Zhejiang Energy Group is the controller of the company, and its main business involves waterway transportation and highway business. Ningbo Shipping Group, the parent group of Zhejiang Energy Group Holding Company, planned to transfer the group's shares to Zhejiang Seaport Investment and Operation Group Co., Ltd. in September 2015, but in the end, it was unsuccessful, but as the only listed shipping company in Zhejiang Province, the company's future shares may still be variable. The company's main business is divided into two major land and water sectors. The shipping sector contributes more than 70% of annual revenue and total net profit. As of 1H2015, the highway business had not been profitable.
The growth rate of waterway freight is steady, with domestic trade mainly coal. The company has a shipping fleet with a total capacity of 17 ships and a total weight of 808,000 tons. The growth rate of cargo volume has been steady in recent years. On the shipping side, domestic trade was mainly domestic trade, accounting for 94% of domestic trade throughput in 2014; on the goods side, electricity and coal accounted for 79% of the throughput in 2014.
Operating the western section of the Ningbo City-Bypass Expressway is expected to reverse losses in the future. The company holds 51% of the shares of the subsidiary Ningbo Shipping Mingzhou Expressway Co., Ltd., and operates the western section of the Ningbo City-Bypass Expressway, with a total length of 42.135 kilometers. The growth rate of daily cross-sectional traffic on the operating road section is declining year by year, 1H2015 is up 6.2% year on year. It is expected that road traffic will maintain a growth rate of 6%-10% in the future, and losses are expected to be reversed throughout the year.
Profit forecast and investment suggestions: The company's revenue growth rates from 2015 to 2017 are expected to be 5.8%, 5.0%, and 5.6% respectively, and net profit growth rates are 75.4%, 8.4%, and 11.4%. Currently, the Ningbo and Zhoushan State Assets Administration Commission have transferred the shares of Ningbo Zhoushan Port Group to Zhejiang Port and Shipping Platform - Zhejiang Seaport Investment and Operation Group, and the company is the only listed shipping company in Zhejiang Province. The promotion of the Zhejiang Port and Shipping Platform Strategy may bring opportunities to the company's development. The target price for 6 months is 9 yuan.
Risk warning: Downstream coal demand has declined sharply; road business continues to lose money