Jinhui Shipping and Transportation : First quarter report for the quarter ended 31 March 2021

JINHUI SHIPPING

AND TRANSPORTATION LIMITED

First Quarter Report For the quarter ended 31 March 2021

HIGHLIGHTS

For the First Quarter of 2021

• Revenue for the quarter: US$16 million
• Net profit for the quarter: US$5 million
• Basic earnings per share: US$0.048
• Gearing ratio as at 31 March 2021: 12%

First Quarter Report 2021

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The Board of Jinhui Shipping and Transportation Limited (the "Company") is pleased to announce the unaudited condensed consolidated results of the Company and its subsidiaries (the "Group") for the quarter ended 31 March 2021.

FIRST QUARTER RESULTS

Revenue for the first quarter of 2021 increased 76% to US$16,181,000, comparing to US$9,214,000 for the corresponding quarter in 2020. The Company recorded a consolidated net profit of US$5,253,000 for current quarter as compared to a consolidated net loss of US$18,371,000 for the corresponding quarter in 2020. Basic earnings per share was US$0.048 for the first quarter of 2021 as compared to basic loss per share was US$0.168 for the corresponding quarter in 2020.

INTERIM DIVIDEND

The Board has resolved not to recommend the payment of any interim dividend for the quarter ended 31 March 2021.

REVIEW OF OPERATIONS

First Quarter of 2021. In the first quarter of 2021, the dry bulk freight market showed encouraging sign of recovery with strong cargo flow outpacing vessel supply across different regions and vessel demand simultaneously outpacing vessel supply across the board. The surge of global seaborne trade of steel and iron ores, grain, soybean and other agricultural commodities, have driven market freight rates in an upward trend during the first quarter of 2021. Baltic Dry Index ("BDI") opened at 1,366 points at the beginning of January and rose to the peak of the quarter at 2,319 points and closed at 2,046 points by the end of March 2021. The average of BDI of the first quarter of 2021 was 1,739 points, which compares to 592 points in the same quarter in 2020.

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Revenue for the first quarter of 2021 was US$16,181,000 representing an increase of 76% as compared to US$9,214,000 for the same quarter in 2020. The Group benefited from the rebound of market dry bulk freight rates and the average daily time charter equivalent rates ("TCE") earned by the Group's owned vessels increased 92% to US$10,279 for the first quarter of 2021 as compared to US$5,349 for the corresponding quarter in 2020. Fleet utilization rate of the Group's owned vessels slightly decreased from 96% in the first quarter of 2020 to 95% in the first quarter of 2021 due to the Coronavirus Disease 2019 ("COVID-19") preventive measures and quarantine protocols implemented by different governments that led to a decrease in operating days of our vessels.

	Q1 2021	Q1 2020	2020
Average daily TCE of owned vessels	US$	US$	US$
Post-Panamax fleet	12,250	8,223	9,929
Supramax fleet	10,022	5,007	6,986
In average	10,279	5,349	7,269

Other operating income increased from US$1,064,000 for the first quarter of 2020 to US$2,598,000 for the first quarter of 2021 due to the Group recognized a net gain of US$1,391,000 on bunker arising from shipping operations. Other operating income also included net gain of US$187,000 on financial assets at fair value through profit or loss were recognized in the current quarter. Other operating expenses decreased from US$11,034,000 for the first quarter of 2020 to US$1,020,000 for the first quarter of 2021 due to the Group recorded a net loss of US$9,742,000 on financial assets at fair value through profit or loss when the global financial markets tumbled in the first quarter of 2020.

Shipping related expenses decreased from US$11,363,000 for the first quarter of 2020 to US$6,912,000 for the current quarter due to the Group recognized the bunker related expenses of US$5 million for the corresponding quarter in 2020. Daily vessel running cost increased to US$3,664 for the first quarter of 2021 as compared to US$3,460 for the first quarter of 2020 mainly attributable to the increase in crew wages due to inflation. We will continue with our cost reduction effort, striving to maintain a highly competitive cost structure when stacked against other market participants.

Finance costs dropped from US$1,093,000 for the first quarter of 2020 to US$498,000 for the first quarter of 2021. The decrease was mainly attributable to the decrease in interest rate and the constant repayment of vessel mortgage loans as compared with that of the corresponding quarter in 2020.

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FINANCIAL REVIEW

During the quarter, capital expenditure on additions of property, plant and equipment was US$7,314,000 (31/3/2020: US$533,000).

On 20 April 2018, a wholly owned subsidiary of the Company (the "Co-Investor") entered into the co-investment documents to co-invest in a property project in Tower A of One Financial Street Center, Jing'an Central Business District, Shanghai, the PRC (the "Tower A" or previously named as "T3 Property"), pursuant to which the Co-Investor committed to acquire non-voting participating class A shares of Dual Bliss Limited ("Dual Bliss") of US$10,000,000. Dual Bliss is one of the investors of the co-investment in Tower A. As at the reporting date, the capital expenditure commitments contracted by the Group but not provided for was US$372,000 (31/12/2020: US$372,000).

The Group entered into an agreement on 2 March 2021 in respect of the acquisition of a Supramax of deadweight 53,806 metric tons at a purchase price of US$7,275,000, which was delivered to the Group in March 2021. Subsequent to the reporting date, the Group entered into two agreements on 27 April 2021 and 20 May 2021 in respect of the acquisition of two Supramaxes of deadweight 52,525 metric tons and of deadweight 52,686 metric tons at purchase prices of US$9,300,000 and US$10,813,000 respectively. The first vessel will be delivered to the Group on or before 10 June 2021 and the second vessel will be delivered to the Group on or before 15 August 2021. We will continuously monitor the market as well as our operations going forward and look out for opportunities to maintain a reasonably modern and competitive fleet, not ruling out any future disposal or acquisition of vessels and will make such decisions on an ad hoc basis to maintain a high financial flexibility and operational competitiveness.

The Group's total secured bank loans increased from US$108,345,000 as of 31 December 2020 to US$117,732,000 as at 31 March 2021, of which 59%, 11% and 30% are repayable respectively within one year, one to two years and two to five years. During the quarter, the Group had drawn new revolving loans and term loan of US$12,556,000 (31/3/2020: US$15,908,000) and repaid US$3,169,000 (31/3/2020: US$20,101,000). The bank borrowings represented vessel mortgage loans that were denominated in United States Dollars, revolving loans, term loans and property mortgage loans that were denominated in Hong Kong Dollars and United States Dollars. All bank borrowings were committed on floating rate basis.

During the quarter, cash generated from operations before changes in working capital was US$7,714,000 (31/3/2020: cash used in operations before changes in working capital was US$15,080,000) and the net cash used in operating activities after working capital changes was US$2,102,000 (31/3/2020: net cash from operating activities after working capital changes was US$2,016,000). The changes in working capital are mainly attributable to the increase in equity and debt securities. During the quarter, the Group's net gain on financial assets at fair value through profit or loss was US$187,000 (31/3/2020: net loss of US$9,742,000 on financial assets at fair value through profit or loss). The net gain of US$187,000 on financial assets at fair value through profit or loss comprised of a realized gain of US$1,642,000 upon disposal of certain equity and debt securities during the quarter, and an unrealized fair value loss of US$1,455,000 on financial assets at fair value through profit or loss. The aggregate interest income and dividend income from financial assets was US$1,569,000 (31/3/2020: US$1,476,000).

First Quarter Report 2021

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