Monday, November 30, 2020
Martin Hennecke
HKEx Stock Code : 03948 
Corporate Profile
The Group's principal operations include coal operations, which are our core business and mainly include the production, transportation and sale of coal; transportation operations, through which our Company and our subsidiaries provide coal transportation service to third parties, other than coal transportation service for the sale of our own coal; coal-related chemical operations, which mainly include the production and sale of coal-based synthetic fuels and other coal-related chemical businesses; and other operations, which mainly include the development, production and sale of traditional Chinese medicine.

Business Review - For the year ended December 31, 2012

In 2012, China's macro economy slowed down its pace of growth, with noticeable downturns especially in the first three quarters. Due to an across-the-board decline in the year-on-year growth rate of various macroeconomic indicators, together with sluggish growth in downstream industries, major coal-consuming industries such as coal-fired power generation, steelmaking, and cement all experienced substantial decreases in the year-on-year growth rate of output, whilst coal-fired power generation industry, which represents 50% of the coal consumption, even suffered negative growth in the power generation volume. Meanwhile, coal prices worldwide lingered at low levels, and coal imports of China increased significantly by 59% year-on-year in 2012, which had a significant impact on the domestic coal market. On the whole, supply and demand of coal was relatively loose throughout 2012, with insufficient demands and sinking prices, thus imposing great pressure on the entire industry.

During the reporting period, confronted with challenges such as declining macro economy and sluggish coal market, the Company overcame all sorts of difficulties with tenacity, attained fundamentally all its operating targets, and steadily implemented its development strategy. In 2012, the Company produced 49.76 million tonnes of commercial coal, representing a decrease of 7.5% from the same period last year, mainly due to the relocation of mine faces which impacted the output of the relevant period; the Company sold 73.20 million tonnes of coal, representing an increase of 11.45% over the same period last year. The Company posted sales revenue of RMB31,584 million, representing an increase of 16.96% over the same period last year, and comprehensive income amounted to RMB7,151 million, representing a decrease of 13.1% from the same period last year.

During the reporting period, the Company continued to place safety management as a top priority by further improving the operation of the safety management system, boosting safety management levels, enhancing control over the safety management process and strengthening development of the emergency rescue system, and made remarkable achievements in production safety. The Company also maintained its national-level honor for production safety, with 12 coal mines certified as “mines with national-level safety quality standard”, and 8 mines as “safe and high efficient mines in the national coal mining industry”, among which 7 mines were ranked as the distinction class, and 1 mine was ranked as the second class. One mine was certified as one of the double top-ten mines of China's coal industry (中國煤炭工業雙十佳煤礦). As at the end of the reporting period, the Company once again achieved zero mortality rates for production of 1 million tonnes of raw coal and for tunneling 10,000 meters down the mines.

During the reporting period, the Company continued its innovation of production technologies to strive for further growth in output and efficiency. The Company achieved breakthroughs in key technologies regarding the recovery of large coal pillars, and achieved a leading position in the PRC in respect of relevant technologies. By adopting the fully-mechanized coal mining technology, unseen before in the Ordos region, the Company cumulatively recovered 829,000 tonnes of coal pillars on main roadways throughout the year. By applying the combined mining technology to coal seam clusters, the Company increased its output by 728,000 tonnes, and realized “one mine, two faces (一井兩面)” production at Dadijing Mine. Furthermore, the Company won the second prize of technological progress from the China National Coal Association for its submission of the “Roof Disaster Control Technology for Shallow-buried Deep Long Wall Faces” (《淺埋深長壁工作面頂板災害治理技術》).

In the face of weak demands for coal during 2012, the Company formulated the sales strategy of (“maintaining sales volume while enhancing efficiency”) in order to meet customers' demands and expand the coal market by extensively collecting market information, closely tracking market dynamics, carrying out sale of trading coal when and as appropriate, strengthening customer relation management and focusing on boosting coal product quality and customer service levels. Meanwhile, by taking into account such objective factors as railway capacity and coal production, the Company made reasonable adjustments to the structure of coal types and coal prices and ensured smooth and orderly production, allocation and transportation, delivery and sales of coal. During the reporting period, while fully hitting its operating targets, the Company, as always, adhered to its prevention-oriented and treatmentcombined environmental protection philosophy based on clean production and full-process control, further carried through its pro-environment guideline of “building an ever-lasting Yitai through green energy”, further enhanced environment management work of its production and operating entities, and continuously pushed forward environmental greening and carbon sequestration forestry projects. Throughout 2012, various departments of the Company planted 687,800 of all kinds of trees, 7,955,600 mu shrubs, and 26,667,000 square metres of lawn, proactively performed its social responsibility and obligation, and promoted the improvement of the natural environment of Ordos.

During the reporting period, with all the projects under construction in steady progress, the Company achieved milestone results. Talahao Mine and the coal processing plant project were approved by the NDRC in September 2012. Currently, construction of the mine and the coal processing plant has fully commenced. The special railway line of Talahao Mine was approved by the Inner Mongolia DRC in September 2012. And the industrial upgrade and renovation project of Kaida Mine was approved by the Inner Mongolia DRC on 28 December 2012.

In July 2012, against a backdrop of slowing macroeconomic growth, a marked downturn of the coal market, and unprecedented depression of the industry, the Company was successfully listed on the Hong Kong Stock Exchange, which indicated investors' acknowledgement and confidence in the Company. The proceeds raised from the IPO were used to acquire relevant operations and assets of the Group, including five mines in operation and certain mine-related assets and business. The completion of the acquisition marked more standardized and optimized corporate management, with effective reduction of horizontal competition and connected transactions, whilst the additional resource reserves and capacity will bring the Company's operations to a new level. The successful issue of H shares has enabled the Company to access international capital markets, not only creating new financing channels but also allowing the world to further know about Yitai, which has laid a foundation for the Company's rapid and globalised development.

Business Outlook - For the year ended December 31, 2012

Based on the overall trend of the coal industry during the “12th Five-Year” period as well as the development goals of the Company for the next five years, we have worked out the following strategies:

First, we will take advantage of the government's move to accelerate consolidation of coal resources and close obsolete capacity to integrate internal and external resources, expand production scales and supporting systems and enhance the Company's core competitiveness and market position. In respect of coal mine construction, we will speed up the construction of Bulamao and Talahao Mines and use preferential policies for coal-to-chemicals projects to obtain resources, construct mines and improve capacity. As for resources integration, the Company will acquire the Hongqinghe Coal Mine being built by the Yitai Group as opportunities arise whilst integrating a certain number of external coal mines. The above steps will help to significantly increase the Company's resources reserve and production capacity and further promote our market position.

Second, we will further expand and upgrade the comprehensive transport network to further enhance our ability in coal outwards transport. The Company will maintain our investment in railways, construct and perfect existing railway projects, better and improve the delivery ability of transport stations, and create good internal transport conditions for connection with national railways to enable the Company's annual comprehensive exportation of coal to surpass 100 million tonnes. We will continue to participate in the construction of and investment in the national railway network including east-west lines such as Mengji railway, Zhunshuo railway and Ordos South railway and north-south routes such as the new Baoshen railway and west Inner Mongolia to central China railway. Through construction of our internal railway network and participation in national rail network building, the Company will form a sophisticated railway network, thus significantly improving our capability in trans-regional coal transport, which will help reduce transport cost, cement our market position and enhance our business capacity.

Third, we will develop clean coal technology, improve added value of products and extend the coal industry chain. The Company will enhance coal processing and washing processes to supply customers with quality coal products. It is explicitly stated in the “12th Five-Year” for energy that the government will steadily push forward with the large coal further processing upgraded demonstration projects. With domestically leading coal-to-liquids technology, successful operation of China's first indirect coal liquefaction industrialization demonstration project and other large projects under preparation or construction, the Company will have a head start over our rivals in the coal to chemicals industry.

Deep processing of coal is a competitive strategic sector in the coal industry. Dedicated to becoming a leader of the coal industry, the Company aims to achieve the efficient, clean and comprehensive use of coal by improving the overall conversion efficiency through technological innovation and by taking advantage of the coal processing, washing and conversing upgraded demonstration projects.

Fourth, we will continue to improve the production safety mechanism and perform environmental social responsibilities. Safety is always our top priority. The Company will continue to adhere to the principle of “safety-foremost with prevention-oriented and comprehensive treatment”, effectively prevent accidents, strengthen relevant efforts and management and promote building of a vocational health system to further improve the level of production safety. We will maintain the effective functioning of the ISO14001 environment management system, scale up comprehensive utilization of resources and ecological environment protection in mining areas, and make the Company's mines intrinsically safe, resource-conserving, environment friendly, socially harmonious, resources highly untilized, clean and efficient ones with guaranteed safety, considerable economic benefits and little environmental pollution.

Source: Yitai Coal (03948) Annual Results Announcement
Chairman ZHANG Donghai Issued Capital (shares) 326M
Par Value RMB 1 Market Capitalisation (HKD) 5,053M
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