Jinhui Shipping and Transportation : Second quarter and half yearly report for the quarter and six months ended 30 June 2021

JINHUI SHIPPING

AND TRANSPORTATION LIMITED

Second Quarter and

Half Yearly Report

2021

HIGHLIGHTS

For the First Half of 2021

• Revenue for the period: US$48 million
• Net profit for the period: US$91million included reversal of impairment loss on owned vessels of US$65.5 million
• Basic earnings per share: US$0.831

For the Second Quarter of 2021

• Revenue for the quarter: US$32 million
• Net profit for the quarter: US$86 million included reversal of impairment loss on owned vessels of US$65.5 million
• Basic earnings per share: US$0.783
• Interim dividend per share: US$0.03

Second Quarter and Half Yearly 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 and six months ended 30 June 2021.

SECOND QUARTER RESULTS

The Group reported a revenue for the second quarter of 2021 of US$31,902,000, representing an increase of 275% as compared to US$8,510,000 for the same quarter in 2020. The consolidated net profit for the quarter was US$85,502,000 as compared to a consolidated net loss of US$5,285,000 was reported in the second quarter of 2020. Basic earnings per share was US$0.783 for the second quarter of 2021 as compared to basic loss per share of US$0.048 for the corresponding quarter in 2020. The improved operating result for the quarter was primarily due to the strong rebound of market freight rates in dry bulk shipping sector in 2021 that leads to a significant increase in the chartering freight and hire revenue to US$31,902,000 for the second quarter of 2021 and the recognition of reversal of impairment loss on owned vessels of US$65,521,000 as at 30 June 2021.

HALF YEARLY RESULTS

Revenue for the first half of 2021 increased 171% to US$48,083,000, comparing to US$17,724,000 for the same period in 2020. The Company recorded a consolidated net profit of US$90,755,000 for the first half of 2021 while a consolidated net loss of US$23,656,000 was reported in the first half of 2020. The consolidated net profit is mainly attributable to the remarkable rebound in dry bulk shipping market as seaborne trade activities gradually recovered since late 2020 that leads to a significant increase in the chartering freight and hire revenue to US$48,083,000 for the six months period ended 30 June 2021 and the recognition of reversal of impairment loss on owned vessels of US$65,521,000 as at 30 June 2021. Basic earnings per share for the period was US$0.831 as compared to basic loss per share of US$0.217 for the first half of 2020.

INTERIM DIVIDEND

On 17 August 2021, the Board has resolved to declare the payment of an interim dividend of US$0.03 per share for the quarter ended 30 June 2021 and such dividend will be paid to the beneficial owners of the shares of the Company whose names are registered in the Norwegian Verdipapirsentralen (the Norwegian Registry of Securities) at the close of business on 31 August 2021. The Company's shares listed on the Oslo Stock Exchange will be traded including dividend up until and including 27 August 2021. The ex dividend date is 30 August 2021 and the dividend will be paid on or about 17 September 2021.

REVIEW OF OPERATIONS

Second Quarter of 2021. In the second quarter of 2021, the dry bulk shipping market further continued to trend upward due to strong vessels demands driven by the surge of global seaborne trade of steel and iron ores, grain, soybean and other agricultural commodities. Baltic Dry Index ("BDI") opened at 2,046 points at the beginning of April and rose to the peak of the quarter at 3,418 points and closed at 3,383 points by the end of June 2021. The average of BDI of the second quarter of 2021 was 2,793 points, which compares to 783 points in the same quarter in 2020.

Second Quarter and Half Yearly Report 2021

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Revenue for the second quarter of 2021 was US$31,902,000 representing an increase of 275% as compared to US$8,510,000 for the same quarter in 2020. The Group benefited from the strong rebound of market freight rates and the average daily time charter equivalent rates ("TCE") earned by the Group's owned vessels increased 266% to US$19,149 for the second quarter of 2021 as compared to US$5,229 for the corresponding quarter in 2020. The fleet utilization rate of the Group's owned vessels slightly dropped from 98% in the second quarter of 2020 to 97% in the second quarter of 2021.

		2021	2020	2021	2020
	Average daily TCE of owned vessels	Q2	Q2	1st half	1st half	2020
	US$	US$	US$	US$	US$
	Post-Panamax fleet	12,250	5,750	12,250	7,382	9,929
	Supramax fleet	20,000	5,194	15,182	5,096	6,986
	In average	19,149	5,229	14,852	5,293	7,269

Other operating income increased from US$3,891,000 for the second quarter of 2020 to US$5,258,000 for the second quarter of 2021 due to the Group recognized a fair value gain on investment properties of US$842,000 and net gain on bunker of US$502,000 arising from shipping operations in current quarter. Other operating income for the quarter also included net gain of US$1,635,000 on financial assets at fair value through profit or loss as comparing to US$2,259,000 for the corresponding quarter in 2020.

Shipping related expenses slightly decreased from US$10,113,000 for the second quarter of 2020 to US$9,632,000 for the current quarter as the bunker related expenses dropped from approximately US$2 million in the second quarter of 2020 to US$304,000 in the current quarter. The decrease in bunker related expenses was partially offset by the increase in crew wages due to inflation. The Group's daily vessel running cost increased to US$4,538 for the second quarter of 2021 as compared to US$4,185 for the second quarter of 2020 as crew wages rose due to inflation and certain initial running costs and expenses were incurred for a newly-delivered vessel in June 2021. 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$863,000 for the second quarter of 2020 to US$465,000 for the second 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.

First Half of 2021. Despite the COVID-19 pandemic has had a devastating economic impact to global economies, many countries launched effective track and trace systems, deployed coronavirus vaccination program, and rolled out of substantial economic stimulus measures. There are notable global economic rebounds in early 2021 and major financial markets soared, reflecting better corporate earnings and market conditions. Dry bulk shipping market showed strong sign of rebound amid global economic recovery. The market is supported by strong cargo flow that outpaced vessel supply. 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 in 2021. The average of BDI for the first half of 2021 was 2,257 points, which compares to 685 points in the same period in 2020.

Second Quarter and Half Yearly Report 2021

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Revenue for the first half of 2021 increased 171% to US$48,083,000, comparing to US$17,724,000 for the first half of 2020 reflected in the average daily TCE earned by the Group's owned vessels, improving 181% to US$14,852 for the first half of 2021 as compared to US$5,293 for the corresponding period in 2020. Basic earnings per share for the period was US$0.831 as compared to basic loss per share of US$0.217 for the first half of 2020.

Other operating income increased from US$2,641,000 for the first half of 2020 to US$7,855,000 for the first half of 2021 due to the Group recognized a fair value gain on investment properties of US$842,000, net gain on bunker of US$1,893,000 arising from shipping operations in current period. Other operating income for the first half of 2021 also included net gain of US$1,822,000 on financial assets at fair value through profit or loss which comprised of a realized gain of US$1,945,000 upon disposal of certain equity and debt securities during the first half of 2021, and an unrealized fair value loss of US$123,000 on financial assets at fair value through profit or loss for the period as Asian financial markets rebounded moderately in late 2020 and 2021. We remain cautious with the increased volatility due to the geopolitical uncertainty, as well as the fluid outlook of interest rates.

For the first half of 2021, dry bulk shipping market had rebounded remarkedly reflected in the upsurge of market freight rates and significant increase in the market value of dry bulk vessels. The management considered that reversal of impairment indication of the Group's fleet existed as at 30 June 2021. With due considerations of factors affecting the long term intrinsic values of owned dry bulk vessels in the reversal of impairment review, the Group's owned vessels' recoverable amounts which are determined based on the value in use are significantly higher than their respective carrying amounts as at 30 June 2021. Accordingly, a reversal of impairment loss of US$65,521,000 on owned vessels classified in property, plant and equipment was recognized as at 30 June 2021 to reflect our change in the expectation on the long term global economic and the dry bulk shipping industry outlook which affect the assumptions applied in estimation of the value in use of our owned vessels.

Shipping related expenses decreased from US$21,476,000 for the first half of 2020 to US$16,544,000 for the first half of 2021. In the first half of 2020, there was bunker related expenses of US$7 million as a result of both price loss on bunker fuel on-board of the Group's owned vessels and an increase in bunker consumption due to positioning of owned vessels in between time charter contracts of vessels, whereas, in current period, there was bunker price gain on bunker fuel which was included in other operating income and the Group's bunker related expenses was only US$454,000. The decrease in bunker related expenses was partially offset by the increase in crew wages due to inflation. Daily vessel running cost slightly increased from US$3,823 for the first half of 2020 to US$4,152 for the first half of 2021 as crew wages rose due to inflation, coupled with certain initial running costs and expenses were incurred for two newly-delivered vessels in the first half of 2021. We will continue with our cost reduction effort, striving to maintain a highly competitive cost structure when stacked against other market participants.

Other operating expenses decreased from US$9,808,000 for the first half of 2020 to US$2,014,000 for the first half of 2021 due to the Group recorded net loss of US$7,483,000 on financial assets at fair value through profit or loss for the first half of 2020. On the contrary, there was a net gain of US$1,822,000 on financial assets at fair value through profit or loss for the first half of 2021, which was included in other operating income.

Second Quarter and Half Yearly Report 2021

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