Henan Shenhuo Coal & Power Co., Ltd. posted a sharp rise in first-half net profit, driven by higher coal and aluminum prices and lower raw material costs.

The company reported net profit attributable to shareholders of 4.78 billion yuan for the January-June period, up 151.06% year on year. Revenue rose 21.35% to 24.79 billion yuan.

Shenhuo attributed the strong earnings to a year-on-year increase in selling prices for coal and electrolytic aluminum products, coupled with a decline in the price of alumina, a key raw material.

The company's core businesses include coal and aluminum production, deep processing and sales. Its coal products are mainly anthracite and meager lean coal, while its aluminum operations produce liquid aluminum and aluminum ingots. Its aluminum foil products, including battery foil and packaging foil, are used in new energy batteries, food and pharmaceutical sectors.

As of June 30, Shenhuo held coal reserves of 1.29 billion tonnes, with recoverable reserves of 605 million tonnes. It has an annual electrolytic aluminum capacity of 1.7 million tonnes per annum (Mtpa) and aluminum foil capacity of 140,000 tonnes per annum (Ktpa), with aluminum foil blank capacity of 265 Ktpa.

In the first half, Shenhuo produced 3.66 million tonnes of coal and sold 3.64 million tonnes, achieving 52.72% and 52.44% of its annual targets, respectively. Coal product revenue rose 8.6% year on year, while gross margin surged 100.17%.

The company's aluminum products operated at full capacity and achieved full sales in the period. Electrolytic aluminum revenue reached 17.05 billion yuan, accounting for 68.78% of total revenue, up 20.28% year on year. Aluminum foil output stood at 63,800 tonnes, with sales of 58,500 tonnes, and revenue from the segment rose 41.35% year on year.

Net cash flow from operating activities reached 7.2 billion yuan in the first half, up 62.29% year on year and significantly exceeding net profit, indicating strong earnings quality. Cash and cash equivalents stood at 11.04 billion yuan as of June 30, up 265.78% from the start of the year, marking a record improvement in cash position.

The company's balance sheet continued to improve, with total assets rising 14.35% year on year to 55.87 billion yuan. Net assets attributable to shareholders increased 12.67% to 27.68 billion yuan. The debt-to-asset ratio stood at 42.32%, remaining at a reasonable level.

Shenhuo invested 371 million yuan in research and development during the period, focusing on advanced aluminum foil production technology. It has achieved stable mass production of 4.5-micron ultra-thin double-zero aluminum foil and 8-10 micron ultra-thin battery aluminum foil, with technical indicators reaching industry-leading levels. The battery aluminum foil products are now stably supplied to leading domestic battery companies, with market share ranking among the top tier.

Looking ahead to the second half, Shenhuo said the coal market is expected to shift from a loose to a balanced-to-tight supply-demand balance, supported by the formal implementation of the national 15th "Five-Year Plan", continued anti-involution policies, upgraded mine safety supervision, peak summer coal demand from power plants, and downstream chemical coal demand. Coal prices are expected to remain at high levels with volatility.

Meanwhile, supportive policies for the nonferrous metals sector are expected to take effect, combined with stable long-term aluminum demand from the new energy industry, which should keep electrolytic aluminum prices at elevated levels. The aluminum foil industry is also expected to maintain rapid growth.

Overall, with sustained aluminum demand from the new energy sector and peak summer coal demand, Shenhuo's earnings are expected to remain at high levels. The company's plans to spin off its Shenhuo New Materials unit for listing and to invest in emerging sectors through a high-quality industrial fund are expected to further unlock growth potential.