YANKUANG ENERGY released its interim report on August 29, 2025. For the first half of 2025, the company achieved operating revenue of 59.349 billion yuan, down 17.93% year-on-year, and net profit attributable to shareholders of 4.652 billion yuan, down 39.38% year-on-year. Non-recurring net profit was 4.430 billion yuan, down 39.31% year-on-year. Net cash flow from operating activities reached 13.563 billion yuan, up 7.47% year-on-year. Basic earnings per share were 0.46 yuan, down 41.09% year-on-year.

For the second quarter of 2025, the company recorded quarterly operating revenue of 29.037 billion yuan, down 11.13% year-on-year, and quarterly net profit attributable to shareholders of 1.942 billion yuan, down 49.03% year-on-year.

**Steady Coal Production Growth with Lean Management Controlling Costs**

In terms of production and sales: During the first half of 2025, the company achieved commercial coal production of 73.6 million tons, up 6.54% year-on-year, and commercial coal sales of 64.81 million tons, down 4.51% year-on-year. The difference of 11.26 million tons between self-produced commercial coal output and sales was mainly due to internal chemical and power business consumption of 8.05 million tons and new inventory additions of 3.21 million tons in the first half.

Looking ahead to full-year 2025, the company targets commercial coal production to historically break through 180 million tons, striving for an increase of more than 40 million tons year-on-year. By production base: Shandong base maintains stable production at 38-40 million tons; Shaanxi-Inner Mongolia base targets 44-46 million tons; Xinjiang base aims to exceed 25 million tons; Australia base maintains stable production of 40-44 million tons; the newly acquired Northwest Mining will contribute over 30 million tons through consolidation.

In terms of pricing: During the first half of 2025, the company achieved average coal sales price of 531.93 yuan/ton, down 23.75% year-on-year, with self-produced coal average sales price of 529 yuan/ton, down 20.7% year-on-year.

In terms of costs: During the first half of 2025, the company's self-produced coal cost per ton was 328 yuan/ton, down 8.7% year-on-year. The company plans to reduce annual coal sales cost per ton by 3%-5%.

Facing downward pressure on coal prices in the first half, the company demonstrated strong operational resilience through releasing advantageous capacity and strengthening cost control. It's worth noting that with coal market prices bottoming out and recovering, delayed sales volume replenishment in the second half, and Northwest Mining's consolidated profit contribution, we believe the company's second-half performance is expected to improve sequentially.

**Synergistic Advantages Accelerating, High-end Chemical New Materials Industry Showing Significant Profit Growth**

In terms of production and sales: During the first half of 2025, chemical product output reached 4.745 million tons, up 13.47% year-on-year, and chemical product sales reached 4.171 million tons, up 11.32% year-on-year. Among these, methanol production was 2.127 million tons, up 6.7% year-on-year, and acetic acid production was 518,000 tons, up 1.8% year-on-year.

In terms of pricing: During the first half of 2025, the chemical segment achieved sales revenue of 12.224 billion yuan, down 2.3% year-on-year. Methanol average sales price was 1,807 yuan/ton, down 1.6% year-on-year, while acetic acid average sales price was 2,275 yuan/ton, down 14.8% year-on-year.

In terms of costs: During the first half of 2025, chemical segment costs were 9.168 billion yuan, down 9.7% year-on-year. Methanol sales cost was 1,225 yuan/ton, down 21% year-on-year, while acetic acid sales cost was 2,083 yuan/ton, down 11.2% year-on-year.

Benefiting from the decline in coal price center and the company's lean management, the chemical segment's profitability improved significantly, contributing 1.07 billion yuan in net profit attributable to shareholders in the first half, an increase of 950 million yuan year-on-year, providing strong support for the company's overall performance and fully demonstrating the synergistic advantages of coal-chemical integration.

**Strategic Acquisitions Successfully Completed, Key Projects Progressing Orderly, Broad Long-term Growth Space**

In terms of mining acquisitions: The company completed the acquisition and handover of Northwest Mining in July 2025, adding 6.352 billion tons of coal resources and 3.652 billion tons of recoverable reserves, laying a solid foundation for the company's long-term development.

In terms of organic growth: Shandong Wanfu Coal Mine has entered joint trial operation; Xinjiang Wucaiwansi No. 4 open-pit mine Phase I 10 million tons/year project has completed stripping and reached coal; Phase II capacity approval procedures are targeted for completion in 2026; Huolinhe No. 1 mine capacity increased to 7 million tons/year; Liusangeddan Coal Mine obtained mining permit; Caosiyao molybdenum mine received project approval.

Over the next five years, mines including Youfanghao and Huolinhe No. 1 in the Shaanxi-Inner Mongolia region will be completed successively, adding 35 million tons/year of new capacity.

In chemicals: Rongxin Chemical's 800,000-ton olefin project has commenced full construction, steadily implementing Lunan Chemical's 60,000-ton polyoxymethylene project, orderly advancing Xinjiang Energy Chemical's 800,000-ton olefin project, and accelerating procedures for Future Energy's 500,000-ton high-temperature Fischer-Tropsch project.

Currently, YANKUANG ENERGY's operating, under-construction, and planned mine capacity reaches 320 million tons/year. The company expects to achieve its planning goal of "300 million tons of raw coal production" by 2030 as scheduled, with broad future growth space.

**Rewarding Shareholders and Sharing Results, High Dividend Yield and Low Valuation Highlighting Investment Value**

Regarding dividends: For the first half of 2025, the company's board of directors proposed to distribute an interim dividend of 0.18 yuan/share (before tax), totaling 1.8 billion yuan in dividends, accounting for 38.7% of first-half net profit attributable to shareholders.

Additionally, the company plans to spend 50-100 million yuan on A-share buybacks and 150-400 million yuan on H-share buybacks. The controlling shareholder also committed to "no reduction + timely increases," demonstrating confidence in the company's future development.

**Profit Forecast and Rating**

With the company's continuous release of organic capacity, orderly injection of high-quality assets from group shareholders, and ongoing employee equity incentives under deepening state-owned enterprise reform, YANKUANG ENERGY is expected to continue growing toward becoming a "clean energy supplier and world-class enterprise."

We forecast the company's net profit attributable to shareholders for 2025-2027 to be 11.8 billion, 13.1 billion, and 15.1 billion yuan respectively, with EPS of 1.17, 1.31, and 1.51 yuan/share. We are optimistic about the company's high-level governance, organic and inorganic growth space, and future development transformation strategy, maintaining a "Buy" rating.

**Risk Factors**: Short-term impacts from changes in domestic and international energy policies; domestic and international macroeconomic recovery falling short of expectations; risk of major coal safety accidents; company asset injection process affected by force majeure.