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    2606   TW0002606001

U-MING MARINE TRANSPORT CORPORATION

(2606)
  Report
End-of-day quote Taiwan Stock Exchange  -  2022-06-23
44.45 TWD   +1.37%
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U Ming Marine Transport : Handbook

05/20/2022 | 01:05am EDT

Stock Code: 2606

U-MING MARINE TRANSPORT CORP.

Handbook for the 2022 Annual Meeting of Shareholders

MEETING TIME: June 8, 2022

PLACE: Taipei Hero House

No. 20, Sec. 1, Changsha St., Zhongzheng Dist., Taipei, Taiwan

(Non-virtual Meeting)

*The English version is the translation of the Chinese version and if there is any conflict between the meaning of terms in the Chinese version and English translation, the meaning of the Chinese version shall prevail.

U-MING MARINE TRANSPORT CORP.

2022 Annual Meeting of Shareholders

Table of Contents

I. Meeting Procedure ……………………………………………………… P1

  1. Matters to Be Reported
  1. 2021 Business Report …………………………………………………………………. P2
  2. 2021 Financial Statements …………………………………………………………….. P7
  3. The Audit Committee' Review Report on 2021 Business and Financial Statements….. P28
  4. Distribution of 2021 Remuneration to the Employees and Directors……………..…… P29
  1. Matters to Be Ratified
  1. The 2021 Business Report and Financial Statements …………………………………. P30
  2. The Proposal for Earnings Distribution of 2021 ………………………………………. P31

IV. Matters to Be Discussed and Elected

1. The Amendment to the "Articles of Incorporation" of the Company …..……………

P32

    1. The Amendment to the "Rules of Procedure for Shareholders' Meetings" of the Company…..…………………………………………………………………………… P34
    2. The Amendment to the "Procedures Governing the Acquisition or Disposal of Assets"
      of the Company…..…………………………………………………………………… P40
    3. The Amendment to the "Procedures Governing Loans of Funds to Others" and the "Procedures Governing Endorsements/Guarantees" of the Company………………… P59
    4. The Election of Directors (including Independent Directors) of the Company……….. P64
    5. The Approval of the Release of the Relevant Directors from the Non-competition Restriction under Article 209 of the Company Act…………………………………….. P69
  1. Extempore Motions ……………………………………………... P70
    VI. Rules and Regulations
    1. Articles of Incorporation ………………………………………………………………. P71
    2. Rules of Procedure for Shareholders' Meetings ………………………………………. P77
    3. Regulations Governing the Election of Board Directors and Supervisors…………….. P81

VII. Appendices

  1. Current Shareholding of Directors …………………………………... ……………… P83
  2. The Impact of Stock dividend Issuance on Business Performance and EPS ………….. P84

U-MING MARINE TRANSPORT CORP.

Procedure for the 2022 Annual Meeting of Shareholders

Call the Meeting to Order

Chairman Takes Chair

Chairman Remarks

(Management Presentation)

Matters to Be Reported

Matters to Be Ratified

Matters to Be Discussed and Elected

Extempore Motions

Adjournment

-1-

Matters to Be Reported:

1. 2021 Business Report

I. Introduction

The recovery of the bulk shipping market was gradually underway in 2021 along with the implementation of anti-pandemic measures in many countries and the increase of industrial demand and demand for necessities. Benefited from the government expanding the construction of infrastructure to stimulate the global economy, such as the Biden administration of the United States has launched a comprehensive 10-year infrastructure construction plan for an amount of US$2 trillion and the prevalence of vaccination and easing of pandemic impact, the recovery of the global economy is expected to accelerate in the future, which is beneficial to the growing demand for dry bulk raw materials. The efficiency of port operations is affected by the pandemic and thus affects the supply of bulk carriers' shipping capacity. The Baltic Dry Index (BDI) was climbing and reached the highest of 5,650 points on October 7 for the year, a record high in 13 years with an average of 2,943 points throughout the year, representing an increase of 176% from the year 2020.

According to the "World Economic Prospects" released by The World Bank in January 2022, the economic growth of the United States and China, the two largest economies in the world, had outperformed what it was prior to the outbreak of the pandemic in 2021. China's economic growth rate was expected to reach 8.0% in 2021, a record high since 2012, and the U.S. economic growth rate was expected to grow 5.6%, a record high since 1985. Emerging markets and developing economies continued to grow strongly with a GDP growth of 6.3% achieved in 2021, of which, India, the 6th largest economy in the world, performed significantly better than expected as a result of the increase in tax income, growth in export, increase in retail sales, and increase in electricity demand. India's GDP had grown to 8.3% from the bottom in 2020, in fact, its growth rate significantly outperformed the average of other Asian countries and the overall emerging market. The global economic growth has mostly broken through the poor performance experienced before the pandemic outbreak and achieved a record high. The transformation of the global economic structure and the high contribution of emerging markets have driven the growth momentum of the global economy with the global GDP growth rate achieved as high as 5.5%.

Many provinces and cities in China had successively carried out electricity and production restrictions in September 2021 due to the "energy consumption and intensity dual control system" policy and the intensified conflict between coal supply and demand, added to environmental protection controls, China had experienced a power shortage crisis, and coal prices from major exporting countries also reached a new high. In addition to coal, the impact of China's restricting steel production on the demand for imported iron ore had caused concerns. The blast furnace process has been adopted by many steel mills in China with iron ore used as the raw material. In addition, the production cost of local iron ore was high and the iron content was low; therefore, China continued to increase the import of iron ore that causing the Capesize Bulk Commodity Index (BCI) to go up in October.

China had relied heavily on imported grains due to the outputs of the summer crops affected by the floods in the summer of 2021. According to the statistics of the U.S. Department of Agriculture, China will purchase about 9.5 million tons of corn from the United States during the 2021~2022 corn seasons, a record high for corn import. The 4th quarter was the peak season for the export of grains of Northern America which activated the freight rate of small and medium-sized ships to rise. The Handymax BSI had reached an average of US$26,770 in 2021, an increase of 224% from the same period last year.

-2-

In terms of the overall marine transit demand, according to the "Dry Bulk Trade Outlook" released by Clarksons in January 2022, the global bulk carrier volume in 2021 was approximately 5.369 billion tons with an annual increase of 3.8%, of which, the demand for iron core decreased. According to the World Steel Association, China's crude steel output reached 1.033 billion tons in 2021, a 3% decrease from the year before. It is estimated that the production of crude steel in China during the "14th Five- Year Plan" period will remain at the level of about 1 billion tons for some time. For the realization of the "energy consumption and intensity dual control system" with the mission of achieving "carbon emission peak" and "carbon neutrality," China reduced coal production and started importing steam coal from Indonesia and Russia. China imported more than 242 million tons of steam coal in 2021, an increase of 25% from the same period last year. The global coal marine transit trade volume increased by 6% to reach 1.239 billion tons. The import and export of grains are relatively unaffected by the pandemic. The global grains marine transit trade volume increased by 2% to reach 520 million tons, of which, China's hog industry had gradually resumed production after enduring the impact of African swine fever. The demand for hog breeding had been strong; therefore, the demand for feed had increased stably and the demand for imports continued to grow with a total of 156 million tons of grains imported, representing a growth of 19% from the year before.

The Deadweight Tonnage (DWT) of ships has grown rapidly since 2015 and extended into 2021 at a rate of 3.6%. However, due to newly imposed rigorous environmental protection regulations, such as, the Energy Efficiency Existing Ship Index (EEXI) and Carbon Intensity Index (CII) to be implemented in January 2023; therefore, ships that do not meet the standards will be forced to slow down sailing speed or to have the main engine replaced, which will accelerate the replacement of outdated ships. The replacement of outdated ships added with the soaring container shipping business in the second half of 2020 resulted in the shipyards giving priority to building large-scale container ships that squeezed the capacity for the construction of bulk carriers. The additional supply available in 2022-2023 will fall to the lowest level in recent years with the supply effectively limited and the demand recovers moderately. According to the "Dry Bulk Trade Outlook" data indicated by Clarksons in March 2022, the growth rate of bulk carrier supply is expected to be 2.2% in 2022, but the growth rate of dry bulk shipping marine transit Ton-Nautical Mile demand is estimated to be 1.9%; therefore, the prosperity of the shipping market is expected and business operation is promising and optimistic.

There were 66 ships in the fleet of U-Ming that were proprietarily owned, through a joint venture, and construction in progress as of December 31, 2021, for a total deadweight tonnage (DWT) of 8,253,200 tons.

II. Business performance

U-Ming's consolidated operating income was NT$14,012,433 thousand in 2021, the net income was NT$4,892,584 thousand, and the basic earnings per share (EPS) was NT$5.79. The business operation is summarized as follows:

(I) Proprietary ship operating performance

U-Ming had grasped the supply-demand trend of the bulk shipping market and adjusted the ratio of fleet long-term contracts and spot contracts in a timely manner so to increase the gross profit of each ship along with the rising freight rate in the spot market in 2021, of which, the gross profit margin of the Supramax ship was as high as 53%, and the gross profit of Capesize and the Panamax was 38%. U-Ming has the most advanced energy-saving fleet with the digital ship management system implemented and an experienced management team in operation so to create the most outstanding business performance within the last decade for U-Ming.

(II) Take advantage of the timing to expand the fleet

The control over the acquisition cost of a ship is one of the key factors for a profitable operation in the future. When the bulk shipping market remained down and the ship cost was not yet increased at the end of 2020, U-Ming had expected that many countries would have accelerated infrastructure

-3-

This is an excerpt of the original content. To continue reading it, access the original document here.

Disclaimer

U-Ming Marine Transport Corp. published this content on 20 May 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 20 May 2022 05:04:08 UTC.


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Ching Lin Wang Head-Finance & GM-Financial Division
Shu Tong Hsu Chairman
Chang Sheng Chen VP-Administration Division & Deputy Spokesman
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