Major Revenue Segments of the Group


Overall business environment

The Group’s principal activities are investment in and development, operation and management of container ports which are conducted through the WIT Port, which is 85% owned by the Group. As a deep water regional container hub port at the mid-stream of Yangtze River and a feeder port to the ports in Shanghai, the WIT Port plays a key role in the transportation of container cargo to and from Wuhan and surrounding areas along the Yangtze River corridor, including the upstream areas of Chongqing and neighboring provinces.

The strong and well established industrial base of Wuhan featuring operators in major industries including automobile and its components, chemical, steel, textile, machinery and equipment as well as those in the construction materials businesses have been and will continue to be the principal providers of gateway cargoes to the WIT Port.

Due to the inherent water-depth limitations along the upstream regions of the Yangtze River, it precludes bigger ships from navigating directly between those areas and Shanghai. The transshipment service provided by WIT offers a more economical alternative to ship container cargoes using bigger ships carrying more containers to and from Shanghai and overseas. Surrounding areas which are serviced by WIT include Hunan, Guizhou, Chongqing, Sichuan, Shanxi, Henan, Hubei and Shaanxi Provinces. Strategic initiatives by the government for shipping companies and WIT promote direct shipment to Yangshan Port in Shanghai (江海直達) have further strengthened the position of WIT Port as a trans-shipment port at the mid-stream of the Yangtze River.

With the development and growth of the container business on track, the Group has also developed port related services including agency and integrated logistics businesses to expand its revenue sources, including bonded warehousing, customs clearance, break bulk and distribution.

The Group has built a multi-purpose port to maintain competitiveness in the market. The construction of the multi-purpose port is expected to be finished by the end of the second quarter of 2015 and it will add an additional 20,000 TEUs to the existing handling capacity when operation commences in the third quarter this year. With increased capacities and facilities, the Company is confident to achieve a new high for breakthrough in the container throughput.


Container Thoughput

Container volume and throughput

  2014 2013 Increase (Decrease)
  TEUs % TEUs % TEUs %
Gateway cargoes 264,012 66 207,372 60 56,640 27
Trans-shipment cargoes 138,736 34 139,811 40 (1,075) (1)
  402,748 100 347,183 100 55,565 16

In terms of market share, during the year 2014, the WIT Port’s market share maintained at approximately 40% (2013: 40%) based on the aggregate of 1,006,580 TEUs (2013: 860,412 TEUs) handled in 2014 and 2013 respectively for the whole of Yangluo.

Total throughput achieved by WIT for 2014 was 402,748 TEUs, an increase of 55,565 TEUs or 16.0% over that of 347,183 TEUs for 2013. Of the 402,748 TEUs handled in 2014, 264,012 TEUs (2013: 207,372 TEUs) or 65.6% (2013: 59.7%) and 138,736 TEUs (2013: 139,811 TEUs) or 34.4% (2013: 40.3%) were attributed to gateway cargoes and trans-shipment cargoes, respectively. The gateway cargoes throughput increased by 27.3% to 264,012 TEUs (2013: 207,372 TEUs) and the transshipment cargoes throughput slightly decreased by 0.8% to 138,736 TEUs (2013: 139,811 TEUs)

Average tariff
Tariffs which were dominated in Renminbi (“RMB”), were converted into HK$, which is the reporting currency of the Group. The average tariff for gateway cargoes for the year under review was RMB248 (equivalent to approximately HK$312) per TEU (2013: RMB236 (equivalent to approximately HK$303) per TEU), an increase of 5.1% year on year. And the average tariff for transshipment cargoes was RMB50 (equivalent to approximately HK$63) per TEU (2013: RMB47 (equivalent to approximately HK$60) per TEU) which saw an increase of 6.4% from that of 2013.


Operating results

  2014 2013 Increase (Decrease)
  HK$'000 % HK$'000 % HK$'000 %
Terminal service 91,368 49 71,101 47 20,267 29
Container handling, storage & other service 19,964 11 17,051 12 2,913 17
Integrated logistics service 74,608 40 62,212 41 12,396 20
General and bulk cargoes handling service 542 - 643 - (101) (16)
  186,482 100 151,007 100 35,475 23

For 2014, the Group’s revenue amounted to HK$186.48 million (2013: HK$151.01 million), representing an increase of 23.5% as compared to 2013. The increase in revenue was mainly attributable to the increase in throughput from the relatively higher tariff gateway cargoes and the provision of logistics services to new customers. Gateway cargoes increased by 27.3% to 264,012 TEUs (2013: 207,372 TEUs). Trans-shipment cargoes throughput slightly decreased by 0.8% to 138,736 TEUs (2013: 139,811 TEUs) due to the Group's strategy of allocating more resources on gateway cargoes instead of trans-shipment cargoes. Revenue from the integrated logistics service amounted to HK$74.61 million (2013: HK$62.21 million), representing approximately 40.0% of the total revenue of the Group.



Integrated logistics

Integrated logistics businesses of the Group include freight forwarding, customs clearance, transportation of containers, and the provision of bonded and general warehousing, stacking yard storage and repackaging. Revenue from integrated logistics increased by 19.9% to HK$74.61 million (2013: HK$62.21 million), which accounted for 40.0% (2013: 41.2%) of the Group’s total revenue. From the third quarter onwards, the provision of logistics service to a major customer ceased due to the expiration of contract by the end of July 2014. The resultant loss in business was partially compensated by the business from new customers of which the Group has secured during the year.

General cargo

General cargoes dropped by 19.8% to 40,031 tons (2013: 49,895 tons) in 2014. However, the contribution of general cargoes was minimal and accounted for less than 1% of the Group's revenue for the year under review.

Gross profit and gross profit margin
Gross profit for 2014 rose by 28.3% to HK$86.85 million (2013: HK$67.68 million). Gross profit margin widened to 46.6% (2013: 44.8%). This was mainly due to the increase in the proportion of gateway cargoes from 59.7% to 65.6% and the expiration of contract for logistics service to a customer with relatively lower margin.

Government subsidies
Pursuant to the general development of the port business in Wuhan, the Hubei Provincial and the Wuhan Municipal governments have been providing support to the development of the container throughput in the form of subsidies to the WIT Port. For the year ended 31 December 2014, total operating subsidies of HK$21.88 million (2013: HK$12.16 million) was granted to the WIT Port.

Profit attributable to Shareholders for the year
Profit attributable to Shareholders amounted to HK$25.59 million (2013: HK$4.74 million), representing an increase of 440.1%. This was mainly attributable to (i) the higher portion of gateway cargoes with relatively higher margin and the increase in average traffic per TEU; (ii) the increase in government subsidies granted; and (iii) cost savings through the rationalisation of the Hong Kong head office which commenced in October 2013.

Earnings per share was HK2.17 cents (2013: HK0.40 cents), representing a significant increase as compared with 2013.


Future outlooks

The recovered economies globally should boost international trading. The Group has prepared for the emerging opportunities through the development of the multi-purpose port. Located in Wuhan, the biggest city delivers promising and stable GDP growth. In order to remain competitive, the Group has been developing the new multi-purpose port. The construction work of the multi-purpose port is expected to be finished by end of second quarter of 2015 and it will add an additional 20,000 TEUs to the existing handling capacity when operation commences by the third quarter 2015. The Board is confident that WIT should achieve at another record high in the container throughput with increased capacities and facilities.