Optimistic about the dry bulk shipping market, Hong Kong-listed shipowner Jinhui Shipping continued to expand its fleet, returning to the newbuilding market after many years to sign its first order.
On June 28, Jinhui Group announced that Jinhan Marine Inc. and Jinming Marine Inc., wholly-owned subsidiaries of Jinhui Shipping, as the first and second buyers, signed shipbuilding contracts with the seller, Jiangsu Hantong Shipbuilding Heavy Industry, respectively, to order two 63,500 dwt bulk carriers.
Each new ship costs about US$34 million, with a total value of about US$68 million (about 494 million yuan), of which the first ship is expected to be delivered in December 2026 and the second ship in November 2027.
For reference, Clarkson data shows that the current cost of a 61,000-64,500 dwt Ultramax bulk carrier is about $34 million, an increase of 3% compared with $33 million in the same period last year.
It is reported that the two newly ordered ships of Jinhui Shipping may be built by Hantong Yingji Heavy Industries. In recent years, Hantong Yingji Heavy Industries has developed into an important base for Hantong Shipbuilding Heavy Industries' specialized construction of Ultramax bulk carriers. According to Clarkson's data, Hantong Shipbuilding Heavy Industry has a total of 82 hand-held orders, including 70 bulk carriers, 9 crude oil tankers, and 3 product oil tankers, of which 29 63,500-ton bulk carriers are all built by Hantong Yingji Heavy Industries.
According to Jinhui Group, the Group's main business is international ship leasing and ship ownership, and the two new vessels are in line with the Group's ongoing strategy to renew its fleet with modern, larger and high-quality vessels, and gradually phase out older vessels and replace them with newer and younger vessels. The Directors believe that by improving the fleet, the Group can increase its competitiveness in the maritime and shipping industry and meet the market demand for its shipping services. Upon delivery, the two vessels will be chartered to a third-party company to transport bulk dry commodities for the purpose of collecting vessel hire and generating recurring freight and rental income for the Group.
Jinhui Group believes that now is the best time to further expand the size of the fleet to increase the group's operating income. The Group currently operates 33 vessels, including 23 owned vessels and 10 chartered vessels, with a total capacity of approximately 2.024 million tons. Compared to other bulk carriers currently operated by the Group, the new vessels are more fuel-efficient and operationally efficient, in line with the latest environmental rules and current codes in the shipping industry.
It is understood that Jinhui Group is an investment holding company, which operates a global shipping business through its 55.69% equity subsidiary, Jinhui Shipping. The group has been in the shipping business since the 1980s and currently operates a fleet of modern bulk carriers, ranging from Handysize to Capesize. In 1991, Jinhui Group was listed on the Hong Kong Stock Exchange as the holding company of a number of ship-owning and ship-leasing subsidiaries. In 1994, Jinhui Shipping was listed on the Oslo Stock Exchange in Norway.
In recent years, Jinhui Shipping has been expanding its fleet by chartering ships and acquiring second-hand ships, but has never ordered any new ships. It is understood that the last time Jinhui Shipping appeared in the new shipbuilding market was back in 2014, when the company ordered a 60,000 dwt bulk carrier through the intermediary Sumitomo Corporation in Oshima Shipbuilding, Japan, which was originally planned to be delivered in March 2016, but in 2015 due to the market downturn, Jinhui Shipping decided to cancel this order to reduce future capital expenditure.
Since the beginning of this year, out of an optimistic outlook for the long-term dry bulk market, Jinhui Shipping has begun to expand its fleet capacity on a large scale, acquiring and leasing a number of second-hand ships for a long time. In just half a year, the fleet size of Jinhui Shipping has increased from 24 ships of 1.416 million tons at the end of last year to 33 ships of 2.024 million tons, an increase of 42.9%.
At the same time, Jinhui Shipping has also begun to turn to the medium and large bulk carrier market. In February this year, the company purchased the 180,000-dwt Capesize bulk carrier "New Delight" from Dyna Shipping for $30.95 million. In April, it chartered a 207672 dwt Newcastlemaxmax bulk carrier "TRUE NEPTUNE" (built in 2017) for the first time, which is the largest vessel in its existing fleet.
In the first quarter of this year, Jinhui Shipping's performance has improved significantly. During the reporting period, Jinhui Shipping's operating income reached 27.894 million US dollars, an increase of 93% year-on-year; Net consolidated profit turned into a profit of US$2.405 million from a loss of US$12.752 million in the same period last year, and basic earnings per share were US$0.022, compared to a basic loss per share of US$0.117 in the same period last year.
Jinhui Shipping said in its first-quarter financial report that 2024 has a relatively good start, and the demand for dry bulk shipping trade is stable. The company expects the freight market to remain strong due to the positive tonne nautical mile effect of geopolitical tensions and disruption of trade routes due to conflict.
Jinhui Shipping pointed out that commodity transportation continues to be affected by complex variables such as industry characteristics, economic and geopolitical drivers. Supply and demand remain balanced, while newbuilding supply remains low and waiting times are long. This situation provides a very solid support for the value of pre-owned ships. Looking ahead, the artificial global economy will recover faster than the market expects, and the company's fleet will be well positioned to continue to seek opportunities to renew its fleet to meet market and customer needs.