On November 7, China Merchants Nanjing Oil (601975) disclosed the information of the third extraordinary shareholders meeting in 2026. The meeting is scheduled to be held in Nanjing at 9:30 am on November 12 to vote on two proposals. First, its wholly-owned subsidiary Nanjing Oil Shipping (Singapore) plans to invest no more than 1.96 billion yuan to build four 115,000-ton LR2 oil tankers in Dalian Shipbuilding Industry (non-related party), Hong Kong flag, The methanol dual fuel reserve design meets IMO Tier III and EEDI phase three, and will be delivered gradually from 20296 to December. Secondly, the wholly-owned subsidiary Nanyou Logistics plans to invest no more than 191.72 million yuan (tax included) (Source: Juchao Information, China Merchants Nanyou Shareholders Meeting Information), and build 10 4,000-ton inland crude oil barges at Hunan Jinhang Shipbuilding, which will be delivered in batches in 2027. (Source: Juchao Information, China Merchants Nanyou Shareholders Meeting Materials, the same below). The two investments and the other three investments during the year totaled 4.56671 billion yuan, equivalent to 34.26% of the total assets of 13.331 billion yuan in the end of 2025 after auditing. Crossing the 30% red line, it must be approved by more than two-thirds of the voting rights held by shareholders present.
The two drive lines have completely different properties.
Product oil tankers are driven by the trade pattern. The reasons given by the company in the proposal are: the global energy refining center continues to move eastward, geopolitical conflicts reshape energy trade, cross-regional trade grows, the proportion of long-distance transportation goods increases, and LR2 is favored by the market. This is not a one-time decision - four consecutive investments have been made during the year: three new 6,600-ton stainless steel chemical tankers for 498 million yuan in March, and four 50,000-ton MR oil and gas tankers for 182.8 million yuan in July. In August, it acquired 100% equity of Nanyou Logistics for 683.687 million yuan (source: Juchao Information, China Merchants Nanyou Shareholders Meeting Information), and in October the same batch was approved for the LR2 and barge projects. Within one year, the ship type was pushed from chemical tankers, MR all the way to LR2, which is to shift the focus of the fleet to "large ships, ocean-going, product oil trunk lines".
The inland river is indicator-driven, not cargo volume-driven. The original text of the barge proposal is to "improve the aging status of the Yangtze River crude oil transportation capacity", "make full use of the expiring transportation capacity indicators" and "replace the existing old pumpless barges". The service targets are Anqing Petrochemical, Sinopec, Hunan Petrochemical, Jin'ao Technology and other fixed customers along the river. In other words, the prerequisite for investment is the expiration of the transportation capacity indicator and the age of the ship, rather than new transportation demand - this determines its yield ceiling.
The first type of beneficiary is the shipyard. Dalian Shipbuilding Heavy Industry received 4 LR2s (1.9596 billion yuan, calculated as about 490 million yuan for a single ship based on four ships (based on this calculation)); Hunan Jinhang received 10 barges (191.72 million yuan, calculated as about 19.172 million yuan for a single ship based on ten ships (based on this calculation)). At the time when the 2028 ship slots are generally full, Both orders represent certain production capacity that the shipyard is willing to lock in.
The second category is China Merchants Nanyou's own fleet structure. LR2 has filled the tonnage gap between it and MR. The average age of the barge fleet has decreased, and the self-unloading capacity allows the tug-barge fleet to dock with more terminals.
The losers are the existing shareholders and the replaced shipping capacity. 34.26% of the total assets were invested within one year, but the two self-reported yields were only 8.43% (LR2) and 5.56% (barge) respectively, and the payback period was 12.42 years and 12.37 years - both lower than the capital return during the shipping boom. After the 10 new barges were put into production, the residual value of the old pumpless barges on the Yangtze River was directly under pressure. The third type of risk was written by the company itself in the document: the barge business is "strongly dependent on the core refinery customers along the river. If downstream customers undergo maintenance and production capacity shrinks, there is a risk of idle ships."
There are three calibers that need to be aligned within the same document, two of which are blank.
First, the investment amount of LR2 is written as "no more than 1.96 billion yuan" in the body of the proposal, and "1.9596 billion yuan" in the cumulative investment table, which is a difference of 400 thousand yuan. The amount does not matter, but it shows that the two places are not the last proofreading of the same draft.
Second, the rate of return of LR2 assumes no cost split. The document only gives three result values: "Each LR2 ship has a net profit of approximately 4.62 million US dollars per year, an internal rate of return of 8.43%, and an investment payback period of 12.42 years." It does not disclose operating costs, residual values, financing structures, or whether taxes are included. Converted according to the exchange rate of 6.7489 given in the announcement, the single ship cost is 489.9 million yuan or 72.58 million US dollars. (According to this calculation); 4.62 million US dollars corresponds to a daily net profit of approximately 12.7 thousand US dollars (according to this calculation). The document does not say where this assumption stands.
Third, there is an unspoken structure between the profit and rate of return of the barge project. The document states that "the total profit during the 25 years calculation period is 7.69 million yuan/year", with an internal rate of return of 5.56% and a payback period of 12.37 years. Calculated based on straight-line depreciation, 191.72 million yuan will depreciate approximately 7.67 million yuan per year in 25 years, which is almost equal to the annual profit of 7.69 million yuan - that is, the annual cash inflow is approximately 15.36 million yuan. million yuan, multiplied by 5.56%, the annuity coefficient of 13.16 for 25 years is about 202 million yuan, which is equivalent to the investment amount of 191.72 million yuan (according to this calculation). In other words, more than half of the return of this project comes from depreciation recovery, and the operating profit itself has a limited contribution; the document does not point out this point.
A testable inference is that these four LR2s are essentially low-priced ship slots for 2029 plus a methanol reserved option, rather than chasing the current high rent. The basis is that when the LR2 spot rent was at a historical high (the Scorpio Oil Tanker announcement disclosed that the average LR2 lock-in price in the fourth quarter was about 181,000 US dollars/day), the company still used the assumption of a daily net profit of 12.7 thousand US dollars for feasibility calculations - the two figures are not the same caliber. (TCE does not deduct operating costs, interest and depreciation), but the magnitude gap shows that the calculation is based on the bottom of the cycle.
Therefore, the directional judgment is: If the one-year LR2 time rental can be maintained above US$30,000/day from 2028 to 2029, the actual return of the project will be significantly higher than 8.43%; if it returns to the level corresponding to the company's assumption, the project has just reached the threshold and does not constitute excess income. The time scale is the first two full years after delivery, that is, 2030 to 2031.
There are three falsifying signals: the company will no longer place additional LR2 orders in 2027, the one-year LR2 time charter falls below US$25,000 per day, or the delivery date of Dalian Shipbuilding Industry is pushed back from the second half of 2029 - any one of these indicates that the pricing premise for this round of expansion is no longer established.
If the voting ratio of the two resolutions at the shareholders' meeting on November 12 is barely more than two-thirds, it shows that small and medium-sized shareholders have reservations about the 34.26% investment intensity. The actual payment progress of these two amounts can be seen in the "other non-current assets" and capital commitment notes in the 2026 annual report. The batch delivery node of 10 barges in 2027 is the first verifiable evidence of implementation.