Generous payout of 41.8 billion! China Shenhua's revenue and net profit both declined last year, with a dividend payout ratio of nearly 80%.

Ask AI · Why does China Shenhua stick to a high-dividend strategy despite a double decline in revenue and net profit?

On March 30, “China’s coal king” China Shenhua (601088) disclosed its latest annual report. In 2025, the company recorded revenue of RMB 294.92B, down 13.2% year over year; net profit of RMB 52.85B, down 5.3% year over year; and basic earnings per share of RMB 2.66.

China Shenhua said that during the reporting period, affected by factors such as supply-and-demand conditions in the coal market, the company’s coal sales volume and average sales price fell by 6.4% and 12.1%, respectively, leading to a 17.7% year-over-year decline in coal sales revenue. The power segment also faced pressure. Driven by factors including lower power-plant utilization hours and declining electricity prices, the company’s electricity sales volume and average electricity sales price fell by 3.9% and 4.0%, respectively, resulting in a 9.3% year-over-year decline in electricity sales revenue.

By contrast, its coal-to-chemicals business performed steadily. Benefiting from the low base from maintenance in the same period last year and an increase in output, the company’s polyethylene and polypropylene sales grew by 12.6% and 11.5% year over year, respectively, driving coal-to-chemicals revenue to rise by 1.7% year over year.

In terms of profit distribution, China Shenhua continued its tradition of high dividend payouts. By the end of 2025, China Shenhua proposed to distribute a cash dividend of RMB 1.03 per share. Together with the cash dividend distributed as an interim dividend last year, the company expects to distribute a total cash dividend of RMB 41.81B for the full year, accounting for 79.1% of net profit.

Wind data shows that since China Shenhua’s A-share listing in 2007, the company has cumulatively implemented cash dividends of RMB 502.34B, with an average annual payout ratio of 63.58%. Over the past three years, the average annual payout ratio has reached 229.79%.

As for resource reserves, as of the end of 2025, China Shenhua’s retained coal resources increased by 7.05 billion tons year over year to 41.41 billion tons, while its retained proven-and-probable mining reserves increased by 2.22 billion tons year over year to 17.31 billion tons.

It is worth noting that in December 2025, the company disclosed a plan to acquire the coal mining, pithead coal power, coal-to-chemicals, and logistics services businesses held by China Energy Group through the issuance of A-share shares and payment of cash. After the transaction is completed, the company’s retained coal resources will increase to 68.49 billion tons, a growth rate of 64.72%; its coal reserves available for mining will rise to 34.5 billion tons, a growth rate of 97.71%; and its coal production will increase to 512 million tons, a growth rate of 56.57%.

From the overall industry perspective, in 2025 China’s energy supply security capability was effectively strengthened. Output of raw coal and consumption of commercial coal remained stable, further highlighting the coal “backstop” role in ensuring supply. Throughout the year, coal prices fluctuated within a wide range, with the price center of gravity moving lower.

On the supply side, domestic coal production maintained steady growth. According to data from the National Bureau of Statistics, in 2025 the output of raw coal from above-designated-size industrial enterprises was 4.83 billion tons, up 1.2% year over year. Imports declined by 9.6% year over year to 490 million tons, but remained at the second-highest level in history. On the demand side, nationwide consumption of commercial coal was 4.99 billion tons, down 0.7% year over year. Of this, the power generation industry accounted for about 58.3% of total consumption, and its coal consumption fell by 2.1% year over year. Coal consumption in the chemical industry grew by 10.2% year over year.

Due to the relatively loose supply-and-demand pattern, the coal price center of gravity moved down noticeably and industry profitability shrank significantly. According to Wind data, in 2025 the average clearing price of Qinhuangdao Port’s 5500 kcal thermal coal spot cargoes was RMB 696.88 per ton, down 18.49% year over year. The coal mining and washing industry recorded a total profit of RMB 352 billion, down 41.8% year over year.

Entering 2026, influenced by factors such as conflicts in the Middle East, an improvement in international coal-and-power demand lifted coal prices. As of March 27, the average spot price of Qinhuangdao Port’s 5500 kcal thermal coal had risen to RMB 761 per ton. In the first two months, the coal mining and washing industry’s total profit increased by 4.5% year over year, showing signs of a rebound in the industry.

Looking ahead to 2026, China Shenhua expects domestic coal demand to remain broadly stable overall. Coal for power generation and for coking will be basically stable; coal for chemical use still has room to grow; coal production will remain generally stable; import coal volumes may be maintained at a steady level or decline slightly; supply and demand in the coal market are expected to be broadly balanced; and prices are expected to trade within a reasonable range and fluctuate.

China Shenhua is the largest listed coal company in China and an A+H listed company under the China Energy Investment Group. It was established in 2004, listed on the Hong Kong Stock Exchange in 2005, and listed on the SSE in 2007. Its businesses include six major segments: coal, power, railways, ports, shipping, and coal-to-chemicals. As of the close on March 31, China Shenhua’s stock price was RMB 46.75 per share and its total market value was RMB 992.59B.