Jinhui Shipping and Transportation : Third quarter and nine months report for the quarter and nine months ended 30 September 2021

JINHUI SHIPPING

AND TRANSPORTATION LIMITED

Third Quarter and

Nine Months Report

2021

HIGHLIGHTS

For the Nine Months Ended 30 September 2021

• Revenue for the period: US$88 million
• Net profit for the period: US$110 million included reversal of impairment loss on owned vessels of US$65.5 million
• Basic earnings per share: US$1.008

For the Third Quarter of 2021

• Revenue for the quarter: US$40 million
• Net profit for the quarter: US$19 million
• Basic earnings per share: US$0.177

Third Quarter and Nine Months 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 nine months ended 30 September 2021.

THIRD QUARTER AND NINE-MONTH RESULTS

The Group reported a revenue for the third quarter of 2021 of US$40,405,000, representing an increase of 183% as compared to US$14,257,000 for the same quarter in 2020. The consolidated net profit for the quarter was US$19,384,000 as compared to a consolidated net profit of US$854,000 was reported in the third quarter of 2020. Basic earnings per share was US$0.177 for the third quarter of 2021 as compared to basic earnings per share of US$0.008 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 and the increase in number of owned vessels that leads to a significant increase in the chartering freight and hire revenue for the third quarter of 2021.

Revenue for the first nine months of 2021 increased 177% to US$88,488,000, comparing to US$31,981,000 for the same period in 2020. The Company recorded a consolidated net profit of US$110,139,000 for the first nine months of 2021 while a consolidated net loss of US$22,802,000 was reported in the first nine months of 2020. The consolidated net profit for the period was mainly attributable to the remarkable rebound in dry bulk shipping market as seaborne trade activities gradually recovered since late 2020 and the increase in number of owned vessels that led to a significant increase in the chartering freight and hire revenue for the first nine months of 2021 and the recognition of reversal of impairment loss on owned vessels of US$65,521,000 in June 2021. Basic earnings per share for the period was US$1.008 as compared to basic loss per share of US$0.209 for the first nine months of 2020.

Given the remarkable rebound in dry bulk shipping market, the management reviewed the Group's fleet and considered acquiring additional vessels could generate steady stream of income for the Group. During the first nine months period, the Group entered into agreements to acquire five vessels and took delivery of three vessels. Revenue for the first nine months of 2021 increased 177% to US$88,488,000, comparing to US$31,981,000 for the first nine months of 2020 due to the increase in number of owned vessels and the improved revenue earned from the average daily TCE earned by the Group's owned vessels, improving 175% to US$17,881 for the first nine months of 2021 as compared to US$6,499 for the corresponding period in 2020.

Dry bulk shipping market had rebounded remarkedly in the first half of 2021, 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. No further impairment loss or reversal of impairment loss on owned vessels was recognized as at 30 September 2021. We remain alert to the increasingly frequent economic, geo-political, or other unforeseen surprises that can trigger volatility to our business performance, as well as the carrying value of our shipping assets and financial assets.

Third Quarter and Nine Months Report 2021

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INTERIM DIVIDEND

The Board has resolved not to recommend the payment of any interim dividend for the quarter ended 30 September 2021.

REVIEW OF OPERATIONS

Third Quarter of 2021. Dry bulk shipping market showed strong sign of rebound amid global economic recovery and the market is supported by strong cargo flow that outpaced vessel supply throughout the quarter. The market is characterized by robust freight rates driven by a general increase in demand for commodities worldwide with the surge of global seaborne trade of steel and iron ores, grain, soybean and other agricultural commodities. Baltic Dry Index ("BDI") opened at 3,383 points at the beginning of July and rose to the peak of the quarter at 5,197 points and closed at 5,167 points by the end of September 2021. The average of BDI of the third quarter of 2021 was 3,732 points, which compares to 1,522 points in the same quarter in 2020.

Revenue for the third quarter of 2021 was US$40,405,000 representing an increase of 183% as compared to US$14,257,000 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 171% to US$23,592 for the third quarter of 2021 as compared to US$8,713 for the corresponding quarter in 2020. The fleet utilization rate of the Group's owned vessels slightly dropped from 99% in the third quarter of 2020 to 97% in the third quarter of 2021.

				2021	2020
		2021	2020	1st nine	1st nine
	Average daily TCE of owned vessels	Q3	Q3	months	months	2020
	US$	US$	US$	US$	US$
	Post-Panamax fleet	20,248	11,805	14,806	9,050	9,929
	Supramax fleet	23,963	8,386	18,254	6,248	6,986
	In average	23,592	8,713	17,881	6,499	7,269

Shipping related expenses increased from US$6,729,000 for the third quarter of 2020 to US$11,732,000 for the current quarter, mainly due to the increase in commission payment in proportional to the increase in hire income, as well as the increase in number of owned vessels that led to an increase in shipping related expenses for the quarter. The Group's daily vessel running cost increased to US$4,992 for the third quarter of 2021 as compared to US$3,486 for the third quarter of 2020 as crew wages rose due to inflation and certain initial running costs and expenses were incurred for newly-delivered vessels. 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 increased from US$2,688,000 for the third quarter of 2020 to US$4,053,000 for the current quarter due to the Group recorded net loss of US$2,925,000 on financial assets at fair value through profit or loss for the third quarter of 2021 as compared to net loss of US$1,681,000 on financial assets at fair value through profit or loss for the third quarter of 2020.

Third Quarter and Nine Months Report 2021

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Finance costs dropped from US$620,000 for the third quarter of 2020 to US$400,000 for the third 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.

FINANCIAL REVIEW

During the nine months ended 30 September 2021, capital expenditure on additions of property, plant and equipment was US$29,560,000 (30/9/2020: US$7,971,000).

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).

On 2 March 2021, the Group entered into an agreement 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.

On 27 April 2021, the Group entered into an agreement in respect of the acquisition of a Supramax of deadweight 52,525 metric tons at a purchase price of US$9,300,000, which was delivered to the Group in June 2021.

On 20 May 2021, the Group entered into an agreement in respect of the acquisition of a Supramax of deadweight 52,686 metric tons at a purchase price of US$10,813,000, which was delivered to the Group in August 2021.

On 9 July 2021, the Group entered into an agreement in respect of the acquisition of a Supramax of deadweight 55,866 metric tons at a purchase price of US$15,180,000, which was delivered to the Group in October 2021.

On 20 August 2021, the Group entered into an agreement in respect of the acquisition of a Supramax of deadweight 58,729 metric tons at a purchase price of US$17,000,000, which was delivered to the Group in early November 2021. As at the reporting date, the capital expenditure commitments contracted by the Group but not provided for was US$14,450,000 (31/12/2020: nil).

As at the reporting date, the total amount of capital expenditure commitments contracted by the Group but not provided for was US$14,822,000 (31/12/2020: US$372,000). Save as disclosed above, there was no other significant capital expenditure commitments contracted by the Group but not provided for as at the reporting date.

Subsequent to the reporting date, the Group entered into an agreement on 5 October 2021 in respect of the acquisition of a Supramax of deadweight 53,350 metric tons at a purchase price of US$15,750,000, which will be delivered to the Group in the fourth quarter of 2021.

Third Quarter and Nine Months Report 2021

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