Kinetic Mines and Energy : Promotional News for Capital Market March-June 2019

Kinetic Mines and Energy News Clippings

Promotional News for Capital Market

March-June 2019

Kinetic Mines and Energy Maintained High Rate Growth in 2018 Annual Results with Net Profit
Increased Significantly by 49.4% to RMB807.0 Million...........................................................................	2
Kinetic Mines and Energy Recorded a Year-on-Year Growth of 49.4% in Profit in 2018 with a Dividend
Yield Ratio of over 10%............................................................................................................................	5
Kinetic Mines and Energy: Possible Implementation of M&A Project in the Middle to the Second Half
of the Year...............................................................................................................................................	7
Kinetic Mines and Energy's Dafanpu Coal Mine Passed Class A Coal Mine Acceptance in Jungar
Banner with a Score of 92.5....................................................................................................................	9
NDRC's Speeding Up the Closure of Small Coal Mines is Expected to Constantly Benefit Kinetic Mines
and Energy.............................................................................................................................................	11
Kinetic Mines and Energy Recommended by Haitong International Securities...................................	13

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Kinetic Mines and Energy Maintained High Rate Growth in 2018 Annual Results with Net Profit Increased Significantly by 49.4% to RMB807.0 Million

2019-03-21 | Quamnet |

All-round Optimal Management for Profit Maximization

(21 March 2019, Hong Kong) Kinetic Mines and Energy Limited ("Kinetic Mines and Energy", together with its subsidiaries, the "Group"; stock code: 1277.HK), a leading and efficient integrated coal enterprise in China, is pleased to announce its annual results for the year ended 31 December 2018.

Financial highlights of Kinetic Mines and Energy's 2018 annual results:

• Revenue increased by 39.7% to RMB2,443.4 million
• Gross profit margin was 44.9%
• Net profit amounted to RMB807.0 million, representing a year-on-year growth of
  49.4%
• EBITDA reached RMB1,246.4 million

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• Gearing ratio decreased to 10.0%
• Basic earnings per share amounted to RMB9.57 cents
• Proposed Final Dividend per share amounted to HK3.0 cents

During the year, Kinetic Mines and Energy maintained a strong growth momentum with record high turnover and net profit. For the year ended 31 December 2018, the Group recorded a total revenue of RMB2,443.4 million, representing a year-on-year growth of 39.7%. Net profit increased significantly by 49.4% to RMB807.0 million. The Group's gross profit margin was 44.9%. Gearing ratio reduced to 10.0%. Basic earnings per share was RMB9.57 cents. The Group achieved a substantial growth in cash flow, with an EBITDA reaching RMB1,246.4 million. The Board of Directors proposed a final dividend of HK3.0 cents per share to its shareholders.

In 2018, as the PRC government continued its promotion of de-capacity, and optimization of industrial structure and industrial layout, the coal market realized overall balance between the supply and demand, and the operations of most enterprises were improved, and new progresses were achieved in industrial restructuring as well as transformation and upgrading. The quality of coal supply improved significantly and the coal prices were kept at a high level in general. Benefiting from favorable coal prices, the profitability of the coal industry continued to improve and the market conditions were taking on the trend of gradual recovery.

By virtue of the advantages in the quality of coal products, well-developed industry chain, sound cost control and efficient production technology, the Group experienced continuous remarkable growth in its turnover. In addition, drawing upon its high-quality coal layers, mining efficiency, quality coal product brand "Kinetic 2" (力量 2), mining cost reduction and mitigating risks arising from coal price fluctuations, the Group thereby achieved the best possible gross profit margin in the current coal market. Moreover, the Group implemented the all-around optimized management strategy. It gradually rolled out the port coal storage, on-site delivery and distribution business, so as to enhance the Group's sales and bargaining capacity at port and boost our gross profit margin rising above the industry average. It also proactively diversified coal sales channels, vigorously explored various quality customer groups, and maintained a high recovery ratio for its receivables. And it continued to strictly control sales, transportation, port and management costs, thereby maximizing its profit.

Mr. Zhang Li, Chairman and Executive Director of Kinetic Mines and Energy, said, "In 2018, international trade friction continued to escalate, which brought critical challenges for both the Chinese economy and the global economy. The Chinese government has facilitated numerous financial and economic stability policies and measures, prompting its economy to advance and grow with a stable momentum. During the year, the raw coal output of coal mining enterprises rose steadily, with the entire industry dedicated to developing an overall balance between supply and demand, and benefiting from the stable coal market and price, profitability of leading coal enterprises was on an upward track. Looking forward to 2019, the Group expects that coal production, sales and trading business will grow steadily. The Group will also take proactive measures to cater for changes in new market regulations, continue to strictly control production cost, follow the operating strategy of low-cost production while fully capitalizing on its stable cash flow and strong profitability thanks to its high-standard and high-quality product competitive edge, aiming to seize development opportunities, and creating the highest value for shareholders."

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Kinetic Mines and Energy News Clippings

Kinetic Mines and Energy Recorded a Year-on-Year Growth of 49.4% in Profit

in 2018 with a Dividend Yield Ratio of over 10%

2019-03-22 | Finet |

Kinetic Mines and Energy Limited ("Kinetic Mines and Energy"; stock code: 1277.HK), a leading and efficient integrated coal enterprise in China, announced its annual results for 2018 on the evening of 21 March, according to which, its revenue doubled to RMB2.443 billion within three years, leaving its peers with sizable scale far behind; its profit made a "triple jump" from RMB138 million to RMB807 million, representing a CAGR of 141.8%. Under the support of record high performance, and by virtue of strong cash flow, it also generated a fruitful shareholder return, with a final dividend of HK$0.03, which brought the full-year dividend to HK$0.045, and a dividend yield ratio of over 10%.

The outstanding operating results of Kinetic Mines and Energy are the fruit of the company's intelligent and efficient management and various preferential tax treatments and policies it enjoys. Its Dafanpu Coal Mine in Inner Mongolia has been rated as a Premium Safe and Efficient Mine in the coal industry, and has become one of the safest and most efficient coal mines in China. Its production efficiency and cost control were both significantly improved during the year, thereby improving the overall economic efficiency of the company.

At the press conference held in Hong Kong for the release of results, some investors believed that the company's profit growth and dividend payouts were satisfactory, and asked various questions including the direction for future M&As and financing plans. As replied by Gu Jianhua, the Chief Executive Officer, the supply and demand in the industry has currently reached a balance, the NDRC and other governmental departments are vigorously promoting M&As in the coal industry and encouraging competent enterprises to invest in the development of new coal mines, and the company has various first-mover advantages with a number of quality M&A targets in the region.

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