U‐Ming Marine Transport Corp. 2019 Annual General Meeting

        U-Ming Marine Transport Corporation has convened its 2019 Annual Shareholders’ Meeting (AGM) at the Taipei Hero House on 13 June 2019; hosted by its Chairman, Mr Douglas Hsu. During the AGM, Mr Hsu presented the company's motions such as the Adoption of the 2018 Financial Statements and the Proposal for Earnings Distribution of 2018 etc. . For 2018 operating performance, the Company’s consolidated revenue was at NT$11.523 billion; with net profit of NT$1.668 billion and the earnings per share (after-tax) of NT$1.97. The motion to cash dividends of NT$1.80 per share to reward the shareholders was passed. The Company has been maintaining a sound financial structure of which the retained undistributed earnings and the statutory surplus reserve available for distribution as future annual earnings dividends amounting to NT$12.253 billion; equivalent to NT$14.50 per share. UMing will continue to create shareholders’ value to reward its shareholders.
Market Outlook
The global economy is expected to slow down in 2019. According to the International Monetary Fund’s (IMF) forecast in April this year, the 2019 global GDP growth will be weakened to 3.3% from 3.6% last year; and that of developed and developing countries will also drop by 0.4% and 0.1% respectively. The prolonged China-US trade war has impacted the overall economy which in turn is affecting the bulk shipping. In the short term, China’s high tariffs on US’ grains will lead to changes in the seasonal trade but China's demand for grains and cereals will not disappear. We expect the demand to return to its normal growth level in the middle to long term; despite the temporary alternate import sources and seasonal changes that are causing structural changes to the shipping routes and freight sentiment. We expect China to strengthen its infrastructure investment through fiscal expansion and monetary policy in order to maintain its economic growth targets.
On the other hand, the “Indo-Pacific Strategy” Partnership initiated by U.S. / Japan/ India, and China’s "One Belt One Road” Initiatives are both competing for global strategic resources. Besides, Japan is also joining in to compete through the World Bank, the Asian Development Bank and the Asian Investment Bank; for regions that needs infrastructure expansion but lacking of funds and technology know-how. As such, the demand for raw materials and energy as well as the outlook for trade are optimistic. India, a strategic partner within the Indo-Pacific Strategy, has been posting a very bright economic growth in recent years; and Pakistan, an important strategic location along the “One Belt One Road”, has also witnessed a rapid growth in imports of coal and raw materials. Overall, Southeast Asian countries have been increasing their imports of raw materials, benefiting from the manufacturing migration from China; in particular Vietnam. They are making up part of the shortfall as a result of China’s economic slowdown and reduced imports of raw materials.
The collapse of Vale's dam in early 2019 has led to a sharp decline in Brazilian iron ore exports since March. However, with the recent part resumption order and the recovery of some production capacity, the Cape-size freight market has seen improving and slowly emerging out of the earlier downturn.
On the supply side, the international environmental protection regulations such as the ballast water treatment system and the usage of low sulfur fuel oil, are increasingly stringent. With the big disparity in fuel efficiency as compared to the new modern eco-friendly ones, ships that are over 15 years of age are becoming less competitive and they are expected to be phased out sooner than expected. So the average scrapping age is expected to be lower which is an important factor to rebalance the freight market.
Business Expansion and Asset-Light Strategy
U-Ming has been leveraging its vast customers’ network and niche market strategy, together with its adoption of digital transformation, to continue in its core business expansion. In early 2018, the Company has signed a 25-year Contract of Affreightment (COA) with Vale International SA of Brazil for the transportation of Brazilian iron ore to China. This COA is the biggest and longest commitment in UMing’s history and the total contract value is anticipated to be more than NT$17.5 billion. It will enhance the Company’s fixed-rate charter portion thus ensuring a constant revenue and cash flow. To expand our involvement in the Chinese market, the Company has also set up "ITG-UMING Xiamen Co., Ltd" and "ITG-UMING Shipping Co., Ltd" in early 2018, with our joint venture partner “Xiamen International Trade Group Co., Ltd. (ITG)”, to accelerate the development of China's coastal and international bulk shipping business.
Through our vast marketing network and good relationships with the major mining and trading companies, supplemented by our comprehensive fleet size and portfolio, U-Ming has also adopted the ‘asset-light’ model to arbitrage its transportation services thus increasing the overall revenue and profit. In 2018, the number of charter-in vessels had increased by 87.8% and its corresponding profit had increased by 144%.” In April 2019, our U-Ming Xiamen office has also obtained the accreditation for a foreign-owned corporation in China to engage in international crewing deployment agency businesses. In the future, U-Ming Marine Xiamen will use this qualification and professional experience to expand its ship management related services and increase the proportion of light assets in its business.
Digitalization and Fleet Safety
In 2015, U-Ming had partnered Ericsson to build the first ever ship networking services ie. “Fleet Safety Management” of which the first phase was completed in 2018. The "Collision Warning" and "Pirate Threat" functions of the system will enable the ship crew to monitor the vessel and others in the vicinity closely. Hence any abnormal conditions will set an alarm to alert all crew for immediate responses thus improving the overall efficiency of the ship operations and safety.
The Company’s new building designs have been based on ‘smart and digitalization’ with vessel performance monitoring systems. Important machinery and equipment data are transmitted back to the company through satellite IoT network instantly allowing our shore staff to monitor the performance of ships closely; setting up a more effective automatic planned maintenance system; reducing the machinery failure incidents and cutting down repair and maintenance costs.
In times to come, once the ships are connected to their engine and equipment manufacturers directly, any abnormalities or faults found onboard can be diagnosed and tackled swiftly between the parties via instant data transmission and communication. Our existing fleet is also in the process to complete the digitalization.
The Company has also set up an operations control hub, namely “Operation Center”, utilizing the Big Data for more effective information management, supervision and fleet management. This enables the Company to grasp the operations and efficiency of the entire fleet and also to improve the individual vessel’s performance and competitiveness; achieving the goal of a "ship-shore integration" for an overall effective management on safety, communication, operations and decision-making process.
Sustainable Operations and Green Shipping
U-Ming has won many recognitions for its continuing pursuit of sustainable development. This year, for the third time, the Company has won the Silver Award in the transportation category at the 2018 Taiwan Enterprise Sustainability Awards sponsored by Taiwan Sustainable Energy Research Foundation. At the same time, it also passed the evaluation criteria of FTSE Russell and Taiwan Stock Exchange to be a constituent of the FTSE4Good Emerging Index and FTSE4Good TIP Taiwan ESG Index. It also won the "Excellent Performance in Business Growth" and "Excellent Performance in Green Shipping Development" awards organized by the Ministry of Communications in 2017.
In response to the 2020 sulphur cap regulation, U-Ming has participated in the Australia-China’s “Green Corridor JIP” project with leading market players to jointly develop a dual-fuel (LNG/Fuel-oil) Newcastle-max bulk carrier specification – an alternative to the conventional fuel-oil engines. The results of the first phase were published on June 1, 2017 at the Nor-Shipping Event, Oslo, Norway; which has proven the economic and technical feasibility of the LNG fuel-powered ships. In August 2018, the design concept for the 260,000 DWT VLOC was also published in Singapore; and this further breakthrough was approved in-principle by the DNV GL Classification Society.
Fleet Overview
U-Ming’s core business is in dry bulk shipping sector which currently owns and operates Cape-size, Post-Panamax, Panamax, Ultramax, Supramax, Cement Carriers, Very Large Crude Carriers (VLCC) and Very Large Ore Carriers (VLOC) amounting to a total of 47 ships (including vessels that are in operation, under construction, joint ventures and ship management service); with a total deadweight of 6.58 million tons and an average age of about 5.3 years. The company has its subsidiaries in Singapore, Hong Kong and Xiamen, China; and has the highest market capitalization among Taiwan’s dry bulk public-listed companies.#