In 2016, the operating income of 1.131 billion yuan increased by 8.08% over the same period last year, the operating cost of 787 million yuan increased by 1% over the same period last year, the net profit of 88.3709 million yuan increased by 450.70%, and the net profit after deducting 87.7168 million yuan increased by 673.77% compared with the same period last year.

Relying on Zhejiang energy resources and high COA share to ensure a steady increase in the main industry

The company has formed a long-term strategic cooperative relationship with major thermal coal customers such as Zhejiang Energy large Energy Group. By signing COA with major customers, the company can effectively resist the risk of market freight fluctuation while ensuring the basic business scale and market share. In 16 years, the company completed freight volume of 19.1224 million tons and realized shipping income of 760 million yuan, which increased by 8.25% and 6.49% respectively. The cost side benefited from the decline in oil prices, with fuel costs (18.43 per cent) down 27.28 per cent from a year earlier. During the reporting period, the company's gross profit increased by 78 million yuan, of which shipping business contributed 54 million yuan (accounting for 69%), and maritime gross profit margin also increased by 6.47pcts to 15.91%.

In the environment of the continuous downturn of the dry bulk shipping market, the company continues to phase out old ships with high fuel consumption and high maintenance costs. at present, the company has 19 bulk carriers with an average fleet age of 14.67 years, and the fleet structure has been continuously optimized. Secondly, overseas subsidiaries make full use of information advantages to continue to increase overseas CAPE charter transport business. The development of this overseas charter business increases the company's transportation business income by 9.24 million yuan. At the same time, the company makes use of the brand advantage to expand the market share and actively develop other types of charter business at home and abroad, so that the company's transportation business income increases by 33.4334 million yuan compared with the same period last year.

The benefit of the road network appears, and the west section of Ningbo round-the-city highway contributes 3772 million net profit.

The company has assets of about 42.135 kilometers in the western section of Ningbo round-the-city highway. In the early stage, due to the lack of road network effect, the production capacity and interest rate has been at a low level, and it has lost money year after year since it was opened in 2008. However, with the continuous improvement of the urban road network, the continuous extension of the highway network and the rapid growth of import and export traffic flow, the average daily cross-sectional traffic flow in 16 years has been 67485 (converted to first-class vehicles), an increase of 14.02% compared with the same period last year. For the whole year, the toll reached 368 million yuan, contributing 37.72 million of the company's net profit, an increase of nearly 30 million over the same period last year, and significantly thickening the company's profits.

The debt structure continued to be optimized, and the financial expenses were reduced by about 43 million yuan.

During the reporting period, the company had a good financial position, repaid some bank loans ahead of time, the total amount of external financing decreased compared with the same period last year, and the interest-bearing liabilities continued to decrease, from 3.817 billion yuan at the beginning of 2015 to 2.974 billion yuan at the end of the reporting period. Secondly, the company redeemed 720 million yuan of convertible bonds issued in 2010 in advance on May 11, 2015 (the interest expense of the previous year was 13.7857 million yuan). Benefit from the company's interest expense reduced by 44.1182 million yuan, financial expenses decreased by 23.51% compared with the same period last year.

Investment suggestion

The company's performance in 17-19 is expected to be 0.10, 0.12 and 0.13 yuan per share respectively, with corresponding valuations of 58x, 51x and 48x respectively, maintaining the "hold" rating.

Risk hint

The dry bulk market remains in the doldrums, and the cost-side oil price rises sharply.