Zhengzhou Coal & Electric Power Financial Report Analysis: Non-recurring Net Profit Plummets by 2811.46%, Operating Cash Flow Net Amount Drops by 69.52%

Core Profitability Metrics Deeply Turn Negative

In 2025, Zhengzhou Coal and Power’s core profitability metrics suffered a disruptive decline. Operating revenue, net profit, and profit after deducting non-recurring items all shrank significantly, with profitability turning from profit to loss.

Judging from the profit figures, in 2025 the company fell into deep losses: the year-over-year decline in net profit exceeded fourfold, while profit after deducting non-recurring items even plunged by as much as 28 times. The profitability capability of its core business has essentially been lost. Basic earnings per share turned from positive to negative—an 0.76 yuan loss per share—meaning that for each share held in the company’s stock, investors faced a corresponding loss of 0.76 yuan in 2025, and investment returns deteriorated sharply.

Expense Structure and R&D Investment Analysis

The annual report does not separately disclose the specific amounts and changes of selling expenses, administrative expenses, financial expenses, and R&D expenses. As a result, only from the overall worsening of profitability can the pressure on the cost side be inferred. However, based on information related to R&D personnel, the company still maintains technology investment. The company has core technologies such as the “three-soft” unstable coal seam safe and efficient extraction and gas treatment. In 2025, it added 33 patents, and multiple technological achievements reached domestic leading and international advanced levels. Its subsidiary Zhengzhou Shuguang has built digital products such as an intelligent mine integrated management and control platform and a Linglong AI application platform. While technological advantages remain, the near-term outputs of R&D investment are not reflected in the profitability figures.

Triple Pressure on Cash Flows

In 2025, the company’s cash flows were under pressure across the board. Net cash flows from operating, investing, and financing activities all showed unfavorable changes, with the pressure on the capital chain becoming significantly larger.

Net cash flow from operating activities shrank by nearly 70%. The main reason is that the drop in coal prices led to a significant reduction in cash inflows from the company’s main business, severely weakening its “cash-generating” ability. Net cash flow from investing activities narrowed its loss year over year, but it still remained in net outflow. The company’s external investments or asset expenditures have continued. Net cash flow from financing activities shifted from the previous year’s small net outflow to a large net outflow, with a year-over-year increase of more than three times. This indicates that the company’s debt repayment expenditures increased significantly, and at the same time its external financing capability may be constrained, putting the capital chain under multiple pressures.

Executive Compensation

During the reporting period, the chairman Yu Lefeng’s total pre-tax compensation received from the company was 663,800 yuan. The general manager Xu Nanfang’s total pre-tax compensation was 653,800 yuan. The pre-tax compensation totals for vice general managers Wang Tiezhuang, Li Songyan, Cao Mingli, Shi Tongmin, and Xing Jianwei were 593,800 yuan, 593,800 yuan, 583,800 yuan, 583,800 yuan, and 573,800 yuan respectively. Overall, there is a stark contrast between executive compensation and the company’s sharply deteriorated performance. Against the backdrop of the company’s deep losses, the reasonableness of the compensation levels deserves attention.

Multiple Risk Warnings

Market Price Volatility Risk

Coal prices are influenced by multiple factors, including the macroeconomic environment, government policies, and market supply and demand. In 2025, the average coal market price fell year over year, directly leading to a 13.03 percentage point decrease in the company’s coal business gross profit margin. If the coal market supply-demand pattern becomes even more relaxed in the future and prices continue under pressure, the company’s profitability will continue to be hit.

Capacity and Asset Impairment Risk

During the reporting period, the Chaohua Coal Mine suspended production. The company accrued impairment provisions for fixed assets of 315 million yuan, which became one of the important reasons for the large loss in net profit. In the future, if other mines suspend or reduce production due to factors such as resource depletion and policy controls, they may face further asset impairment risks, creating a second round of impact on performance.

Risk of Capital Chain Break

Operating cash flow shrank significantly, and financing cash flow recorded a large net outflow, continuously consuming the company’s cash reserves. If subsequent coal sales collections do not improve and external financing channels are obstructed, the company may face the risk of tight liquidity and even a breakdown of the capital chain, affecting normal production and operations.

Industry Transformation Risk

With deeper energy-structure transition and the continued increase in the share of new energy power generation, the growth momentum of coal consumption is weakening. Although the company is advancing intelligent mine construction and digital transformation, whether the pace of transformation can keep up with the industry’s rhythm and whether new businesses can form effective earnings support remains uncertain.

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