Tiandi Science & Technology Co., Ltd. reported a sharp drop in first-half net profit, as coal sector clients cut procurement prices and spending on high-tech equipment.

Revenue fell 11.01% year on year to 12.57 billion yuan ($1.85 billion)  in January-June 2026, while net profit attributable to shareholders plunged 64.68% to 735 million yuan, according to the company's interim report.

The company, a leading coal industry technology provider that supplies over 60% of China's intelligent mining face construction, said major clients further reduced purchase prices, leading to double-digit revenue contraction.

The steeper profit decline was not explained in the report, but Sxcoal analysis points to two main factors: lower revenue and a high comparison base. In the first half of 2025, the company's subsidiary Tiandi Wangpo transferred a 51% stake in Qinnan Energy for 2.69 billion yuan, booking substantial investment gains. Investment income in the first half of this year fell 91.60% year on year to just 236 million yuan.

By business segment, coal machinery sales remained the largest revenue source at 4.99 billion yuan in the first half. Safety equipment and engineering projects each generated over 2 billion yuan, while technology projects contributed 1.96 billion yuan.

These high-tech equipment businesses carry relatively high gross margins, but are precisely the areas where downstream clients cut spending first during industry downturns. Coal machinery sales revenue fell 18.99% year on year in the first half, safety equipment declined 12.74%, technology projects dropped 8.14% and engineering projects fell 3.14%. Only environmental equipment grew, up 3.47%, while coal sales posted the strongest gain of 33.78%.

Total main business revenue reached 12.44 billion yuan in January-June 2026, down 10.82% year on year. Costs fell faster at 13.78% to 8.79 billion yuan. Selling, administrative and research expenses declined 2.06%, 0.82% and 9.15% respectively, but cost controls failed to offset narrowing profit margins.

Asset quality concerns emerged as two key indicators surged. Accounts receivable ballooned 24.00% from end-2025 to 15.04 billion yuan by June 30, accounting for 26.42% of total assets. Inventory rose 22.30% to 6.85 billion yuan over the same period.

Cash and equivalents fell 34.27% from end-2025 to 6.13 billion yuan, with net operating cash flow at negative 3.17 billion yuan, reflecting significant working capital pressure. However, the company holds 9.48 billion yuan in large-denomination certificates of deposit and 2.16 billion yuan in debt investments maturing within one year, providing ample liquidity reserves.

Despite multiple headwinds, the company's core business retains resilience amid the price downturn, though operational pressure is evident. The situation is not unique to Tiandi.

The coal equipment sector benefited from rapid growth in intelligent mining construction in recent years, but the coal industry's cyclical nature has now caught up. Existing mine renovation has slowed and approvals for new mines have declined significantly, reducing business volumes even for the industry leader, though order books remain relatively healthy.

The changing industry landscape poses deeper challenges. Tiandi acknowledged that global energy restructuring is driving deep transformation in the coal sector, with intensifying competition and deteriorating client profitability directly impacting its subsidiaries.

The company is pursuing new growth avenues through full-industry-chain coordination and digital transformation. In non-coal business, Chongqing Research Institute signed 242 million yuan in contracts including tunnel methane monitoring, while China Coal Research Institute undertook a biomass green methanol project in Lanzhou New Area. Tiandi Benniu has extended scraper conveyor technology to non-coal mining sectors such as phosphate and bauxite. The company added 1,137 authorized patents, with invention patents accounting for nearly 80%.