Summary of Haitong Development Conference Call Company Overview - Haitong Development is a leading dry bulk shipping company in China, controlling nearly 5 million deadweight tons of capacity, ranking high in global ultra-flexible vessel capacity [2][4] - The company has expanded from domestic to international trade since its establishment in 2009 and has been listed on the Shanghai Stock Exchange since March 2023 [4] Industry Insights - The dry bulk shipping market includes the transportation of commodities such as iron ore, coal, and grain, with vessel types categorized by size [4] - The Baltic Dry Index (BDI) experienced significant fluctuations due to external factors like U.S. tariffs, Australian hurricanes, and Brazilian rainfall, leading to a substantial decline in the first half of 2025 [2][5] - Since June, the BDI has rebounded to around 2000, a year-on-year increase of over 10%, driven by increased shipments from Australian and Brazilian mines and seasonal demand for coal [2][5][6] Key Points and Arguments - The company has implemented measures such as route selection, flexible capacity allocation, and concentrated repairs to mitigate the impact of market volatility [5] - Future quarters are expected to benefit from the Federal Reserve's interest rate cuts and an upstream mining production cycle, which will positively influence dry bulk shipping demand [7] - The West Simandou project is anticipated to provide a stable growth point, with initial shipments expected before the Double Eleven shopping festival [7][8] Supply and Demand Dynamics - The current dry bulk fleet is aging, with a historically low number of orders, creating a tight supply situation that favors existing operators [9][10] - The average age of vessels is around 15 years, with about 30% being over 15 years old, which could lead to significant industry changes if older vessels are retired [10] Future Plans - The company plans to expand its fleet to 100 vessels by 2028-2029, primarily through self-funding and bank loans, while also purchasing second-hand vessels for cost efficiency [3][14] - The company has established a marketing department to strengthen ties with upstream miners and has signed a strategic cooperation agreement with Xiamen Xiangyu to explore business opportunities [8][24] Environmental Considerations - The company is adapting to stricter environmental regulations, with measures in place to manage carbon emissions and improve compliance ratings [12] - The impact of carbon emission regulations is manageable, as costs can be passed on to charterers [12] Financial Outlook - The company expects improved profitability in the second half of the year, with high freight rates anticipated to persist [13] - Despite a significant decline in performance in the first half due to lower rates and repair costs, the outlook for the third and fourth quarters remains optimistic [13] Market Positioning - The company is focusing on its core dry bulk shipping business and does not plan to diversify into container or cruise shipping sectors [21] - The recent addition of three oil tankers is aimed at supporting internal trade operations, with limited impact on overall performance [22] Conclusion - Haitong Development is well-positioned in the dry bulk shipping market, with strategic plans for fleet expansion and partnerships that leverage market opportunities while navigating environmental challenges and fluctuating demand dynamics [2][7][8][13]

Investment Rating - The investment rating for the company is "Accumulate" [8] Core Views - The company reported a revenue of 1.8 billion yuan for the first half of 2025, representing a year-on-year increase of 6.74%, while the net profit attributable to shareholders was 87 million yuan, down 64.14% year-on-year. The decline in performance is primarily due to a significant drop in dry bulk shipping market rates and increased costs from ship maintenance and environmental upgrades [1][2] - Despite short-term performance pressures, the company is expected to improve its performance in the second half of the year as the market recovers and the benefits of new capacity come into play [1][5] - The company has shown strong operational resilience by selecting high-margin shipping routes and flexible global vessel scheduling, achieving an average TCE of 12,258 USD per day for its self-operated ultra-flexible vessels, which is approximately 33% higher than the market average [3] - The company is expanding its capacity against the market trend, having added 12 vessels in the first half of 2025, bringing its total controlled capacity to 4.84 million deadweight tons [4] Financial Summary - The company expects net profits for 2025-2027 to be 360 million, 790 million, and 1.14 billion yuan, respectively, with corresponding EPS of 0.39, 0.87, and 1.24 yuan [5][7] - The projected revenue for 2025 is 4.129 billion yuan, reflecting a 13% increase from the previous year [7] - The company maintains a strong cost advantage and operational capability, which is expected to release higher profit elasticity as capacity expansion aligns with market recovery [5]

1. Report Industry Investment Rating - No industry investment rating information is provided in the report. 2. Core Views of the Report - **Container Shipping**: The EC futures market shows a weak shock, and the spot freight rate in September is in a rapid decline channel. The tariff pressure in the second half of the year is expected to reduce the support for freight rates, and the competition among shipping companies may intensify. The recommended trading strategies are short - term bearish shock for single - side trading and rolling operation of reverse spread for 10 - 12 contracts [5][7][10]. - **Dry Bulk Shipping**: The dry bulk freight index increased on August 22. The freight rate of Capesize ships increased, and the Far East Dry Bulk Index (FDI) also rose on August 25. The freight rate of large - scale ships is expected to recover in the short term, and the medium - sized ship market is expected to be slightly stronger in shock [17][18]. - **Oil Tanker Transportation**: The crude oil market and the refined oil market have different trends. The crude oil market is in a tight supply - demand pattern, which supports the increase of freight rates, while the refined oil market is relatively stable with weak demand. Short - term attention should be paid to the impact of concentrated bookings on the Middle East route in September, and long - term attention should be paid to the impact of environmental protection elimination and supply - demand reshaping on freight rates [26][27]. 3. Summary by Relevant Catalogs Container Shipping Market Analysis and Strategy Recommendation - **Futures Market**: On August 26, EC2510 closed at 1318.9 points, down 2.88% from the previous day. The latest SCFIS European line reported 1990.2 points on Monday after the market, down 8.7% month - on - month. The final delivery settlement price of EC2508 was 2135.28 points [5]. - **Spot Market**: In September, the spot freight rate is in a rapid decline channel, and the loading rate of shipping companies has decreased. MSK's offer for Shanghai - Rotterdam in WK37 is 1900 US dollars/FEU, down 200 US dollars from last week. The freight rates of other shipping companies also show a downward trend [7]. - **Tariff Impact**: The US plans to complete the investigation of adding furniture import tariffs within 50 days. In 2024, the container volume of furniture, home furnishings and lighting imported by the US accounted for 13% of the total imports. If the tariff is implemented, it will bring cost pressure to major exporting countries such as China and Vietnam [6]. - **Trading Strategy**: Single - side trading is recommended to be bearish in shock, and the valuation center of the October contract is expected to be revised down. For arbitrage, it is recommended to conduct reverse spread rolling operation for the 10 - 12 contracts [10]. Industry News - The US Vice - President mentioned that the US currently imposes a 54% tariff on China and has multiple dialogues with the Chinese government to end the trade war. The US may finalize a trade agreement with South Korea. Trump claims to impose tariffs on imported furniture, and the interest rate cut by the Federal Reserve is considered appropriate [11][12]. - Regarding the Red Sea situation, Trump said it is difficult to deal with Netanyahu, and an outcome is expected in 2 - 3 weeks. Iran will start a new round of talks with the UK, France and Germany. The leader of Hezbollah refuses to disarm, and Israel is ready to support Lebanon in disarming Hezbollah [13][14][15]. Dry Bulk Shipping Market Analysis and Outlook - **Freight Index**: On August 22, the Baltic Dry Bulk Freight Index rose 2.69% to 1944 points. The Capesize ship freight index rose about 3.33% to 2793 points, the Panamax ship freight index rose 2.97% to 1770 points, and the Supramax ship freight index rose 1.35% to 1424 points. On August 25, the Far East Dry Bulk Index (FDI) reported 1316.81 points for the comprehensive index, up 4.7% month - on - month [17][18]. - **Spot Freight Rate**: On August 22, the freight rate of the Capesize ship iron ore route from Tubarao, Brazil to Qingdao was 23.44 US dollars/ton, up 0.73% month - on - month, and the freight rate from Western Australia to Qingdao was 9.40 US dollars/ton, up 7.37% month - on - month. The weekly freight rate data shows that the freight rates of some routes have increased or decreased [19]. - **Shipping Data**: From August 18 to 24, 2025, the global iron ore shipping volume decreased by 90.8 tons month - on - month. In the fourth week of August 2025, the cumulative shipment of soybeans in Brazil was 725.78 million tons, and the cumulative shipment of corn was 496.04 million tons [20]. - **Incident Impact**: An accident occurred at the Simfer mine in Guinea, and all activities at the mine have been suspended. The accident may affect the project progress, but the project is not expected to stop for a long time [21]. Industry News - In July 2025, India's coal imports decreased, with different demands for different types of coal. The free trade agreement negotiation between Canada and the South American Common Market will restart. The Brazilian court overturned the decision of the antitrust regulatory agency to suspend the "soybean fallow agreement" [24][25]. Oil Tanker Transportation Market Analysis and Outlook - **Freight Index**: On August 22, the Baltic Dirty Tanker Index (BDTI) was 1042, up 1.26% month - on - month and 16.16% year - on - year. The Baltic Clean Tanker Index (BCTI) was 618, up 0.65% month - on - month and down 1.28% year - on - year [26][27]. - **Market Trend**: The crude oil market is in an upward trend, with increasing demand for VLCC and Suezmax, and a tight supply - demand pattern supports the increase of freight rates. The refined oil market is relatively stable, with weak demand and sufficient supply of some ship types, and the freight rate maintains a shock trend [27]. Industry News - India will buy oil from the most profitable places, including Russia. The continuous rebound of oil prices is due to geopolitical disturbances and supply interruption risks. The market continues to pay attention to the Russia - Ukraine issue, and oil prices will continue to fluctuate [28].

Company Overview - Fujian Highton Development Co., Ltd. is focused on domestic coastal and international bulk cargo shipping services, having developed a strong market competitiveness in the domestic private bulk shipping sector [12][14]. - The company has seen its self-operated fleet in overseas shipping areas grow by over 300% since its listing, indicating significant expansion in its operational capabilities [14]. Industry Context - The shipping industry plays a crucial role in supporting economic development and national strategies, handling approximately 95% of China's foreign trade transportation [10][12]. - Recent government policies encourage the growth of shipping enterprises, promoting mergers and acquisitions to enhance competitiveness and operational scale [10][11]. - China's shipping industry is positioned for accelerated growth, supported by its leading global position in shipping fleet size and port infrastructure [12][13]. Fundraising Plan - The company plans to issue A-shares to specific investors, aiming to raise up to RMB 210 million, with net proceeds allocated to purchasing three new bulk carriers [29][30]. - The total investment for the project is estimated at RMB 269.4 million, with the company intending to enhance its fleet capacity and optimize its global shipping routes [29][30]. Share Issuance Details - The share issuance price is set at RMB 7.00 per share, which is not less than 80% of the average trading price over the 20 trading days prior to the pricing date [15][22]. - The issuance will not exceed 30% of the company's total share capital before the issuance, ensuring that control remains with the existing major shareholders [16][19]. Investor Relations - The main investors in this issuance are Daqing Investment and Dalan Investment, both controlled by the company's actual controller, Zeng Erbin, who plans to fully subscribe to the new shares [14][19]. - This move is expected to strengthen the company's control and operational stability, enhancing market confidence [14][19].

Report Summary 1. Report Industry Investment Rating No investment rating information is provided in the report. 2. Core Views - **Container Shipping**: The spot freight rate is gradually reaching its peak, and some shipping companies have slightly reduced their rates for late July. The EC futures market is generally volatile. Attention should be paid to the opening price of MSK in the first week of August, as well as the impact of tariff policies on shipping schedules and the progress of the cease - fire negotiations in the Middle East [4][6]. - **Dry Bulk Shipping**: The international dry - bulk shipping market ended its three - week decline. The rates of large - vessel markets are expected to stop falling and recover, while the rates of medium - sized vessel markets are expected to fluctuate strongly in the short term [26]. - **Oil Tanker Shipping**: The short - term freight rates are mainly affected by geopolitical conflict premiums. Attention should be paid to changes in market sentiment. The price of domestic refined oil may be reduced, and the oil price is affected by factors such as Trump's possible sanctions on Russia and trade tensions [30][31]. 3. Summary by Directory Container Shipping - **Futures Market**: On July 14, 2025, EC2508 closed at 2027.2 points, down 0.17% from the previous day. The trading volume and open interest of some contracts changed significantly. The month - spread structure also showed corresponding changes [2]. - **Freight Rates**: The SCFIS European line was at 2258.04 points, up 6.35% week - on - week and down 58.43% year - on - year. The SCFIS US West line was at 1557.77 points, down 3.79% week - on - week and down 65.99% year - on - year. Different routes had different price trends [2]. - **Supply and Demand**: In July, it was in a stage of increasing supply and demand, approaching the peak of the peak season. The weekly average capacity in July, August, and September was 27.77, 28.83, and 30.04 million TEU respectively, with a slight decrease in July and August compared to the previous schedule [6]. - **Tariffs**: Trump announced additional tariffs on imports from Canada, the EU, and Mexico starting from August 1. The impact on China's exports and re - export trade needs attention [4]. - **Trade Data**: In June, China's exports to the US were $381.7 billion, down 16.1% year - on - year but with a significant improvement in the month - on - month growth rate. Exports to ASEAN were $581.9 billion, up 16.8% year - on - year, and exports to the EU were $492.2 billion, up 7.6% year - on - year [5]. - **Trading Strategies**: Unilateral trading should focus on tariffs and geopolitical dynamics, and for arbitrage, 10 - 12 reverse arbitrage rolling operations are recommended [9][10]. Dry Bulk Shipping - **Freight Rate Index**: The Baltic Dry Bulk Freight Index (BDI) rose 198 points to 1663 points, a 13.5% increase, reaching the highest level since June 25. The Capesize vessel index, Panamax vessel index, and Supramax vessel index all showed different degrees of increase [19][20]. - **Spot Rates**: On July 11, the spot rates of various routes increased to varying degrees, such as the Brazil - Qingdao iron ore route and the Australia - Qingdao coal route [22]. - **Shipping Data**: From July 7 - 13, 2025, the global iron ore shipping volume was 29.871 million tons, a decrease of 78,000 tons. The shipping volume from Australia and Brazil was 25.588 million tons, an increase of 938,000 tons [23]. - **Import and Export Data**: In June, China's steel exports decreased month - on - month, while imports also decreased. Iron ore imports increased month - on - month, and coal and grain imports decreased month - on - month. The overall situation in the first half of the year showed an increase in steel exports and an increase in soybean imports [24]. - **Market Analysis**: The Capesize vessel market's freight rates stopped falling and recovered due to increased vessel inquiries and improved demand expectations. The Panamax vessel market's rates continued to rise due to strong demand for coal and grain transportation and tight market capacity [26]. Oil Tanker Shipping - **Freight Rate Index**: On July 11, the Baltic Dirty Tanker Index (BDTI) was at 929, down 0.21% week - on - week and down 11.86% year - on - year. The Baltic Clean Tanker Index (BCTI) was at 546, up 0.74% week - on - week and down 33.50% year - on - year [29][30]. - **Market Analysis**: The short - term freight rates are mainly affected by geopolitical conflict premiums. The domestic refined oil price may be reduced, and the oil price is affected by Trump's possible sanctions on Russia and trade tensions [30][31]. Industry News - **Tariff News**: Trump announced additional tariffs on imports from Mexico, the EU, and other countries starting from August 1. The EU has extended the suspension period of counter - measures against US tariffs until early August [4][10][11]. - **Shipping Policy**: Guinea requires that 50% of bauxite exports must be transported by Guinean ships [27]. - **Oil Market News**: Trump's dissatisfaction with Russia may lead to more sanctions, which could affect the oil market. The OPEC + has reached an over - expected production increase agreement, and the oil price is affected by multiple factors [31][32].

Core Viewpoint - The company, Fujian Haitong Development Co., Ltd., anticipates a significant decline in net profit for the first half of 2025, projecting a decrease of 60.78% to 69.04% compared to the same period last year [1][2]. Group 1: Performance Forecast - The company expects a net profit attributable to shareholders of the parent company to be between 75 million and 95 million yuan, a decrease of 147.25 million to 167.25 million yuan year-on-year [1][2]. - The projected net profit after deducting non-recurring gains and losses is estimated to be between 73.97 million and 93.97 million yuan, reflecting a year-on-year decrease of 54.36% to 64.07% [1][2]. Group 2: Previous Year’s Performance - For the first half of 2024, the company reported a total profit of 242.76 million yuan and a net profit attributable to shareholders of the parent company of 242.25 million yuan [2]. - The earnings per share for 2024 were reported at 0.27 yuan, adjusted for a stock dividend distribution [2]. Group 3: Reasons for Performance Change - The dry bulk shipping market faced severe challenges in the first half of 2025, with significant declines in shipping rates, as indicated by the average BDI, BCI, BPI, and BSI values dropping by 30% to 33% year-on-year [2]. - The company is undertaking maintenance and upgrades for both existing and new vessels, leading to increased short-term maintenance costs, which have not yet fully realized the benefits of the new capacity [2]. Group 4: Future Outlook - The company plans to adapt to market trends by seizing cyclical opportunities in the shipping market, expanding its controlled capacity, optimizing global route layouts, and enhancing operational efficiency to strengthen profitability [3].