Benefited from the rising profits driven by the supply shortage of the dry bulk market, Huiyang Shipping hit a record high in profits last year.
Huiyang Shipping recently announced its 2021 financial report, with annual consolidated revenue of NT$19.169 billion (approximately RMB 4.328 billion), operating profit of NT$8.258 billion (approximately RMB 1.865 billion), and after-tax net profit of NT$8.245 billion (approximately RMB 1.862 billion), an annual increase of 73 times, and performance has set new historical records, which will challenge a new operating peak this year.
Huiyang Shipping said that due to strong demand recovery after the epidemic and the port quarantine measures of various countries have caused a decline in the average turnover rate of ships, and the imbalance in supply and demand has pushed up the daily rent of small and medium-sized ships. The maximum daily rent of a flexible bulk carrier, one of Huiyang Shipping's main ship types, reached US$37,000, helping Huiyang Shipping's profit growth.
The operating costs of the bulk transportation industry are relatively stable, and the rising daily rents have driven a significant increase in the interests of Huiyanghai's operating industry. Huiyang's average operating rate of profit has been 21% in the past three years, reaching 28% in the first quarter of 2021, and even broke through 50% in the fourth quarter, setting a record high of a single quarter, with an average of 43% for the whole year, which also rewrites the record of historical highs.
The annual increase in exchange for contracts in 2021 was the highest in Huiyang Shipping in the past five years, up to 70%. This year, it is still conservatively estimated that there is a room for contracts to increase in contracts of 25%. In terms of fleet layout, Huiyang Shipping delivered a total of 7 small and medium-sized energy-saving new ships in 2021 and disciplinary 10 old ships, bringing about operating cash flow of approximately US$20 million. Huiyang Shipping will continue to update its fleet in the future. It is expected to add 6 new ships this year, and there are 14 undelivered handheld orders, and will join the fleet one after another according to the delivery arrangement.
Huiyang further stated that from the supply side, the number of new shipbuildings in the past five years has been low, making it impossible to respond to demand expansion; from the demand side, demand has begun to be filled in the spring and after the end of the Winter Olympics, and with the upcoming entry of the South American cereal harvest season, it is expected that freight rates will remain above a certain level this year.
Huiyang Marine Transport is optimistic and the prosperity of the bulk carrier market is expected to continue. The new environmental protection regulations in 2023 are about to take effect and are expected to affect 80% of ships on the market. At that time, ships that do not meet the standards need to slow down, which will inevitably lengthen the ship's turnover time. Huiyang Shipping has the largest number and largest proportion of energy-saving fleets, which will minimize the impact, help to make stable profits and continue to hit peaks.
