From January to September 2009, the company achieved operating income of 1.303 billion yuan, down 39.18% from the same period last year; operating profit was-210 million yuan, down 213.23% from the same period last year; net profit belonging to the owner of the parent company was-210 million yuan, down 238.87% from the same period last year; and basic earnings per share was-0.3093 yuan. Among them, earnings per share from July to September were-0.164 yuan. The loss was larger than-0.1 yuan in the second quarter.

Changhang Fenghuang is a dry bulk cargo transportation company under Sinotrans Changhang Group, which mainly operates bulk dry bulk cargo transportation such as ore, steel, coal, grain and so on in Yangtze River, coastal and near ocean. The company's income mainly comes from Yangtze River transportation and coastal transportation.

The main reasons for the sharp decline in the company's performance are: 1) Coastal bulk freight rates continue to fall. China's coastal bulk freight index averaged 1115.68 points in the first three quarters of 2009, down 52 per cent from 2336.5 points last year. In the case of the simultaneous decline in freight rates and cargo volume, the company's main source of profit, coastal transport revenue, continues to decline; 2) in the Yangtze River, due to fierce competition, the Yangtze River freight level is low, the Yangtze River transport has continued to lose money in recent years. The company achieved EPS-0.05,-0.1 and-0.164 yuan respectively in the first, second and third quarters, and the loss expanded quarter by quarter.

The transportation capacity expands radically, the management risk is bigger. The company currently has a capacity of 2.6 million deadweight tons, including coastal capacity of 700000, Yangtze River capacity of 1.8 million, ocean capacity of 100000.

At present, the company has placed orders for 60 new ships and 1.71 million deadweight tons, with a total contract price of 8.1 billion, which will be delivered one after another in 2009-12, and the company will face huge capital expenditure in the next three years.

The company's current asset-liability ratio has reached 79.4%, ranking first in the shipping sector. The operating cash flow in the first three quarters is-120 million. In the future, the company may need to solve the capital expenditure problem of the new ship through market financing.

Greatly expand coastal transport capacity, moderately develop ocean transport capacity, and seek to become the only domestic waterway company that provides river and ocean services. In the 1.71 million deadweight ton contract, 105.76 deadweight tons and 516000 deadweight tons will be put into ocean and coastal bulk cargo capacity, totaling 1.5736 million tons, accounting for 91.83% of new orders.

In the short term, Yangtze River Transportation will still lose money, while there is great uncertainty about the increase in coastal freight rates. The performance loss in 2009 is inevitable, so it will be reduced by 09-10EPS to-0.20 yuan and-0.11 yuan. Taking into account the growth that may be brought to the company by future capacity expansion, maintain neutral rating risk hints: 1) freight risk. The rebound rate of coastal bulk cargo is lower than expected, which will have a negative impact on the company's earnings; 2) the huge capital expenditure pressure caused by the delivery of new ships in the next few years; 3) the Yangtze River transport business will continue to deteriorate in the future.