Zhengzhou Coal Mining Machinery: Impact of U.S. Tariff Incident Relatively Small, Aiming for 100 Billion Target by 2030

Zhengzhou Coal Mining Machinery (601717.SH) announced a dividend yield exceeding 8% for 2024. During the company's 2024 performance briefing held today, investors actively raised questions regarding US tariff policies, business development, and dividend plans.

Jia Hao, Vice Chairman and General Manager of Zhengzhou Coal Mining Machinery, stated that the company and its domestic subsidiaries have a relatively small proportion of direct export revenue to the US, and the current US tariff incident has a limited impact on the company. In the coming years, the company's coal machinery and auto parts businesses still hold significant potential. The company aims to achieve a development target of 100 billion yuan by 2030 through diversified business layouts, resource integration, and industry chain collaboration.

Zhengzhou Coal Mining Machinery achieved a total operating revenue of 37.025 billion yuan in 2024, up 1.73% YoY. Net profit attributable to the parent company reached 3.934 billion yuan, an increase of 20.16% YoY. Non-GAAP net profit was 3.604 billion yuan, up 19.05% YoY. Additionally, the company values shareholder returns and plans to distribute a cash dividend of 1.12 yuan per share (tax included), totaling 1.956 billion yuan, accounting for 49.72% of the 2024 net profit attributable to the parent company. Based on the company's closing price today, the dividend yield reached 8.05%.

Regarding future dividend plans, Jia Hao mentioned that the company currently has no interim dividend plan. The company will continue to provide consistent and stable cash dividends to investors, considering industry trends, corporate development plans, and operational funding needs, aiming to deliver long-term investment returns.

When discussing the impact of overseas business and US tariff hikes on the company, Jia Hao noted that the company's overseas business revenue in 2024 was approximately 12 billion yuan, including export revenue from the company and its domestic subsidiaries, as well as revenue generated by the company's overseas auto parts subsidiaries. The coal machinery business successfully expanded into international markets such as Australia, the US, India, Turkey, Vietnam, and Indonesia. In the auto parts sector, Yaxing has long-term stable partnerships with internationally renowned automotive and auto parts producers, while SEG has established a global marketing and production network, with sales teams in key markets across Europe, the Americas, and Asia. Direct export revenue to the US accounts for a relatively small proportion, and the tariff incident currently has a limited impact on the company. The company will continue to monitor any subsequent adjustments to relevant tariff policies.

Zhengzhou Coal Mining Machinery's main businesses are divided into coal mining machinery and auto parts. The company has also planned a transformation direction and development strategy focusing on electrification, intelligence, digitalization, and globalization. Through diversified business layouts, resource integration, and industry chain collaboration, the company aims to achieve a development target of 100 billion yuan by 2030. Jia Hao stated that the coal industry remains China's primary energy source, closely related to national energy security, and will continue to develop steadily in the coming years. The automotive industry is undergoing a transformation towards electrification and intelligence, offering vast development opportunities.

Among these, the coal machinery segment contributed significantly to the company's profit growth in 2024, with a notable optimization in the segment's revenue structure and an increased proportion of high-margin products.

However, some investors expressed concerns that the continuous decline in coal prices may severely compress coal companies' profits in 2025, potentially leading to reduced equipment investment. Jia Hao acknowledged that the domestic revenue of the company's coal machinery business accounts for over 93%, while export revenue does not exceed 7%. Domestically, the decline in coal prices will impact the profitability of the company's downstream customers, which may, in turn, affect their procurement of coal machinery equipment.

Nevertheless, Board Secretary Zhang Yichen highlighted an optimistic aspect: "The rapid development of intelligent coal mining equipment in recent years has led to an expected penetration rate of 20%-30% for intelligent coal mining workfaces. The coming years will see a period of both new and replacement demand for intelligent coal mine upgrades."

To mitigate potential impacts in the domestic market and prepare for future development, the company has intensified its efforts in overseas business development. Jia Hao stated that the company will focus on expanding the overseas market for its coal machinery business, actively targeting major coal-producing countries to develop underground mining equipment markets. However, the global political and economic environment in 2025 remains highly uncertain, and each coal machinery project requires customization, making it difficult to predict overseas revenue growth.

The company also provided an overview of its future development plans for the auto parts segment. Jia Hao mentioned that the company will continue to grow its core business and market share while accelerating its transition to new energy, advancing new product business layouts, and enhancing competitiveness and profitability. Yaxing is actively developing the NEV market and expanding its share in the chassis damping business. New businesses such as air suspension systems are rapidly growing. SEG is promoting the large-scale development of high-voltage motor parts, exploring new motor business opportunities, and enhancing profitability through operational excellence.