CCOZY

• Overall Financial & Production Performance

  • Achieved CNY 73.13 billion in operating revenue under both CAS and IFRS; CAS net profit was CNY 12.46 billion (up 4.4% YoY), IFRS profit attributable to shareholders was CNY 8.19 billion (up 11.8% YoY).
  • Maintained strong cash generation: net operating cash flow reached CNY 9.86 billion, up 28.6% YoY.
  • Overcame production challenges including difficult geological conditions and stricter safety inspections, and adjusted product mix to increase average thermal coal calorific value by nearly 200 Kcal per tonne.

• Capital Project Progress

  • All process units of the 900,000 tonne annual capacity Yulin Phase 2 polyolefin project (Shaanxi) are mechanically complete, with startup expected to begin in November 2026; the EVA unit will start production in 2027.
  • The Liquid Sunshine demonstration project at Ejin Horo Energy Chemical has entered trial operation, with production planned to start after December 2026.
  • The 2,660 MW Wuxuan coal power integration project is fully in the equipment installation stage; a 100 MW wind power project in Yuyang, Shaanxi has started construction; Shanghai Energy completed 100% equity acquisition of a 400 MW fishery-solar complementary PV project in Leizhou.

• Shareholder Return

  • Plans an interim cash dividend of CNY 2.44 billion (CNY 0.184 per share), marking 3 consecutive years of interim dividends; total cumulative cash dividends since listing exceed CNY 46 billion.

• Full-year 2026 coal production: Management will stick to the original annual production plan and aim to recover H1 output losses in H2, but final results will depend on execution due to ongoing strict safety inspections.
• Coal costs: H2 2026 unit costs are expected to improve from H1 as production volume increases, but full-year annual costs may not match or improve on 2025 levels, as management prioritizes profitability over raw cost reduction; overall cost fluctuations within ±10% are considered normal and costs remain controllable.
• Chemical business profitability: H2 2026 polyolefin margins are expected to fluctuate at current elevated levels and be roughly on par with H1 margins; the Yulin Phase 2 project will not contribute meaningful incremental volume until 2027, when it will add 900,000 tonnes of polyolefin capacity and improve overall segment profitability, with higher-margin premium differentiated products expected to outperform the existing Phase 1 project.
• New energy development: The broader China Coal Group has a 15th Five-Year Plan target of 50 million kW of total renewable energy installed capacity, adding an average of 8 million kW per year; China Coal Energy's specific 15th Five-Year Plan new energy target is pending board approval and will be disclosed after finalization.
• Two delayed coal mine projects: The Libi and Weizigou coal mine construction projects are both expected to face roughly a 1-year delay; Weizigou is scheduled to start production at the end of 2027, and Libi is scheduled to start production in 2028.

Under Chinese Accounting Standards, total operating revenue for H1 2026 was CNY 73.13 billion, with a net profit attributable to shareholders of CNY 8.14 billion (up 5.8% YoY).

• Coal Segment: Commercial coal production reached 61.95 million tonnes, with total commercial coal sales of 119.7 million tonnes (61.4 million tonnes from self-production). Average selling price of self-produced commercial coal was CNY 524/tonne, up 11.5% YoY, with thermal coal at CNY 494/tonne (up 13.3% YoY) and coking coal at CNY 1,017/tonne (up 14.9% YoY). Unit sales cost of self-produced commercial coal was CNY 285.69/tonne, up 8.6% YoY. Higher selling prices increased profit by CNY 3.3 billion, while higher unit costs reduced profit by CNY 1.36 billion and lower sales volume reduced profit by CNY 1.17 billion.
• Chemical Segment: Production of major coal chemical products reached 3.01 million tonnes, with sales of 3.235 million tonnes. Polyolefin average selling price was CNY 7,017/tonne (up 5% YoY), urea was CNY 1,828/tonne (up 4.2% YoY), and methanol was CNY 1,868/tonne (up 5.5% YoY). Polyolefin unit sales cost fell 11.8% YoY to CNY 5,674/tonne. The segment increased total profit by CNY 878 million YoY.
• Power Segment: The power business increased total profit by CNY 172 million YoY.
• Equipment & Financial Business: The segment reduced total profit by CNY 425 million YoY.

• Ongoing stricter industry-wide safety inspections following the May 2026 Shanxi coal mine incident have reduced H1 2026 company production by 3.39 million tonnes (down 8% YoY), and continued tight inspections create uncertainty for achieving the full-year original production target.
• Shift from outsourced mining labor to in-house labor has increased unit labor costs, contributing to the 8.6% YoY rise in self-produced coal unit sales costs.
• Uncertainty around future additional tax payments: The one-time H1 2026 increase in non-operating expenses (up 788% YoY, driven by back taxes and late fees from policy interpretation differences) is fully absorbed in H1 results, but future additional tax adjustments aligned with regulatory requirements remain possible.
• Construction delays for the Libi and Weizigou coal mine projects, caused by construction incidents and unexpected geological conditions (gas content variation at Libi), will push back production startup by roughly 1 year for each project.
• Commodity price volatility: Chemical and coking coal profitability remains dependent on market price fluctuations, which cannot be fully forecast.

Q: What are the plans for the newly announced strategic cooperation with Gansu Province, and what is the current project status?

A: The group plans to develop the China Coal Yudong energy base, which includes the Tangshan and Nanzhuang coal mines with total geological reserves of ~1.75 billion tonnes and planned annual production capacity of 9 million tonnes. A wholly owned subsidiary, China Coal Gansu Energy, has been established to advance preliminary work, and no actual investment has been made to date; further updates will be disclosed when material.

Q: Why was H1 production lower than expected, will production recover to pre-incident levels, and what is the impact of stricter safety inspections?

A: H1 production was 8% lower YoY, primarily due to stricter post-incident safety inspections and complicated geological conditions at some mining areas. The company will attempt to recover output in H2 to meet the original full-year target, but actual results will depend on execution, as the company strictly adheres to all new safety requirements. Industry-wide coal output was down 1.7% YoY for the first six months, so tighter inspections are a sector-wide impact.

Q: What is the cost outlook for H2, and why did H1 costs increase?

A: H1 cost increases were driven by lower production volume (which raised fixed costs per unit), the shift from outsourced to in-house labor, and planned maintenance. H2 costs are expected to improve as production volume rebounds and management optimization continues, but full-year full costs may not be lower than 2025 as the company prioritizes profitability over raw cost control. Overall costs remain within the normal ±10% fluctuation range and are controllable.

Q: When will the new Yulin Phase 2 chemical project start production, and how will it perform financially?

A: Most units of Yulin Phase 2 will start commissioning in November 2026, with initial production starting in December 2026; only the EVA unit will be delayed to 2027. The project produces higher-value differentiated premium polyolefin products using advanced processes, so its profitability is expected to be better than the company's existing Phase 1 polyolefin facility, with incremental volume contributing to earnings starting in 2027.

Q: Why did the one-time H1 non-operating expense spike happen, and are more such increases likely in the future?

A: The 788% YoY increase in non-operating expenses was driven by back taxes and late fees resulting from historical differences between the company's policy interpretation and current regulatory requirements for tax classification. All required payments have been made and the full impact is already reflected in H1 2026 results. Any future adjustments will follow official regulatory requirements, and the company has improved internal tax management to reduce future interpretation gaps.