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

Distinguished leaders and investors, I am Shudong and welcome you to participate in this Semi-Annual Performance Briefing of the company in 2023. I sincerely thank you for this long-term concern, support and care for the company. We have with us CFO, Chai Qiaolin. We also have with us Security Affairs Department, Strategic Planning Department, Finance Department, Coal Business Department, Coal Chemical Industry Department, Electric Power and New Energy Department, Coal Sales Center, Chemical Product Sales Center. Now I'm going to introduce this brief introduction of the company's performance in H1. For the H1, this year, the company fully implemented development idea of improving our stock capacity and improve this efficiency and then to have this restructuring of this overall growth. And now we have already got this overall high quality development, maintaining a stable trend. So the first one is the coal production. We have already got output of commercial coal was 67.12 million tonnes, increase of 7.89 million tonnes by 13.3%. The sales volume of commercial coal was 147 million tonnes, increase of 13.17 million tonnes by 9.9%. Among them, the sales volume of self-produced coal was 64.85 million tonnes, a year-on-year increase of 10.6%. And we have this buyout trade coal sales reached 76.2 million tonnes, up by 10.5% Y-o-Y. The sales volume of Asian coal was 5.61 million tonnes, down by 4.6%. And then for the selling price. The average selling price of self-produced is CNY 624 per tonne, down by CNY 128 and the thermal coal is CNY 548 per tonne, down by 13.8%. And the average selling price of coking coal is CNY 1,412 per tonne, down by 23.1%. The average selling price of buyout trade coal was CNY 692 per tonne, down by 16.9%. And then the next one is about our production and sales of our major coal chemical products. The output of polyolefin was 762,000 tonnes, up by 1.3% Y-o-Y. Sales volume of 749,000 tonnes, up by 3.0% and urea output was 986,000 tonnes, down by 1.8%. Sales volume was 1.199 million tonnes, up by 5.0%. The methanol output was 965,000 tonnes, down by 0.5%. And then the output of ammonium nitrate was 290,000 tonnes, Y-o-Y increase of 32.4%. So all the selling price of main coal chemical products. The sales price of polyolefin is CNY 6,903 per tonne, down by CNY 807 per tonne. The sales price of urea was CNY 2,484 per tonne, a Y-o-Y decrease of CNY 240 per tonne, down by 8.8%. The sales price of methanol was CNY 1,770 per tonne, down by 7.8%. The sales price of ammonium nitrate was CNY 2,414 per tonne. The cost of main coal chemical products. The unit sales cost of polyolefin was CNY 6,055 per tonne, Y-o-Y decrease of 10.6%. The unit sales cost of urea was CNY 1,680 and the unit sales cost of methanol was CNY 1,973. And then equipment business, the output value of coal mining equipment was CNY 4.91 billion, up by 14.8%. Financial business operating income after deducting intersegment transactions was CNY 928 million, an increase of CNY 12 million or 1.3% Y-o-Y. Other businesses: we have operating income after deducting the intersegment transaction, including electricity, aluminum, processing equipment, et cetera; it altogether was CNY 356 billion, up by 2.9%. So some main financial indicators. In the first half of the year, the company achieved an operating income of CNY 109.357 billion and total profit was CNY 20.138 billion. And the net profit attributable to shareholders of listed companies was CNY 11.835 billion. The basic earning per share was CNY 0.89 and a Y-o-Y decrease of CNY 0.12. And therefore, H1 this year we have CNY 109.357 billion so it's down by 7.4%. The CAGR growth is 8.5%. So the total profit was CNY 20.138 billion, as I said before, and this market condition is not very good and we still strive to make the positive ones. So the CAGR increase is also still quite high so the basic earnings per share was CNY 0.89, Y-o-Y decrease of CNY 0.12. So the weighted average return on equity was 8.63%. And we also have like this weighted average return on equity was 8.63%, down by 2.38%. The asset liability ratio was 49.9%, down by 1.6%. And we also can see that all together we have this profit increasing factors like sales volume of self-produced commercial coal increased by CNY 2.706 billion. And then the major risks are: the first one is we have this unit sales cost of self-produced commercial coal decreased and profit increased by CNY 1.404 billion. The financial: our overall price of self-produced commercial coal decreased by CNY 8.289 billion. And we have the investment income decrease by CNY 1.212 billion. And we all together have this self-produced commercial coal price decline with this reduced profit of CNY 8.289 billion. Investment income decreased by CNY 1.212 billion. So we can also see that the cash flow status in H1 of this year. The net cash flow from the company's operating activity was CNY 17.035 billion, a Y-o-Y decrease of CNY 3.087 billion and then the Y-o-Y decrease of CNY 2.007 billion and we have already formed different kinds of management methods to deal with that. So for H2 this year, we will still carry on this overall development of this high quality development and then to also strengthen our overall construction to have this overall annual work and then to strengthen this project development and then to perfectly realize all the different ones. And then to further enhance this energy security supply, guarantee capacity and promote this green and low carbon transformation development. The second is to thoroughly implement development requirements for this deepening and upgrading the reform of state-owned enterprises, promote the reform to be deeper and more practical with a higher level and we also have like continuously development of that. The third is adhere to this world-class benchmarking company and continue to further promote the lean management, vigorously carry out quality improvement and efficiency improvement, focus on improving this quality of this operating and development. And then the fourth one is continue to improve the innovation management system, to accelerate the construction of innovative competence and then to also accelerate the construction of an intelligent management and control platform integrating production, operation and management and drive transformation and development with innovation. The fifth, we will continue to adhere to this system concept and bottom-line thinking, better coordinate and develop this safety and security and also to have this better carbon emission reduction and to have this overall development of this green development. The sixth one is we actively promote the level of governance and the quality of information disclosure, actively promote the special work of improving the quality of listed company controlled by the central government and then fully complete the key tasks of different aspects. So all the management and all the colleagues of the company will bravely to take responsibility and act positively and focus on these key points and strengthen their overall efforts, develop new achievements with high quality, better serve the national strategy and give back to all the shareholders. I also hope to guarantee this realization of this year-round task and then to have this high quality development to better serve us and then to serve and pay back our investors and shareholders. That's all. So thank you. Now let's come to the Q&A session and I welcome all of you for your questions. Thank you.

[Operator Instructions] So now let's have 6402 to propose the question. So first tell us where are you from.

I am Minsheng Securities, Wang Sing. So I have 3 different questions to ask the company. The first one is about our CapEx because for entire H1, I see that CapEx is actually quite low. I would like to know what is the reason? And then we also can see that for the entire year, we have this overall adjustment of the CapEx, we have that. So for CapEx?

Okay. So for this, I would like to have our colleague to answer that. Thank you so much for the question.

So compared with 2022, we significantly improved the CapEx and we have about 24% of the realization. So we also can see the reason why. Number one is we strictly stick to this examination and then we also can see that for the time, it will be longer. So for this investment, we see this the return, it will be taking a longer period of time. Next the reason is when we do this restructuring and then it has something to do with this overall cycle of this macroeconomic condition. So these are the 2 reasons why we have the lower CapEx realization rates. And we also can see that for this annual plan, we don't have any adjustment for that.

Yes, I still have 2 more questions. I would like to ask them together. The second question is I would like to ask because for H1, we have this coking coal down by 23% of the unit sales. However, for this disclosure of the subsidiary financial information for this [indiscernible] that is only dropped by 4%. I would like to know why? And then the third question is about the Shaanxi Yulin, there's deep integration and we have about CNY 90 billion of this benefit and we still have about CNY 80 million of that. However, for this deep processing, we have about 70% of this investment is about CNY 14 billion. Do you still hope to use this loan to solve that? I want to know what's your consideration. That's the 2 questions I have.

Okay. So who wants to answer that? It's about this Yulin's deep processing project. Okay. So I would like to answer this question about Yulin's, the third question and you can also see it is about the capital gain and about our loan. I would like to have our colleagues to answer that. I will have Mr. Chai to answer that and later I also would like add up for this project for us.

You can also see for our investments that we have played a very good role for that and generally speaking for this overall development for this whole structure and because now and we have about CNY 90 billion to be down to CNY 30 billion. And we also can see that a part of that is we have about like the profit and we also can see it is about 15% of this gross margin to calculate, we only have about CNY 20 billion of this profit. So for different stages of the business operations of the company, we still need to hold our cash flow. The second one, we are still considering the next stage of that and in order to have like a better one and we also can see for this about CNY 20 billion of this loan that is about to expire. So we also would like to say that. So the second thing is for this overall CapEx and for all the different projects for this final investment, we could guarantee all those projects could be launched. And then the next thing is we need to have at least to have 30% of all the projects for that. So for this CapEx, we will just hold it a little bit. We will hold that for the different banks and they would follow us to give us the loan. So for this overall investment plan, we have this overall plan and then we can also see for China Coal, we have this very orderly management of our profit. So for this capital plan is like that because we hope to hold more cash flow. So for every year, we also have this existing money to have this report and declaration and then to also manage our cash flow and then this is the way for you. I hope I have answered your question.

Okay. Now I would like to answer the second question. I would like to know that for this [indiscernible] data, where did you get it for this semi-annual?

So for this [indiscernible], I have checked this semi-annual report, there's certain information about the subsidiary financial conditions.

So for H1 last year for the subsidiaries and we also can see that it's about like 2023 and this is about 31.15.

Now we have this investor with 1838. Please first tell me what's your name and where are you from.

I am Huatai Securities, Wang. I have 2 questions. The first one is for H1 for this output of the coal. Indeed this is actually quite good. Compared with other different companies, we have this very significant increase. We have already seen that for H1, we also have some new investments. And I would like to know what is this capacity for H2 and will it actually have more contribution for H2 or maybe for next year? And for the cost -- so maybe for Dahaize and we also have some increase of that. And we also could have some other like potential capacity that could be added and whether we could just put it in production. This is about the capacity and production. The second question is I would also like to know that for H1 this year and for next year for Kinetic Coal and for electricity coal, what is your prospect into the future?

Okay. For the first question, I will first have with us our coal business leader to answer that.

For H1 this year for this coal capacity, basically this is according to our plan, slightly higher than our plan. So we have about 67 million, basically satisfy our timeline and our plan according to the timeline for H2 and we have 2 important key points. The first one is about this potential increase and whether we could release some potential production because we are based on some other different coals and we put it in this protected list and we are also using several elements of that. So for this increment, it will not be clearly shown in H2 this year. So the third one is about like Dahaize. So for the future supply of Dahaize next year, I think we still certainly have some potential increase as a company. So for next year, main contribution of this new capacity is coming from Dahaize for this steam coal.

Okay. And for the next question, can you please repeat that?

For the second question, I would like to ask you to look forward to this H2 for this steam coal and coking coal's price prospect.

Okay. So you can also see for this price, we indeed look forward to that as one of the focuses. However, the market is always developing in an unexpected surprising way. So I would like to share with you from this demand and supply analysis, I found this supply so for H1's production is about [ 2.3 ] and there we already increased by 7.4% and it is up by 93%. So we also can see that from what you have already said, this is -- the guarantee of this production is being done orderly manner and this is also having a significant decline of this coal price internationally and we have this zero tariff policy where this is a very cheap imported one. So we can see that this import would definitely highly exceed that to have this great increase of that. So altogether for our imported coal and our capacity, I would like to say this is a very sufficient supply. And from the demand perspective we could feel that for the demand, this is quite weak growth and this is for the pandemic. After the pandemic, we have this very big reverse expectation. With this kind of supply demand relationship for H1, I think this is about it's going down for the price. So it's actually like CNY 722 and therefore this in stock is about CNY 1,042. So the price compared with last year, we still have like a quite a significant decline. And speaking of this demand of supply, we can also see that these are not very matchy and this is the reason why we have this price decrease. So if I look at half of this year, we have to demand on this industrial projects to be launched and with this is some macroeconomic recovery. So we still have some uncertainties. And then I will not have a very clear expectation for that. It depends on like how big the economic development will have that. So we still have a basic judgment is about a fluctuation moment, but it won't have a big increase. It won't have a big decline as well for the price of that. We think this is actually in the fluctuation range so for this freight coking coal, I think this is actually the supply is quite sufficient and the demand is actually not as high as we expected. So for this coking coal, we still use this low stock conditions so far this low stock status quo. So from this freight perspective, through a certain period of time it has reflected this overall negative view about the market. So for H1 of this year and I think it has already got about RMB 800 to RMB 1,000 per unit price, it's actually quite a big slump. And for H2 this year, our preliminary judgment is we could have this certain rebound. However for this positive market trend, it's actually quite hard to be got. And therefore, this later of the time we would like to see that what is the support of that if it has this certain lifting of these restrictions, we will definitely have some positive trends. However, for our preliminary judgment, it's actually quite low momentum of the growth. That's all from me. Thank you so much for your question.

And now we will have this word question. The first one is congratulate you on all this disclosed this ranking as a second one only next to Shenhua. So for this dividend, information is actually closely related to this stock one. So China Coal for this liability sheet is all being very good. So we have about this debt has lowered to about CNY 18 billion so far [Foreign Language]. So for this dividend are all like being maintained at 60%. So I think if we could improve this dividend ratio, it could actually have better evaluation for our stock price. So do you have this kind of consideration to follow suit?

So because for this, first, we will definitely have this very good consideration. We will take it seriously. So for the dividend issuance, we have the benchmark like Mr. Chai has also mentioned. We also are like having some constitutional parts of a different cash flow we have. So currently speaking, I think we will not have this very big change of that. And therefore this annual dividend, we will have a yearly dividend plan. For 2023 for this kind of situation, we will wait until next year's March for this annual report when it is released, we will have that.

Okay. We will just disclose that next year with this next annual report. So next question from this online is for this different coal industry for this income. So does it mean for these different distributions of the different areas of Chinese assets, it will all be offsetted?

So indeed for this income of this chemical coals and when we consolidate it, yes, they have been offsetted. So we can also see for this about CNY 4.832 billion. So for this coal and coal chemical, they have been offsetted for the rest of year between them. And the other part is about the construction about this coal plant's establishment, you have about CNY 1.7 billion.

Okay. Got it. So the next question is we have already seen that you are doing this thermal electricity bidding and tendering. So how do you consider about this integrated coal electricity, the thermal electricity for the listed company? How do you plan to have this thermal coal electricity projects?

So we can also see that as Yi has said for this group's thermal integrated tendering and bidding and we also have several different considerations. And then concentrated on this corporation within our own group. So we also have already seen that for sales team for this thermal electricity for this area of the business is not like our major business. Maybe in the future we will consider some other partners cooperating with some other organizations to see the final situation of this implementation and as prerequisite of this implementation and investment to comprehensively consider this future development based on all the things we have.

Okay. So next question is with calculation, we could have this 2Q's sales price is about CNY 520. So Q1 is about CNY 576 because for this thermal coal, 80% are all about long-term price. However, this is with very big fluctuations. Can you tell me when you have this Y-o-Y significant decrease of the price of this thermal coal, why is that? Can you tell me why is that? Because 80% of that coming from this long-term agreement price so why is it having such big decline [Technical difficulty]?

We've already got the question, but we are discussing who to answer that.

Let's see that whether investors want to speak directly to our managers.

[Operator Instructions] So now let's see whether you could directly answer the question or you would first connect to this telephone questions.

[Technical difficulty]

So what about we allow the leaders to prepare for the answer one more time.

Okay. We can directly answer that. We will just have our sales colleagues to answer that.

Thank you so much for the question. We were discussing Yulin is about this price decline of the steam coal and about this mid and long-term contractual price. It is not in line with that. Are you asking that? I would like to double confirm are you asking this question? So for this question because for China Coal, we directly stick to this [ SAS ] requirement about the work and then we also can see that we also have this mid- and long-term agreement. We also have this small amount of this [ R ] stock sales. This is just about the surprise decline of this R stock sales and that led to that.

Now let's have another question. So we will have 1683 to answer that. So first let us know who you are and what's your name.

I am [indiscernible], Procurement Fund Development. I would like to know that you have added about CNY 2.9 billion so we have about CNY 2.29 billion. So we have CNY 690 million for this entrance and allowance of that. Can you first talk about all those different rights of mining separately?

Okay. And for H1, as you said, for this rights, we have added additional CNY 2 billion. So this CNY 2.2 billion is our new procurement and it's about the national policy according to this actual ones and we have confirmed that. And this is about the overall staff. And then the next thing is we also have some other different ones and this has already satisfied our confirmation condition. So we changed into the right of mining. We strictly stick to this national policy. So sorry, because the sound is not very clear. I cannot hear you clearly.

Okay. So I will speak up a little bit. So just now you have mentioned about this newly added ones. This is about our supply chain company. They have already got this newly acquired resources and then according to this certain policies, according to that we confirm them as the right of mining and this is the evaluation. You mean this is like this new mine being procured by you. You have newly acquired a mine?

Yes, this is new resources.

Okay. So you mean that for the mine? Okay. So this is just about this prospect. Right. So now we have this new mining rights, am I right?

So we can also see that we have already signed this agreement with this local government. We already signed this agreement and after this agreement being signed, we could have that. So for this, we have confirmed this right of mining because we have this short-term agreement with this local government. And now the reverse is also like some agreements we have already signed and this is just what we did and to confirm that, we already have a small amount is owned by us and now they have satisfied this confirmation and the transference of the right. So we confirm them as this right of mining.

Then I would like to have this 3585 to propose the question.

I am [indiscernible] So the previous question was me so far this 2Q for this thermal coal price. Because I first would like to explain and we've checked this compared with the previous quarter because this Q2 last year, it was actually quite a massive price. So it's actually about CNY 576. For Q2 is about CNY 520. We have about RMB 56 for this price fluctuation because 80% is about the long-term one. So for Q1 to Q2, only dropped by 9 for this CNY 5500. So for the 20% of this market coal has led us to this RMB 50 of that. So it means that it's calculated by about RMB 200 per tonne for this average price decline. So multiply it by 20%, you will have this. So I would like to know this is quite a big range of decline.

We cannot hear them. Please wait a sec. They are preparing to see how to answer your question.

I have another question. So what about you first? So the price change, did you just to have this kind of a card for example for Q2? So you have disclosed this kind of the number of cards of all those outdoor mines compared with Q1, has this declined? And for this, we cannot see that. We only can see is about like a 5,500 or like a 4,500 and then for your competitors, they all have disclosed that they have already got this all -- like a number of the units being declined. Does it also have something to do with that? The first one is about this market price decline, does it meaning that this number of the cards would also lead to this average price decline?

Okay. So first of all, thank you so much for the question. I think you really pay a lot of attention to that for this a price fluctuation and therefore how big is this market price. You have already calculated. Yes. So for this, I have like transaction price I would like to share with you so this is basically in line with that. For January, it's about CNY 1,200 on average; so February is CNY 1,100; for March is about CNY 1,130. This is the Q1 and this is about like around CNY 1,150. This is the on average wise. And therefore, April in Q2 and then the transaction price on average is about CNY 1,020; so for May, it's about CNY 950; so for June it's about CNY 800. Now I haven't done the calculation so we can also see on average. So if it has to reach about like RMB 200 of this steel price, yes, it's about like at least over RMB 150. Yes, it is comparable with your analysis. You have detailedly calculated that for us. So maybe later we also would like to learn from you for this aspect, we're going to do more considerations and reflections.

Okay. So does it have something to do with the number of the cards maybe for the average. So we can also see that you use like 4,700 to calculate that. How do you calculate according to the specifications?

And we also have this kind of like calculation method and this would also influence this. This is a comprehensive one and this is also about this ordinary coal, we have already disclosed that.

Any other questions from you? Okay. Now we will carry on allowing another word written question. The question is I would like to ask Mr. Chai whether you have this possibility of increase the dividend proportion. So this market value is like a long-term wise lower than this net asset and how do you think about it? And then for this national government and this NDRC's requirement, how do you feel about it?

For this dividend, after being listed we have about 30% of the dividend ratio in the entire market. We think this is still quite good, quite high proportion. The second thing for this dividend proportion have fully considered because we have to fully utilize our money and also satisfy the shareholders' demands and then to also do more investment. And then we also could have a better return and then to have all the 3 different aspects to be done because for this and we also have fully considered our counterparts and competitors in the market about this overall content and we could also compelling start to have this very scientific way of doing that. So I think now for the current one is like for all this dividend issuance and we are following the market where we also see how to do this overall development and the return of these investors. I think when we have this investors' profits and interest better invested in the long-term development, we could have a better dividend issuance in the future, right? So because of all the reasons, but generally speaking for our current dividend ratio, I think we are still following the market. For the second one, as you said, I have already paid attention to that because now the market price and the market value and for this comparison and indeed, we also can see that we have about this constant deepening and optimization of this asset. One is about profitability is constantly on the rise. So I think we will definitely have better share price. This is what we can do and we will try to do it and try to improve that. The other thing is we also have seen that for some different expansions, I welcome you, maybe you could just help us both online and offline where we'll have some discussions. We could just research and we also hope that we could have this long-term development, have this better payback and we also will do that and so we also hope that. This is the second thing. And the third thing is we also can say that maybe you could assume that for H1 this year compared with H1 last year for this profitability and revenue have all been lowered. However, you can also see that we have also done some further investment for H1 last year and we also have this very good CAGR. So it has already shown our competence. And we also can see for this price of the coal, we cannot control that. However, we have to rationally treat that and evaluate that. And we have also seen that we have already stressed about the raw material and the price. So for this, I think from this aspect, I would like to know that we still should be very positive. So for H1 this year, we have already seen this very reasonable decline of this too high -- overly high coal price and then it has also played a very good role of that. So we also can see that compared with H1 last year and for this year, we also feel that this is facilitating our long-term development. So from here we will also have this continuous growth and this positive growth. So although this background and environment is being restricted and we also could have better development. I don't know whether I have fully answered your question or not.

Okay. The next question is for this 2022 for this CNY 6 billion of the rights of the mining. We have this kind of a similar situation for this kind of provision for this accrual. Do you do this timely disclosure? So you cannot have this very effective communication with small and medium-sized stakeholders and shareholders. How would you improve that?

So for last few years, we continuously strengthened our lean management and then, as you said, we have this -- we have done this provision, you have also said that. And so the quality of this asset is definitely being consolidated all the time and then we also can see that this has definitely got this high quality development. For this bad quality of the asset, we do this provision for impairment, yes. And whether from the financial perspective, this is definitely we need to be done continuously. And then in the future for this target, we pay more attention to whether we do this impairment or not. Maybe for the end of this year, I don't know whether we have that or not. We still have to depend on this overall H2's situation and we constantly pay attention to the government, to the departments. If we have a certain similar requirement and policies, we will do this impairment test. If it is required, we will do that. But now I will not give you a confirmed answer is yes or no. I cannot answer that.

And I have something to add here is about like the financial colleague has already given a very clear answer, we could do this impairment according to the rules and regulations and we could do this impairment test to do it in appropriate time. And we also will do some -- like a different time and situation and we will also do a very timely communication and disclosure with you. So please, rest assured.

Now let's have 6461 to propose the question. First, tell us what's your name and where are you from.

I am a personal investor. I also pay attention to China Coal for a long period of time and I have a question. I would like to know because for H1 this year for this coal product cost, Y-o-Y it has dropped by 7.6% and this is actually quite well done among the competitors. But most of the companies for their single unit cost that they have analyzed. So I would like to hear from you a breakdown of the analysis for this single unit cost reduction so from CNY 380.7 to drop to this CNY 200-something. So where are they mainly from? So which are the aspects contributing to this lowering? Is this about this improvement of this overall capacity? And then made to this single cost and then it has led to some other different directions from the financial perspective to lead to this big cost reduction. Can you elaborate on that?

I would like to answer for that. So thank you so much for the question. For this overall Y-o-Y decline, indeed we have already seen for this accruals so this fixed cost would be lowered on average. And the next thing is as a company and we could also see we have this optimization and we also have some lack of procurement like volume-based procurement and to lower our cost is actually very stable. So the next thing is we also can see that we also have some different project adjustments. And for our project and for H1 this year, we indeed have lowered this newly added profit so this has lowered to this onetime investment. And we also can see that compared with several years ago and for this year, we have already got this overall leadership. So I think this is a guarantee that -- so we could guarantee this overall projects will be rolled out until a certain period of time. We could find that later -- we can do that until now. This is actually very well processed and this is for us to have a better cost. And then the next thing, forward delivery because a lot of our investment of this manufacturing and this is also about for example, we could have this overall adjustment. And then the next thing is they could be reduced so far this non-necessary expenditures. So that's the information. So we also can see that we also have some impairment and we are hoping to have this lower contracts of that and then we also have this policy of this Ministry of Finance and it has expanded, this certain threshold. And therefore like July and August, we could also have about CNY 20 less. So we also can see that there are different resources and indeed we don't have the space of doing that. And for the management and for the cost staff so we also can see for all this management.

Okay. Got it. I still have another question. That is because recently -- I would also like to know more because for this coal chemical and for L1 is actually quite low. I have also read that for this newly added ones so maybe for this newly added projects in principle, they will not do this disclosure. I also would like to know that for the information you have for the future and how many coal chemical projects, how many you have for our in-house investment? So this is -- what is this proportion of your [indiscernible]. And so what is the loans? Do you have like a preferential and better interest rate of all those loans you get?

So for this, this is about [ Mr. Wang ] from this coal chemical industry to control that because for this question you proposed. And we also can see for this coal chemical aspect, this is a very important business of our group. For these early stages, we have like the early stage of the operation. So now we are also considering some like for example it's about polyolefin. So we also can see, we hope to have this complete construction and we also have already considered for all this coal to generate to this hydrogen to have this polyolefin and what do we need to do is that we are still considering that.

So you don't have like new projects in plan for this chemical aspect?

So far coal chemical now, we don't have a lot of ones. We only have like a Shaanxi Yulin for this polyolefin deep integration ones for this future projects. We still don't have this condition to do that. If we have this condition to be disclosed with everybody, we will do that.

Okay. Just I still have another question is because I actually hope to know that what is the loan and what is the situation and what is the interest rates that you have? And I hope that can you explain to us?

And we also can see that this is 70% of our loans so currently this is the market interest rate we have from the banks. And now for this chemical ones so these are very good projects. For this, overall financing cost is quite low. For the current one is about 3% and this is in line with this national LPR 1-year interest rate. So this is what we have.

And now let's have another written question. This is currently speaking for the thermal coal supplies increase you have observed and then whether it will be like released gradually.

Okay. So we will first talk about this capacity release because at first and we have already heard some guarantee of the supply and for some capacity of the coal mines have already been released. And then for this release of the future, it will not be too big and this is about this coal productivity to be released. That's all I want to say. We would not release too much.

Okay. Next question is for all the leaders. Currently you have about CNY 90 billion on your book in your account so how much money is actually savings from other companies?

We will have Mr. Chai from finance to answer that.

And I would like to say that for the current is about CNY 93.7 billion around that and then we have about CNY 24 billion is from savings from other companies. And we have about CNY 24 billion for the savings.

Okay. So the next question is we would like to have 2 questions from the leaders. The first one is how do you think about the trend and what is that? So we also could see for all those different calculation and et cetera, how do you think about that?

So the first question about the price, I also would like to say that for all these and for those sales ones and we don't do this expectation. So for the future, this is about this income and business and this is about the corresponding supply chain and for this timely -- I hope that you could stay tuned if it's for the future adjustments.

Okay. So the next question. For 2023 for the cost of that, this is about CNY 285 billion, it has this Y-o-Y decrease. However, debt is about CNY 272 billion. So for the Dahaize, there's a scale effect, it doesn't lower the cost of this self-produced coal. So can you give me a very reasonable and detailed explanation for 2023 how do you change the cost or you could also give me a range of this expectation?

Okay. Indeed, as you said, so we also can see that for Q4 and based on this quarterly manner and we also can see for Q2 compared with that we have this increase. And for this cost management and it doesn't give full play to this scale effect, I would like to explain. And therefore, you mentioned about Dahaize and this is about this high efficiency and higher productivity one. This is far lower than our cost, it's far lower than our average ones. So for Dahaize so since the end of 2011, we started to do that for 2022 and we have already got this annual one. And for 2023 for the 2 years if you do that for this cost of Dahaize, maybe we also have this slight decline of that. However, it doesn't have this overall big decline of the cost. I don't know whether you could understand or not if I explain like this.

Okay. So the next question, do you have this possible capital investment from this group?

According to our understanding, I don't have that in plan. If I have that, I will disclose as soon as possible.

So I have 2 questions. The first one is for this cost per tonne is about CNY 285, it actually dropped by 7.6%. So for this outdoor one, it has also lowered this consumption of these materials. Can you explain for that? And then what is this expectation of that? And then the next thing is we have this half-year's CapEx to be declined. Do you also hope to have like a bigger impairment of H2? Do you have this a bigger impairment CapEx plan?

Because in Q2 for H1 and for this material one is actually down by CNY 1.28 billion and then we can also see that for this outdoor profit is lowered and therefore the materials is actually being lowered as well. So for this material cost is also lowered. This is the first question. What's the second question? And then it's about CapEx, for H2's CapEx. And just now we have already explained for CapEx for this year. For so many years we continuously having this high quality of management so for this low efficiency and low revenue of this asset -- this quality of asset is very good and it's being consolidated all the time. So from our revenue and operation, you can also see from there and then you can see that for H2 whether we do this CapEx. Indeed for asset we will do is a continuous one and now we do this analysis to see whether we have this impairment or something. This is a continuous one. So we will still do it as a continuous impairment and then so we also can see that this is also paying a lot of attention to that to see that whether they have some continuous ones. And then we will also follow that continuously to see that whether we would have some assets to be impaired or not. If we still have the signs and we will still do that according to the requirement to do the test. If it's according to the test and we have like specific different conditions, we would also deal with that. However, we also have already seen that if they have this kind of situation of this impairment, we will definitely tell you in advance to disclose them so to do this timely disclosure.

Okay. The next question is I would like to ask for this Pingshuo's outdoor mine, is it stable?

We don't have too big change. No big change.

The next question is for 2Q for the cost -- other cost it has significant increase for this single town is about CNY 54.5 so for 1Q is about CNY 33.8. Can you explain the details?

Okay. For Q2 cost. For Q2 for the cost and I have already uploaded that so it has some other different ones and I also have already said that in Q2 it's actually higher than Q1. It will be reflected also by lack of water treatment or something. They have all been added here so this is slightly higher.

Okay. So the next question is about financial company. Do you have invested in other trust products? Do you have some investment risks? Please answer that.

So for this, I would like to have our financial department.

Since establishment, we don't do any external risk investment. We only do some like self-owned law in our own system. We do this industrial investment. We don't do any of these. So we continuously will invest in our own businesses. So please rest assured.

So the next question is I would like to know that for the current manufacturing, how is that? What is the annual production? Can you answer that for us?

So thank you so much for the question. And this is about CNY 1.1 million and then also like realized more than CNY 0.5 million. And for H2, basically we could still realize the previous plan and for example we don't have some big changes.

So the next question is you can also see that the price is having this significant price decline for ethanol, why the production cost is significantly improved. Please answer that for me. Can you answer that?

So for the methanol costs, there are 2 different reasons. The first one is for this, the revenue is actually lowered for this byproduct, income is lower and then it has led to our higher ones. And then the next thing is we have this raw material and for this procurement price is also on the rise. So these are the 2 reasons.

So the next question is actually about -- so how much is actually sold by this [ Xiangning ]? What are sold by this Shanghai Energy? And why the sales of the coal have all been attributed to the thermal coal and for the coking coal is actually 0. Why is that?

So the first one is about like the kind of that because this is actually between the [indiscernible] and this is also like calculated this thermal coal. So we do like that according to the demand in this local market.

Okay. So the next question is for the self-owned coal, it has stopped sales for a long time. So can you also like let me know that how many years can it have this stable operation for how many years? Please answer that.

So for this [indiscernible] and this is our major coal base and we have about more than 10 years for the stable production. And so for all the different coals, it's not much left and then we could use it for about like 10 years.

Okay. Now let's tell them another way of proposing questions to see are there some different questions from the investors.

[Operator Instructions] Now let's have 837. To answer your question, please first tell us where are you from and what's your name?

And so for the Pingshuo one, I would like to ask for the year is for this remaining like the [indiscernible] account, how would it be changed?

So for the Pingshuo coal for the change, it will not have too big change because for this coal bed, it will not change too much. For the [indiscernible] account, it will not have too much change.

Now let's have another investor with the phone number ending with 9762 to answer that.

So I am [indiscernible]. I would like to probe the previous question is about the cost and coal chemical. And just now for this coal price, previously we also have some questions being proposed. I would still like to ask that because what we have seen is for H1 for this thermal coal, it has declined by 14% and then the market price is also down by 13%. If we say it's about like 80% of that and then we could also see that -- or why is that? Why it would like to have this kind of -- like the same kind of reduction with this stock price? I would also like to know that whether you could check this structure to give us a more detailed explanation. The second one you have already like answered a lot of -- sorry.

So first, you have so many questions, we still have to separate and answer. First, to answer your first question, okay?

So please answer the first question.

So part of this price of this thermal coal and about the change, right? So I have already explained and we also could see that for all the different cost and we actually still have this better focus on this thermal coal and for that. So we could also see that for all this, like price is actually having this big structure. So this is about the structure leading to this cost reduction and this is basically stable. And then we also can see that for our company and on the one hand -- so we also can see that our price is actually including everything. And of course this is -- on the one hand, this is about the price and we could also see that for all this profit or something and about the price is actually following that. And then the next thing is we also have some like market fluctuations so we just follow the market fluctuation with this price changed. I don't know whether I have explained this or not. So this is our Pingshuo Mine for the thermal coal and the price is actually following the market.

Okay. You first have answered that because of Pingshuo's profit is actually on the rise. So second question is you all have talked about this cost breakdown and then you have already said from this year-round perspective how would the cost change compare with last year from a whole year perspective?

We also can see that, first of all, is about this production and we could have this effective control. And the second thing is for this cost change and we also could see that if you could just control that and we could definitely help. And then if it's like half a year, basically this could already be all done and maybe for another period of time, we're going to control that. For example, we could also have some different cooperations and then we also can have -- so this could actually better like full play to the efficiency and then to guarantee this level and then to protect that. And I think we could have this better. So maybe we cannot -- for example for next year, we also have some other objective thing. It's not like our overall work we do that. And maybe so -- and for last year for all the work, we have to do that and to have this scientific calculation.

So the next one is a written one. We have seen that we have like CNY 86 billion to CNY 78 billion so the debt rate is lowered. Congratulations. You all have mentioned about 50% of that is quite reasonable. However, you can also see that this is not very reasonable and then you can also see that you have about CNY 92.7 billion. And now whether it's true and then not restricted. In the future, will you just lower the debt rate?

So for the debt rate and this is quite reasonable. Indeed for this overall like separated management and we can also see that for all those done in an orderly way. And if this is like lower the debt rate, but it's not in an orderly manner and this is actually not a very sustainable one. And then next thing so we could also see that how do we promote that. So we can also see that whether we could have this overall staff and including all the different deposits and for all those storage and then we have about -- theoretically, they could all be seen and with that. So another thing is -- so the first thing is about it's about over CNY 20 million and we also could see that for the biggest one is -- the second thing is we have also mentioned about this overall real estate market. It could also have like this debt we had in the early stage. So if we do that for this year for this 6/30 to another year of the 6/30, we have some other debt to be repaid with interest. So for the debt is a guarantee that for this cash flow is super for next year's payment. And then we have a bigger CapEx, these are just within our plan. Maybe in the future we also could have some others and for all these, you can also see that because in the future we could have some more and then we could still guarantee about like CNY 10 billion. On the prerequisite, we could guarantee to at least have about CNY 60 billion. And previously if we could all have that and then maybe for all these different ones so the next thing is we could guarantee about the logic. So with the logic there, maybe including for our patients, we could guarantee about our overall project. On the one hand, we have the cash flow of about [ CNY 11 billion ] and I have about like 1/3, I still have about CNY 4 billion and these are all like a small amount. So this is all the efforts we have done and you have to admit that it is like that. And we also can see this is what I don't agree that we should adjust for the sake of lowering of the debt rate and then to do that.

So the next question is about the revenue and the profit have all been lowered. However, for the expense have all been increased. It's actually a very big increase of the sales and expense and it is not in line with that. So for this management of this payment and the salary, is this like increasing too fast?

So for the sales expense is on the rise. It has increased by CNY 180 million. It's mainly about some sales related to that and this is also having something to do with that. So we also have seen that for that because this is actually quite limited. And then comparatively speaking for this year, this is still on the rise. Now this is about the sales expense. So for the rest of this other different cost increase, we have several ones because we have this increase of this salary. This is just like 1 part, but not a major part. Another thing is for 2022 Q4, we have procured some companies so we have already consolidated them. This is another one. And this is actually compared with H1 last year, this is also another increase. And the next thing is about we have calculated some periodical ones. So for the 2 years of the management fee are all analyzed. That's all.

Thank you for all the interaction and for the questions. That's all for today. And I would like to know that are there something you want to add? Are there anything?

I would like to do a -- I think for here, you all know that I would have to have a clarification. So for this preparation of the meeting if you come here and since 2016 until now so one is about the steel, one is about coal. So their requirement is actually to eliminate this quite lag behind and not advanced asset and strategy. And we also have already shut down some different low efficiency and high safety risk ones and this is still with a very high demand. So we also can see that with that, we also could see if we have some different coals and we didn't eliminate them. Maybe we still need to just do that. However, with this national government policy, we could just consolidate them. And then we also can see like we also have some different attention given and for example we also have some different cost reduction, et cetera. So we could definitely have this orderly development to promote that. However, we could guarantee that over like 50 years, maybe for the previous RMB 10,000, it could be lowered. And then for the policy influence, we have to consider that and we cannot say that -- maybe it does not mean that we could hold that. Maybe after 15 years later we just to do that. Maybe time efficiency is also what we need to consider and then we also need to consider for some other different situations, it is different. So this is what we hope that we could see all the documents disclosed by us and we also can say that for a company with CNY 34 billion, this is still about some different experiences and then if I don't pay any attention to that and I just manage like that. The other thing is in the future maybe we could also say that with this national policy, we don't have any big change compared with what we have now. With this current policy direction, we will not have too big changes. However, we definitely need to have all kinds of different stuff and that's a guarantee that for all the time to be condensed and then to have the target being in line with the national strategy. I also hope that you could also scientifically and rationally deal with all the data in our development. So thank you. Thank you for the conclusion and thank you for all the participation. Because of the limited time, we haven't got all of you answered and I also hope that you could contact with our security and public relationship department for the further answering. That's all for today's session. Thank you.

Thank you so much. That's all for today. Thank you. Wish you all the. Bye-bye. [Statements in English on this transcript were spoken by an interpreter present on the live call.]