Chapter 4

Coal and Power

The coal-and-power business inside Tianchi Energy — TBEA's 85.78%-owned Xinjiang subsidiary — is the group's largest single earner and the cash that funds its polysilicon capex. Tianchi made ¥3.39bn of net profit in FY2025, close to half of group attributable profit [1]. But the engine is cooling: its profit has roughly halved since FY2023 as Xinjiang coal prices fell [2]. A growing, high-margin pithead power business is the partial offset.

The group's largest earner

Tianchi Energy runs open-pit coal mines in the Zhundong (准东) coalfield of Xinjiang — the national reserve base the filing describes as shallow-buried, low-stripping-ratio, and among the most economic in the region — with approved coal capacity of 74 million tonnes a year and 5,040MW of pithead thermal generation (4,040MW excluding captive plants) [3] [4]. In FY2025 the subsidiary held ¥54.34bn of assets and turned ¥23.85bn of revenue into ¥3.39bn of net profit [5].

Sources: FY2025 Annual Report, Principal subsidiaries [6] and product-segment table [7]; share of profit derived from reported financials [8].

The structure is vertically integrated. TBEA mines low-cost coal, burns part of it in its own pithead plants, and moves the electricity out of Xinjiang through the "West-to-East" transmission corridors its own transformers equip — the plants are labelled "疆电外送" (Xinjiang power export) in the filing [9]. This is why the two lines behave differently as coal prices move, and why they belong in one chapter rather than two.

The engine carries the group

Coal and power together produced ¥7.73bn of gross profit in FY2025, about 42% of the group's ¥18.28bn — a slice larger than the entire grid-equipment franchise (The Grid Franchise) [10]. At the net-profit level the concentration is starker. Tianchi's ¥3.39bn, multiplied by TBEA's 85.78% stake, contributes roughly ¥2.91bn to attributable profit — about 49% of the group's ¥5.95bn in FY2025 [11] [12].

Sources: group attributable profit, FY2025 Annual Report key accounting data [13]; Tianchi net profit at 85.78% stake, FY2023–FY2025 principal-subsidiary tables [14] [15] [16].

FY2024 is the year that shows what the engine does. Tianchi's attributable contribution (about ¥4.26bn) actually exceeded the group's entire ¥4.14bn of attributable profit — everything else the group did, netted together, lost money [17] [18]. The "steady core" of the investment case is, at the bottom line, substantially one coal-and-power subsidiary in Xinjiang.

The engine is cooling

The reason the engine cannot be treated as a fixed floor is that its profit is falling with the coal price. Coal-product gross margin has dropped every year since FY2022 — 47.63%, then 46.41%, 32.42%, and 22.39% in FY2025 — a 25-point decline in three years [19] [20] [21] [22]. This is a price effect, not a volume one: management states coal output was held roughly flat and sales volume "stable," against a backdrop of surging Xinjiang capacity and "continuously falling" coal prices [23]. Coal-product gross profit has fallen from about ¥8.46bn in FY2023 to ¥3.80bn in FY2025, a decline of roughly 55%.

Source: coal-product and power-generation lines of the FY2022–FY2025 product-segment tables [24] [25] [26] [27].

The internal hedge

The same falling coal price that squeezes the mining margin is fuel-cost relief for the power plants, and this is where the vertical integration pays. Power-generation revenue grew 28.2% in FY2025 to ¥7.18bn, and its gross margin held at 54.75% — up from a ¥4.51bn base in FY2022 [28] [29]. Power gross profit (¥3.93bn) overtook coal gross profit (¥3.80bn) for the first time in FY2025 — the chart above shows the crossover. The growth came from newly commissioned pithead units burning captive coal that gets cheaper as the market falls; thermal output reached 15.54 TWh at an average 3,846 utilization hours [30].

Source: FY2022–FY2025 product-segment tables [31] [32] [33] [34].

The hedge is real but partial. Power generation added about ¥1.79bn of gross profit between FY2023 and FY2025; coal-product gross profit shed roughly ¥4.66bn over the same span. The offset covered a bit more than a third of the coal decline, which is why total energy-segment gross profit still fell from ¥10.60bn (FY2023) to ¥7.73bn (FY2025). Vertical integration slows the bleed; it does not reverse it while coal prices are falling.

What it funds, and what to watch

The engine's job in the group is to generate the cash that the capital-hungry businesses consume — the polysilicon build (The Polysilicon Engine) and the group's continuing ¥22bn annual capex. That capex is not slowing: alongside the completed polysilicon lines, Tianchi is building a ¥17.03bn Zhundong coal-to-gas plant (about 18% complete) and the group a ¥6.78bn alumina project, so the energy and materials arms are themselves absorbing capital rather than only returning it [35].

The read: the coal-and-power engine remains the most valuable, highest-return part of TBEA, but it is a still-large cash machine that is shrinking, not a fixed floor. The strongest fact against a bearish view of it is the power business — a 55%-margin, growing, captive-fuelled stream that structurally benefits from the very coal-price weakness that hurts the mining line. What would change the read, in either direction, is checkable in the next two annual reports: the coal-product gross margin (22.4% and falling), whether power-generation volume keeps climbing fast enough to offset it, and whether Tianchi's net profit stabilizes above the ¥3bn mark or continues down toward the group's other earners.