China Coal Energy Company Limited (1898) Earnings Call Transcript & Summary

[Interpreted] So this meeting is actually [indiscernible] with all the investors. We would like to remind you that you all need to rationally understand the market [indiscernible] to make the speech. Welcome.

Dear shareholders and investors, good afternoon. I am [indiscernible], from China Coal Energy. Welcome you all to come to this 2022 annual performance briefing. I sincerely thank you for your long-term concern and support for our company. Today, we have with us Mr. [indiscernible], President and Non-Executive Director of the company; Mr. Chai Qiaolin, Chief Financial Officer and relevant leaders in charge of the company's security affairs, planning, events, government, finance, coal division, coal chemical division, sales center and chemical marketing center. And now I would like to introduce the company's performance in 2022. So for all the data, except for this specific explanation, they are all calculated according to the China accounting standards. So the first is the operating performance in 2022. In 2022, our company lately implemented the decision-making and deployment of the CPC Central Committee [indiscernible] high-quality development, fully implemented the development idea of the improving efficiency by stock and incremental transformation with overall plans to promote, reform and development of the production operation to control costs and deep link management. The company's coal production enterprise activity released a vast production capacity. And coal chemical enterprises make overall arrangements for production equipment to maintain this safe, stable and efficient operation. Equipment enterprises have further promoted the transformation and upgrading of this high and intelligence and conveniently optimize the product business structure. So to finance the company to continue to promote this financial innovation. So the main production operation data have all achieved the great successes again, maintaining high-quality development trend in steady progress. So now I'm going to share with you the main production on the data. So the coal production and sales volume is actually reaching 119 million tonnes, up by 4.97 million tonnes or 4.4% Y-o-Y. So the sales volume of commercial coal was 263 million tonnes, a Y-o-Y decrease of 43.85 million tonnes or 14.3%. Among them, the sales volume of self-produced coal was 120 million, Y-o-Y increase of 7.3%, buyout trade costs, sales reached 130 million tonnes, down 29.6% Y-o-Y. Import and export and domestic agent reached 14.39 million tonnes, up by 14.2% Y-o-Y. So selling price of coal products, the average is 11.4% of the increase. The average selling price of buyout trade coal was CNY 812 per tonne, up by 6.7% compared with the same period of last year. So the cost of coal products and the unit sales cost of the company's self-produced coal is CNY 322.84 per tonne, up by CNY 0.6. Basically the same as last year. So the production and sales of major coal-chemical products, output of polyolefin was 1.48 million tonnes, up by 1.1%. Sales volume was 1.469 million tonnes, up by 0.5%. So year-year output was 1.834 million tonnes, down by 10.5%. Sales volume was 1.792 million tonnes, down by 19%. So the output of methanol was 1.879 million tonnes, up by 21.6%. Sales volume was 1.855 million tonnes, up by 21%. So we can see that this price of main coal chemical products, the sales price of polyolefin is CNY 7,401 per tonne, down by CNY 120 per tonne and down by 1.6%. The sales price of urea was CNY 2,612, up by CNY 384 up by 17.2%. The sales price of methanol was CNY [indiscernible] per tonne, an increase of 4.7% and the sales price of ammonium nitrate was CNY 2,632 and up by 37.2%. So the cost of the main coal chemical products, the unit price of polyolefin product was CNY 6,884, up by 2%. The unit sales cost of urea is CNY 1,882, up by CNY 186 up by 11%. So the unit sales cost of methanol is CNY 2,044 per tonne, so up CNY 116 per tonne Y-o-Y. And the unit sales cost of ammonium nitrate is CNY 1,032, down by 25.2%. So I would like to briefly introduce this equipment business. So in 2022, the output value of coal mine equipment was CNY 9.96 billion, up by 5.3% Y-o-Y. Operating income was CNY 10.6 billion, Y-o-Y increase of 2.3%. So the financial business, the operating income was CNY 2.386 billion, increase of CNY 695 million or 41.1%. So for other business conditions, for example, like electric power, aluminum processing equipment and bidding service and railway transportation, achieving the operating income of CNY 7.583 billion. So now I'm going to share with you this major operating financial indicators. In 2022, we have reached [indiscernible], and the total profit was CNY 32.897 billion, up by 26.2%. The net profit attributable to shareholders of listed company was CNY 18.21 billion, Y-o-Y increase of 32.8%, basic earnings per share was CNY 1.238, Y-o-Y increase of 32.7% and the weighted average return on equity was 14.88%, up by 2.17%. So the asset liability ratio was 51.5% and down by 4.2%. So on the international financial report standards, pretax profit was CNY 34.583 billion, up by CNY 6.714 billion Y-o-Y. So the profit attributable to the shareholders was CNY 19.719 billion, up by CNY 4.547 billion. The basic earnings per share was CNY 1.49, up 0.35% Y-o-Y. So the capital liability rate is 34.3%. So compared with last year, so the major increase in factors are as follows. The first one is the price of self-produced commercial coal has increased by CNY 8.817 billion, and the sales volume of self-produced commercial coal increased by CNY 2.614 billion. Investment income increased by CNY 1.495 billion and chemical business increases CNY 488 million. And we have already got reduced the profit and then we have got about CNY 4.852 billion for this provision of impairments and then tax and surcharges increased about CNY 1.422 billion. Management expense increased by CNY 786 million. Now operating expense increased by CNY 360 million. R&D increased by CNY 105 million. Let's about the key projects. So we had this [indiscernible] mine with the output annually reaching for 15 million tonnes of high quality and has this trial operation as a whole and the construction has been scaled up to be increased to 20 million tonnes, and they have already passed this on-site review. The construction of [indiscernible], this low calorific value coal power generation project with the annual output of 4 million tonnes of site has progressed smoothly. So [indiscernible] coal chemical industry Phase II project was an annual output of 900,000 tonnes of polyolefin has completed all external formalities for approval. And we have this Phase I. Shanghai Energy Company was basically completed and connected to the grid and we also have this new agricultural PV complementary project [indiscernible] Group started and that have already been listed in the [indiscernible] new energy projects in [indiscernible]. So now let's talk about the CapEx and the planning arrangement in 2023. In 2022, the company's CapEx is closely focused on the 4 major sectors of coal, coal chemical industry, electric power and coal mine equipment, including capital construction projects. So we have about CNY 14.708 billion, with CNY 9.271 billion completed. And among them, we can also see that the coal sector completed CNY 6.704 billion, and the coal chemical sector completed CNY 326 million. And for other different sectors, they have reached over CNY 1.148 billion, and the company's plan CapEx is CNY 18.02 billion, an increase of CNY 8.749 billion compared with the actual completion in 2022, up 94.37% Y-o-Y, increase of CNY 3.312 billion compared with planned capital expenditure in '22 up by 18.38% Y-o-Y. So the coal sector platform completed 10.456 billion; coal chemical sector, 3.804 billion. The power sector plant completed 1.883 billion. The new energy capital plans to complete 1.4 billion. And the rest is CNY 0.5 million. And then we also could do this but in 2022, the company contributed to the dividend according to the net profit of the stock exchange to have issued this cash dividend ratio reached 30% with a total dividend of CNY 5.0484 billion, and it's actually CNY 0.414 per share, including taxes. So now I'm going to share with you the production operation plan, the key work arrangement of the company in 2023. Now let's first talk about this in 2023 overall plan. The company adhere to this general tone of striving for progress while maintaining stability, fully implemented the development idea of improving efficiency by stock in the incremental transformation and strengthen this lean management, deepen enterprises. And there, we also hope to have about 125 million tonnes for the polyolefin produced and 1.9 million tonnes of urea. And at the same time, we will actively take measures to scientifically control our costs and to strive to achieve the good business result without major changes in the market. In 2023, the key work, the company will focus on high-quality development, further promote the development idea of stock efficiency improvement and incremental transformation and accelerate the construction of this world-class energy enterprise. So first, around this 14- to 15-year plan, we will accelerate the construction of demonstration basis of co-electricity JV, co-electricity and the renewable energy JV and continues to optimize the layoff industrial structure, improve the capacity of energy security supply, accelerate the low-carbon green transformation. The second is the [indiscernible] the new round of a state-owned enterprise reform task, solidly promote special work of improving the quality of listed company controlled by the central government. And then we hope to have this high-quality development with a more sound and efficient market-oriented and legal operations. So the third is the continued strength in the value drive and continuously optimize the system and mechanism of scientific and technical innovation, actively integrate in international scientific and technological innovation. So the fourth is to adhere to this system concept and the bottom line thinking, continue to strengthen this work of safe production equal to environmental protection, energy conservation and emission reductions to solve all those risks shifted here to this world cross benchmark continuously improve this level of refined and lean management, continuously improve the quality and efficiency assesses so we complete with annual production and official objects. So the fix is to continuously improve this level of corporate governance and the quality information, disclosure further improve this communication with investors, the strength and market management and maintain a good image of the capital market. So dear shareholders, and the management and all the colleagues who were keeping in mind our initial mission, make persistent efforts for [indiscernible], actively participating in the practice of Chinese side of the modern energy to give back to the all shareholders and investors with our new achievements in building the new world-class energy enterprise, high-quality development. That's all for me. Now let's come to the Q&A session, and welcome for all your questions. Welcome.

So actually, we could have this telephone questions first and then is the online questions later. [Operator Instructions] So for online participants, you would better just use this word, question, or they could just use this Raise Hand button and then raise your hand if you have some questions. [Operator Instructions] So for the online participants, you could type your questions in this check box or you could directly unmute yourself.

[Operator Instructions]

We haven't got any questions here. There is one word question here. The question is actually from Agricultural Chemicals. So we just had this 1.4 billion. Can we say it's about 2 billion of this net profit is about 6 million of this production. Can you later have this separate disclosure in the future? I will have Mr. Chai from Finance Department.

First is according to your calculation, you could calculate that. And it's actually the situation in 2022, like that. As you said before, from different mines, because for this disclosure, we haven't got this very detailed disclosure of that. So for this [indiscernible], if it's actually being executed, we will have this overall consideration. Okay. Thank you so much. So I have this 6322 telephone investor to propose your question. And then can you hear me? Yes, please fire away.

And dear leaders, I am from [indiscernible]. And then I also feel that it's very happy for me to participate here. I have 2 questions. The first one is for this year, for this overall mine costs reduction is how because you can see that for last year, it's actually not a big change. However, for this cost, any data available. So the second one is actually from the [indiscernible] progress. You can also see that what is the production capacity and then you could actually have how much of the capacity and in the future because we have about 20 million of this overall production. So these are my 2 questions. I still invite Mr. Chai to answer for the finance.

First question is about cost. In 2022, for this overall commercial coal cost is actually quite stable compared to 2021, it's basically stable. So for all the different mines are all under normal production. So from the cost perfective, I think, is actually quite stable. So this is the first question. The second one is for the hybrid for this overall production has already been successfully been started. And then we also can see for the overall contribution from the production, it definitely has a certain increase. So I have to follow up another one. It's actually for 2023, how much you hope to have this production from [indiscernible] and then do you have this kind of arrangement? In 2023, we hope to have about 15 million -- 15 million tonnes.

And now let's have this 1862 to propose a question, please first tell us your name, and where you're from.

[indiscernible] I have a question, and so we also can see for the current list, and then you are already having this like very good cash flow and for the future. So for this impairment, so how much is actually the one that we are going to do this impairment? And so can we actually do this impairment of the asset to be like more stable or like having no fluctuations?

And for this question, we also have this Mr. Qiaolin Chai, our CFO; and for asset impairment. So for this overall arrangement, I would like to talk about it. So from this impairment of the company, it's not like we deliberately just tried to say, okay, how much we want to do that is actually because of these policies. And there for this certain stuff. And we also can see we have this policy. So for this environmental protection regulations. And then for this mine companies like us and we also can see this -- for the current quality of our China Coal Energy is actually very good and then maybe we have some more policies. For example, for these resources that we are going to develop and because of this local government arrangements or considerations, these will all influence our overall impairment. It also has a certain consideration. And we also can see this is also helping us, and that was this guarantee. So we also can see -- maybe this is actually hard to answer that because we don't know what's in the future. So any more questions from you? No more. So now let's have this 401 investor to come here. So please tell us where are you from and what's your name?

I am [indiscernible]. And I have 3 questions. So the first one is we have already seen that, although for the year-round, the cost is quite stable. However, in Q4, so for this coal cost, you actually increased this by 13%. Actually, by quarter, it's up by 20%. I want to know that what is the reason why the cost increases so much? And can you give me a breakdown? And maybe in the future, we could actually expect to have lack of further cost to be like calculated more in Q4? This is the first question. The second one is actually for this law agreement being signed with the proportion. You can see that for those newly added ones, they all need to have this long-term agreement, maybe for the hydro. The mines have all been signed with this long-term agreement. Next one is about coal chemical industry. And you also can see that for our self-owned ones and for this overall oil and gas industry, they are still like having this expansion. And then what is the overall outlook of this coal chemical industry? So with the oil price being lowered, and we also can see it's about 18 billion for this CapEx. I want to know that how do you just allocate this 18 billion?

So the first one is we have this Mr. Chai from finance to answer that. The second question, I would have another colleague and the last one is about have this Mr. [indiscernible] to answer that. The first one is about the Q4, the cost and it has this quite a big quarterly increase. It has something to do with the business feature of the coal manufacturing company. You can see at the end of Q4, we need to do this maintenance and check-up. So you can see that compared with the first 3 quarters it's having lowered the production for the fixed cost, it will be higher. And the second thing is for Q4. So for the cement [indiscernible] and the checking. So for the materials and for the spare part investment, it will also be increased. And then in Q4, we also need to prepare for next year's production. So for Q4 for the materials and for spare parts and preparation, we have a higher cost. The next thing is actually based on this entire annual business, and it has this certain increase. So because of this joint influence compared with the first 3 quarters, it is having certain increase. And there, you also can see that, as I said, it has something to do with this business feature of our coal production companies. So in Q4, the cost is roughly all higher than the first 3 quarters. So this is about the first question. And the second sale. I briefly answer you. So for the tactical production, but it's a long-term plan and China Coal Energy is definitely based on this requirement from the National Development and Reform Commission and NDRC. And for this newly added release of this capacity, we were signed with a long-term agreement. So for our group [indiscernible] for 2023 capacity based on the budget and we do the evaluation, and we will justify long-term agreement. This is mainly based on this coal production in 2023. And then we have done this prejudgment. So for this actual production and for the implementation of the final production, and we cannot just see that 100% we will have this long-term agreement. However, we plan -- be sure that it's definitely like a strictly executed according to the new policies issued by NDRC. So the last one is about the coal chemical industry. I will give it to Mr. Li.

So for 2022, I think that it's actually with the coal price being quite high. And for the coal business, it's actually quite good, for the coal chemical. So we proved that our coal chemical industry is still quite competitive. So you say that actually the price is going downwards. So for the price being low or actually for coal chemical is actually mainly beneficial. So the reason why they don't do this -- a lot of development of coal industry is actually with the price being lowered, you could help this to be stable. And there, for the China Coal Energy and for some newly developed materials, we have developed in this aspect about the coal chemical. I think we will have like a further elevation of that. That's all.

So just now you have also mentioned about 2023 for the CapEx plan. I would like to tell you that 18 billion. So for coal, we have arranged 10.5 billion, and therefore, electricity is 1.8 billion. And for new energy is -- like with some rest and the following. So I have already mentioned this before. So that's all for me. Thank you.

Okay. Thank you so much. So any more questions? For the new energy sector is actually about 1.4 billion and the coal mine equipment sector is 472 million for the rest is actually the rest of the sector. So for this construction of the hydro being finished. So in the mid and the long run, we have this reduced the production. So we have the strategic plan to share with you. So in the future. So for our CapEx plan, you wouldn't have like a very big reduction. Why? Because for this overall plan of the company, so for example, we have to avoid risks and for electricity and coal chemical, we have with this long-term planning. And then it has also included some coal chemical and electricity projects. So in the future, and we wouldn't reduce the CapEx plan. And there, we will have another question. So we have already heard actually, we have over accumulative losses about CNY 20 billion, and then you are actually doing this provision of this bad debt. So it's around CNY 10 billion. So what are the projects that are going to be calculated in provision. So do you think that the management team will be subject to this investigation and the losses and that how do we avoid this kind of event from happening again?

So for the short-term loans, the interest is lower than the market if it's higher than the market. And then do we hope to replace the current loans by applying for new loans. So first, I would like to say that what you mentioned about the approval of that, it's actually the provision of [indiscernible] prepared. So for these projects that we are going to develop. And it's not just about the resources or the assets are actually having some problems. And there we also need to have, for example, and we have already got the resources as being protected. We need to focus on corporate social responsibility. We cannot do this illegal development. So for this overall efficacy is expired for protection, we will do that. So it has this time value. So for a certain period of time, it requires, for example, this is more like the way of calculation. It's not like this is the whole asset is gone. And that is not like this is actually being very bad. So I have also mentioned that for this 5-year plan. And for some places, maybe they haven't got this plan for this 5 years and now we hope to do it in the next 5 years. So with this kind of calculation, so it requires, for example, a certain amount of investment. And there, I see this final effect. So these are just like the provision of that, and then it's about the cost. It's not just like the project, having some problems or something. And you also see it has to cater to this national stress and then this national strategies. So we also can see that we need to have a certain title and then we are also actively taking some measures to try to synergize with the local government and with technological optimization to have this faster utilization. And then in the future, we also have [indiscernible], you wouldn't have something like what you say is about this state-owned resources and assets to be subject to losses. So I have something to say here. So for China Coal Energy, for the loans are all like ordinary loans with appropriate interest rates. It doesn't have anything like the trunk loan or something. I don't know what do you mean by trunk loan? Okay. Thank you so much. So now I have another investor. So please first have with us your name and where are you from?

Hello leaders. I'm from Shandong Railway Development Fund. I have 2 questions for you. So the first one is still about hydro overall situation. In 2022, and we have seen that as for the chance agrochemical. It has about CNY 2.9 billion of this profit. So you can calculate that [indiscernible] the net profit is about CNY 1.822 billion RMB with a net profit. So I want to know that for the hydro for this overall sales price habitat per tonne of the cost. And then it's actually the overall exploitation cost and for all the different taxes and for this net profit and how much is that?

So this is the first question. Okay. We will have this financial department to answer the question. The first one is about the hydro price. And for hydro can see it's about RMB 600 per tonne, and it doesn't have the tax included. And for the profit, you say that actually based on the [indiscernible] agrochemical for the hydro is about RMB 1.8 billion to RMB 2 billion and your calculation is right. So from the hydro coal completion costs from 2022 because if the production capacity has not been fully released. So for this coal price, it's actually quite high. And therefore, the completion cost is about RMB 300 per tonne. Okay. And another thing is -- so for sales price, about 600, can I understand this is actually the guarantee of this steam coal. However, for this chemical coal and with the steam coal. So this overall cost is about RMB 700 to RMB 750 per tonne, right? So when I say 600 is actually the comprehensive already. It doesn't have taxes, it is the tax included around 700 million. All 600 million is excluding the tax. And then the second thing is I would like to say that in 2022, for -- ensures the profit for this coal profit is about RMB 100 for [indiscernible]. I think for the mine is actually a long time. So the profitability is actually definitely lower. But out is a new mine so it's definitely having a better profitability. So after this rough estimation, we think that because [indiscernible] do you think this is a very reasonable calculation? I think you have done a very detailed calculation when you do like that. And then you can see it's about 6.9 billion for the net profit. It's actually attributed to our listed company. And there for this nitrate and chemical interest is also included there. So actually, it's actually slightly lower than what you calculated because the 6.9 also includes other different business assets. We also can see the next one is actually, do you hope to have this dividend ratio to be increased. So for the CapEx plan, how do you arrange about this? What would you mean by you mean like for financing? And? So we can see that we have already kept this 30% of this dividend issuing is actually about 30%. The second one is about the financing aspects, about CapEx. So the first, we have already got like quite rich cash flow. And then we also use this bank loans and then about this issuing bonds in this pivotal market and to solve this next year's CapEx. Okay. So thank you so much for your question. I would have this in 990 for this phone number to raise the question. So please share with us your name and where you're from.

I'm from CICC. So I would like to say that we have about 5 million for the agreement. So what is this approval process of this agreement. [indiscernible] this contract reviewing has already been finished. In the future, we need to have this specific approval steps. And when will that be?

It's about 30 million tonnes in completion when the agreement is being reviewed. So if we are going to check that. So maybe for this year, we will have that. This depends on the approval steps. And then it also depends on this related departments of feed for their approval.

Got it. And the next thing is -- and what about the quality of this steam coal?

So for the quality of the coal? So generally speaking, I see it's actually similar with the [indiscernible] one. So for [indiscernible] mine, it's about 41 million for the production. So for this oil content, it's because of the coal being different, so it has some niche differences.

Okay. And we have another word question. So for 2022 for the standard coal for H2, how was the price compared to H1? What is the overall reduction? And what about the delivery of this Australian coal? So do we have this long-term price reduction in China for this [indiscernible]?

So for 2022, H2 -- and what would you mean by that? Okay, read one more time.

It's actually the coking coal, the [indiscernible] coal. So the question is in 2022 H2, [indiscernible] what's the price?

I briefly talked about it. So for the categories of coke is actually with a lot. And then the comprehensive price is about RMB 1,600. And then the second question, it comes to this long-term agreement, right? Do I understand right? The management is asking. So what is the latter half of the question, can you repeat?

So the latter half is for Australian coke import has been approved and recovered or not. And for the long-term price of this domestic coal, will it be lowered. So for Australian coal, you pay a lot of attention to that.

Previously, and we have already got this news to interview that. And for this Australian coal import is actually we would restore 4 imports. And then it's actually for this overall channel and the online news thing that we need to go through the full aperture. So they just to say that actually with this approval, you would do this overall import. We judge it wouldn't have this too big importing of coke, so we also can see that this is actually part still with a very high range and just fluctuate, but it won't have too big changes.

So the next question, and the next question is, how do you view the change of the coal price in 2023 would this still be maintained at a high level and the import of Australian coal, would it influence your profit?

And I briefly shared with you because for Australian coal import, we have already said for this overall import quantity, we charged. We wouldn't have too big resources to come here. So for coal, it's actually quite balanced for China Coal Energy. Even if the market price fluctuates, it would have to be different. So for the 2023 proportion of this long-term agreement and from this national perspective, we think the overall market price is actually going downward. However, it's actually not reduced significantly. So for the long-term agreement, now we have this high proportion of this long-term agreement being signed. And then from January to March, so for this actual price on average, it's actually still at RMB 3 higher than last year. So for the long-term agreement, we also think it would have this small changes in this range. So we judge that for the overall market, we wouldn't have this kind of a big increase or big decrease of that. So we think that for this, the average price is about $300. And for this year, we also have a certain reduction. However, so for demand and supply, we all haven't got this very significant fluctuation. So we wouldn't have this too big adjustment. And for import, it has about 290 million. So in the future, we think for the entire market is about 300 million. So for this Chinese market being so big, you wouldn't have had to big influence about the price with this small amount of import. That's the automatic. So to 2805. Please share with us your name and where you're from.

I am [indiscernible]. And I have 2 questions. The first 1 is I would like to ask that so for our CapEx. So just now you have also mentioned that in 2023, it's a very high CapEx, and then you wouldn't have this very big reduction. So for the categories, mainly about the coal chemical and now you have also mentioned about the electricity. So could you please also share with us. So for this overall ROI, what is your requirement. And then for this coal chemical, would you focus more on CTO or more about like urea business? And the second one is about for this price and you also have already heard from the import of this Australian coal. So if we see this API price plus freight, cost plus taxes. And then compared with the domestic coal price, it's even cheaper. So I don't know maybe based on the current sorting market and for this thermal plant situation and the demand, how do you judge about this future spot price?

So first, let's have with us Mr. Li from this coal chemical industry. So the major direction is still about is about polyolefin let. So we also can see that because the EBA and some like metal-related ones, and they have a higher value-added prices. And we expect this return on investment. It doesn't have this reduction. So I think it's standard that all. And for the sales, we will have this [indiscernible] so I briefly answer this for you. So about for this 2022 import being greatly reduced it's actually about this international market price is fluctuating significantly and it has led to this coal price significantly skyrocketing. So from January to July, the import is actually lowered significantly for H2. So for international price, it's lower than for domestic price is also lower. However, the proportion is not too big. And then for import and domestic, we have about RMB 50 to RMB 100 for the advantage. So this is also like -- have seen this quite big favoring positioning for this import. We expect that this coal, it wouldn't be like certain countries even limited without exports. So for international coal price, we think the trend is definitely going downwards. And then, for this high price advantage, it wouldn't be like stably maintained like that. So from January to March, and then you also can see for this overall resource supply for this long-term agreement without being signed, you also could see this quite nervous mentality. And because of this import, we also had this time difference. And maybe we wouldn't have this kind of advantage all the time. And then they have this kind of risk. And we judge that this is what we are all agreeing with the price being lowered. And for this import coal and without this price advantage, they also wouldn't have this very good advantage. And we expect that the overall import will be about 340 million. So for Australian coal and for other coal imports, we think it wouldn't have this true big impact. And you wouldn't have this too big price reduction. So this is our basic judgment.

And for the first question, I still would like to probe a little bit because just now we have already talked about the CapEx because for 2023, and it is actually quite small for this proportion taken by this coal chemical. And then it is always kept at a high level. And we also can see for this new coal projects when they have been finished, maybe these are just about the cold chemical to come up to the stage or whether I heard it wrong or not, I have heard something about electricity investment. I want to double check.

So not to have this strategic development department to answer you. So for the question proposed by you, indeed, for this China Coal Energy for coal as our main business. So for electricity and chemical industry, we all have some project preparations. And now we are all implementing specific procedures. I wouldn't name the names of the projects based on this situation, we find that we all have like a big amount of like CapEx. And for example, for our overall reform Phase II. And we also have some other different projects. So for example, like of coal, and they are all being promoted. So for petrochemical, and we also -- we will see this significant development. So in the future for CapEx plan, and I think it could be kept at a high level. I think.

Okay. So thank you so much for the detailed answering the [indiscernible].

Thank you. Okay. Thank you. Now let's have 1626 investor to post a question, please share with us your name and where you're from.

Hello, all the leaders I am from Minsheng Securities and I have 2 questions. The first one is we have seen for the 2022 production, we have about 5 million tonnes of the increment. So doesn't all come from hydro and the increase of the production, what's the proportion contributed by hydro because it is still slightly lower than our prediction. So for the special production if it doesn't have a big growth, is it because of this maintenance of Q4 is all because of the capacity utilization has all been lowered? That is the first question? The second question, we want to know that actually for this coal chemical, except for nitrate and urea. So what is the future price prospect? And second for this buyout Tradeco for this future outlook and your plan.

Thank you. So for the first question, we will have Mr. [indiscernible] to answer you.

For 2022, this production increases about 5 million, mainly coming from hydro. We have seen some specific increase about 5 million, yes. So the second question was about the coal chemical. What is the price strategy of the company. And for traditionally, the price is definitely like being stable, but lowered. And for 2023, for this coal is actually being like released in a concentrated way. and then they all have like a huge amount of production being released. So for urea because of this guarantee of the supply, maybe it's actually quite stable. And then for polyolefin because you can see that the supply far exceeds the demand. So this may be going downwards, but it's also quite stable at the bottom. So for methanol I think it's also like supply completely on the rise. However, the demand is quite weak. So for methanol is also like fluctuating, however, being very, very strong.

Okay. I have something else to add. So about the price trend. So for fully all the thing is actually highly related to oil price. And we have considered this going lower in this year. However, we also predict that compared with 2022, it will be lowered. So we expect for coal chemical factory in 2023, it's actually even better than 2022 for this gross margin.

And then now let's have this buyout answered by our sales team. So for the 2022 for the buyout compared to 2021, we have this significant decline is mainly because of 2022, this market price fluctuates a lot because China, this government has this price limitation and we are strictly executing this NDRC's demand. So we're just a control this certain business about this Tradeco. So it has got about 20 million tonnes of production. So for 2023 compared to 2022, we expect -- for the overall market, the price is actually going downwards. We wouldn't have this 2022 succession situation. However, we also just have the by out proportion. We have arranged this overall year round the plan. So currently, I think that to finish the target given by us, there should be no problem. And we also can see it's about this arrangement of this capacity. And we also can see that any production that we have planned to promote. So for last year, we haven't got this. We haven't got any production executed or like exit now. And just now, I didn't hear clearly. So it's about 6 million tonnes for the hydro. So for last year, and it's about 8.4 million tonnes for the hydro. This is another word question. So for [indiscernible] and the [indiscernible] Gold Mine sales and in 2022, are they the same, like this 80% of the mid- and the long-term contracts. And then last year, we have done this market strategy in [indiscernible] hydro. We hope to have about 0.6 million tonnes of this reserve base of the central government. And that for the services model in China. So can you elaborate on this, introduce to us. Thank you. So for the first question, I will have Mr. Chai to answer you. So the questions proposed by you is about [indiscernible] because for 2023, for the overall long-term contract planning, we have a series of the requirements, and we have this overall plan and the budget, we are calculating the specific numbers stated by NDRC. So for the quantity being assessed as the certain logic between the two. So we wouldn't have -- we see that it has this certain proportion to be signed. It's definitely like according to this Chinese policy. So about this reserve capacity, we will have [indiscernible] reserve base. Yes, this year, we will start the project construction. And now we will introduce for the overall investment nominal for this overall national arrangements. So the specific situation. No, I'm talking about the overall national approach. So what about you to do the introduction -- for this reserve base of that and our own storage is actually similar with oil. So just to prevent this price to be fluctuating too much and to have this buffering of the price. So this year, for [indiscernible], the reserve center, we definitely would have constructed. So the next one is actually from online. And the question is for [indiscernible], and he has mentioned about ROE evaluation. So in the future, how does the company hope to improve this ROE? So will you improve this dividend ratio? So we'll have Mr. Chai to answer here.

So for ROE, and with this business, the performance would be better. And we have already got this quite good growth. So the next step, we still use this scientific arrangement of the production to have this cost reduction to focus ROE would be further improved. And then we also can see that it has a very stable cash increment. And we are still using this dividend ratio of what we have always used before. So the next question is actually for [indiscernible]. So for net profit and the net margin rates have all gone declined. What are the reasons? We will still have this financial deployment to answer this?

So one reason is for this coal price and compared with 2021, 2022 price is also on the decline. So this is one important reason why this profit is going on the decline. And in Q4, the coal production in coking production is also on the decline. So we have this capacity and the price all come to the decline. So we can see this H2 compares H1 is lowered.

The next question. The next word question is, so for this impairment and the provision it's about this cost. So whether it all like you would just see the viability of this person who want to make the decision when you have some losses about the purchase, as I said before. So for all this impairment provision, it's not like just directly just to say that, okay, I will just already calculate the loss. It's actually because of the strengthening of the environmental protection. So in the short period of time, and we cannot just immediately develop that, and for different policies with certain conditions being okay. So we still cannot construct and implement that. So we can also see it's about like a nitrate. And for this production is about 20 years. And that is actually about 15 years later, we will just do this impairment. And therefore, a large-scale energy company like us. So we also have this strategic reserves. And then you can see this is all very necessary. So we also can see that for this impairment is all more like this periodical like price consideration. And you also can see it's not like whether you have this specific stuff. And this is what I want to add, okay? So the next word question is in the next 2 years for 2023 to 2024. So any new plans about this profit arrangement and the any plans? I have already answered and this is actually the same question. So we will keep this 30% of this cash dividend ratio. We will keep that. We have already answered that. No significant change of the policy. Okay. So the next word question is why in the short period of time and this short-term loan, interest rates are all quite high? So maybe for the appendix saying that for this about 4.4% of the interest rate, I would like to explain. So this is with local government, we do 50-50 of this investment. So for this kind of company, and we don't offer them like a unilateral funding. So they -- based on their own operations, and then they just have this basic marketing contribution. They just put it at the cost. However, for this 85 billion of the assets, and that is actually about very small proportion is actually of this interest rate. So the interest rate for the first period over 3 years is about 3%. And then we also have about 10 billion of the balance. So we also can see that if we just exclude that, actually, the overall interest rate is even lower. And then for this China Coal Energy, this overall capital interest cost is just about 2%. No matter is about liability with all like the cost of capital is all very good. That's all. Okay. So next question is how do we solve this company's competition with these other companies? You say that actually you will have this the designated procurement of the assets owned by the group and without damaging the shareholders benefit and also improve this ROE, how do you do that? So according to this China Coal Energy, when we signed this agreement to avoid this competition. So we will try to take necessary method and included but not unlimited to gradual solution of this competition. So we are actually promoting this step by step, however, we are also just having this specific assets to go through this coal-related resources. And now according to market development, we will address the timely. We leave that to you. Next question. So in the future, when you have this target of operation, so will you first like uses CSX requirement about the improved ROE as a priority. This listed company under SASC. So we definitely will just conscientiously implement this ROE requirement stated by that. And the second question is about the -- and how do you just plan to have this one and then the auction is actually very active. And then you also can see are there any new methods to have this risk to be sold to have this exploration rights? So currently, this about this large China Coal Energy Industry and coal is still in the future, a very important industry of that. So we have this strategic restoration. So you have already mentioned about the such for the impairment, we need to have certain time to be calculated. It's not like this asset itself. For example, like I just have this possibility to develop and then I develop that. So we also can see that and we still are waiting for this future market. So the next one is -- for this all different steam coal, how do you consider that price to be changed. And therefore, there's a long-term contract, how do you view about the price. So we will have this sales company to answer that. However, this is actually for different expectations by quarter, it's actually having a lot of uncertainties. And we also can see so for this 2022 and is all having this fluctuation at this high level. And then for this price change, you can also see this chance, this tale is actually early days of the year is actually quite stable. And there for this March to April, it has quite a big fluctuation in the signing of the annual one and about the market and the water and the utility influences. And then we can also see that for every year, the changes that are quite different. However, for the overall trend is actually quite. So we still see to this principle because opportunity for this long-term agreement is actually signed in the high proportion compared with 2022. We also have about 10% to 20% of the increase. So for this long-term agreements, we all have the specific arrangement. So for this high proportion of this long-term agreement signed with the powers and the price is definitely within this range. So for the market part. So if with us quite a stable one and then for some other mining and for the refinery industry. So we think there should economic recovery, it's definitely very obvious. So for H2 this year, maybe for this surprise, we will have certain periodical fluctuation. However, because of this import of the coal. And therefore, the supply and demand relationship is still quite stable and quite balanced. So we think for this overall seasonality. And for this monthly situation, it doesn't have a lot of changes. However, for the surprise point is definitely like the downward trend, especially for the [indiscernible]. So for this long-term price is about 700 and the fluctuation is also within this reasonable range because all the different companies have a different judgment. So we think for this long-term agreement to be signed and then it's actually having a high proportion. So like the country's overall [indiscernible] is actually quite good. So now let you actually say that any more questions from the investments. So any questions? Okay. We will have this to propose a question. Please first share with us your name, where are you from. So I just have a question here.

And you can also see, based on the current impairment provision. If in 2023, the business performance is still quite good. And then this business scale is actually quite good. And then we can also see with current like different better assets and nonperforming assets and how are you going to do this impairment? So let me answer that. I have already mentioned. So for this impairment, it's not like we deliberately just to try to do that. It's from our current consideration. It's actually all the assets are all very good quality with some specific ones. And then you have this policy and political ones and then it just cannot be developing a short period of time. So whether and they have the policy to be proposed. And this is not like we can make the judgment subjectively. However, without this subjective issues with the current quality of the assets, I'm very confident to say that for my current plan, I don't have any impairment plan. So in the past few years, you can also see that to be like realistic, it seems that you're always just doing this nonstop impairment and then you make the investors really worry. So maybe for the impairment appears like this. And then we just expected whether the profit is good or not, you cannot just predict the performance like we really worry that for the company for this treatment of these nonperforming assets. Maybe it's not very transparent. We have the problem like that I think I have already mentioned for this impairment, you have to consider that we are a large-scale energy company. So our profit mainly come from the nature. So as a natural company with the environmental protection requirements and all the different requirements, we definitely would stick to this policy. And then we just don't exclude the same that for some projects, for some different ones and we need to further adjust that and coordinate that. And then when we have this condition to adjust that and it's all natural. So when we propose this impairment, you can also see that for this overall profitability, it's all like very stable and on the rise. And it's all like developing with this stability maintained. So we feel to definitely like a payback with the investors with your love and care. However, so this nonperforming asset is actually [indiscernible]. So with your performance being very good. However, you do this impairment every year. So this is actually quite unique. And for every year, you are doing this impairment. And then the scale is actually all the rules, all the time. So being on transparent, I think it's a big problem because you have already found this impairment for consecutive several years. So can you give us like the number that we could expect. For 2023, we will still have like [indiscernible] of this impairment to scale. So for this question, I think that when we come through this FX, you definitely have like a rough estimation. So can you just give us like a quite transparent answer for the investors, okay? So the situation is, as I said before, so for our impairment, it's not like we deliberately do that or like we just charge, okay, what kind of assets, problems that we do that. And there, for example, we have also mentioned about mine impairment. So we also can see that compared with this 5-year plan, we haven't got that. So within 5 years, we just not constructed. However, we just have to keep that. So for last year, it's not a standard for the mines have been less or worse. And then we also can see you just defined as like a nonperforming as an energy company, you need to have like have a lot of stuff. I know, I know. I mean the thing is that every time when we ask about this impairment, you always like use this like exploration rights. However, it's not acting that you have this exploration right. But there for so many years on that, you are always doing this impairment. I think that if you every year, you just [indiscernible] what about you can be transparent, how significant the problem is, okay, just to be more transparent with us. The thing is you can see our asset structure. So for about 340 billion, about 64% and above it's all about the fixed assets. So we also can see and the product hydro and they are always like creating new profit and this is our growth. And then indeed, we also have this kind of for example, like they come to the market. And then for this original one, and they are doing this kind of stuff. And we also can see this is like the energy company, and this is like our pattern. We really understand. However, just to give us more transparent information. So we really understand it's just that we can be more transparent about the information provision. So I would like to say like this. And we also can see this is more like the peak of our impairment. And we also can see that you always ask us to say more, and you blame me for like always talking about these sources and the assets, and you could all like judge like this.

Okay. So let's have this 837 investor to share with us, can you share with us your name and where you're from.

So my personal communication. So just now, you have talked about of this 2% of the cost of the loan. And then in the future, if you are going to improve our ROE and for our current debt scale, would it be like even more? Or we will be like a reduced to a more support area? And the next thing is so for our overall influence of this exploration expiration. So after this agreement being signed, will we also have some like higher cost?

So I would like to answer your first question. First, for our capital cost for our overall 85 million, except for about 200 million being short term and for the rest of that all be that long term. But the 2% is I have seen that it's about 3.6%. And when I say the 2% because we also have like our financial companies. And then we also use this existing cash flow to do this weighted calculation it's about comprehensive cost is about [indiscernible]. So it's about 51% of the liability for this report. So we also can see it's a difference from most of the company. And then we have this concentrated stock company and therefore, this continuation ones. And then if we just put them on this liability and then we have to kick them out. So for some actual -- like liability rate is about 48%. So for every year, it will be lowered by about 3% to 4%. So this is like for liability rate it's actually still being lower all the time. And for the future, we still will strengthen the transformation and development. So from these effects. And when we have like more projects being harvested and for the liability rate, you also can see that we could guarantee this certain profitability. And then it always be maintained at a stable and [indiscernible] condition. Thank you, all the leaders because of limited time and that's all for today. So let's see that any other things that the leaders want to add or something that you want to conclude. So now let's have this as Mr. [indiscernible], Executive Chairman, to share with you his conclusion.

Dear shareholders, investors, good afternoon. Here, I would like to represent the company to sincerely thank you for your participation and your long-term concern and support and the company will strictly stick to this like ambitious development but with stability maintained to comprehensively implement this first level, first class energy company internationally and constantly seek a new path and then to have this new development and with the new opportunities that make progress steadily and far rating ones. Thank you so much for your contribution made to our company. And looking to the future, with this critical period when building the [indiscernible] country in all around the way we must support our head into the future. We've priced and innovative and strive to create a new situation of the high-quality development of China Coal and have this better value for investors. Thank you.

Thank you. Thank you so much.

Thank you. And thank you so much for today. And thank you so much for the leaders and for all the investors. I wish you all happy life and all the best. [indiscernible]. [Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]