China Coal Energy Company Limited ($1898)

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

Thank you dear investors and analysts, good afternoon. I am Jiang Qun, Board Secretary of China Coal Energy. Welcome to our results presentation. Attending today's meetings are Deputy Secretary of the Porte Company, Executive Director and President, Mr. Gao Shigang; Mr. Jing Fengru, Independent Executive Director; Mr. Chai Qiaolin, Chief Financial Officer; as well as the head and staff from Securities of Finance Department, Planning and Development Department, Corporate Finance department, Co-business Department and Chemical Business Department, Power Business Department and Marketing Management Office. We sincerely thank you all for your long-term care and support of the company. Now I will brief you on China Coal Energy's operating results for the first quarter in '26 and the main work arrangements for the second quarter. Unless otherwise specified, the following data are calculated on the Chinese accounting standards. In Q1, the company resolutely implemented the decisions and deployments of the CPC Central Committee and as they consult deeply pursue the development philosophy of improving efficiency from existing assets and transforming through incremental growth and fully advance the various measures to stabilize production and sales Des by challenges such as change in geological conditions in some mines, we strengthened production sales coordination, enhanced refined management, ensuring smooth and stable operations. Under Chinese accounting standards, the company achieved operating revenue of CNY 34,189 million, total profit of CNY 5,641 million. Net profit attributable to shareholders of CNY 3,844 million, and basic earnings per share is CNY 0.29. The main features of the company's operation and production in Q1 are as follows: Firstly, with the full efforts to stabilize production and sales with scientific approach. The company worked hard to overcome challenges such as change in geological conditions and increased difficulty in production, achieving commercial coal production of 30.17 million tonnes, a decrease of 3.18 million tons year-on-year. We step up efforts to sublet sales and ensure supply with commercial coal sales of 36.02 million tons, of which self-produced to commercial co-sales were 29.7 million tons, down 2.98 million tons year-on-year. For the coal chemical business, we coordinate safe production and plant operation, completing output of major cochemical products of 1.554 million tonnes, including 373,000 tons of polyolefins, 537 tonnes of urea and 524,000 tonnes for methanol, roughly flat year-on-year. Sales volume was 1.703 million tonnes, up 4.8% year-on-year. Second, simply in quality improvement and cost initiatives the company dynamically optimize the production and cost control for logistics and sales. Unit selling costs of self-operated commercial coal was 278.76 tonnes, up 3.3% year-on-year, mainly due to higher labor costs from converting outsourced production teams to in-house operation with a higher social security lower production sales volume led to higher unit material costs and depreciation and amortization costs. Other costs decreased year-on-year due to increased conversion of outsourcing to in-house operation and reduce the outsourced stripping volume in open pit mines, benefiting from lower purchase prices of feed coal and fuel coal the co chemical business saw unit selling cost of polyolefins at CNY 5.545 per tonne, down 4%. Urea unit selling cost at CNY 1,318 per tonne, down 1.8%, and methanol unit selling cost at CNY 1,354 per tonne, down 4.2%; three, major product prices stabilized with coal prices up slightly year-on-year. The company's comprehensive selling price of sale produced to commercial coal was 496 tonnes, up by RMB 4 per tonne year-on-year. Among that thermal coal price with CNY 465 per tonne, up CNY 11 per tonne. And coking coal price was CNY 991 per tonne, up by CNY 69 per tonne. Coal chemical products prices continue to show diverging trends. Although polyolefin prices rose in March, the average selling price of the polyolefins in January to March was CNY 6,274 per tonne, down 8.8% year-on-year due to a significant decline in the January to February. Urea price was CNY 1,793 per tonne, up 9.3%. Ammonium nitrate price was CNY 1,813 per tonne, down 2.6%. Fourth, resilient operating performance and continued optimization of financial structure against the backdrop of lower coal production and rigid cost increases, the company adopted multiple measures to offset cost pressures and achieved a total profit of CNY 5,641 million, down 9.2%. Key factors include profit increasing factors including an increase in investment income of CNY 169 million, a profit increase of CNY 158 million from the power business. And the profit increase of CNY 119 million from higher coal prices and a profit increase of CNY 108 million from reduced taxes and surcharges. Profit reducing factors included a profit decrease of CNY 661 million from lower sales produced commercial coal sales volume, a profit decrease of CNY 254 million from higher unit selling cost of self-produced commercial coal. A profit decrease of CNY 67 million from the financial business, a profit decrease of CNY 52 million from the coal chemical business and a profit decrease of CNY 41 million from higher period expenses. The company continued to strengthen lean management and maintain good levels of our overall labor productivity and operating cash to sales ratio. Second, key work arrangement for Q2. Since the beginning of this year, China's macro policies have been coordinated and intensify major project construction has accelerated. Investment growth has turned positive. The domestic demand market has steadily recovered. Export growth has exceeded expectations and positive factors in economic operations have continued to increase. is a critical transitional period. The company will further strengthen production organization, refine measures to tap potential and increase efficiency, ensure that all operating indicators achieve all the milestone targets. Firstly, we will continue to strengthen production sales coordination to go all out to promote output and quality; second, deepen lean management and cost control, tapping the potential for cost reduction and thirdly, steadily advanced key project construction accelerate implementation and effectiveness of the 2 integrations. Fourthly, continuously improve our corporate governance and information disclosure quality, deepen communication with investors and maintain good image in the capital market. And going forward, the company will adhere to the bottom line of a safe development and unswervingly pursue high color development. Thank you all. Now we are opening the floor for questions.

[Operator Instructions] Thank all management.

I am [ Sung Tru ] an analyst from Pharma ChancaSecurities. I have 2 questions. Firstly, in Q1 for the thermal mines and also for the coking coal prices have increased. So what is the reason behind that? And what is the continuity for these 2 products? Is it going to be consistent?

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

Thank you for your question. In 2026, China Coal Group and also China Coal Energy. Our overall sales structure and marketing system remains consistent with 2025, but the pricing has registered some changes. So from January to March, the price has increased from less than CNY 700 to CNY 780 and by the end of March, I think it's around CNY 750 million. And the long-term agreement prices is about RMB 8 lower than Q1 last year. And for the spot market price, last year, it was turning down, but this year, it is trending up. So the spot market price is like RMB 13 higher than same period last year. And in 2026, there were some changes in the sales structure in terms of the launch and agreement sales and also the product structure, the product mix has also changed. So because we have a lower sales proportion from our long-term agreements and also the launch an agreement pricing is different from last year by the difference of RMB 8. And for the spot market, the price is RMB 13 higher. So that's why the overall pricing is better. And also in 2026. Again, because of the lower long-term agreement volume and higher spot market pricing, normally in Q1, the market was not very good and the price should go up or is something that we could look forward to by optimizing the management or by optimizing the contractual structures. So it's going to be sustainable.

For my second question, it's about the coal chemicals. In the single quarter, the quarterly pricing has turned down. But for methanol and also for polyolefins, actually, the overall prices have increased a lot. So what's your take on the magnitude of profitability increase for March. So any guidance on the profitability improvement. And also, are there any guidance for the annual profitability improvement for the chemicals. Can you help us to break it down?

Sorry, let me repeat your question. You mean that our expectations of the profitability generated by the coal chemical business. Is that the question? Yes. I mean, like a quarter-on-quarter basis, how much will it be improved? Okay. Let me address this question. So in the previous presentation, it's been mentioned that in March, the cochemical price has come down, mostly because of the co chemical price was at a low level from January to February. But for well-known reasons, in March, the chemical price has increased because of the new market landscape. So that's why the company's co-clinical product prices have increased. However, in average, the overall pricing from January to March was not as high as expected. And later on, I could ask the finance people to break down the profitability for the co chemicals for Q1 and also for March. And regarding the future outlook, but especially from this moment to end year and like the trend of profitability for cochemical. It's fair to say that it's highly subject to the market environment and also the international landscape. So it's really hard to say. And regarding the -- how the coal chemical price would trend, I could also ask our colleagues from marketing office to share more about it. Okay. So I would ask our colleague from the marketing office to share his views about the pricing trend for coal chemical.

Okay. Thank you for the question. In the 2025 annual results announcement, we have made some comments regarding the supply and demand landscape and dynamics in '26. The overall impression is that the supply and demand for co chemical in China, there's oversupply. And also, the energy pricing would have a short-lived impact or unsustainable impact on the coal chemical business. So there are different opinions regarding the international conflict. And some say that it will be in within 3 months, some say we did 6 months, something down 6 months. So all of these will affect the crude oil price. So if the conflict will last for over 3 months and the crude oil price maintain like over CNY 80 million, then that means the energy pricing system would be relatively strong, and that will also affect the demand for the co chemical products. So from March to April, the coal chemical pricing has increased by like up to 40%. And this week, it has go down by a few hundred. So down by 3% to 5%, which is aligned with market expectations.

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

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

[Operator Instructions]

Thank you for this opportunity. First, I want to say congratulations to China Coal Energy for your excellent performance. I have 2 questions. It's more of a follow-up question. Previously, you said that in our thermal coal and you had higher sales in a more premium variety and in the annual report, if I remember correctly, in 2025, your calorific value in 2025 is up by [ CNY 200 ]. And in Q1, the thermal coal's pricing in general is going down. So do you expect even more improvement in your quality of coal or a high calorific coal. Do you give a higher wage? Do you expect that to happen? Question number two, since we have the coal chemical business, and many other players, they also do this and they need to have some maintenance and repair sessions. And for now, the margin of coal chemical business is buoyant. And in the coming quarters, do you expect some maintenance or impairing sessions that could affect -- that could drag down the scheduling and manufacturing for some products? That's my question.

Okay. About the pricing of our coal, yes, it's true, we have been improving the coal quality. In Q1, the average calorific value of our coal was improved by RMB 100, giving us RMB 27 more per tonne and that raised the average selling price of our coal by RMB 16. And based on what Mr. Li has said about how the general pricing is going down and how we have a different portfolio lower in LTA and the change in price. That is why you see the price we got. And in the future, we will continue to improve the quality of our coal. We will such a higher price for the more premium coal -- as for the quality of the coal and its boost to our profit margin, how sustained will it be it depends because we have started this measure starting from last year. We already saw the improvement in quality, but the longer it is in place. There will be less of the marginal, in fact, margin improvement to our margin. And about the coal-chemical maintenance and repair session. I will give it to my colleagues.

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

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

We will give the floor to the participant phone number [Operator Instructions].

Thank you for this opportunity. I am from Citic Securities . I am Zhao Bolin. I have 2 questions. The first 1 is about coal costs in our Q1 report for the in-house coal. You have reduced the health of the outsourced work that is whether it's less of the expenses there. But we don't see other expenses being affected. So I wonder, will it also affect -- will it still affect your cost in the future. And with the magnitude of the impact from this outsourcing a lot for this year. Issue from the finance department. So in our other costs, the Q1 specialty fund use is lower than last year. The specialty funds and the use of it, it based on the rules and regulations strictly. So about the mine underground safety, infrastructure and the improvement, those requirements, those actual needs on the ground would determine how much we use those specialty funds. Question about coal chemical costs. I've seen how the units posted in Q1 for polyolefin has been turning down. And for the raw material cost and also the selling price of the coal has been trending up. So I want to know more about your lower production cost, how can you cut the cost like this? And how will the feedstock expenses change in the future?

Thank you. Mr. [indiscernible] has said already for our price, helping selling price coal, we have improved the product mix, and we have better coordination of production and sales, and we improved the core quality. That's how we are charging a higher price. But for the spot price is in line with the market trend. As for the chemical feedstock procurement price, it's also reflected in there, too. Question, so you have higher selling price because you have a more premium coal? And as for the chemical pricing, you fluctuate with the market trend, is that correct? And Mr. Jonathon saying, we have said explicitly our in-house coal has a higher price. It is affected more by the Pinghuo coal because the Pinghuo coal accounts for a very big chunk of our sold coals, sub coals that we sell to the others. And for the coal chemical raw material, we source it from Yulin and Ordos, it's different from the Pinghuo coal. So we use the coal sourced locally from Inner Mongolia hurdles under lean. So part of the coal we use for the coal chemical business, it is -- part of it is from our own in-house production and the other is from the third party that we procure from other vendors. And whether it's in-house, coal or procurement from third parties is all market based. So that is why the pricing trend deeds from the with our selling price.

[Operator Instructions]

Greetings, everyone. I am [indiscernible] Securities and I have 3 questions for the management team. Our Q1 coal production is down on a quarter-over-quarter basis. So I want to know the factors reducing our production. Is it -- hadn't blown over yet? Can we recover the loss production here so that we can have flattish production on a year-over-year basis. And question number two, what is the situation with our long-term agreement here? For some of the coal manufacturers in Shanxi, Shanxi and Inner Mongolia, they're pricing their products based on the NDRC. But others, they are pricing their products based on each pit with the clients. So for the long-term agreement for some hits, how do you price your products? Question number three, for the investment return, you have gained more than RMB 100 million is different from the general market trend. And in Q1, your pricing for coal has also grown. So my question is that for the investment companies for the companies that you have invested in, have they got better quality in heel is that why you have better investment yield for your first question about the production and whether we can recover the lost ground. I will give the floor to Mr. Ding.

Okay. Thank you for your question. In Q1, and because of the geopolitical because of the geological environment changing of Pinghuo and also since we have more of the outsourced labor to in-house because of these changes, we had some production reduction. For Pinghuo and Cbay companies, their working environment has gone back to normal. And for the for the other location, it is still being affected. And for the next step, we will do what we can to make sure we can have the normal production and repair to try to produce even more than our numbers last year. Mr. Pinghuo is saying we have disclosed to the market, our production plan for commercial coal, and we will try to go by our plan and even overshoot our plan. But still for your investment, please face your calculations on our production plan. for your model making as for the pit level LTA pricing, I'll give the floor to Mr. Lee.

Okay. Thank you for your questions. Thank you for the question. In 2026, the NDRC has a very clear guidelines about the long-term pricing it's going to be consisting of a benchmark price plus dynamic pricing, but this is also subject to supply-demand dynamics based on their willingness and their consent. So we have also followed this model, long-term price and benchmark pricing plus the dynamic pricing. So from January to March, basically, we are using the upper limit of the guide price. And also, we have to take reference of some pricing indicators without major adjustment. And compared with 2025 -- in 2025, the long-term pricing, the pricing has been quite volatile, which has led to the difficulties in executing these motor prices. And this year, based on the existing long-term pricing system, we have established some additional mechanisms and special pricing depending on the market situation and also in certain regions. I -- that's all. Okay. That's very clear. Yes, the third question is about the. I would ask our finance colleague, Mistry, to address the question okay the investment income has increased by CNY 169 million, and this is mostly because of the profit gains of the companies that Clinical Energy is a shareholder of. For example, the Zhongnan company, the sales and production volume has increased by CNY 68 million and also 1 of the other companies hanging coking coal in Q1, the production sales volume also increased by 40%. So the overall investment income of the company has increased as a result of it.

[indiscernible] projections, it might go down. So what is the proportion of the thermal coal out of the total add coal sales? And whether that proportion will fluctuate throughout the year? Or will there be any seasonal changes? This is my first question. Okay. I would ask Mr. Lee from our marketing office to address the question.

Thank you for this question about the long-term contract signing. So the NDRC has a strict stimulations about the signing of long-term agreements in 2026. The principles remain the same with '25, so the cap is at 75% of the production volume. But considering the demand in 2026 for thermal coal and also in 2025, the actual signed volume has not reached the designated volume. So NDRC has made some adjustment about the volume and proportion. And I can't disclose the exact numbers because it's related to the state plan, but it has go down a little bit. And also for the fulfillment of a long-term contract, NDRC has also very clear requirements. It's going to be delivered in a balanced manner from January to March, facing such a supply pressure, our long-term fulfillment has also surpassed 90% throughout the year, the fulfillment rate will be over 90%. Maybe there could be monthly fluctuations, but nothing major. Because China Coke Group has very strict execution plans about these long-term contracts and also with a very stable supply-demand relationship. So there won't be any major changes in that regard.

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

Regarding the cost, this year, the cost has increased by at 3.3% year-on-year, mostly because of the volume changes. And also 60% to 70% of the asset-based costs are rigid. So it's not very scientific to expect it to go down all the way. So we're also implementing cost initiatives -- we are strengthening the control of the production process and to empower the production with technology as well as strengthening the cost control for equipment and also the company is stepping up the investment in safe and environmental protection as well as some smart and intelligent features. Currently, the company's cost is at a relatively low level. And in 2026, we will continuously implement the reasonable cost initiatives.

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

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

Next investor with the [indiscernible] please name yourself and institution.

Dear management I am [ Want Tao ] from Oriental Wealth Securities. I have 2 questions. Firstly, just now Mr. [indiscernible] has mentioned that the thermal value of some coal money area has increased by 100 calories. So what is the current catarrific value of these mines? And whether these kind of value increase is going to be normalized or not? I will ask a question 1 by one.

Okay. So for the -- our main product, the calorific value is about like 4,500 give and take. And based on the market demand and also based on the geological conditions, it will fluctuate. So the 100 salaries is an increase of on a year-on-year basis. As mentioned earlier, within this year, that number is likely to change because we are strengthening the quality management, and these measures have been implemented since last year. So as time goes by. In other words, in the second half last year, there were some good outcomes. And when we disclosed last year's annual financial statement, we have pointed out that the core quality has improved last year. And also, we have improved the's results, and we have also produced the high-grade coals like for the 5,000 or 5,500 coal. So that's why the overall quality and coal grades have improved. And for this year, particularly for the second half, whether the year-on-year increase will maintain such a magnitude, that's unlikely because in Q1, the year-on-year increase would -- could still be quite significant. But after Q1, I think that trend with be moderated. But again, this is subject to the market landscape. So the coal quality changes is related to the geological conditions and also it's related to the product mix. So we are prioritizing the calls with a high calorific value, but that means that the overall production volume might go down slightly. So we are looking for the sweet spot based on the market dynamics. Okay. That's very clear. So you mentioned that these measures started to be implemented in the second half last year. It's from Q2 last year or from what date? Okay. Let me put it this way. We started to formulate measures like early last year. But as time goes by, there are the results becomes more significant. Okay. That's clear.

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

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

Thank you, Mr. Zhao. I want to ask a follow-up question about the industry about the coal chemical and also for the potentially newly approved projects, any hints about the progress of these new projects? Is it going to be more relax. Are you talking about the Pinto co chemical project? I didn't get that.

Yes, it's the new coal chemical project not the unit Phase II project. Okay. I would ask my colleague from the coal chemical BU to address the question. Okay. So for the inshore project, we are still actively driving this project forward. And based on the latest requirement from NDRC, we are very active to optimize our plan and also to refile the materials. We'll try to submit the third declaration materials to NDRC in June.

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

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

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

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

Okay. Here it goes. In Q1, the in-house coal sales was down by CNY 2.9 million, and less revenue from the trading coal, but you have better margin in Q1.

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

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

Okay. Thank you for the question about our trading coal. Over the years, for the leading business of coal, we have stepped up our management especially after the policy measures about the trading call we have beefed up our procurement and risk control. So although the volume for trading coal has gone down a little, just for the margin and for the best -- for the risk control, we have done better, and we are sourcing more directly and we have made good progress here. So for trading coal in 2025, it has -- the volume has shrunk a little. And after a year's adjustment this year, the trading cost structure and margin has more stabilized, and we expect that trend to hold. Commercial coal cost has gone up in Q1, that's because we had less production. For the in-house coal production, 60% to 70% of that is in [indiscernible]. So for the more variable controllable costs, we could further do cost down. And we could better control the cost from the sources and also the cost during the manufacturing process, we would have strict control of all expenses, and we would use more advanced technologies to improve efficiency. That's how we intend to do cost down. For now, our cost is already capped at a very low level. And if there is any cost of changes, it must be aligned with our manufacturing demand. And in 2026, we plan to continue our very scientific and strict cost optimization.

The next question for the management is, what's your plan for the capacity addition during the 15- to 5-year plan for coal production.

From Strategy Department, Mr. Feng. During the 15th 5-year plan, we expect a smooth capacity addition pattern in mid 15th 5-year plan for the newly build comes that they will have the full year ramp up. And by then, we will have a very smooth, and then based on the market conditions based on the government requirements and LTAs, we will schedule our production. And by year, in 2027, we expect CNY 130 million 2028, was CNY 135 million by 2029, CNY 140 million 2030 CNY 150 million.

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

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

Answer, Well, over the years, our utilization rate has been 10%, it has never gone above 100%. And the maximum level could be at 110% of the designated capacity.

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

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

From Mr. Tan. In 2026, our we have planned this RMB 21.3 billion of CapEx for coal, electricity and coal chemical. We have some of the projects being built and some other new projects. And if we make key progress in the polyolefin projects, we would disclose it in a timely manner. For the 15th 5-year plan, we are making the high-level plan here. If there is anything new here, we will disclose it as soon as possible. And we have about, again, RMB 20 billion of CapEx planned for the 15th 5-year plan. And about the future payout China Coal Energy has set store by the shareholder return. We have always had a payout ratio of above 30%. And based on capital market expectations in the recent years. We increased the payout ratio from 30% to 35%, and we have more frequent payouts. We have not just the annual payout and of the year payout, we also have the midterm payout so that we can better answer the expectations from investors for a shareholder return. And considering our long-term development means since we want to expand further and make us an even stronger manufacturers. So in the recent terms, we want to -- we are very highly likely to keep the payout ratio at the current level. Next question. our co chemical business in Xinjang and also coproduction. And do you have any new plans to produce coal and do coal chemical Inner Mongolia?

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

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

Next question. So what is the year-over-year production volume change for the high grade.

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

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

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