its innovation system featuring a small internal brain plus large external brain. We established the National Natural Science Foundation of China Enterprise Innovation and Development Joint Fund in the field of Coal Energy, the National Key Research and Development Program, Disruptive Technology innovation key project, Energy Low Carbon Joint Initiative, reorganized the National Key Lab of digital and Intelligent Technology for Unmanned Coal Mining, established Energy and Low-Carbon Innovation Center of the Beijing-Tianjin-Hebei National Technology Innovation Center, got approval for the construction unit of the Central Enterprise Industrial green low-carbon original tech source and a leading technology-based enterprise with focused on national strategic needs. The development of original technology in the strategic emerging industries, the group increased our R&D spend by 2.2x compared with 13th Five-year period. Breakthroughs in key technologies were advanced, including special catalysts for polypropylene units filling the technology gaps.

During the 15th Five-Year Plan period, China Coal and China Coal Energy will be guided by the Xi Jinping thought on socialism with Chinese characteristics for a new era, fully implement the spirit of the 20th National Congress of the CPC and its subsequent plenary sessions fully implement the new development philosophy, deeply implement the renewable security strategy of 4 revolutions and cooperation, respond to the major strategic decision of carbon peaking and carbon neutrality, fulfill our mission of ensuring national energy security, strengthening SOEs and state-owned capital and leading the high-quality development of coal industry, adhere to the dual wheel drive of efficiency gain of existing assets and transforming incremental assets practice.

The 2 integration plus model build a hedging mechanism against the downward risk of the external market for own coal and against future carbon emission constraint, create an industry chain of coal, electricity, chemicals, renewable with China coal characteristics expand in emerging industry.

Shanghai Energy will leverage its 3 major bases in Jiangsu Xuzhou, Shanxi and Xinjiang as strategic pillars to strengthen its coal power generation and renewable and integrated energy services. It will accelerate innovation, industrial transformation, achieving complementary advantages and tiered succession among its basis to become a benchmark for China Coal Energy's transformation in the Yangtze Delta region.

Xinji Energy will focus on the Anhui and Jiangxi region aiming to create a CNY 100 billion level energy supply industrial cluster in East China. It will promote co-development of coal, thermal and renewable power with 7 major industrial bases in Huainan, Fuyang, [indiscernible] and Jiangxi, laying a solid foundation for high-quality development. China Coal will leverage the synergy of its listed companies to enhance high-end energy supply and service guarantee capabilities, striving to become a highly competitive integrated energy player by 2030 and by 2035, a world-class energy company with multi-energy complementarity, green and low-carbon exemplary leadership and modern governance.

Third section, industry analysis. 2026 marks the start of China's 13th Five-Year Plan. China's development is characterized by strategic opportunities and risks with increasing uncertainties. The company's production operation reform and development will face a complex external environment. In macro economy, the world is undergoing accelerated changes with increasingly complex and intense great power competition affecting domestic development. At the same time, China has mismatched supply and demand and many risks and hidden dangers in key areas. However, the fundamentals supporting China's long-term positive economic outlook, including a stable economic foundation, numerous advantages, strong resilience and great potential remain unchanged. Supported by serious macro policies, especially the 15th Five-year plan, the development has great prospects.

In terms of industry operation with profound adjustments in the global energy landscape and parallel construction of a new energy system, the green and low carbon transition is a long-term process. Ensuring energy security is essential for stable economic and social development and coal's role as a primary energy source and a safety net is more prominent. Considering international geopolitical tension, the supply and demand of China's coal market in 2026 is expected to be tight. The LTA mechanism for ensuring the supply of thermal coal will still be an anchor and the spot price of coal is likely to rise with more fluctuations.

Looking into the 15th Five-year period, we are still in strategic window of opportunity. The foundational role of coal and thermal power will be strengthened and new power system with renewable as the mainstay is being accelerated. Technological and industrial innovation is integrating and a unified national market is advancing. This period presents both opportunities and challenges as well as pressures and drivers. Facing this new landscape, China Coal possesses the following advantages: first, resource and scale, abundant coal resources, ample production capacity, strong internal synergies, a solid development foundation and considerable industry influence. Second, value creation advantage. Lean management has been implemented with notable cost reduction efficiency gains and economic benefits and our operational performance consistently ranks among the top of the central enterprises.

Third, industrial chain synergy. We continue to optimize our industrial structure, integrating coal, coal chemicals, renewables with more resilience. Fourth, innovation and mechanism. Investment in technology continues to grow. The science and innovation system is refined, giving us more momentum.

Fourth section, outlook for 2026. In 2026, China Coal will adhere to the general principle of pursuing progress while ensuring stability, efficiency gains from existing assets and growth from new businesses focused on our core business, deepen reform and innovation, accelerate the green transformation, co-work development and safety, strengthen core functions and competitiveness, promote high-quality development and contribute to ensuring national energy security and achieving a good start for the 15th Five-Year plan.

First, we will scientifically optimize production organization develop potential and enhance efficiency. We will carry out special actions to improve quality and efficiency, strengthen refined management and cost control. Second, we will focus on project development and advance strategy implementation. We prepare the 15th Five-year plan, develop the coal electricity, chemicals, renewables business, strengthen the modern industrial system, create new growth engines and enhance the hedging capacity. Third, we will consolidate and deepen reform achievements and drive reform to greater depth. We promote reform to the grassroots level, remove institutional and mechanism obstacles. Fourth, we will strengthen the management of listed subsidiaries and solidify investment value. We will improve the market cap management, enhance the quality of information disclosures, strengthen investor communication and maintain overall stability in operational performance, barring significant market changes.

Dear friends, the development of China Coal is inseparable from your trust and support. We will always uphold the principle of openness, transparency and mutual benefit to continue to improve our management to accelerate green transformation and innovation and strive to become a trustworthy outstanding listed company with long-term investment value. We firmly believe that with the joint efforts of all shareholders, investors and all sectors of society, China Coal will take on greater responsibility and make even greater contributions to the advancement of Chinese style modernization. Thank you.

Thank you, Mr. Gao. Now let me give you a presentation of the operating performance of China Coal Energy during the 14th Five-year plan and the work arrangement for '26. So dear investors and analysts, I will begin with the performance presentation of China Coal Energy. Unless otherwise specified, this is subject to the Chinese accounting standard.

China Coal Energy has resolutely implemented decisions and plans of the Central Committee and firmly grasp the theme of high-quality development and earnestly practiced development strategy of improving efficiency in existing operations and transforming new ones. It has accelerated the advancement of 2 joint operations and actually building the 2 hedging mechanisms, continuously enhancing development resilience. First, high coal output and stable sales with enhanced efficiency during the 14th Five-year plan, the company resolutely showed the mission of ensuring energy supply and carrying out in-depth benchmarking of refined management, we have achieved a total of 639 million tonnes of commercial coal output, an increase of 43% compared with the 13th Five-Year Plan and a total of 1.4 billion tonnes of commercial coal sales, an increase of 52.7% compared with the 13th Five-Year Plan period.

In '25, the company made every effort to ensure safe and stable supply of coal and fully release the production capacity of high-quality mines. To maximize output and benefits, the company strengthened the management of coal quality at the source. We have increased the mining area by 18%, optimizing the output. However, due to stricter safety supervision and changes in the geological conditions, the company's coal output decreased. The total commercial coal output was approximately 135 million tonnes, a decrease of 1.8% but still at a relatively high level in history. The company adhered to the general tone of a stable and refined sales, strengthened the coordination between production and sales and deeply implemented the marketing strategy of a segmented product and segmented markets. It innovatively launched a new trading model such as a virtual coal mines and maintained the sales base under the background of deep pressure in the industry. The fulfillment rate of the medium and long-term contracts for thermal coal exceeded 90%, fully playing a role of a stabilizer in energy supply.

In '25, the total commercial coal sales were 256 million tonnes, a decrease of 10.2%. And the self-produced commercial coal sales were 136 million tonnes, a decrease of 0.9%. And the purchased coal sales were 109 million tonnes, a decrease of 23%. The average sales price of self-produced commercial coal was CNY 485 per tonne, a decrease of 13.7%. Among them, the sales price of the thermal coal was CNY 448, a decrease of 10.2%. The sales price of coking coal was CNY 949, a decrease of 24.3%. The sales price of purchased coal was CNY 492 per tonne, a decrease of 15.6%.

Second, stable and refined sales in coal chemical industry and rapid growth in new energy business. During the 14th Five-Year Plan, the company's coal chemical business maintained a very robust curve. The total output of major coal chemical product was 28.9 million tonnes, an increase of 49.2% compared with the 13th Five-Year Plan. And the total sales volume was 29.545 million tonnes, an increase of 49.9% compared to the 13th Five-Year Plan. The total installed capacity of wholly owned and controlled coal-fired power plants under construction and operation was 53.9 million kilowatts, an increase of 58%. The total installed capacity of new energy has also reached 12 million kilowatts, growing from scratch.

In '25, the company's coal chemical business adhered to the standard operations, strengthening basic management and successfully completed the national commercial reserve tasks. The total output of major product was 6.06 million tonnes, an increase of 6.5%. Among them, the output of polyolefins was 1.38 million decreased by 8.5%. The output of urea was 2.134 million tonnes, an increase of 14.1%. The output of methanol was 1.955 million tonnes, an increase of 13% and the output of ammonium nitrate was 0.58 million tonnes, an increase of 1.9%. The company continuously improves its marketing network, flexibly adjusted sales strategies, optimizing the layout and flow direction.

In '25, the total sales volume reached 6.356 million, an increase of 8.8%. Specifically, the sales volume of polyolefins was 1.381 million tonnes, a decrease of 9%. The sales of urea was 2.423 million tonnes, an increase of 18.9%, the sale volume of methanol was 1.963 million tonnes, an increase of 14.4%, and the sales volume of ammonium nitrate was 0.58 million tonnes, an increase of 3%. The sales price of polyolefin was CNY 6,337 per tonne, a decrease of 9.4%. The sales price of urea was CNY 1,752, a decrease of 14.4%. The price of methanol was CNY 1,737 per tonne, a decrease of 1.1% and the price of ammonium nitrate was CNY 1,776 per tonne, a decrease of 13.5%.

Thirdly, upgrading of coal mine equipment services and the prominent value of financial business. During the 14th Five-Year Plan, the coal mine equipment business promoted the improvement and expansion of joint storage and supply and intelligent transformation, achieving a total output value of CNY 50.41 billion, an increase of 56.6%. The financial business is centered on the construction of the treasury system and continuously improving the level of centralized and lean management, maintaining an asset scale of over CNY 100 billion, and net profit continued to grow steadily. In '25, the coal mining equipment business will accelerate its transformation towards intelligent manufacturing plus modern services, achieving a total output value of CNY 9.21 billion. We have also obtained international orders worth CNY 1 billion, an increase of 22.9%. We have also been highly rated by SASAC.

Fourthly, in-depth promotion of lean management. During the 14th Five-Year Plan, the company deeply implemented standard cost management and all production centers established cost control mechanisms. In '25, in the face of a CNY 77 per tonne decrease in average selling price of self-produced commercial coal, the company deeply carried out the lean management approach. The unit sales cost of major product decreased significantly. In '25, the unit sales cost of self-produced commercial coal was CNY 251.51 per tonne, a decrease of CNY 30.2 per tonne or 10.7%. Specifically, material cost decreased by CNY 5.45 or 9.4%. Labor cost decreased by CNY 0.82 per tonne or 1.4%.

Depreciation and amortization increased by CNY 1.76 or 3.9%. Maintenance expenses decreased by CNY 1.26 or 11.6% Transportation and port charges decreased by 1.82 or 3.2% and other costs decreased by CNY 22.63 or 43%. So this was mainly due to the company's implementation of cost management and also the optimization of production organization, which led to a decrease in the material cost per tonne of coal.

Additionally, due to the need for safety production and future production continuation, the use of -- there's an increase of unit depreciation and amortization costs. And in 2025, due to the decline of the purchasing price of raw coal and fuel coal, the unit sales cost of some product decreased year-on-year, specifically, the unit sales cost of polyolefin was CNY 6,136, a decrease of 1.6%. The unit sales cost of urea was CNY 1,297 per tonne, a decrease of 21.7%. The unit sales cost of methanol was CNY 1,321 per tonne, a decrease of 35.7% and the unit sales cost of ammonium nitrate was CNY 1,412 per tonne, an increase of 7.4%.

Number five, the company maintained a stable business performance and continuously optimizing the financial structure. During the 14th Five-Year Plan, the company strengthened the operation management and focusing on improving quality and efficiency. We have reached annual revenue of CNY 198.2 billion, an increase of 91.8%. And the average annual profit was CNY 30 billion, an increase of 253%. The weighted average return on net asset increased by nearly 6 percentage points compared to the end of 13th Five-Year Plan. The average annual net cash flow from operating activities was CNY 39.7 billion, an increase of 109%. The company's market cap increased by 209%. And the total net profit attributable to parent company over the past 5 years was CNY 88.7 billion, laying a solid foundation for the long-term development.

In '25, because of the decline in the market price of coal and chemical products, the company achieved a revenue of CNY 148.1 billion, a year-on-year decrease of 21.8%. The total profit was CNY 26.6 billion, a year-on-year decrease of 15.7%. The net profit attributable to parent company was CNY 17.9 billion, a year-on-year decrease of 7.3%. The comprehensive GP margin was 27.5%, an increase of 2.6%. The basic earnings per share was CNY 1.35. Despite the overall pressure in the industry, the company still maintained a strong profit resilience.

The company continuously strengthens cash flow management with a net cash inflow from operating activities of nearly CNY 30 billion, providing a solid support for business development and shareholder returns. The asset liability ratio further decreased to 45.8%. The capital structure became more stable and the risk resilience is increased.

The changes in the total profit in '25 were as follows: firstly, the unit sales cost of self-produced commodity coal decreased, increasing profit by CNY 4.16 billion. Second, the reduction in taxes and surcharges increased the profit by CNY 0.8 billion. Thirdly, the power business increased the profit by CNY 0.7 billion. Fourthly, reduction in period expenses increased the profit by CNY 0.53 billion. Fifth, the reduction in impairment provisions increased the profit by CNY 0.426 billion.

The main profit decreasing factors were: first, the decline in self-produced commodity coal pricing by 10.5%. Second, the main coal chemical enterprises reduced profits by CNY 0.36 billion. Thirdly, the decrease in the sales volume of self-produced commodity coal reached profit reduced profit by CNY 0.35 billion. Fourthly, the reduction in investment income reduced the profit by CNY 0.34 billion. Fifth, the decrease in nonoperating income and expenses reduced profit by CNY 0.087 billion. Number six, the company steadily advances the 2 joint operations and enhance the momentum for development. During the 14th Five-Year Plan, the company accelerated the 2 joint operation program and also being the 2 hedging mechanisms of coal electricity, chemical and new energy, accelerating the installation of key projects.

In 2025, the company's CapEx plan was closely centered around coal, about CNY 21.678 billion. And during the reporting period, a total of CNY 19.92 billion was completed, achieving 91.9%. Relevant key projects were steadily advancing. For example, the Libi Coal Mine is expected to achieve the dry operation by end of '27 and the Weizigou Coal Mine is expected to achieve a try operation by end of '26. The Wushenqi power plant is expected to be in operation in the second half '27 and the Yulin Coal Deep Processing Project has entered the equipment installation stage.

The company's CapEx plan for '26 was CNY 21.32 billion, an increase of 7.05% compared with 2025. By business segment, the Coal segment plans to allocate CNY 7.24 billion. The Coal Chemicals segment, about CNY 8.48 billion; the Coal Power segment, about CNY 2.18 billion; the New Energy segment, about CNY 2.6 billion, the Coal Mining Equipment and other segments, about CNY 739 million.

Seven, the foundation of safety and environmental protection remains solid. In '25, the company has strengthened the foundation and consolidating the basics, increased the safety protocols and carried out in-depth safety production efforts with no major safety incidents. The company strengthened the pollution prevention and ecological governance and also established a long-term mechanism. The regionalization and specialization reform was deepened. And the company maintained a leading position in the top 100 Chinese listed companies and has received an A level information disclosure evaluation from the Shanghai Stock Exchange for 16 years in a row.

Number 8, the dividend payout policy continuously been optimized. The shareholder returns remained stable during the 14th Five-Year Plan. The company's cumulative dividends were CNY 28.2 billion, an increase of 393%. And since its listing, the company's cumulative dividend has reached CNY 46.1 billion. In '25, to enhance the investment value of the listed company, the company's Board of Directors proposed to distribute RMB 5.07 billion in a cash dividend to shareholders in '25, which is 35% of the company's shareholders' share of profit. After deducting the interim dividend of CNY 2.2 billion already distributed, the cash dividend to the distributed to the shareholders is CNY 2.87 billion.

Number 2, main work arrangements for '26. In '26, the company will continue to adhere to the general principles of seeking progress while maintaining stability, improving efficiency and striving to have a good start of the 15th Five-Year plan. The company plan to produce and sell over 130 million tonnes of self-produced commercial coal with 1.45 million tonnes of polyolefin product and over 2.03 million tonnes of urea under the condition that the market does not undergo significant changes, the company will strive to maintain overall stability of revenue and profit. And also the company will fully ensure a stable supply of energy to fulfill its responsibility of energy supply security, accelerating the transformation and upgrading of energy service business to ensure the efficient and smooth operation of the entire value chain from production, transportation, sales, distribution and usage.

And second (sic) [ third ], we will deepen the lean management and the cost control for the Phase 2 of Yulin Chemical project. And number four, we'll steadily promote the 2 joint operation programs as well as the co-electricity chemical, new energy industrial chain to promote the green development. Number 5, continuously deepen enterprise reform and mechanism innovation to consolidate the achievements of reform and improvement and to stimulate organizational vitality and talent potential. Number 6, we also strengthen the level of digitalization, increasing R&D investment as well as to cultivate new high-quality productivity with Chinese coal industry characteristics.

And number 7, we will also enhance the ability to prevent and resolve major risks. We will strive to further consolidate the foundation of market value management. And number 8, the company will continuously consolidate the foundation of market value management as well as the level of corporate governance and the quality of information disclosure.

Dear investors and analysts, looking back to the 15th Five-Year Plan and 2025, China Coal Energy against a complex and dire market environment, we have demonstrated resilience. And in 2026, we'll continue to maintain this attitude to forge ahead and also to reward our shareholders with even greater returns. Thank you.

Thank you. Now please join me to welcome Mr. Zhang Futao from Shanghai Energy to present the performance in '25 as well as the work arrangement for '26.

Dear Mr. Gao, Mr. [ Jiang, ] distinguished guests, ladies and gentlemen. I will present to you the performance in '25 as well as the plans for '26 and the 15th Five-Year Plan. Firstly, we have intensified efforts to improve quality and efficiency, enhancing the level of operation. The company closely focused on the 1 profit and 5 raised targets. For example, we have embraced some cost-down initiatives such as blending inferior coal and reducing all the materials. We managed to reduce cost by CNY 500 million and the production cost of raw coal and the cost of electricity sales decreased by CNY 40 per tonne and CNY 0.012 per kilowatt hour, respectively.

We strengthened the management of off-peak electricity usage, saving nearly CNY 13 million in electricity fees. We have also coordinated the use of safety and maintenance funds, reducing cost by CNY 50 million. We have also expanded new customers. We are also proactively adapting to the market. We have also improved the value added to our products. This has led to an efficiency boost of CNY 16.28 million. And also the raw coal calorific value has also increased by 164 [ Kcol. ] Additionally, the company has also achieved operating income of CNY 7.67 billion and net profit attributable to shareholders of listed company of CNY 220 million, total profit of CNY 150 million, total assets of CNY 1,900 billion and net asset of CNY 12.63 billion and earnings per share of CNY 0.31 and the asset liability ratio of 35.28%.

We have also strengthened the coordination of production, transportation and marketing. Faced with this continued downturn in the coal market and unprecedented production pressures, the company coordinates production, transportation and marketing, optimizing the production organization and also we all aim to stabilize the production capacity. So in '25, the company's annual commercial coal volume is 6.13 million tonnes and refined coal output has also improved to over 4.47 million tonnes and also the power generation capacity, 4.24 billion kilowatt hours.

Among them, the power -- new energy-based power generation is 536 million kilowatt hours. And thirdly, we have also solidified the reform and continuously improving the development momentum. Additionally, we have also increased -- vigorously promoted unified allocation of human resources, deployed 216 personnel between mines, including 87 technical personnels that are operating under the mine. The ratio of the 3 lines has reached by 1 x 1.7 x 3. And number four, we have also steadily advanced the key projects. The company took key projects as the basis to accelerate the construction of the 2 joint operation programs or demonstration bases in Xinjiang and the first mining project of Xinjiang Weizigou coal mine smoothly entered the construction stage.

Additionally, the construction of a key new energy project has also been accelerated. The 165,000-kilowatt PV project in the subsidence area of Ningdong mine has been fully connected to the grid for power generation. The installed capacity of new energy under construction has reached 672,000 kilowatts. The Datang Power Grid renovation was also put into operation. Fifth, the company has continuously strengthened innovation and R&D. The company has continuously increased our commitment to this direction with our R&D expense increase of 4.12% and also has won 24 provincial and ministerial level and the industrial level awards with 8 achievements reaching a domestic leading or above levels. The company has also obtained 45 national authorized patents, including 10 invention patents and key science projects such as carbon storage space and virtual power plant have been implemented in an orderly manner. The source grid load storage coordinated regulation microgrid project has also been included.

Number 6, the company has paid close attention to shareholder dividends. Since its listing, the company has achieved a cash dividend for 21 years in a row with a total dividend amount of CNY 3.91 billion, which is 4.46x the raised funds of CNY 877 million. In September '25, the company implemented a 25 semiannual cash profit distribution, distributing a total of CNY 65 million. This is the company's second interim dividend. From 2017 to 2024, the company's cash dividend ratio to the net profit attributable to shareholders of the listed company has exceeded 30%.

In '25, on the basis of implementing interim dividends, the company distributed a total of CNY 217 million in cash dividends to all shareholders at a rate of CNY 2.1 per 10 shares, accounting for nearly 100% of the net profit attributable to shareholders. At the same time, the company distributed 3 bonus shares per 10 shares to all shareholders and increased the share capital by 1 share per 10 share through capital reserve.

Number 7, the company has continuously strengthened market value management and fully met market expectations. The company accelerated the pace of external development and -- we have also kickstarted the Phase 1 of the 400-megawatt PV power generation project in Luxi C [ Qidong ] City, and it has been approved by the Board of Directors and also the company actively completed the share purchase by some directors or former supervisors as well as senior management and middle-level management, purchasing 623,200 shares with a total value of CNY 7.10 million.

China Coal Energy has increased the holdings of Shanghai Energy shares by 2.43 million shares with a holding ratio of 62.78%. It has continued to introduce active shareholders. For the next step, the company will continue to take value creation as the core, continuously boost investor confidence and promote reasonable reflection of the company's quality and its investment value through standardized governance, stable operation and transparency.

Second, Shanghai Energy's 15th Five-Year Plan. At present, the company has formulated a preliminary 15th Five-Year Plan. The overall thinking is to resolutely implement the strategic orientation for green and low-carbon transformation and also leading a core mission of high-quality development in the coal industry as well as to fully incorporate the ESG concept into the company's strategy and operation.

And again, the company is building the 2 hedge mechanism and remain firm in the 1, 2, 3, 4, 5 development strategy without wavering. That is aiming at creating a new [indiscernible] mine, and we will build a hedge mechanism based on these 2 joint operation programs, creating 3 major bases in Jiangsu Xuzhou, and Shanxi and Xinjiang adhere to the regionalization integration principles and also strengthen the 5 coordinations of safety, stability, improving efficiency of existing assets and transforming new assets.

We will also accelerate the expansion of external coal product from a single fuel to raw materials. We will also focus on researching and developing the technology of coal grading and quality differentiation. The 3 mines and the headquarters will remain stable production, increasing the planning of resources in [indiscernible] area and also promote the sustainable exploitation of resources in the headquarters. The 2 mines in Xinjiang will shift their focus to improving economic benefits, taking the path of differentiation and focusing on improving coal quality and also to achieve a key transformation from production growth to value creation.

Power and new energy sector, we will adhere to our load-oriented approach, focusing on the load-intensive areas and also to build an integrated energy park service providers to meet the needs. The headquarters will fully leverage the integrated advantages and actively expand electricity customers. We will use different ways to obtain resources through investment acquisition and as well as building new projects in rural areas to obtain new resources. Comprehensively boosting the business for the energy service. We will firmly establish the concept of going out for development and also encouraging the high value-added and high-tech content business.

Next, work plan for 2026. '26 is the starting year of the 15th Five-Year Plan. We will be guided by the Central Government to implement the spirit of the 20th National Congress of CPC and also requirements of the Central Economic Work Conference. We will comprehensively strengthen the party's leadership unwaveringly implement the new development concepts. We will also strive to improve the quality and efficiency of operation and with a focus on the [ 1233/6 ] tasks as well as accelerating the start of the 330,000-kilowatt PV project in the remaining area of the 1 million kilowatt ecological governance clean energy base in Peixian. Additionally, we'd also try to strengthen the 3 production keys of roof control, system optimization and advanced prevention.

Dear guests, ladies and gentlemen, the achievement of Shanghai Energy today could not have been possible without your long-term care support and help. I would like to express my sincere gratitude. We will take this opportunity as we will take this performance briefing as a new starting point and carefully listen to the valuable input and opinions of all investors and draw on the experiences of China Coal Group. In the next step, we will continue to optimize the effort of operation, continuously improving our corporate governance and strive to create greater returns for investors. Thank you.

Thank you, Mr. Zhang. Let's give the floor to Mr. Sun Kai about the performance of Xinji Energy in 2025 and the working plans for 2026.

Distinguished investors, good afternoon. I'm very pleased to meet with all our friends at the Xinji Energy performance briefing. I would like to extend my sincere gratitude and heartfelt greetings to all the friends from various sectors who have consistently cared for and supported the development of Xinji Energy.

We forged ahead with innovation, achieving breakthroughs against challenges, marking a successful conclusion to the 14th Five-Year Plan. In 2025, it was a critical period for Xinji Energy as we navigated challenges and tackled difficulties head on. Our cadaries and staff united as one fully embodying the Xinji spirit of perseverance, resilience and dedication. We actively responded to multiple challenges, including a downturn in the coal market and spot market trading for electricity sales, achieving record results in key operating indicators. For the year, we produced 19.76 million tonnes of commercial coal and sold 19.69 million tonnes. We generated 14.2 billion kilowatt hour of the electricity and sold 13.4 billion kilowatt hours.

We achieved operating revenue of CNY 12.3 billion total profit of CNY 3.1 billion net profit attributable to shareholders of the parent company, of CNY 2.1 billion and EPS of CNY 0.8 for the year. By the end of 2025, total assets reached CNY 53 billion liabilities or RMB 33.7 billion with a gearing ratio of 60%. Owners' equity attributable to the parent company was CNY 17 billion, up by 9% year-over-year.

In 2025, it also marked the conclusion of Xinji Energy's 14th Five-Year Plan. During this period, all categories and staff implemented the strategy of enhancing efficiency for existing assets and driving growth through new businesses, and we had 7 major achievements. The first as we made historical breakthroughs in transformation. We established a new industrial structure with coal at the foundation, thermal power as the support and renewable as the direction. The coal foundation was strengthened with commercial coal production up by 1.7 million tonnes, a growth of 10%. The thermal power business achieved a leap from single point projects to clusters with controlled installed capacity increasing by 5.96 gigawatts, nearly fourfold. The renewable business grew from the scratch, establishing a demonstration base for the group's 2 integrated business models and now a crucial milestone.

Secondly, we made significant improvements in production efficiency. We improved our production layouts and with commercial coal production achieving an average annual growth rate of over 2%. The calorific value of commercial coal was up by 392 kilocal per kilogram, generating over RMB 1.5 billion revenue from quality improvement. Equipment upgrades improved with all 5 operational coal mines passing intelligent acceptance inspection.

Third, construction of an intelligent safety protection and control system. We advanced system governance and intelligent construction upgrading intelligent safety systems and disaster early warning platforms, advanced tools like AI intelligent identification and video surveillance, intelligent safety perception network covering underground and service operations was established, enabling real-time monitoring and intelligent early warning of gas, water hazards and ground pressure, taking our risk control capability to the next level.

Fourth, we achieved leapfrog growth in operating performance. Total assets exceeded CNY 50 billion, nearly doubling total assets and profit versus the end of 13th Five-Year Plan. We entered a fast track for both scale and quality, achieving a dual breakthrough in asset and profitability. Gearing ratio was 63%, down by 9.55 percentage points. Labor productivity per headcount reached CNY 724,800, up by 69%.

Fifth, we reaped the fruits from our reform efforts, a corporate governance system known as 1135/11 was established, comprising 1 charter, 1 measure, 3 rules, 5 lists, 1 menu and 1 completion. We were selected as a demonstration enterprise for grassroots corporate governance by SASAC. We completed our 3-year action plan for SOE reform with high quality. Sixth, we achieved leading progress in tech innovation. We invested RMB 330 million intelligent construction. We undertook 3 national key R&D projects during the 14th Five-Year Plan period with 10 world-leading technological achievements. We were selected as one of the first batch of pilot enterprises for digital transformation by SASAC and established the industry's first 5G plus smart power plant.

Seventh, we owned our social responsibility over the 5-year period, 76 million tonnes of LTA coal were delivered, exceeding national energy supply assurance targets and fulfilling our role as a pillar in ensuring energy security. We spent CNY 450 million to improve our employees' sense of gain and well-being. We paid CNY 13.67 billion in taxes. We've consistently built an ESG governance system. In 2025, we received the highest A rating for information disclosure and got recognized as an excellent enterprise for national coal industry, social responsibility report released for 8 consecutive years.

2026, we are setting clear goals systematically planning, outlining a grand blueprint for the 15th Five-Year Plan. 2026 is a pivotal year for Xinji's energy transformation and development with firm and clear objectives. Comprehensively improve production quality and efficiency with commercial coal production less than 18.5 million tonnes and aiming for 19 million tonnes. Power generation, no less than 30 billion kilowatt hours. We'll make every effort to improve operational quality, optimizing the annual budget targets for the 5 rays indicator will develop at full speed, ensuring timely commissioning of 3 power plants.

2026 also marks the start of Xinji Energy's 15th Five-Year Plan closely aligning with national requirements for building a renewable and modern industrial system and Anhui, Jiangxi, development plan and leveraging the advantages of the coal-based full industrial chain, we've established a 1245/7 development strategy. The focus will be on the following tasks: First, focusing on stable production and increased sales to build up on our strength in coal. Adhering to the development principles of safety, efficiency, green and intelligence while improving the quality and efficiency of the existing 5 operational mines, we will advance the level deepening of [indiscernible] Xinji #2 mine and 1 mine or we develop [indiscernible] the coal resources and complete the integration of coal [indiscernible]. We focus on changes in coal products and categories to enhance our competitiveness.

Second, we will focus on the 2 integrated business models to fully advance new project construction. We will strictly control the safety and quality of power projects under construction to ensure the timely grid connection and power generation of [indiscernible] power plant, accelerate the renewable projects, construct and strengthen the renewable industrial landscape, achieving leapfrog development.

Thirdly, we will focus on industrial upgrades to explore emerging industries. Leveraging the resources in coal mining areas and our renewables development, we conduct feasibility studies combined with water electrolysis, hydrogen production and CCUS for thermal power centered on the strategy of building a new energy system and based on the regional industrial parks and facilities, we will promote projects for substituting clean energy in regional heating and achieve industrial upgrades.

Fourth, we focus on innovation-driven development to empower high-quality development. We will expand intelligent control applications, data lake integration and standardized governance. We will plan for the construction of high-value AI plus scenarios, creating a smart support system covering production, safety and management. We will accelerate the construction of national key labs, establish experimental environments for technologies such as unmanned intelligent mining, intelligent rapid tunneling and adaptive and control deep mine equipment.

Fifth, we will focus on the 3 defense lines and solidify the foundation for stable development. Safety is the lifeline and environmental protection is the bottom line and compliance is the red line. We will strengthen these 3 defense lines. Sixth, we focus on strengthening the enterprise through talent. We will improve recruitment model, systematically maintain normalized recruitment and try to meet the labor needs of grassroots units. We improved the compensation system, break the equal pay for all approach and effectively safeguard the income of frontline workers. We conduct scientific analysis, promote competitive selection for positions and build a talent pipeline for cadres.

Seventh, we focus on party building leadership to forge strong entrepreneurship. We will always adhere to CPC's leadership over SOEs, ensuring high-quality development with party building. We deepen the comprehensive governance of the party, consolidate the political responsibility, improve party building quality, advance the scientific standardized systematic construction of party building, promote the deep integration of party building with production and operations. Looking back, we have overcome obstacles and achieved remarkable results.

Looking ahead, we are full of confidence. 2026 is a crucial transitional year for Xinji Energy's transformation. We will maintain an unrelenting spirit to strengthen our confidence for ahead and work diligently. We will make every effort to accomplish all annual targets and write a new chapter for the company's high-quality development during the 15th Five-Year Plan. We will keep improving quality and efficiency, supporting market cap growth through solid operations and rewarding all shareholders and investors with strong performance.

I wish all investors a smooth work, good health and abundant rewards. Thank you.

Thank you, Mr. Sun. Now we'll open the floor for Q&A with both online and on-site participants. We will give priority to the on-site questions while also addressing some online questions, please.

Thank you, Mr. Zhang and management from China Coal. I am analyst from CITIC Securities. I have 2 questions about coal chemical. Since the conflict in the Middle East, people are concerned about the pricing trend of coal chemicals. So what will be the trend now compared with the last year for coal chemical pricing?

And the second question is about the polyolefin business. So last year, the production and sales volume of polyolefin has dropped. Do you think that this year, the production and sales would rebound? And if that's true, will that lead to better economies of scale and thus lowering the unit cost of sales for polyolefin?

Okay. I would like to ask [ Ms. Li ] from the marketing to address this question.

Okay. Thank you for the question. the international conflict has indeed an impact on the chemical products as well as on energy. So for China Coal Group, the pricing of our urea and polyolefin has also been affected, even though recently, it started to rebound to a more reasonable level. We have made some price comparison on March 31. So urea pricing is basically flat with the same period last year. So in 2025, the urea pricing was relatively stable. So it went down, but it has rebounded. This has something to do with the supply control as well as additional export.

For polyolefin, the pricing is more volatile. The price is like 10% higher than last year. That's for the polyethylene. While for the propylene, the price is actually still higher. It's like CNY 1,000 higher than same period last year. Even though recently, both futures and spot prices are falling. And also, I think that in the Chinese market, the capacity and the supply abilities are relatively sufficient. So in 2026, there are a lot of new capacity. So in the '26, the price would be more reasonable but it won't drop a lot because indeed, this conflict has a huge impact on the energy sector.

Okay. So regarding the production and sales volume of polyolefin, I'd also like to ask Mr. Shu from the Coal chemical BU to address this question.

Okay. So in 2025, we have 2 sets of our devices are under major maintenance or overhaul. So judging by the current circumstances, reaching a full load or full operation is very probable. So this year, we have a plan the production volume of 1.45 million tonnes. And I think we are able to go beyond that by around 60,000 tonnes. And secondly, after the device overhaul, the overall operation is becoming better. So that means the cost will be lower, and that also extends to next year. So that means we'll have better outcomes. gentleman in the first row.

Okay. Thank you, Mr. Gao and also thank management from China. I am [indiscernible] from the [ Yangtze River Metal. ] I have some questions. So firstly, a question to Mr. Gao regarding the 15th Five-Year Plan of the group. I understand that in the 14th Five-Year Plan, the group has a lot of investment in the coal chemicals, and people are also interested to find more about the directions of our investment and the volume guidance for the 15th Five-Year Plan for Coal Chemical as well as whether the dividend payout of China Coal Group would also change with the changes of CapEx. So that's my first question.

And the second question is about -- we know that in Anhui province, the electricity price is turning down this year. And actually, judging by the performance last year, the integration advantage is quite significant. revenue stream was quite stable. So after the placement of several power plants, what will be the prospect for like the power generation segment in '26 and '27? That's my second question.

Last question is about market cap. As mentioned earlier, the company will continue to do more in the capital market. So the current the ratio is like still lower than 1. So what will be the plan to improve the price-to-book ratio or any other additional plans in the capital market?

Thank you for the question. So this is about the coal chemicals. It's true that we've been paying close attention to this segment. The chemical business is one of our main businesses. So apparently, we need to be aligned with the national strategy to remain committed and unwavering in this direction. We are paying close attention to a few initiatives. We have some production bases in the Mongolia and the Shanxi province. We're also interested to find more about the opportunities in Shanxi province and Xinjiang for some like early technical investment or some demo project. And second thing would be the coal-based LNG. We are also engaging in some research in North China because for coal chemical business, it has a high requirement for the quality of the coal as well as the maturity of the chemical technology as well as the equipment readiness. So we are also considering these aspects.

And thirdly would be coal to oil. As we know, because of this international insurgence, now China we have like 77% of like oil dependency on the foreign countries and also over 40% of gas dependency on foreign countries. So from a strategic point of view, the nation is trying to improve the supply chain activity, in particular, in light of the current international conflict. So we have also made some attempts in the coal-based oil but the profit margin is not as high as coal-based methanol or coal-based olefins. If the technology readiness is not good enough, then it might lead to loss-making. So we are engaged in the R&D in this area. This is also actually our forte. So for China Coal Group, we've been cultivating in these areas for many years. So these will be the main directions.

And the other thing, as mentioned earlier in a prior presentation, the coal-based hydrogen and then using the hydrogen to generate grain alcohol, we are making some experiments in order. If the technology becomes more mature, then we might to invest more in this direction. As to how to land this project, that will be dependent on the state's industry policies as well as our technology maturity and also the coal quality and whether it matches with our know-how in the chemical segment. So we would try to seize the right timing, and we are currently engaged in some preliminary research. But please rest reassured that coal and the power and chemical and new energy, these are the main businesses for China Coal Group. And we would steadily step forward in these areas. Thank you.

Next, please.

Thank you for your question. I'd like to address the question about the commissioning of the power plant. So the last year, the [indiscernible] power plant, the power capacity is 14.2 billion. And this year, for the Xuzhou and Shanxi, with these new power plants, our electricity -- the generated electricity would increase by 13 billion. So I think that means the profit margin for the power business would be better.

And also the power business is also correlated with the coal cost. 75% of the cost is actually the coal. And because of our 2 joint operation programs, we're able to leverage this advantage. So our power plants is very resilient against the risk. And thirdly, for our power plants, I think we have over 1 million capacity and over 660,000 capacity. So these are very ideal for the spot market transactions. So I think the profit prospect of the Power segment is something that we could look forward to. Thank you.

Now move to Shanghai Energy. Let me briefly address the questions. So for Shanghai Energy, we've been driving these initiatives there are still some gap from our targets. So in 2026, we aim to address the following initiative. Firstly, to improve our operational ability, which is like the value of a listed company. So that means we would stabilize our production capacity to improve the quality, to optimize the product mix and also the production efficiency and in work to boost our operation.

And secondly, from a perspective of development, we would also accelerate the cadence mostly in 3 directions. Firstly, for the coal industry, in principle, we would want to stabilize the coal output. So capacity will be controlled within the number 709. And regarding the quality, we would also try to speed up like the contribution ratio from external projects, including the Xinjiang project. We need to speed up the construction of the Xinjiang project and also improving the quality of coal output. And also, we also wanted to speed up the construction of our facility in Gansu province and Shanxi province. And at appropriate timing, we would announce more details to the capital market.

In the meantime, for our power business at the headquarter level, we would also engage in some major expansions. As you probably have noticed, we had like this MA project. And we would have even more MA projects for new energy as well as some of our self-developed projects. And all of these will be carried out. At the same time, our ESS project is also in the validation stage. And maybe very soon, we're able to disclose more details.

And also regarding the construction of the new power system like the distribution network as well as the micro grid, we are working on these agenda. At the same time, we have also a new direction that is low carbon and green initiatives, including making use of geothermal energy as well as the recycling of the coal ashes or coal powder. So all of these are on the right track. So we aim to leverage this development to drive the market value.

And thirdly, we would also strengthen the communication with the capital market so that our investors would understand and appreciate the value of Shanghai Energy. At the same time, we are also actively introducing more shareholders and to improve the branding as well as driving the market cap. Thank you.

Thank you, Mr. Zhang. Next, please. The lady in the middle.

I am from [indiscernible]. I have 2 questions. First, about dividend payout because we have noticed that in the recent years, China Coal has been improving your dividend payout. And you had some special dividend payout after the annual result after -- for 2023 and 2024 and also last year when the coal price was low, but you still improved your dividend payout ratio from 30% to 35%. And these measures were well received by the market. And many of the long funds they have been paying attention to the changes we have been making. But in this year's annual payout, you have used the payout ratio of 35%. You're not improving it further. And we used the Hong Kong performance at a relatively lower base to do the payout ratio. So that means for the A shares market, the payout ratio is about 28%. And this for the long insurance-based funds, this is a bit stressful for us because we expect higher returns.

So my question for the management team is what's your plan for the future dividend payout? And we also noticed how the finance ministry has adjusted up the payment ratio for SOEs and for those in coal sector, it's at 35%. So does that affect your payout ratio? That's my first question.

For question number two, we have noticed you have many of the good quality assets. In May 2028, so your commitment about the noncompete with [indiscernible] will expire and the PBE in Asia market is at 1.5x and in Hong Kong Stock Exchange, it's 1x. So that means you're no longer under the pressure to do further asset injection and the external environment is good for you. So do you have any plans to inject the good quality assets into the listed companies?

Okay. The dividend payout question will be taken by Mr. Li.

We were listed in the H-share market in 2006, and we made the commitment to have a cash dividend payout ratio of 20% to 30%. And it is part of our company charter. And from that IPO year, although we made the range of 20% to 30%, but it has never gone below 30%. And when we make the dividend payout policy, we want to strike the balance between our development, operation stability. We want to maintain our high-quality development. And we have been asking for the inputs from investors from our shareholders, from the management teams and from the Board. That's how we made the dividend payout policy.

And for your question, I have several points to make. So people might say that we have a lot of the cash reserves and with so much cash on hand, why don't we pay out more. RMB 90 billion of those money market funds, we put such of the finance management under the holdings company. So out of the RMB 90 billion, about RMB 40 billion belongs to the group level. So that -- not all of those cash reserves can be tapped into. And also, we have got the special reserve funds for safety and environmental compliance. So it's not the idle funds resting our balance sheet. And if you deduct all that amount, we have only about RMB 40 billion at our disposal. And considering our revenue size of at least RMB 150 billion, this is a good enough ratio here. and we want to further improve our operational efficiency to give better returns to our shareholders.

I want to explain more about how we are using those cash reserves. It's not being idly held. And of course, about investor returns, at the end of the day, it all comes back to the high-quality growth. It's not just about the cash payout. You can calculate our payout ratio in the 14th 5-year plan versus the market average. We are always on top. In 2020, we paid out RMB 1.7 billion. And in 2024, it was RMB 6.3 billion, and we also offered some special dividends. Last year was also about RMB 5 billion. And through further improving efficiency and improving our growth, we are expanding the base for dividend payout. And no matter how violent the market could be, we still have a stabilized growth, and that's a better guarantee for your returns.

And about whether we can further expand the payout ratio. Well, in the 15th 5-year plan, you have been asking about the M&A possibilities and asset injection possibilities. These are part of our plan, and they all need funds. They need liquidity. For a good enough asset, we need to at least have RMB 10 billion or even RMB 20 billion to be part of the bidding process if we want to acquire it. And for all the transformations and the development we need for the 15th 5-year plan, we also need the ammunition. So we have to factor in all those different variables and also getting the input from investors and shareholders. And we will definitely listen to the input from you and then we welcome all advices from you to formulate the payout ratio policy.

About your second question, we have got a lot of attention from our existing assets and the injection of other assets. Yes, the group has some other coal and electricity-based assets. And you're wondering what would happen to them. This is something we have been studying at the group level. We do not rule out the possibility to securitize those assets or injecting them into the listed subsidiaries. But as to how does that happen through what channel and when we are conducting the researches here. We do not have a finite solution here. If we have come to a conclusion, we would definitely disclose it to the capital market.

And about the noncompete commitment being expired, thank you for noticing that, and we have been discussing this issue. And we are studying all these issues. And again, if there are some concrete conclusions, we would disclose them in a timely manner.

Okay. Let's continue.

I'm from Minsheng Securities. I have 3 questions. First question for China Coal Energy. Last year, the coal price was trending down, and you have made different efforts to cut costs. That is why you had good enough performance. And based on your 2025 financial report, you have lower levels of the specialized reserve. And in 2026, we have a lot of uncertainties in the external market and the geopolitical landscape. So can you give us some outlook about the unit coal cost? How would that trend?

And second question is for [indiscernible]. In Q1, the power plant in Shanxi and Xuzhou has been put into operation. Another one will be put into operation in the second half. And in 2027, 2028, what are the new growth drivers? Or would you prioritize paying the liabilities, paying for liabilities or increasing the payout ratio?

And the third question, Xinjiang [indiscernible] subsidiary was loss-making. It's tied to the Xinjiang 106 coal mine. And in 2026 with the coal mine will go live. It's also based in Xinjiang. And once it goes online, what's your expectation for the profit level?

About unit production cost of coal. So we have used more of the specialized funds last year. And in the 15th 5-year plan, we had good cost control. It was very effective. It's not about how much we tapped into the specialized fund, but our mines are modernized and highly efficient and production technologies and designs are very advanced. That matters. So no matter how strict or severe the circumstances are, we could have stable operation, and that's the most important foundation for the good operation.

For the specialized funds, it mostly went to the inspection and safety. And we do not get to decide how to spend it. There are some strict state-level rules about how to spend it. So we have a very detailed rule about spending it. It's all going according to rule. So we do not get to decide to use it more or less based on the market trends. There is rules about this usage. And last year was -- last year for 14th 5-year plan, so we decided to invest more into safety and inspection so that we would have smooth operation for the 15th 5-year plan. Every year, there are different focuses for such investments. That is why it seems that we used more of the specialized funds.

As for the smaller balance, starting from last year, we took some big measures. One part of the cost would be about the finances. We have unified. We have got a transparent procurement for all the raw materials and eliminating 90% of the middlemen. So we're connecting directly to the vendors, and we can have better management of the vendors. Last year, procurement cost was reduced by more than 7%, and we continue -- we will continue that trend this year. And we have done the online procurement for such procurement so that we can keep tabs on procurement.

So that's what we have done from the source. And we have standardized cost control. And over the years, we have established a good SOP there. And Mr. Gao is being hands-on in monitoring this system, making sure that each step of the process, we can scientifically squeeze the costs. And this is still an ongoing process. We believe we can effectively control the costs here.

But I want to emphasize, it's not about how much more you can squeeze the costs here because margin is also tied to the selling prices. The unit coal shipping fees could be tied with the sales. And we -- there could be different pricing for different varieties of the coals, and we could shift the manufacturing capacity for different varieties. And last year, we increased about RMB 800 million in profit through shifting the capacity for different varieties of coal. So it's not just about cutting costs, this one dimension. We have multiple levers to pull.

Question about Xinjiang. Thank you for the question. In Q1, our Shanxi and Xuzhou power plant went live. This year, we increased the power generation by 30 billion kilowatt hour in Q1, up by 2 billion units. So that ensures our future profitability.

Your question about our investments during the 15th 5-year plan. Mr. Gao in his report has mentioned our Xinji 1, 2, 4, 5, 7 strategy and the 2 hedging system. We have -- we're aiming to build the industry cluster in East China, and we will have 2 transformational sites. And we also have the coal power chemical renewable. We have got installed capacity for thermal plants, and we want to make a thermal power plant base. And for the coal-based chemical, it's also an important component. And for our coal production capacity, we are tying it with the chemical production and renewable production so that we can be better hedged against the future risks. And in the 15 5-year plan, we are adding another some incremental capacity. And in the 7 bases we have, we are conducting new businesses there.

Question about Shanghai Energy. [indiscernible] company sustained loss last year. It had 1.8 million tonnes of capacity. And in 2025 because of the complex geological structure, it affected our production capacity. And also the 1.6 mine, there was an incident with a higher carbon monoxide level. And to prioritize safety, we had this thorough inspection and governance. And these 2 factors led to only 960,000 tonnes of 47% reduction versus our goal and also coal price was reduced a lot. In 2025, it was RMB 195 per ton, 30% down year-over-year. That is why mine 106 sustained losses in 2025.

As for the WISCO mine, it is in the same region with Mine 106, but it has some features. It has bigger capacity, 3 million tonnes of capacity. And also during the construction of WISCO, we added the washing -- coal washing plant -- but for Mine 106, there is no washing and selection. But in WISCO, we have added the washing step, so it's more differentiated. So it's possible that we could use it for chemical coal. We could change our sales strategy. And we are also planning for a cost control here to better ensure cost reduction after it went online to achieve good efficiency.

In the interest of time, let's have one last question.

I am from [indiscernible] Securities. I am [indiscernible]. Two questions for the management team. In the past decade, we saw how the 3 listed companies have got very advanced footprint. You're present in Shanxi, Xinjiang and in other regions in China. You're more advanced than your peers. And -- in the presentation, you said in the 15th 5-year plan, you have presence for coal power chemical renewable. But after 2030 when peak carbon emission has been reached, do you have any changes to coal power chemical renewable business? Are you adding new things? Or are you putting a stop to any of these sectors, any of these businesses?

Question number two, Xinji is aiming to build 100 billion energy cluster. How do you make that happen?

So you're already asking questions about the 16th 5-year plan. It's beyond 2030. So you're asking a very sharp question, tricky for us to answer. But based on what I have learned, this is from Mr. Gao and based on my knowledge about the group strategy, let me give you a response. About coal power, chemical renewable strategy, we have the 2 integration and 2 hedging system. So during my prepared remarks, I have mentioned the 2 integration coal plus thermal power so that we can be better protected against the changing prices of coal. If the coal price goes up, electricity could be sustaining losses. If the coal price goes down, it could be loss-making for coal. But if we tie the 2 together, we produce the coal and we use it ourselves so that there's less price fluctuations affecting our performance. And making sure that our margin would be steadily trending up, less fluctuations here.

Second integration is thermal power being tied to renewable. Why do we do this? It's about the carbon emission restrictions here. We are onboarding many of the renewable projects. They are part of the green energy. It can offset some of the CO2 emissions from our thermal power generation. So this can address the carbon emission restrictions for us. That is why we set the 2 integration strategies, 2 integrations leading to the 2 hedges.

As for -- in 2030, how will we develop the coal power, chemical renewable strategy, we have another strategy about efficiency gains from existing assets for our existing businesses. You already know that. But for our future growth, you have the thermal power and renewable. These are the focuses. Where is our leverage here? For the coal business, we want to use less human labor. We want it to be even unmanned. We want higher unmanned intelligent solutions so that we can have more efficiency gains.

As for thermal power generation, many other power companies have high coal consumptions for the new power generation units, they could be reducing coal consumption by 10%. By consuming less coal, it means less carbon emission. And we also have other steps like desulfurization and that can also further be even more environmentally compliant. And as for the chemical, we are combining biomass with chemicals. We make hydrogen with green energy, and then we add hydrogen into our chemical devices. You're all experts here. And in the chemical process, hydrogen is used a lot. But the hydrogen we have now is gray hydrogen made out of coal. But now -- but in the future, if we have the green energy-based hydrogen and we add it into the chemical process, it can help reduce our carbon emissions, too.

And through -- this is our rationale and our strategy. For carbon peak emission and carbon neutrality, this is the trajectory that we are on. We're not just grounded. We also have high ambitions. In the renewable sector, we are also making some explorations. For example, the gas, natural gas and also biomass-based protein and the green ammonia and green hydrogen. We're following those technologies, but they are not part of our main business just yet, but we're considering those new advancements.

Thank you, Mr. Gao. The question about Xinji. Thank you for your question. About our 100 billion cluster in the 15th 5-year plan, we're headquartered in Huainan. And the Huainan mine should be -- we're trying to make it amend. And for the Fuyang green mine, we are trying to combine coal with renewables, and there was a new policy targeting it last year. And about the [indiscernible] industry, cycling industry for the Weixin power plant, where it is based, we are combining it with another coal energy. We're providing the local government with cheap energy and also heat generation.

And fourth, around the Xuzhou factory, there is a zero carbon industrial park and we can combine it with heat generation and renewable. And for our Luan power plant, after putting it into operation in H1 this year, we could expand its possibilities based on what's available to us locally. And for the Tengchong base, it is around a development -- economic development zone. We could provide that region with thermal power. And it's the same story for [indiscernible] because renewable energy is taking some share from thermal power in the future, we want to work better with the government so that we can gain more inroads through such introductions.

Well, let's wrap up the Q&A session. Dear friends and investors, the management team from the -- from our group has answered your questions. But in the interest of time, I know if you have some unresolved questions, you can keep in touch with us. You can reach out to us. We're happy to address your questions.

Again, thank you for your questions. Thank you for following our development and participating in our earnings briefing. Thank you.