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Author/Source: Securities Times Date: 2009-4-1 -------------------------------------------------------------------------------- Despite adverse factors such as the domestic and international macroeconomic conditions, China Coal Energy achieved record-high levels of revenue and profits in 2008. The company also announced that the board of directors has decided to suspend further investment in the coal mine with an annual production capacity of 10 million tons, the methanol plant with an annual capacity of 1.8 million tons, the olefin plant with an annual capacity of 600,000 tons, as well as the related infrastructure projects, and to explore improvement and alternative solutions. During the reporting period, the company achieved operating revenue of 51.465 billion yuan, a year-on-year increase of 42.8%; it also recorded net profit of 6.812 billion yuan, representing a year-on-year increase of 17.7%. The basic earnings per share was 0.52 yuan. It is reported that in 2008, the company’s three main business segments – coal, coal coking, and coal mine equipment – all achieved significant growth in their revenue. Among them, the operating revenue from the coal business increased by 40.6% to 38.299 billion yuan, from 27.241 billion yuan in 2007; the operating revenue from the coal coking business rose by 78.1% year-on-year to 6.712 billion yuan. The company stated that although the price of coke products began to decline in mid-August 2008 due to changes in the macroeconomic situation, overall for the whole year, the price of coke products still increased significantly compared to the previous year, which enabled the company’s revenue to grow substantially as well. It is worth noting that in 2008, the company’s operating costs increased by 51.8% to 29.84 billion yuan. During the period, material costs increased by 8.118 billion yuan on a year-on-year basis, driven by rising material costs associated with the expansion of production scale, an increase in the sales volume of purchased coal, and higher prices for raw materials. In terms of large-scale coal mine construction projects, China Coal Energy made significant progress during the year. It is reported that the preliminary work for the company’s coal chemical project in Ordos, Inner Mongolia, has made substantial progress. After a detailed survey of the mining area, the total resource volume was determined to be 5.201 billion tons. The exploration rights for the Menkeqing deposit have already been obtained, and procedures such as the transfer of mining rights for the Hulusu deposit and project approval are currently in progress. The 250,000 tons per year methanol project of China Coal Energy Heilongjiang Coal Chemical Co., Ltd. has begun trial production. However, regarding Company’s A-share fundraising projects – the 10 million tons per year coal mine, 1.8 million tons per year methanol plant, 600,000 tons per year olefin plant, and related supporting projects in Heilongjiang – China Coal Energy conducted further economic benefit forecasts and evaluations, which showed that implementing these projects in the Yongqing mining area of Jixi, Heilongjiang, would no longer allow for achieving the original expected economic benefits. From the perspective of maximizing the company’s commercial interests and protecting shareholders’ interests, the company’s board of directors has decided to suspend further investment in this project and to explore improvements and alternative solutions. Furthermore, in 2008, due to the decline in the stock price of COSCO’s A-share shares held by China Coal Energy during that period, the company incurred a fair value change loss of 1.406 billion yuan on its 40 million shares of COSCO’s A-shares; in the same period of the previous year, there had been a profit of 1.698 billion yuan.