Title: Shorthand draft of 2017 interim results conference of DATANG INTERNATIONAL POWER GENERATION CO., LTD. (Hereafter abbreviated into “Datang Power”)

Time: August 16, 2017

Place: Shanghai

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Host: Dear investors and friends, good afternoon! Thank you for taking time from your busy schedule to attend the 2017 interim results conference of Datang Powe. I'm the host, Sun Yan. Firstly, it's my honor to introduce the distinguished leaders at this results conference. They are Mr. Ying Xuejun, executive director, vice general manager and board secretary of Datang Powe, Mr. Bai Fugui, director of the fuel management department of Datang Powe, Mr. Sun Yanwen, director of the financial management department of Datang Powe, and Mrs. Wei Yuping, representative of securities transactions of Datang Powe.

Secondly, welcome Mr. Ying Xuejun who is the executive director, vice general manager and board secretary of the company to give opening speech to us.

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Ying Xuejun: Ladies and gentlemen, it is my great pleasure to be here with your investors and analysts and on behalf of Datang Powe, I express our sincere thanks for friends supporting and caring us.

In the first half of 2017, the newly installed capacity in China reached 50.56 million KW. Driven by the stabilized real economy with a better performance, the electricity consumption of whole nation and society rose 6.3% from a year earlier, which maintained good momentum of development. The utilization hours of thermal power equipment was 2010 hours, which increased 46 hours from a year earlier. However, the cost of electrical coal still relatively high, which grew 60 to 70% from a year earlier. At the same time, with the continuous deepening and development of power system reform, the market share of electricity continued to expand in the first half, and the management situation of power generation enterprise is very grim. Facing the new and grim management situation, our company holds energetic determination and confidence. After the completion of the stripping of coal-chemical assets, our company joined in the struggle without any burdens, enjoyed spirit-concentration and power-cohesion, focused on main business, strove to be first-class and struggled for a better future. We completed 90.6 billion KWh output of power generation in the first half of this year, which rose 10.52% from a year earlier and changed the shrinking trend of power generation in recent years. The power generation achieved a substantial increase and reached half its annual targets.

In the first half of 2017, the total profit of power generation sector reached 2.242 billion yuan, and the power generation sector, including coal machine, gas turbine, hydropower, wind power, photovoltaic and nuclear power is profitable. According to Chinese accounting standards, in the first half of 2017, the net profit of shareholders of listed company reached 1.081 billion yuan, which reduced 36.19 % from a year earlier. At the serious situation of the surging and continued high coal price, it is difficult for the company to maintain the low reduction rate year on year.

Thirdly, welcome Mrs. Wei Yuping, representative of company securities to give a detailed introduction of 2017 interim results of our company. Then my colleagues and I would like to deeply explore questions regarding the market with all of you. Thank you!

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Wei Yuping: Dear investors and friends, good afternoon! I am honored to share the management situation of Datang Power Generation in the first half of 2017 on behalf of the management, review the market environment faced by the company in the first half of 2017 and provide a brief introduction of the business outlook and operational strategy for the second half of this year.

Firstly, I would like to introduce the main results and business progress of the company in the past six months to you.

For the main management results, as of June 30, 2017, our installed capacity reached 47092 MW, which increased 8.33% from a year earlier and its power generation was about 90.6 billion KWh, which rose 10.52% from a year earlier. Moreover, the surging power generation was driven by the substantial increase of national demand of electricity and thermal power. In the first half of 2017, our thermal power grew about 9.4 billion KWh from a year earlier, the accumulated average utilization hours were 2032 hours, which rose 104 hours from a year earlier and the growth rate was 5.39%,and the average feed-in tariff was 370.08 yuan / MWh, which reduced 7.1 yuan/ MWh from a year earlier.

For the corporate finance, in the first half of 2017, its operating revenue was 30.048 billion yuan, which increased 2.91% from a year earlier; the net profit of shareholders of listed company reached 1.081 billion yuan, which reduced 36.19 % from a year earlier; the total assets of company were 231.8 billion yuan, which with 23.04% reduction rate dropped 69.3 billion yuan from a year earlier, because of the stripping of coal-chemical assets; in addition, the completion of our asset-liability ratio was 74.28%, which reduced 5.34% from a year earlier, because of the improvement of corporate finance after the stripping of coal-chemical section.

For the installed capacity, in the first half of 2017, our installed capacity grew 2756 MW and our installed structure improved further, among which the installed proportion of thermal power reduced further and the installed proportion of renewable energy, such as hydropower and wind power, etc. rose further; and the coaling machine, gas turbine, hydropower, wind power and photovoltaic accounted for 71.35%, 6.14%, 17.18%, 4.65% and 0.68% respectively.

For the power-generation output, the power-generation output of company increased year on year and the proportion of market power also jumped sharply. In the first half of 2017, our power-generation output of thermal power, hydropower, wind power and photovoltaic were 78 billion KWh, 10.3 billion KWh, 2 billion KWh and 0.2 billion KWh respectively. In general, the power-generation output in the first half of 2017 rose 10.52% from a year earlier, which caused by two aspects, for the external factors, the strong increase of national power demand, as well as the wind power and solar energy grew 16.83% and 9.45% respectively. For the internal factors, with the deepening of marketization process of company, its responsible subject takes initiative action for power-generation work, through whole year, struggles in advance for big market share of power, and forestalls the output of thermal power to drive the surging of overall output of power generation. For market power, in the first half of 2017, our settlement of various types of market power were 22.4 billion KWh, which rose 175% from a year earlier and accounted for about 26% of total on-grid energy. It can be seen, in the first half of this year, the proportion of the absolute output of market power or the total sales amount of market power were all significantly higher than the previous years.

For the utilization hours of company's machine set, in the first half of 2017, our utilization hours of accumulated average power generation reached 2032 hours, which rose 104 hours from a year earlier and among which the thermal power, hydropower, wind power and photovoltaic were 2219 hours, 1411 hours, 1146 hours and 840 hours respectively;

For the interests of power section, in the first half of 2017, the total profits of company's power sector reached 1.782 billion yuan, among which the profits of thermal power, hydropower, wind power and photovoltaic were 1.671 billion yuan, 0.059 billion yuan, 0.445 billion yuan and 0.067 billion yuan respectively. However, compared with the last year, the interests of thermal power and hydropower reduced 3.571 billion yuan and 0.489 billion yuan respectively and the interests of wind power and photovoltaic increased 0.126 billion yuan and 0.01 billion yuan respectively. The reasons for the reduction of total profits year on year are: firstly, the price of standard coal rose 252.92 yuan/t from a year earlier, which took an influence on 5 billion yuan reduction of total profits; secondly, the power-generation output grew 8.62 billion KWh from a year earlier, which took an influence on one billion yuan increase of total profits; thirdly, the electricity price within tax dropped 7.1yuan/KWh from a year earlier, which took an influence on 0.5 billion yuan reduction of total profits.

For the cost of power generation, in the first half of 2017, our accumulated price (without tax) of standard coal for furnace was 595 yuan/t, which with the 74% growth rate rose about 252 yuan/t; our cost of fuel (including gas) was about 195 yuan/KWh, which increased 68.72 yuan/KWh from a year earlier, while the cost of fuel (excluding gas) was about 184.33 yuan, which rose 77.63 yuan/KWh from a year earlier. For the cost structure of management, in the first half of 2017, the fuel cost, depreciation, service & maintenance, salary & benefits of employee, taxes of local government and others accounted for 58%, 21%, 2%, 5.76%, 2% and 10.7% respectively.

For the energy saving and environment protection, in the first half of 2017, our company strove to increase the intensity of environment protection and emission reduction; its main emission index of pollutant dropped dramatically and continually year on year; and the power generation corporate belongs to the company cumulatively finished the modification work of 60 generator sets for lower emission and the modification work of 2 machine set lower emission;

For the planning and construction of company, in the first half of 2017, our approved projects were clean energy projects and the approved amount were 406.7 MW, among which the wind power and photovoltaic were 400mw and 6.7MW, and these newly approved projects are widely distributed in Inner Mongolia, Jiangxi, Hainan and so on; our new construction projects were clean energy projects and the construction amount were about 140MW, among which the wind power and photovoltaic were 99.5MW and 40MW, and these projects are widely distributed in Jiangxi, Qinghai, Liaoning and so on.

Then, let's look back at the electricity market environment that the companies faced in the first half of the year.

For the demand of electricity, in the first half of 2017, the social power consumption reached 2950.8 billion KWh, which increased 6.3% from a year earlier and the growth rate rose 3.7% year on year, which kept the rapid growth since the second half of 2016.The power consumption of the second industry increased 6.1%, which pulled 4.4% growth of social power consumption and was the main driver of the increase of social power consumption. The power consumption of the third industry increased 9.3%, which pulled 1.2% growth of social power consumption and was the main driver of the increase of social power consumption. Affected by the high radix at the same period of 2016 and the warmer weather of the first quarter, the residential consumption of electricity increases about 4.5% year-on-year.

In term of the supply side, the newly added installed capacity of the country in the first half year is 5056 KW, and reduces by 6.43 million KW year-on-year. By the end of June, the installed capacity of 6000KW and above is 1.63 billion KW nationwide, with the growth of 6.9% year-on-year, the supply capacity is sufficient and orderly development effect of coal and electricity is more obvious. The investments in coal and electricity reduce by 29% year-on-year and the newly installed scale of coal and electricity reduces by 48% year-on-year. Power source structure and layout are continuously optimized, and for newly added non-fossil energy power generation, the installed capacity accounts for about 73% of the whole, increasing by 20% year-on-year.

In term of the utilization hours of power generation equipment, cumulative average utilization hours nationwide are about 1790 hours from January to June, 7 hours lower than the same period of last year, among which the utilization time of hydropower is 1514 hours, reducing by 144 hours year-on-year, the utilization time of thermal power generation is 2010 hours, increasing by 46 hours year-on-year, and the utilization time of wind power generation is 984 hours, increasing by 67 hours year-on-year. On the whole, the installed capacity growth of power generation nationwide in the first half year slows down and the overall supply and demand situation is loose.

In term of the marketization trading electricity quantity, National Development and Reform Commission and National Energy Administration held the discussion meeting in Yunnan at the beginning of the year. At the meeting, it is revealed that in 2016, the marketization trading electricity quantity of the country including electricity quantity in the direct trading exceeded one trillion kilowatt hours, accounting for about 19% of the total electricity consumption of the society in which the electricity quantity in the direct trading was nearly 0.8 trillion kilowatt hours. It is expected that the market electricity quantity will be further expanded and its will be further expanded. ?From the previous introduction of the company’s actual market electricity situation, it is true that the share of market electricity quantity is further expanded.

In term of coal market, its supply and price trends will be mainly affected by policy factors. Since the beginning of this year, the national policies to ensure the supply and stabilize coal price are gradually implemented, advanced coal production capacity is also gradually released, but restricted by the national coal production policy and the stage environmental protection to limit production, the overall electricity coal supply is tight, and the price of electricity coal is still running at a high level.

The brief descriptions of the company’s outlook and the operational countermeasures for the second half year are as the following.

In term of the macro perspective of the electricity market, it is expected that the overall national electricity supply capacity is surplus in the second half year, electricity supply is relatively surplus in some areas, the price of electricity coal is continuously running at a high level, the production and operation of power generation enterprises continue to face severe difficulties and challenges, but the raise of electricity price will partly relieve the operation pressure of power generation enterprises.

It is expected that the growth rate of electricity consumption in the whole society in the second half of 2017 will be slightly higher than 4% and the year-on-year growth for the whole year is about 5% which as a whole stays the same as that of the previous year. It is expected that the installed capacity of national power generation will reach 1.76 billion KW with the year-on-year growth of about 7%. It is expected that utilization hours of national power generation equipment is about 3720 hours in which the thermal utilization hours of power generation equipment is about 4150 hours, better than expectations at the beginning of the year.

For the company, the opportunities and challenges faced in the second half year are shown in the following two aspects. In term of pressure, the situation of national surplus power supply has not yet been reversed, and the downstream pattern of hour utilization still exists. The balance mechanism of quantity and price of coal market is forming, but the price of coal is generally stable but remains at a high level. In term of motive power, in July 1, the state adjusted the structure of electricity price, raised the feed-in tariffs, and cancelled the structural adjustment fund for industrial enterprises levied from the power generation enterprises that brings certain benefits for the company in the second half year. In addition, the reform and reorganization of the power industry has been opened as a whole, the coal power transforms from the main body power source into “simultaneously providing the basic power supply with reliable capacity, electricity quantity and flexible mediation capacity”, meantime, the “green certificate” system is being implemented and the quota system will be carried out. The transformation and development of power industry is imperative.

For this reason, the second half of the company will continue efforts in the following aspects: The first is to continue keeping the momentum of struggle to spare no effort to grab electricity output, and strive to take the leading position in the regional benchmarking, consolidate and expand the advantage position to grab electricity output. The second is to optimize the purchasing strategy of coal structure, increase the high-quality long-agreement coal purchasing, exploit the source of low price market coal, and seize the market opportunity to raise the stock. The third is to grasp the strategic opportunity of “The Belt and The Road” construction, the coordinated development of Beijing-Tianjin-Hebei and the adjustment of energy structure, optimize the company’s “13th Five-Year” development planning, optimize the thermal power generation structure and accelerate the development of non-water renewable energy.

The company’s achievements are over here temporarily. Thank you!

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The host: then there is the question and answer session. Welcome all the friends here to ask questions. Please say your organization name before you ask questions.

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Question: Distinguished leaders! I’m Wang Long of Houshan Investment Company. The first question is that I saw electricity output in the second quarter increased by about 2 billion over the first quarter quarter-on quarter, but why is sales revenue down more than 0.5 billion in the two quarter compared with that in the first quarter? The second question is that in the first half of this year, how much is the discount for the direct power purchase of big clients? What’s the change compared with that at the same period of last year? The third question is about Ningde Nuclear Power Co., Ltd. In July, Fujian Province lowered the electricity price of No. 3 and No. 4 machine of the Ningde Nuclear Power Co., Ltd. the announcement of China General Nuclear Power Corporation says that the new electricity price will be implemented from March. No.3 and No.4 machine of Ningde Nuclear Power Co., Ltd. was put into operation in 2016, will the new electricity price be tracked back to the previous year, and for example, will the overcharged before be returned back? The fourth question is that could you give a description that how much is the electricity price raised under the circumstance the basic electricity price for coal electricity is raised and average electricity price of listed companies raised in July, will this affect the coal electricity price linkage at the end of the year? Did the company itself calculate how much it could be raised? The last question is to introduce about the plan of new machine set put into production each year from two years to three years in the future, and will this supply-side reform of coal electricity have any influence on us? Will some machine set under construction stop production?

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Ying Xuejun: Let me answer the second question firstly. The direct power purchase of the big clients is 15.6 billion degrees in total in the first half year and the range of average drop in price is RMB 0.045 per degree. The direct power purchase of the big clients is 5.9 billion degrees in the first half of 2016 and the range of average drop in price is RMB0.049 per degree. The price reduction for direct power purchase of the big clients has narrowed slightly, but the difference is very small. The price is RMB0.049 per degree in the last year and is RMB0.045 per degree this year. ?

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Question: The Daily News of Huaneng Company says that direct power purchase of the big clients this year is less about RMB0.04 than that of the last year. Why do we only have 0.004 yuan less?

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Ying Xuejun: It may be caused by different regional structure. We have a relatively large proportion in Beijing-Tianjin-Tangshan area. Last year, we only generated electricity of 6 billion degrees in Beijing-Tianjin-Tangshan area, in which the price of electricity transmitted to Shandong is reduced more but this year, we prepare to generate electricity of 23 billion degrees in which the price of some electricity transmitted to Shandong is reduced more, but the price reduction in the area is very low. This year, the price reduction in Beijing-Tianjin-Tangshan area is only less than RMB 0.02, the quantity is larger and the proportion is higher, so the comparison of this number can’t always explain many problems. ?

Our cross city-region electric quantity is 36 million this year, whose average price reduction is 0.116 yuan while that of the last year is 0.097 and they are slightly different. There is still some electricity for substitution, which is less than that of the last year. The electric quantity in the last year was more than 300 million but less than 400 million. The price cut for this part is 0.111yuan, while that of the last year is 0.123yuan, and they are slightly different. As for price cuts, three parts of the electricity are slightly different from that of the last year.

For the further two or three years, new production capacity plan shall be added, thermal power units under construction with a capacity of around 7 million kilowatt. For this time, four plants are faced with suspending construction with a joint capacity of around 4.75 million kilowatts, and these four plants shall be completed in the next two to three years. From this year, we have enlarged unit constructions of new energies, especially the wind power, for new energy, we have put 150,000 or160,000 kilowatts into production in the first half of this year with 500,000 kilowatts under construction, 260,000 kilowatts to be approved in the second half of this year and 1000,000 kilowatts approved yet to start. In the future development, the proportion of wind power is gradually increasing. Hydropower projects under construction, as well as 1 unit of Sichuan Changhe Dam will be put into operation this year. In addition, two hydropower projects adding up to 200,000 kilowatts is expected to be put into operation next year.

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Question: comparing with the first quarter, why the electric-power output of the second quarter generates more electricity than the first quarter by 20 billion degrees while sales in the second quarter is less than the first quarter by more than 5 billion?

Sun Yanwen: Our revenue in the first quarter of the electric power is 13.4 billion, and the second quarter is 13.6 billion. Although electricity of the second quarter increases, why the power income does not increase so much? The main reason is that the electricity proportion of the second quarter increases. Actually, the market electricity proportion of the first quarter is around 17% while that of the second quarter is around 30%, therefore although the electricity increases rapidly, but the income does not increase so fast. However, as for the two quarters, electricity income of the second quarter is higher than that of the first one.

The second issue is Ningde nuclear power, which shall be started in July of this year, as the Fujian Provincial Price Bureau issued a document on the adjustment of nuclear power tariff. After issuance of this document, prices of the No.1 and No.2 machine were not affected while the No.3 and No.4 were mainly affected. The electricity price of the No.3 machine became 0.45 and that of the No.4 is around 0.372. However, the specific tracing time is still under consultation with the relevant government departments and not yet determined.

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Question: Will it be traced back?

Sun Yanwen: We cannot guarantee that we will not, but at least we will strive for it with the Government, try best to safeguard enterprise‘s interests, timely report to and communicate with the Government. Try to reduce the impact, but no impact is impossible.

The third question is on price adjustment in July, for this time, the country cancels the adjustment fund of industrial enterprises structure, which gives space to price adjustment of coal dispenser feed-in tariff. Toward Datang Corporation, comprehensively, the impacted price is about 0.008 yuan and the impacted income in the second half is about RMB 300 million. Since this adjustment is only planned for certain areas, the price in Zhejiang has not been adjusted, which is slightly lower than that of the national average. As for the coal electricity price linkage at the end of the year, from the perspective of current coal price and the comparison between coal price and current electricity price, the electricity price is supposed to be adjusted according to the policies in documents issued by the National Development and Reform Commission in 2015, because it was probably triggered the coal electricity price linkage mechanism. But about how much it will adjust，,how to adjust and when to adjust, we will actively report to the related state departments to strive for adjusting in accordance with the mechanism of coal electricity price linkage policies. But adjusting or not, in fact, not only should take into account of the enterprises, but also the impacts on the whole society. So we are used to it that usually the price reduction is fast and the price increasing is slow and relatively difficult. But we will try to strive for it since now the coal price is still running at a high price.

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Question: The electricity prices of No. 1 and No. 2 machines of the Ningde Nuclear Power Co., Ltd. haven’t been adjusted, will it be adjusted downwards in the future? And if the future coal and electricity prices increase, will the prices of No. 3 and No.4 machines be adjusted back?

Sun Yanwen: At present, a part of nuclear electricity has been involved in market competition, with regard to the adjustment in the future, I cannot give you an accurate answer right now. But we will try to strive for it, because now the power surplus is large in general.

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Question: I’m from CITIC Securities Co., Ltd. I have three questions, the first is about the price reduction of marketized trading electricity, the benchmark for price reduction is desulfurization benchmark or the benchmark after the whole process of desulfurization, denitration, dust removal and ultra-low-emission? The second is about electricity price adjustment in Zhejiang province. Zhejiang is prepared to be a wholesale market, will the electricity price in Zhejiang province not be adjusted on July 1 or is the adjustment amplitude still been discussed? Thirdly, a power industry reform was proposed in your industry prospects, in the future, it will gradually transform from main power supply to basic power supply, which is with firm capacity, electricity and flexibility mediation ability. Actually I think this is a far-reaching impact. In the future, we will conduct flexibility transformation, so can you share your opinions on the coal power’s participation in peak regulation, as well as the pricing mechanism.

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Ying Xuejun: As for the first question, the reduced price of transacted electricity quantity was priced according to full coverage, including desulfurization and denitration. And we have some franchises, and it is a franchising relationship between devulcanized and denitrated electricity price and our company, so there is negotiation between us, but what you see is the price with full coverage. With regard to flexibility transformation , what policies will bring to the future electricity price, During the plan period in the past, some machine sets only needed to do well in safe production, there would be grain ration in the future. With the advance of supply side reform, the planned electricity was marketed gradually, more and more machine sets tend to adapt to the requirements of the power grid to fight for more “food coupons”, and we shall turn to users and talk about the grain ration issue with our users. With the new changes in electricity demand, flexible peak regulation was mentioned. In the past, the peak regulation was basically based on 60%, 50% or even 40%, but now with the changes of the new energy demand characteristics, such as air conditioner, etc., the deviation between daytime and night is big, which requires the power plants to have better peaking capability. We are active in this aspect, and we actively propel it according to the requirements of the local power grid to us electrical generation enterprises. Now we are trying in Zhejiang district and Fujian district, and we will make such a request in Beijing - Tianjin - Tangshan region. In this aspect, we are following the rhythm of the power grid. Once policies and requirements are proposed, we will follow up progressively. We didn’t actively take actions in advance, since input is needed in this aspect, and the policy is that we can add utilization hours according to the flexibility peaking. There are no special requirements as well as special incentive policies in other areas so far.

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Sun Yanwen: With regard to the question about electricity price adjustment in Zhejiang province, as we know at present, it is not prepared to adjust in Zhejiang, actually, there are some areas haven’t been adjusted too, such as Yunnan.

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Question: Where is the money collected before by Zhejiang Industrial Enterprise Structural Adjustment Fund?

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Sun Yanwen: There is no telling about where the money goes, but at least for the coal-fired power unit, the feed-in tariff will not be adjusted this time.

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Question: I'm Wang Lu from Shenyin & Wanguo Securities. What is the average coal price in the first quarter and second quarter? Besides, can you describe the situation of the ratio of long-term contract coal and its monthly and annual settlement?

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BaiFugui: The procurement price of as-received coal is 588.96 yuan in the first quarter and 557.53 yuan in the second quarter, accumulative total 572.63 yuan in the first half of the year, showing the trend of decreasing. The ratio of long-term contract coal is like this, 40.8 million tons of long-term contract coal was ordered in the whole year, accounted for 65% of the total demand of annual budget of that time, and the actual coal amount purchased in the first half of the year rose 19% year on year, which ended the significant decline in five consecutive years. The coal purchase amount declined with a annual rate of ten-million-ton from 2011, in 2011, the consumption of Datang Power exceeded one hundred million tons, and the big figure declined to 60 million last year, 40 million tons had declined in four years, but the big figure added in the first half of this year, and the natural coal amount consumed in the first half of this year increased by 5.97 million tons. If it will continue increasing in this speed, maybe 10 million tons will be increased year on year in the whole year, which will end the history of decline in four consecutive years. The purchase amount of long-term contract coal in the first half of this year is 13.16 million tons, accounting for 42% of the total purchase portion, and its cash rate reaches 77% according to schedule. The cash rate of long-term contract coal of coastal power plants reaches about 92% and the total amount is 77%, which is less, mainly because Beijing-Tianjin-Tangshan direct power plants are affected by resources and transport capacity, moreover, this part hasn’t been subject to strict national supervision. Only coastal power plants and harbor coal are re strictly regulated by the state, those in Beijing-Tianjin-Tangshan region haven’t been strictly regulated, so the cash rate in this part is lower, which is affected by resources and transport capacity.

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Question: I’m Ma Tao from Rongteng Asset Management Co., Ltd. Is there any cooperation project about solar energy of distributed energy with the government, and how about grid access?

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Ying Xuejun: With regard to the distributed energy, our company is also planning to advance it because it will be the trend of development next step. Only one distributed photovoltaic project is being carried, which is 6700KW and located in Hainan.

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Question: I’m a researcher from Guotai Jun’an Securities. Will the number of utilization hours of planned electricity be affected after implementation of large users direct purchase in each region? Because some regions seem to be very radical, and directly subtract the planned electricity proportionally after getting market electricity.

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Ying Xuejun: It is different in each district. But most districts will subtract the planned electricity after getting market electricity, nothing but the portions are different. The portion of each district is allocated according to its actual situation, and this is mainly done by the National Development and Reform Commission, the proportion of punishments is not too large in fact. For example, we sent electricity to Shandong, 5% will be deducted from Beijing - Tianjin - Tangshan region, but in some other districts may deduct 20% or 30%, the proportion is different. But generally speaking, the proportion of deducted base electricity price of all the big clients’ direct purchasing electricity will be put forward before quotation, it will not deduct half and half, but slightly deduct a bit from the base to measure and calculate the value of proportion when quoting, I believe all of you know how to calculate it.

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Question: I’m Zheng Si’en from the AXA SPDB Investment Managers Co.， Ltd. What’s the progression of directional private placement or expected progress of the company? When will you access the approval during the current year? Besides, the price gap between Hong Kong stocks and A shares is large, and A shares and H shares will complete such an issuance at the same time, so how difficult for the company to finally implement it?

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Wei Yuping: Let me introduce the progression of directional private placement, since completed the first round comments reply in June, the second round comments haven’t been mentioned so far. It is understood that our company is waiting in line for preliminary examination, the situation is known that there are more refinancing companies, if four or five companies can access the preliminary examination for measurement and calculation, it is estimated that the time of our preliminary examination will be between September and October. Secondly, as for the price gap between H shares and A shares, H shares are of a fixed price that it is determined to be 2.26 yuan per share after shareholders meeting on March 31, and according to new policies, the price of A shares cannot be determined for the issuing price can only be determined as determined principles upon issuing. There is a condition for the issuance of A shares and H shares that they shall be approved before they can be issued. Now the shareholders’ meeting also gave the upper limit of the number of shares issued by A shares and H shares respectively, at that time, the issuing price will be determined combing with the approved time and negotiate with major shareholders to determine issuing time. After the full issuance is completed, we initially guess and estimate that the shareholding ratio of major shareholders in Datang International Power Generation Co. Ltd. will not be less than 50%, which is close to the forecast at the beginning.

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Question: I’m Wan Wei from China Securities Co., Ltd. With regard to the coal and electricity restructuring of central enterprises, is there any new scheme known by the company or the whole group, for example, in addition to Shenhua Group and China Guodian Corporation, what’s the restructuring plan of the remaining four electric power group in the future?

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Ying Xuejun: There are more rumors in the market this year, now we know the China Guodian Corporation was suspended and Shenhua Group also suspended in the same day magically. Because of the restructuring, the advance speed of electric power system reform is faster than the expectation of generating electricity enterprises like us, who are involved in it. But it is still slower than national plan, however, the first round has already started and is progressing steadily. Is there a second round? As the mixed reforms of state-owned enterprises, including electric power system reform, have been written into government work reports, it shall be an irresistible general trend. However, how to reform in the end? At present, we haven’t received any administrative information for this aspect, so we cannot give you a clear answer instantly.

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Question: I’m Liu Jiani from China International Capital Corporation Ltd. My first question: What is the financial cost standard of the first half of the year? In particular, is there any increase in the second quarter compared with the first quarter? The second question: What are the opinions of the company on overall trend of coal prices in the second half of the year?

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Sun Yanwen: About the first question, as for the second quarter of this year compared to the first quarter, and the first half of this year compared to the same period last year, the financial cost especially in terms of financial expense has indeed risen, and the average interest rate of the first half year of this year is 4.5%, while that of last year was about 4.2%.We all know that many central enterprises have canceled the issuance of enterprise bond，which is mainly because the interest rate of issuing enterprise bond is higher. So we want credit line in return, thus, the price of the loan is also lifted up, therefore, the overall financial costs are indeed rising for us.

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Bai Fugui: The coal trend of the second half year will mainly be affected by policies, because it is not the buyer's market nor the seller's market, it is the policy market. In the second half of last year, the whole coal supply and demand began to reverse, because of the national macro-control and production capacity. At the national level, it will continue to introduce policies to protect prices. For the pricing of long-term contract coal, its basic price is 535 yuan, plus two indexes for correction, NDRC considers 535 yuan as a reasonable price. But from the beginning of the year until now it has been far higher than the price by more than 6% which is considered beyond the reasonable range. It was 557yuan on last month, and 565 yuan this month, thus it rose 8 yuan, but this is the price of long-term contract coal, the market price is between 640 yuan and 650 yuan, so the price is still high. At present, the NDRC has intensively issued some guidance on the release of production capacity. Especially from 15 to 17 of this month, the NDRC will jointly with the Ministry of Land and Resources of the People's Republic of China (MLR) , Ministry of Environmental Protection of the People's Republic of China (MEP), Ministry of Agriculture of the People's Republic of China (MA), National Energy Administration (NEA) and State Administration of Coal Mine Safety (SACMS ) for field trips to research the supply of coal in the three northeastern provinces. Now the most serious shortage of the coal is the three northeastern provinces. Especially in Heilongjiang and Jilin, there is a hard gap, and if the gap is not settled as soon as possible, there will be no coal for this year's winter heating, so the government is attaching great importance to ensuring supply. Indeed, the process of the release of production capacity is interfered by the inspection of environmental protection and safety inspection, etc. but all of which are in accordance with the law. However, the inspections for the production of coal mine is influential, especially in the peak consumption. More or less, they affect part of the production capacity, causing supply tension in a short time, resulting in the rising of the coal prices. Now, the security inspection and environmental inspection of the main coal provinces including Shanxi, Shaanxi and Inner Mongolia have come to an end. Especially the main coal producing province Inner Mongolia is celebrating its 70th anniversary. As it comes to an end, the amount of coal production will increase. Now the coal peak is drawing to a close, so the year's coal consumption peak will soon be over. As the close of the peak and the effect of release of production capacity, the supply side becomes loose, I believe there shall be a significant change, although we think that the supply relationship now is balanced and still a little tight. That is to say, the supply of September and October shall be relatively loose and the price shall fall. In winter, the northern heating has reached a small peak in demand. By this year, since our state decided to release new capacity, the high-quality production capacity has released at least 200 million tons. But the first half of the year released only 90 million tons, that is to say, it has to release at least 110 million tons in the second half of the year. Although there is a small peak of demand this winter, we don't think it will be much tighter than the summer supply for it's impossible. So we predict this summer is the most intense period and the highest price is in summer. So we predict that , in the second half of of the year, mainly affected by the national macroeconomic regulation and control policy, the coal supply tends to be balanced, and the coal will still be in a high price, no more ups and downs, but slightly back is entirely possible.

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Moderator: Thank you very much for your enthusiastic speeches. Now, please welcome the deputy general manager of Datang Power and secretary of the board of directors, Mr. Ying Xuejun to make a speech.

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Ladies and gentlemen, just now Ms Wei Yuping on behalf of the company introduced the interim results of 2017 and related situation of our company. Meanwhile, the senior management has also carried on a thorough communication with you about the current market concerns. Thank you for your concerns and support to us. We achieved certain achievements in the first half of the year, but we still face a severe situation in the second half of the year. All the work faces more challenges. In this regard, the company will spare no efforts and go all out to face the difficulties, meet the challenges and seize the opportunities to achieve results.

In the first half of 2017, the market situation we faced can be summarized by three severities. The first is the severity of market competition situation. With the reform of electric power system deepening, the proportion of the planned power continues to be compressed, and the price cut of market electricity price continues to increase, so in the second half of the year, the market consumption ratio will further increase and the difficulty of increasing supply and keeping price will be greater. The second is the severity of the electricity-coal situation of supply-guarantee and price-control. Affected by the coal price de-capacity policy, the coal price is still high overall consolidation, and the unpredictability of the coal price in the second half of the year is still great. The third is the severity of the energy industry development situation. According to the policy guidance, the coal electricity will gradually transform from the main power to the basic power with firm capacity, electricity and flexibility mediation ability at the same time, which will force the restructuring and upgrading of coal-fired enterprises. Next year we will start the renewable energy quota system and green card compulsory constraint trading, so the non-water renewable energy shortage problems will become increasingly prominent.

Meanwhile, our company also faces three major opportunities. One is that the adjustment of the electricity price structure will be conducive to the increase of revenue and efficiency. On July 1, the state raised the electricity price of surfing internet by adjusting the structure of the electricity price, and abolished the structural adjustment fund for industrial enterprises collected from power generation enterprises, which had a positive effect on the increase of the company's revenue. The other is that strict control will restrain the irrational increasing of the coal price. The competent department of energy shall strengthen the release of high-quality production capacity and the restructuring and replacement of production capacity as well as consolidate the linkage of production, transportation and demand. Restart the limit order after last year's long-contract order, so the coal price is expected to return to a reasonable range. Third is that the development structure optimization will add impetus to the development of the company. Whether it is the successful restructuring of coal chemical industry last year or the fifth project of Togtoh power this year, the smooth operation of Changheba Hydropower, or the acceleration of the construction and development of new energy projects, all of these structural optimization brings new vitality to the company, and also has laid a good foundation for next-step optimization development. In the second half of the year, the company will focus on double optimization. On the one hand, we will go all out to optimize development, intensify the development of new energy projects and creation of high-quality projects, continuingly advance the share issuance and capital operation, etc. promoting the continuous optimization of company's assets structure. On the other hand, we will go all out to optimize the operation, to do the safety production, to pay special attention to the power grabbing, and to reduce and control costs. All staff will gather strength and strive for self-improvement to ensure the achievement of the whole year and deliver a satisfactory answer to the shareholders and investors. Finally, on behalf of the company, I would like to extend my sincere thanks to all investors and analysts for your constant trust and support to the company!

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Moderator: Here is the end of today's performance conference. Thanks again for your participation. Wish everybody good health and wish Datang Power a further improvement. if you have any question after the meeting, welcome to communicate with us by telephone and other forms. Thanks again!

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