China Qinfa Group Limited Issues Profit Warning for FY2025 Amid Strategic Shifts in Indonesian Coal Assets

Key Highlights

• Significant Profit Decline Expected: The Group anticipates a loss after taxation of up to RMB98 million for the year ended 31 December 2025, compared to a profit after taxation of approximately RMB556.37 million in 2024.
• Discontinued vs. Continuing Operations: Discontinued operations are expected to record a loss of up to RMB226 million, while continuing operations are projected to generate a profit of up to RMB128 million for 2025.
• Major Factors Impacting Results: Decrease in coal prices, declining production volumes in discontinued operations, increased production in continuing operations, significant foreign exchange losses, and absence of gains from loan restructurings that benefited 2024 results.
• Expansion in Indonesian Coal Assets: The Group has increased effective interests in several Indonesian coal mining companies, including majority and full ownership in key mines.
• Operational Milestones: Substantial increase in coal production and washing capacity at SDE Mine 1, with ongoing and upcoming expansion projects poised to further boost processing capacity.
• Upcoming Infrastructure Projects: The commissioning of a 30MW power plant at SDE Mine 1 and construction advances at SDE Mine 2 and TSE Mine 1 are expected to enhance operational efficiency and cost-effectiveness.

Detailed Analysis

Profit Warning and Financial Performance

China Qinfa Group Limited has issued a profit warning for the financial year ended 31 December 2025. The Group expects to record a loss after taxation of no more than RMB98 million, marking a dramatic reversal from the profit of approximately RMB556.37 million achieved in 2024. The profit-and-loss breakdown reveals that discontinued operations will incur a substantial loss of up to RMB226 million, whereas continuing operations are anticipated to maintain profitability, generating up to RMB128 million.

Factors Contributing to the Loss

• Coal Price and Production Volumes: The average selling price of coal declined in 2025 compared to 2024. Discontinued operations saw a sharp drop in raw coal production volume from 6.7 million tonnes in 2024 to 2.1 million tonnes in 2025. In contrast, continuing operations increased output from 2.6 million tonnes to 5.4 million tonnes.
• Foreign Exchange Losses: The depreciation of the Indonesian Rupiah against the Renminbi and the US Dollar significantly impacted the Group, resulting in foreign exchange losses of approximately RMB104.44 million in 2025, a notable increase from RMB38.69 million in 2024.
• One-off Gains in 2024 Not Repeated: No gain on material modification of borrowings was recognized in 2025, whereas the Group reported a gain of RMB476.36 million from such activities in 2024.

Strategic Expansion in Indonesian Coal Mining

During 2025, the Group strategically increased its effective interests in several coal mines in South Kalimantan, Indonesia. As of year-end, Qinfa held the following stakes:

• PT Sumber Daya Energi (SDE): 70%
• PT Venerasi Sejahtera Energi: 100%
• PT Inisiasi Merdeka Jaya: 100%
• PT Suprema Marulabo Energi: 100%
• PT Trisula Sumber Energi (TSE): 100%

Production and Infrastructure Developments

The Group’s coal business demonstrated robust operational growth:

• SDE’s Raw Coal Production: Increased from 2.57 million tonnes in 2024 to 5.42 million tonnes in 2025.
• Washed Coal Output: Jumped from 308,000 tonnes in 2024 to 3.15 million tonnes in 2025.
• Total Coal Business Volume: Rose to 5.78 million tonnes, up from 5.16 million tonnes in 2024.

The coal washing system at SDE Mine 1, now operational, has boosted the washing capacity to 8 million tonnes per annum. An expansion project, expected to conclude by April 2026, will add another 5 million tonnes, bringing the total to 13 million tonnes per annum. This aligns processing capacity with mine output, promising improved product quality and competitiveness.

Power Plant and Mine Expansion Projects

• Power Plant at SDE Mine 1: A 30MW plant is scheduled to be operational by March 2026, targeting substantial reductions in electricity costs for the mining area and enhancing cost efficiency.
• SDE Mine 2: Construction is progressing as planned, with a designed capacity of 10 million tonnes per annum. The mine is expected to commence production in April 2026, with a supporting coal washing system set for commissioning simultaneously.
• TSE Mine 1: The Group is negotiating with a prominent state-owned enterprise for the construction contract of TSE Mine 1, targeting a designed capacity of 8 to 10 million tonnes per annum. The agreement is expected to be finalized in the first half of 2026, subject to partner approval and regulatory clearance.

The Group intends to prioritize capital investment to accelerate development across these Indonesian coal projects.

Shareholder and Investor Insights

• Material Profit Warning: The anticipated swing from profit to loss is significant and could materially impact the Company’s share price.
• Currency Risks: Investors should be aware of ongoing exposure to currency volatility, particularly the Indonesian Rupiah.
• Operational Growth vs. Financial Headwinds: While production and strategic assets are expanding, these have yet to translate into bottom-line profitability due to market and financial headwinds.
• Pending Developments: Key milestones in infrastructure and mine development are expected in 2026, which could influence future financial performance and valuation.
• Uncertainties Remain: The results are based on unaudited management accounts. The final audited results, due by end of March 2026, may differ.

Conclusion

China Qinfa Group Limited faces a challenging operating environment in 2025, with significant losses expected after a previously strong year. However, the Group is aggressively expanding its coal operations and infrastructure in Indonesia, which could enhance future profitability and market position. The coming year will be pivotal, as key projects come online and negotiations for further expansion progress. Investors should closely monitor developments and exercise caution in trading the Company’s securities.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Investors should refer to the Company’s official announcements and audited results for the most accurate and up-to-date financial information. The Company’s financial performance remains subject to market risks, regulatory changes, and the successful execution of its strategic initiatives.

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