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Financial Association News on August 29th (Reporter Zhang Liangde) Due to the decline in coking coal prices in the first half of the year and the general decrease in industry profitability, Huaibei Mining Holdings (600985.SH) saw a nearly 20% year-on-year decline in performance. Industry experts predict that as the output of pig iron continues to decrease, downstream pressure in the industry chain will transmit upstream, leading to a further decline in coking coal and coke prices in the third quarter, potentially further compressing industry profit margins.

After market hours today, Huaibei Mining Holdings disclosed its 2024 interim report, with the company achieving operating income of 37.236 billion yuan in the first half of the year, roughly the same as the same period last year; net income attributable to the shareholders of the listed company was 2.935 billion yuan, a year-on-year decrease of 18.19%.

As one of the representatives of dividend stocks, Huaibei Mining Holdings will not pay a mid-term dividend this year. However, the company stated in today's announcement on the "Action Plan for Quality Improvement and Efficiency Increase to Return in 2024" that it will actively respond to regulatory policy requirements by improving the mid-term dividend distribution mechanism through amendments to the "Articles of Association".

The company's revenue mainly comes from commodity trading, coal products, and coal chemical products. Compared to the same period last year, the revenue from the commodity trading sector has increased, rising from 16.413 billion yuan to 17.82 billion yuan this year; however, due to the decline in the selling prices of coal and coke products, revenue from coal products and coal chemical products has decreased. It is worth noting that the company's ethanol project has started to contribute income this year.

In the first half of the year, the company's coal production reached 10.3234 million tons, a year-on-year decrease of 8.86%; coal sales volume was 8.0329 million tons, a year-on-year decrease of 18.17%, generating a business income of 9.192 billion yuan, a year-on-year decrease of 26.23%. The gross profit from commodity coal business sales was 4.654 billion yuan, a 20.84% decrease from the same period last year.

Although the long-term contract price of coking coal in the third quarter is basically flat compared to the second quarter, the market price has continued to decline since July. It is expected that there may be a mid-quarter price adjustment for the coking coal long-term contract in this quarter, with industry insiders predicting a 200-300 yuan/ton decrease in the price of low-sulfur primary coking coal long-term contracts.

In the first half of the year, the main product of the coal chemical business of Huaibei Mining Holdings, coke, has basically remained the same as the same period last year. However, due to the decrease in the price of coke from 2524.90 yuan/ton in the same period last year to 2127.00 yuan/ton this year, a decrease of 15.76%, the overall sales revenue of this business has decreased from 4.304 billion yuan in the same period last year to 3.626 billion yuan, a year-on-year decrease of 15.74%.

As for the subsidiary, in addition to the certain impact on the company's profitability due to changes in product prices, Anhui Tanxin Technology Co., Ltd., a wholly-owned subsidiary of Huaibei Mining Holdings, also contributed to the company's revenue with its 0.6 million tons of anhydrous ethanol project. The project entered the trial production phase at the end of last year, with an expected annual consumption of 0.45 million tons of methanol after reaching full production, and the ability to achieve an annual production capacity of 0.6 million tons of anhydrous ethanol. However, according to the company's semi-annual report, the company only produced 0.0755 million tons of ethanol in the first half of the year and did not achieve full production, contributing revenue of 0.343 billion yuan to the company.

Regarding the annual operating plan, the company stated that it will strengthen management to reduce costs and increase efficiency, striving to achieve the annual production budget of 21.39 million tons of commodity coal, 4.2 million tons of coke, and 0.35 million tons of ethanol. The cost per ton of coal is expected to decrease by more than 5% year-on-year, and the clean coal yield is expected to reach 50%. Through the benchmarking management of the chemical sector, the company aims to optimize resource allocation and achieve increased profit and reduced losses for the chemical industry in 2024.

In addition, the Lixiangshenglong and Ledianxilang, and five other limestone mining projects will be completed and put into production by the end of this year. At that time, the company's limestone mining capacity will reach 26.5 million tons. The Tahuotu Mine in Inner Mongolia, with a designed production capacity of 8 million tons per year, is expected to be completed by the end of 2025. The 60MW centralized surface photovoltaic project will be fully connected to the grid and generate electricity by the end of 2024. The 2×660MW ultra-supercritical coal-fired generator set project is planned to achieve "double machine, double investment" by the end of 2025.