Comments: the main business loss, the source of profit mainly comes from asset disposal. At the end of 2011, the company added 180000 deadweight tons, with 19 bulk carriers, with a total capacity of 925000 deadweight tons. The freight volume was 18.7307 million tons, the turnover was 29.126 billion ton / km, and the business income was 992.4663 million yuan, which was 99.43%, 88.53% and 100.63% of that in the same period last year, respectively. But as fuel prices rose 30 per cent year-on-year, the company's main costs rose sharply. In 2011, the company's fuel cost accounted for about 40% of the total operating cost, while the port charges increased significantly, and under domestic inflationary pressure, the cost of spare parts and materials also increased to varying degrees. The company's high main cost has reduced the shipping industry's gross profit margin from 22% in 2010 to 14% in 2011. The company's operating profit in 2011 was-5.57 million yuan, compared with 48.77 million yuan in the same period in 2010. the main source of net profit in 2011 was the sale of assets, including a property, three old ships and a 27.67% stake in Ningbo Shipping Hitron Industrial Co., Ltd.

The increase in interest rates has greatly increased the interest expenses on large loans. In 2011, the company spent 245 million yuan on financial expenses, an increase of 28 million yuan over the previous year, mainly because the interest rate increase in 2011 increased the interest rates of long-term loans for more than five years by 1.11 percent, and the one-year working capital loans by 1.25 percent. The company still has a long-term loan of more than 2.7 billion yuan for highway construction, and the increase of borrowing interest rate has increased the financing cost of the company.

The highway is expected to turn a profit in 2012. The cumulative import and export traffic of the western section of Ningbo round-the-city highway in 2011 was 5.9386 million, an increase of 1.45 percent over the same period last year; toll income was 270 million yuan, an increase of 15.91 percent over the same period last year; and net profit was-29 million yuan, a loss of 31 million yuan over the same period last year. On December 28, 2011, the eastern section of Ningbo Expressway will be opened to traffic, 11 expressway connections in the city will also be completed one after another, and the city's "one ring and six shoots" highway network will be fully completed in 2012, we expect that due to the penetration effect, the western highway business is likely to turn from deficit to profit in 2012.

Performance is likely to decline in 2012, with a downgrade of "neutral". In 2012, China's dry bulk transport demand is expected to slow down significantly, while coastal transport capacity rises sharply, and the difference between supply and demand scissors will pull down the freight level. The ships raised by the company through convertible bonds will be put into operation in 2012, with a total capacity of 95000 tons in March and May. We estimate that the freight rate in the coastal shipping market will remain depressed under the situation of increasing scissors gap between supply and demand in 2012. The company's EPS in 2012-13 is expected to be 0.03yuan and 0.05RMB respectively, and its rating is downgraded to "neutral".

Risk hint: the economy at home and abroad has declined sharply, and the growth rate of transport capacity supply has exceeded expectations.