Shanxi Lanhua Sci-Tech Venture Co., Ltd. reported a sharp rise in first-half net profit, driven by higher coal and urea prices and increased coal sales volumes.

The company posted revenue of 4.79 billion yuan($0.71 billion) for January-June 2026, up 18.32% year on year, with net profit attributable to shareholders surging 44.60% to 83.11 million yuan, according to its interim results.

Lanhua Sci-Tech operates 13 coal mines with a combined designed annual capacity of 19.90 million tonnes. Of these, 11 are producing mines with total capacity of 15 million tonnes per year, while its 41%-owned Yamei Daning mine has annual capacity of 4 million tonnes. One resource-integration mine under construction is designed for 900,000 tonnes per year.

The company's fertilizer segment operates three urea plants with combined annual capacity of about 1 million tonnes. Its chemical operations include two dimethyl ether plants with combined capacity of 200,000 tonnes per year and one caprolactam plant with annual capacity of 140,000 tonnes.

Coal output in the first half reached 6.93 million tonnes, down 8.55% year on year, while sales rose 11.23% to 6.72 million tonnes. Combined with a 16.28% increase in unit prices, gross profit from coal climbed 45.57% to 1.30 billion yuan.

Urea production fell 3.92% year on year to 389,900 tonnes, with sales down 3.20% at 381,400 tonnes. Higher urea prices and lower unit costs lifted gross profit by 210.92% to 113 million yuan.

Net operating cash flow turned positive at 281 million yuan, reversing from a negative position a year earlier, reflecting higher revenue from increased coal sales and firmer prices for coal and urea.

Total assets stood at 37.01 billion yuan as of June 30, with total liabilities of 22.34 billion yuan, putting the debt-to-asset ratio at a high 60.37%.

The company said domestic raw coal output contracted year on year after May as tighter safety inspections in key producing regions curbed supply, supporting a steady market uptrend with sustained price gains for anthracite, coking coal and thermal coal. It expects coal prices to remain elevated with a higher price center in the second half.

Lanhua Sci-Tech flagged safety and environmental compliance risks, noting that coal and coal-chemical operations face tightening emission standards and heavy green transformation burdens that could trigger regulatory penalties or production curbs if projects lag.

The company also cited market and profitability risks from cyclical price swings in coal and urea amid intense competition, adding that its large capital commitments for projects under construction and high interest-bearing debt expose it to market volatility.

Key projects for 2026 include converting the Sitou mine from exploration to production and environmental technology upgrades at its coal-chemical plants. The company warned that geological constraints, construction delays, funding issues or approval bottlenecks could slow capacity expansion and undermine full-year output and operational targets.

Brokerage research notes said Lanhua Sci-Tech's resource base has been strengthened since winning the Sitou exploration right in 2025, with its position in the Qinshui coalfield supporting future capacity growth. The integrated "coal-ammonia-urea" and "coal-syngas-caprolactam" chains ensure captive coal supply for feedstock, helping hedge price volatility, while urea capacity is set to expand to 1.2 million tonnes after energy-saving retrofits.

Analysts expect steady earnings growth over the next three years, with EPS projected to rise through 2026-2028, supported by continued coal supply stabilization policies, priority urea supply guarantees and a tight supply-demand balance in caprolactam.