Zhuhai Port adjusts its ship purchasing plan; it will acquire two 22,500-ton multipurpose vessels under construction.

To shorten the shipbuilding period and better match the berthing standards of customer-dedicated wharves, Zhuhai Port decided to change its ship purchasing plan, changing the purchase of 2 25,800-ton coastal multi-purpose vessels to the purchase of 2 22,500-ton multi-purpose seagoing vessels under construction.

It is understood that Zhuhai Port has completed a non-public offering of 140 million RMB ordinary shares, raising approximately 1 billion RMB in net funds, which are planned to be invested in port equipment upgrade projects and port and shipping integrated waterway and sea transportation supporting vessel projects. Among them, the port and shipping integrated waterway and sea transportation supporting vessel project involves the construction of 25 3,500-ton inland river multi-purpose vessels, the purchase of 2 25,800-ton coastal multi-purpose vessels, and the construction of 2 12,500-ton coastal seagoing vessels, with a total investment of 512.5 million RMB, and plans to use 465.17 million RMB of the raised funds.

However, on April 3, Zhuhai Port Co., Ltd. announced that Zhuhai Port Successful Shipping Co., Ltd., a 51%-controlled subsidiary of Zhuhai Port Shipping Co., Ltd., will change the purchase of two 25,800-ton coastal multi-purpose vessels to the purchase of two 22,500-ton multi-purpose seagoing vessels under construction from the original trading partner. The total investment of the project remains unchanged at 160 million RMB, all of which will be invested using raised funds.

The announcement shows that Zhuhai Port Successful Shipping has purchased the construction orders from Hainan Successful Network Technology Co., Ltd., another shareholder holding 49%, and its wholly-owned subsidiary, Hainan Heshen Shipping Co., Ltd., acquiring ownership of the two 22,500-ton multi-purpose vessels currently under construction. The price of a single vessel does not exceed 80 million RMB. Currently, both vessels have been assembled on the shipyard slipway and are expected to be delivered before December 31, 2020.

Zhuhai Port explained that this change is due to changes in the market environment. In order to shorten the time for vessels to enter the market, match the berthing standards of customer-dedicated wharves, quickly establish business channels, and ensure the effectiveness of the use of raised funds, it was decided to change the above-mentioned investment project. The newly built vessels will mainly undertake coastal transportation of goods such as steel from northern ports to South China.

The announcement points out that the planned routes for these two multi-purpose vessels mainly target the domestic steel bulk cargo transportation between Northeast China and South China. The main sources of goods are concentrated in major and medium-sized steel mills in Northeast China, and new sources of goods are actively being developed in Qinhuangdao, Caofeidian, and other areas in North China. The return cargo to the north mainly consists of construction sand and gravel from the South China region to ports in the Yangtze River Basin. As the main target source of goods for this project, the annual sea transportation volume of steel from Northeast China to South China is approximately 6 million tons. Successful Network, as the main sea transportation service provider for steel mills in Northeast China, has a good advantage in the goods market. The coastal transportation business between the north and south undertaken by Successful Network will give priority to Zhuhai Port Successful Shipping as the carrier, which is expected to bring a relatively stable amount of steel sea freight to Zhuhai Port Successful Shipping every year.

Zhuhai Port stated that the implementation of this project can increase the revenue of Zhuhai Port Shipping's own coastal bulk cargo transportation business through the routes introduced by Successful Network, which is an important part of Zhuhai Port's "logistics center strategy." Promoting the implementation of this project is beneficial to cultivating and expanding the company's own shipping fleet, improving the comprehensive competitiveness of Zhuhai Port Shipping's supporting services, and meeting the strategic development needs of Zhuhai Port's port and shipping main business. On the other hand, it can leverage the partner's advantage in goods sources, lay out the coastal bulk cargo business from Northeast China to South China, and build a steel logistics center centered on Zhuhai Port. The implementation of this project will help to promote the stable growth of Zhuhai Port's throughput and promote the healthy development of Zhuhai's port economy.