Close to the international main channel, Dalian Port is a natural deep water port and one of the important hubs in Northeast Asia. As the largest specialized terminal logistics operator for oil / liquid chemicals, container and automobiles in the Northeast, Dalian Port s cargo throughput in recent years has grown steadily. In 2009, its cargo-handling capacity ranked 6th and container throughput ranked 8th among ports nationwide. Before the Dalian Port Group acquired the port assets, Dalian Port achieved revenues of 1.683 billion yuan in 2009 and 0.904 billion yuan in the first half of 2010, and net profit attributable to equity holders of 583 million yuan and 3.13 billion yuan. On completion of the acquisition, the company's operating income will increase dramatically. In 2009, the pro forma combined revenue increased 1.34 billion yuan or 79.60% in comparison with before the acquisition; In the first 6 months of 2010, the pro forma combined revenue increased 692 million yuan or 76.62% in comparison with before the acquisition.
The development of sub-business has remained stable
Dalian Port is one of the three largest oil transit centers in China and the largest oil trans-shipment port in the Northeast. From 2006 to 2009, the revenue CAGR of the major two businesses port handling and port service as well as stockpiling and leasing was 7% and 27%. Future oil handling will continue to benefit from the construction of national strategic oil reserve bases; oil handling capacity will be expected to maintain steady 12% growth.
In addition, Dalian Port is the largest container hub in the Northeast. With the gradual stabilization of the global economy and the pick-up of import and export trade, the container throughput at Dalian Port grew 20% in the first 5 months of 2010. Currently, all business segments of the container hub are developing well;, the handling capacity of the domestic container business increased by 30.3% in 2009, and is expected to become a highlight of future container business growth.
Benefiting from domestic fixed asset investment growth and the stable cooperation of major global ore producers, business at the ore terminal grew rapidly from 2006-2009, during which the compound growth rate of throughput was 56%, with operating CAGR revenue of 57%. In future, if Dandong Port and Jinzhou Port are strategically integrated, the competitive advantage of the ore terminal operations will be greatly improved.
As China s second largest food terminal corporation and the most competitive food transit center in the Northeast, handling growth at the bulk grain terminal remained stable, with CAGR revenue of 12.70% from 2006-2009. With a base of a 100,000-ton grain reserve from the first large strategic customer the State Grain Reserves Dalian Depot going into production, the procurement of 500 bulk grain trucks by the end of 2010, and the strategic cooperation agreement with China Oil & Foodstuffs Corporation (COFCO) as well as the progressive development of transport logistics for bulk grain, which has a higher gross margin, the new bulk grain terminal operations will continue to step into good growth momentum.
During the first 5 months of 2010, benefiting from the continuation of domestic car consumption and the pick-up of foreign auto sales, the handling capacity at the auto terminal was about 60,000 cars, exceeding that of the entire 2009 year, a substantial increase of 352.46%. The massive port to port shipment of vehicles along the coast from north to south in future will guarantee the automotive transport volume for the Dalian Port auto terminal.
The newly built cargo terminal is one of the important transshipment centers for bulk cargo in the Northeast. Steel and coal are its strategic goods; the proportions of their throughput were respectively 35.7% and 34.9% of the total capacity at the cargo terminal in 2009. Soon they will be developed as 10-million-ton cargo loads according to the plan, so as to greatly increase the handling capacity and profitability of the cargo terminal.
A key point for investment: port resource integration in Liaoning coastal area
In July, 2009, the Plan for the Opening and Development of the Liaoning Coastal Economic Zone was approved at the State Council executive meeting, which proposed to build Dalian into the international shipping center of Northeast Asia, accelerate integration of resources in Liaoning coastal ports, and build a port cluster with Dalian Port as the center. Being identified explicitly as a "leader , Dalian Port is the biggest beneficiary, which provides a strong guarantee for the integration of resources in Liaoning coastal ports. With the issue of Dalian Port A shares, the appearance of Dalian Port Groupon the market and its acquisition of port terminal operations and related assets, Dalian Port Group has taken an important step in the acceleration of the capital operation.
Dalian Port has now integrated port resources both inside and outside Dalian port areas.
Integration inside Dalian port area
Changxing Island: It is an important extension in the layout of the medium/long term port area at Dalian Port. Currently, various terminals are in the planning and under construction stages, with a reasonable business structure and a perfect grid of routes. Changxing Island is now positively expanding intentions to cooperate with large enterprises, which is expected to make a contribution to Dalian Port securing enormous profits.
L shun Port: Dalian Port Group has signed a strategic cooperation framework agreement with the L shun District Government, planning to establish Dalian Port (L shun) Co. Ltd, and, with it as the main part to integrate with Yantai-Dalian Ferry. The measures above will greatly improve the dominant status and performancelevels of the roll on/roll off business to create better conditions for roll on/roll off business integration at Dalian Port.
North Shore of Dayaowan: Dalian Port Group will restructure the layout of the North Shore of Dayaowan to make it a backup for the development of the Dalian core port area.
Zhuanghe Port: Dalian Huayankou Economic Zone is an important point in the Liaoning development strategy Five Points, One Line and is planned to establish Zhuanghe Terminal Co. Ltd. It is one of the joint-stock companies of Dalian Port.
The integration inside Dalian port area will make Dalian Port the main part in the development of Dalian public terminals, reinforcing its leading position and bringing it greater space for development.
Integration outside Dalian port area
Dalian Port is no longer a local port in traditional meaning; it has become a port group operating regional coastal resources and arranging port clusters. According to the government s planning and layout, the parent company of Dalian Port Group has had strategic cooperation with Jinzhou, Dandong, Huludao and other places in various forms:
Huludao Port: Suizhong Coal Terminal Co. Ltd., of which Dalian Port Group owns 90% of total corporate equity, is engaging in pre-development work, with planned annual throughput capacity of 5,000 tons. Huludao Port is expected to become a 100-million-ton sea port of Mengdong Coal.
Dandong Port: Dalian Port Group is taking the lead in the development and construction of the Haiyanghong port area in order to meet the needs of east area development after the opening of the Eastern Road Railway.
The integration of Jinzhou Port is worth particular mention as an important strategic point. Jinzhou Port is the most complementary port in business with Dalian Port, and cooperation between the two will result in an effect of 1+1>2 ; that s why the two sides have been longing for cooperation so eagerly. It is learned that their complementarity will be mainly in coal, petrochemical, container and minerals. Through this powerful combination, Dalian Port will better develop their business with Mengdong Coal, improve their profitability in the oil business, share customer resources in the container and ore sectors and achieve common development and a win-win situation.
Cross-regional integration is supported by the government policies. In the form of placing into shares after pre-training , joint-stock companies without upfront capital investment will buy shares when they see the efficiency of the business, therefore, they are the biggest beneficiaries. Dalian Port cross-regional layout will create new growth prospects, and Dalian Port will realize a regional expansion development by building another port outside the Dalian area.
With the accelerating pace of resource integration, a new port grid has been shaped: with Dalian Port as the center, Dandong along the Yellow Sea and Jinzhou and Huludao on the Bohai Sea to complement one another and undertake staggered development. Dalian Port issued A shares, on one hand, to expand the scope of their business and enhance core competitiveness; on the other hand, to raise the funds needed for their business development and enhance their overall strength; all of these are of importance for achieving their goals and carrying out their long-term strategy.
From: Port of Dalian Authority
