In the first half of this year, the performance of China’s top five coal giants, including Shenhua, was under pressure due to the continuous decline in coal prices, with net profits recording significant double-digit declines. Among them, the net profit of Shanmei International plummeted by 49.25% year-on-year, facing the dual challenges of soaring accounts receivable and lagging transformation efforts.
According to the latest statistics from Data Treasure, in the first half of this year, over 90% of listed coal companies nationwide saw a year-on-year decline in total operating income, with a similar percentage experiencing losses or declines in net profits. The substantial drop in coal prices has become a core factor dragging down performance, with the average transaction price of 5500 kcal power coal at Qinhuangdao Port plummeting by 22.2% year-on-year to about 685 yuan per ton.
Amid the overall industry weakness, Shanmei International saw a steep 31.28% year-on-year decline in operating income in the first half of the year, with a staggering 49.25% drop in net profit attributable to shareholders, far exceeding the industry average. Its coal production revenue sharply decreased by 29.59%, while coal costs increased instead of decreasing, leading to a 13.19% decline in sales volume.
The company’s trading volume fell by 15.43% year-on-year, with a 16.93% quarter-on-quarter drop in selling prices in the second quarter, maintaining a meager gross profit margin of only 1.25%.
In the first half of the year, Shanmei International’s operational net cash flow was negative 469 million yuan, a sharp drop of 2.85 billion yuan compared to the same period last year. As of the end of the second quarter, the total liabilities reached a massive 21.405 billion yuan, equivalent to 1.1 times its A-share market value, indicating a heavy debt burden.
Furthermore, the quality of Shanmei International’s assets has significantly deteriorated. Accounts receivable surged to 548 million yuan, an 82.67% increase from the end of last year; inventory expanded to 1.314 billion yuan, a substantial increase of 132.57%; and prepayments rose to 292 million yuan, a growth of 58.7%. Among the accounts receivable, an amount of 2.009 billion yuan was provisioned for bad debts, involving full provisions for 14 customers.
The semi-annual report indicates that Shanmei International has hardly ventured into new energy or clean energy development, and revenues from emerging businesses like photovoltaic equipment manufacturing were not separately disclosed with specific data. Research and development investment decreased by 8% year-on-year to 171 million yuan.
Apart from Shanmei International, the other four major coal giants are facing similar challenges. China Shenhua’s revenue in the first half of the year was 138.109 billion yuan, down by 18.3% year-on-year; the net profit was 24.641 billion yuan, a 12% decline. As a leading enterprise in China’s coal industry, this marks the company’s third consecutive decline in semi-annual net profit.
China Shenhua stated that coal sales volume and average selling prices have dropped by 10.9% and 12.9% respectively since the beginning of this year, with electricity sales volume and prices falling by 7.3% and 4.2% respectively.
Shaanxi Coal Industry saw revenue of 77.983 billion yuan, a 14.19% decrease; net profit was 7.638 billion yuan, down 31.18%. The decline in coal prices exceeded 23% for the company.
China Coal Energy had revenue of 74.436 billion yuan, down by 19.9%; net profit was 7.705 billion yuan, a 21.3% decline. The company’s self-produced coal price plummeted by 114 yuan per ton, leading to a significant 27.7% decrease in coal business gross profit.
Yankuang Energy recorded revenue of 59.349 billion yuan, down by 17.93%; net profit was 4.652 billion yuan, a decline of 38.53%. Similar to the others, the company faced over a 23% drop in coal prices.
All these companies attributed their significant decline in performance to the continuous downward trend in coal prices. China Shenhua saw a significant year-on-year decrease in coal sales revenue; Shaanxi Coal Industry and Yankuang Energy witnessed coal price drops of over 23%; and China Coal Energy’s self-produced commodity coal prices sharply declined by 114 yuan per ton, leading to a significant 27.7% decrease in coal business gross profit.