1. Incident January 22, 2009 (600798) “Ningbo Shipping” announced the 2008 annual performance increase announcement. According to preliminary estimates by the financial department of Ningbo Shipping Co., Ltd., the company's net profit for the full year of 2008 is expected to increase by about 75% compared to the same period last year (net profit of 173517470.30 yuan). Specific financial data will be disclosed in detail in the 2008 annual report. 2. Our analysis and judgment Since the second half of 2008, due to the impact of the global economic crisis, the international maritime transport market has changed dramatically. Since the fourth quarter, China's iron ore imports have experienced negative growth for two consecutive months. This is the first time this has happened in eight years. At the same time, the BDI transport price index showed a sharp diving trend. The BDI index fell from 11739 points to a low of 666 points, reaching an astonishing 94% level. Currently, the BDI continues to hover at a very low position of 800-900 points, and the global bulk goods market has suddenly gone from “huge profits” to a “huge loss” situation. This situation is why people in the marine transport industry have never seen this situation. The market has gone from raiding bulk carriers to “basking in the sun” at anchorages outside global ports. At the same time, the sharp drop in global oil prices has also printed a sharp drop in coal demand Degrees As a result of the decline, demand for maritime transportation of “iron ore,” “coal,” and other ores suddenly declined sharply. In the fourth quarter alone, iron ore imported from China decreased by more than 30 million tons over the same period last year, and the decline reached more than 25%. We believe that according to the company announcement, the company received only 16.5 million profits in the fourth quarter (equivalent to only 0.028 yuan per share), a sharp drop of 70% over the previous year. The annual profit growth was lowered from 144% in the previous three quarters to 75% for the whole year, indicating a significant change in the company's operations in the fourth quarter. The company's business scope is mainly marine bulk cargo transportation. Transportation turnover is closely related to the Chinese economy and China's imports and exports. The decline in steel production directly affects China's bulk cargo demand, and the decline in the operating level of coastal enterprises in Zhejiang has also reduced demand for coal and steel. Regarding the outlook for China's coastal bulk cargo transportation in 2009, we predict that the increase in turnover will drop from 15% to about 3%. At the same time, due to the launch of a significant number of new ships, there is a possibility that coastal transportation prices will decline further. It is estimated that the average coastal transportation price in 2009 will drop by about 20% compared to 2008, China's bulk marine transportation demand will increase from 15% to -5%, and both transportation volume and transportation prices will decrease by 20%, which will have a great impact on the transportation business of maritime transport companies. 3. Investment recommendations We believe that the company's business relies on bulk cargo business to a high extent, and that the global economic slowdown has had a huge impact on the maritime transport industry. It is inevitable that the maritime transport industry will enter a period of adjustment in the next few years. It is expected that the growth rate of transportation will decline rapidly in 2009, while prices will also drop significantly. This has a huge impact on the company's future revenue and performance. In 2009, the company's operations may experience a relatively large decline. We expect the company's revenue from 2008 to 2009 to be 1.4 billion yuan and 1.3 billion yuan respectively, up 18% and -8%, respectively, and net profit of 305 million yuan and 85 million yuan respectively. Revenue and profit will decline in 2009. We expect earnings per share to be 0.52 yuan in 2008, and only 0.15 yuan per share in 2009. The transportation market will continue to be sluggish in 2009, and we will downgrade the company's rating to “neutral.”