The company's gross margin has declined year by year, mainly due to the opening of Sinopec's oil transportation pipeline along the Yangtze River, which has led to a sharp drop in oil products loaded and unloaded through Nanjing Port. The port industry has high rigid costs (personnel wages account for 40%-50%); due to the state-owned nature of the controlling shareholder, the company faces many difficulties in carrying out thorough restructuring, which is also an important factor in the rapid decline in the company's gross margin. The company's gross margin fell from 68.66% in 2005 to 39.25% in the first half of 2009. The company believes that 4 million tons is the lowest point, and there will be a certain amount of growth in the future. The company's participating companies, Sinochem Yangzhou Petrochemical Terminal Storage Co., Ltd., and Oder Oil Storage (Nanjing) Co., Ltd. are all under construction and will not contribute investment income to the company for the time being. It is worth noting that Longtan Container Company, which participated in shares, had operating profit of 136.383 million yuan in 2008, and received investment income of 1.0875 million yuan from the participating company, Longtan Container Company, accounting for a large share. However, based on the slump in the container operation market in 2009, the investment income from it declined rapidly. Currently, the company owns 25% of the participating company's shares, and the holding company accounts for 20% of the shares. The company said that if the participating company's profitability increases in the future, it is not ruled out that the participating company's shares will occur. In 2009, in order to speed up the construction of the Nanjing Port Longtan Phase IV project, after discussions with the shareholders of Longtan Container Company, each shareholder settled the first capital increase according to a 60% share of the capital increase. On April 21, 2009, the company completed the initial capital payment of 116 million yuan. The joint stock company's operating port area includes Yizheng Port Area and Qixia Port Area. Among them, the original 5 anchorages in the Qixia Port area are in line with the Nanjing Yangtze River Bridge Fourth Bridge construction project. Anchors 1, 2, and 3 can no longer be used, and 2 anchorages are currently in operation. As a result, the company received 120 million yuan in compensation (this revenue has already been invested as capital increase for Longtan Container Joint Stock Company). The impact of this incident on the company: Based on the opening of the Sinopec oil pipeline, the ability of crude oil to enter the river has dropped drastically, causing some anchorages in the Qixia Port area to be idle. Therefore, the requisitioning of the 1-3 anchorage is beneficial to the company in the short term, which is beneficial to the company, but if the amount of crude oil entering the port increases in the long term, it will become a bottleneck for the further development of the company's crude oil handling business. The company's future position: stabilizing the crude oil business, expanding refined oil products, and strengthening the industry. Currently, the company is implementing this strategy in the Yizheng port area, but a chemical project in the Yizheng port area was suspended in the early stages due to environmental issues. Currently, the company's port utilization rate is 70-80%, mainly due to expanding the service target to 3,000-ton small ships. The company currently has no plans to develop a new port operation area. We believe that although the opening of the Sinopec oil pipeline led to a sharp decline in the company's crude oil business, in addition to pipeline transportation, in addition to pipeline transportation, Sinopec must maintain a certain amount of water transportation, and at the same time, there are certain requirements for oil pipelines. For this reason, some oil products must be transferred through the port, and Nanjing Port is also the only port where the sea enters the river. The company still has a certain monopoly advantage in oil transportation. In addition, the company also owns part of CNPC's refined oil market. In February 2009, COSCO Group signed a strategic cooperation framework agreement with the Nanjing Municipal People's Government. COSCO plans to allocate resources from Nanjing Port as an important hub port on the Yangtze River. As of April 16, the Nanjing Port Authority had not signed any agreement with COSCO Group on the restructuring of the Nanjing Port Authority. The company explained that the last meeting was a political meeting, which ultimately ended, and no other opinions were expressed. Based on the current development status of Nanjing Port, it is difficult to improve performance through endogenous growth alone. Our meeting with COSCO's holding company may be a breakthrough for Nanjing Port to achieve leapfrog development in the future. Investment Suggestions: Changes in the profitability of Longtan Container Company and trends in cooperation between COSCO and Nanjing Port Authority