Event description

The performance inflection point appears, and the existing business provides the margin of stock price safety. The company has issued an announcement of pre-increase in performance, with a loss of only about 9.4 million yuan in the first half of the year, while a loss of 47.91 million yuan in the first quarter, indicating that the company has made a profit of nearly 40 million in the second quarter, and the performance inflection point has been shown. Since 2008, the Yangtze River business has been a major drag on the company's performance. At present, the internal and external environment facing the Yangtze River business is improving: the external inland shipping competition order will be improved, and the internal company has been integrating departments and personnel to reduce management costs; the company's goal is to break even with the Yangtze River business in 2011. We expect coastal and ocean operations to contribute about 200 million to 300 million yuan a year, and will reach 400 million to 500 million yuan by 2012 as capacity delivery is completed.

Sinotrans Changhang Group bulk cargo business integration, future event catalyst. Sinotrans Changhang Group's planning for bulk cargo business has not been clear. With the arrival of the Group's 12th five-year Plan, we expect that the development orientation of Changhang Fenghuang will be clear by the end of the year, which will become a catalyst for market events.

Overall, existing business performance growth provides stock price security support, while future business integration is expected to provide stock price catalyst. We expect the company's EPS from 2010 to 2012 to be 0.05,0.30 and 0.40 yuan respectively, corresponding to 96 times, 17 times and 13 times of PE respectively, giving a "cautious recommendation" rating for the first time.