Event: On October 24, 2025, Inner Mongolia Dian Tou Energy Corporation Limited released its third-quarter report. For the first three quarters of 2025, the company achieved operating revenue of RMB 22.403 billion, a year-on-year increase of 2.72%, and net profit attributable to shareholders of RMB 4.118 billion, a year-on-year decrease of 6.40%. Non-GAAP net profit stood at RMB 4.030 billion, down 5.95% year-on-year. Net cash flow from operating activities was RMB 7.850 billion, up 13.30% year-on-year, while basic earnings per share (EPS) were RMB 1.84 per share, declining 6.12% year-on-year.
For Q3 2025 alone, the company reported quarterly revenue of RMB 7.939 billion, up 3.34% year-on-year, and net profit attributable to shareholders of RMB 1.331 billion, down 8.52% year-on-year.
Analysis: 1. **Steady Coal Performance**: The company operates in the core coal-producing region of eastern Inner Mongolia, with major clients concentrated in Northeast China. As outdated coal capacity continues to be phased out in the region, the supply-demand balance has improved, demonstrating stronger resilience compared to the national market. As of October 24, 2025, the average annual price of 3,200 kcal lignite in eastern Inner Mongolia was RMB 282 per ton, down only 3.6% from 2024, reflecting price stability. With a high proportion of long-term contracts supporting sales, the coal segment is expected to maintain steady performance.
2. **Aluminum Electrolysis as Growth Driver**: The company’s subsidiary, Huolinhe Hongjun Aluminum & Electricity, a major contributor to minority interests, reported minority shareholder gains of RMB 830 million in Q3 2025, up 34.95% year-on-year, highlighting the segment’s rapidly improving profitability. Additionally, the under-construction 350,000-ton aluminum electrolysis project in Jarud Banner is expected to commence operations by late 2025 or early 2026, further boosting the company’s aluminum capacity and future earnings.
3. **Synergistic Coal-Power-Aluminum Development**: As a key platform for coal, power, and aluminum integration under the State Power Investment Corporation in Inner Mongolia, the company has significant expansion potential. Its planned acquisition of Baiyinhua Coal & Power Company, which owns 15 million tons/year of lignite capacity and 405,000 tons/year of aluminum electrolysis capacity, will enhance its core business scale and solidify its regional leadership while unlocking long-term growth opportunities.
Earnings Forecast & Investment Rating: Given the company’s high-quality coal, power, and aluminum assets—with steady coal earnings and growth potential in green power and aluminum electrolysis—we expect net profits attributable to shareholders of RMB 5.492 billion, RMB 6.025 billion, and RMB 6.741 billion for 2025–2027, with EPS of RMB 2.45, RMB 2.69, and RMB 3.01, respectively. We maintain a "Buy" rating.
Risk Factors: Uncertainties in macroeconomic conditions, geopolitical impacts on global markets, policy changes in coal-power sectors, potential coal mine safety incidents, and delays in mergers and acquisitions.
Comments