MIRA INFORM REPORT

Report Date :

31.10.2013

IDENTIFICATION DETAILS

Name :	China Nanhai Oil Trust & Trading Company
Registered Office :	18/f Haijiao Building, No. 93 Tianhe Road, Guangzhou, Guangdong Province 510620
Country :	China
Financials (as on) :	31.12.2012
Date of Incorporation :	27.04.1985
Com. Reg. No.:	440000000084239
Legal Form :	State-Owned Enterprise
Line of Business :	Importing and exporting commodities and technologies, excluding export commodities under state-unified operation and import commodities operated by the state-designated companies, processing with imported materials, processing with imported samples, assembling with imported parts, and compensation trade in agreement; counter trade & transit trade.
No. of Employees :	40

RATING & COMMENTS

MIRA’s Rating :

B

RATING		STATUS	PROPOSED CREDIT LINE
26-40	B	Capability to overcome financial difficulties seems comparatively below average.	Small

Status :	Moderate
Payment Behaviour :	Slow but correct
Litigation :	Clear

NOTES :

Any query related to this report can be made on e-mail: infodept@mirainform.com while quoting report number, name and date.

ECGC Country Risk Classification List – March 31^st, 2013

Country Name	Previous Rating (31.12.2012)	Current Rating (31.03.2013)
China	A2	A2

Risk Category	ECGC Classification
Insignificant	A1
Low	A2
Moderate	B1
High	B2
Very High	C1
Restricted	C2
Off-credit	D

CHINA - ECONOMIC OVERVIEW

Since the late 1970s China has moved from a closed, centrally planned system to a more market-oriented one that plays a major global role - in 2010 China became the world's largest exporter. Reforms began with the phasing out of collectivized agriculture, and expanded to include the gradual liberalization of prices, fiscal decentralization, increased autonomy for state enterprises, creation of a diversified banking system, development of stock markets, rapid growth of the private sector, and opening to foreign trade and investment. China has implemented reforms in a gradualist fashion. In recent years, China has renewed its support for state-owned enterprises in sectors it considers important to "economic security," explicitly looking to foster globally competitive national champions. After keeping its currency tightly linked to the US dollar for years, in July 2005 China revalued its currency by 2.1% against the US dollar and moved to an exchange rate system that references a basket of currencies. From mid 2005 to late 2008 cumulative appreciation of the renminbi against the US dollar was more than 20%, but the exchange rate remained virtually pegged to the dollar from the onset of the global financial crisis until June 2010, when Beijing allowed resumption of a gradual appreciation. The restructuring of the economy and resulting efficiency gains have contributed to a more than tenfold increase in GDP since 1978. Measured on a purchasing power parity (PPP) basis that adjusts for price differences, China in 2012 stood as the second-largest economy in the world after the US, having surpassed Japan in 2001. The dollar values of China's agricultural and industrial output each exceed those of the US; China is second to the US in the value of services it produces. Still, per capita income is below the world average. The Chinese government faces numerous economic challenges, including: (a) reducing its high domestic savings rate and correspondingly low domestic demand; (b) sustaining adequate job growth for tens of millions of migrants and new entrants to the work force; (c) reducing corruption and other economic crimes; and (d) containing environmental damage and social strife related to the economy's rapid transformation. Economic development has progressed further in coastal provinces than in the interior, and by 2011 more than 250 million migrant workers and their dependents had relocated to urban areas to find work. One consequence of population control policy is that China is now one of the most rapidly aging countries in the world. Deterioration in the environment - notably air pollution, soil erosion, and the steady fall of the water table, especially in the North - is another long-term problem. China continues to lose arable land because of erosion and economic development. The Chinese government is seeking to add energy production capacity from sources other than coal and oil, focusing on nuclear and alternative energy development. In 2010-11, China faced high inflation resulting largely from its credit-fueled stimulus program. Some tightening measures appear to have controlled inflation, but GDP growth consequently slowed to under 8% for 2012. An economic slowdown in Europe contributed to China's, and is expected to further drag Chinese growth in 2013. Debt overhang from the stimulus program, particularly among local governments, and a property price bubble challenge policy makers currently. The government's 12th Five-Year Plan, adopted in March 2011, emphasizes continued economic reforms and the need to increase domestic consumption in order to make the economy less dependent on exports in the future. However, China has made only marginal progress toward these rebalancing goals.

Source : CIA

Company name & address

China Nanhai Oil Trust & Trading Company

18/f haijiao building, no. 93 tianhe road, guangzhou

guangdong PROVINCE 510620 PR CHINA

TEL: 86 (0) 20-38805869

FAX: 86 (0) 20-38861362

EXECUTIVE SUMMARY

Date of Registration : april 27, 1985

REGISTRATION NO. : 440000000084239

LEGAL FORM : State-owned enterprise

CHIEF EXECUTIVE : zhou muxiang (LEGAL REPRESENTATIVE)

REGISTERED CAPITAL : CNY 4,490,000

staff : 40

BUSINESS CATEGORY : TRADING

Revenue : CNY 245,593,000 (AS OF DEC. 31, 2012)

EQUITIES : CNY 7,597,000 (AS OF DEC. 31, 2012)

WEBSITE : www.nayocn.com

E-MAIL : nayocn@nayocn.com

PAYMENT : AVERAGE

MARKET CONDITION : average

FINANCIAL CONDITION : fairly stable

OPERATIONAL TREND : fairly STEADY

GENERAL REPUTATION : AVERAGE

EXCHANGE RATE : CNY 6.08 = USD 1

Adopted abbreviations (as follows)

SC - Subject Company (the company inquired by you)

N/A – Not available

CNY – China Yuan Ren Min Bi

OPERATIONAL TREND & GENERAL REPUTATION

This section aims at indicating the relative positions of SC in respect of its operational trend & general reputation

Operational Trend:- General Reputation:-

Upward Excellent

Steady Good

Fairly Steady Fairly Good

Ordinary Average

Fair Fair

Stagnant Detrimental

Downward Not known

Not known Not yet be determined

Not yet be determined

LEGAL STATUS & HISTORY

SC was established as a state-owned enterprise of PRC with State Administration of Industry & Commerce (SAIC) under registration No.: 440000000084239 on April 27, 1985.

SC’s Organization Code Certificate No.: 19033315-5

SC’s registered capital: CNY 4,490,000

SC’s paid-in capital: CNY 4,490,000

Registration Change Record:-

No significant changes of SC have been noted in SAIC since its incorporation.

Current Co search indicates SC’s shareholders & chief executives are as follows:-

Name of Shareholder (s)	% of Shareholding
China Nanhai Oil Joint Service Corporation	100

SC’s Chief Executives:-

Position	Name
Legal Representative, Chairman, and General Manager	Zhou Muxiang

RECENT DEVELOPMENT

No recent development was found during our checks at present.

SHAREHOLDER CHART & BACKGROUND

Name % of Shareholding

China Nanhai Oil Joint Service Corporation 100

--------------------------------------

Date of Registration: March 30, 1984

Registration No.: 440000000095876

Legal Form: State-Owned Enterprise

Chief Executive: Ye Qing叶青

Registered Capital: CNY 114,170,000

MANAGEMENT

Zhou Muxiang, Legal Representative, Chairman and General Manager

--------------------------------------------------------------------------------------------------------

Ø Gender: M

Ø Qualification: University

Ø Working experience (s):

At present, working in SC as legal representative, chairman and general manager

BUSINESS OPERATION

SC’s registered business scope includes importing and exporting commodities and technologies, excluding export commodities under state-unified operation and import commodities operated by the state-designated companies, processing with imported materials, processing with imported samples, assembling with imported parts, and compensation trade in agreement; counter trade & transit trade.

SC is mainly engaged in international trade.

SC’s products mainly include: marine machinery equipment and parts, docks and platforms equipment, hardware tools, bearings and parts, etc.

SC sources its materials 60% from domestic market, mainly Guangdong, and 40% from overseas market. SC sells 40% of its products in domestic market, and 60% to overseas market, mainly USA, Europe, Mid East, Southeast Asia, etc.

The buying terms of SC include Check, T/T, L/C and Credit of 30-60 days. The payment terms of SC include Check, T/T, L/C and Credit of 30-60 days.

*Major Customers:

==============

Intl Sources Ltd.

Cosmopolitan Jeanswear Co.

Alu Inc.

Staff & Office:

--------------------------

SC is known to have approx. 40 staff at present.

SC rents an area as its operating office, but the detailed information is unknown.

RELATED COMPANY

SC is not known to have any subsidiary at present.

PAYMENT

Overall payment appraisal:

( ) Excellent ( ) Good (X) Average ( ) Fair ( ) Poor ( ) Not yet be determined

The appraisal serves as a reference to reveal SC's payments habits and ability to pay. It is based on the 3 weighed factors: Trade payment experience (through current enquiry with SC's suppliers), our delinquent payment and our debt collection record concerning SC.

Trade payment experience: SC did not provide any name of trade/service suppliers and we have no other sources to conduct the enquiry at present.

Delinquent payment record: None in our database.

Debt collection record: No overdue amount owed by SC was placed to us for collection within the last 6 years.

BANKING

Basic Bank:

Ping’an Bank

AC#: 01278292024483

FINANCIALS

Balance Sheet

Unit: CNY’000	As of Dec. 31, 2011	As of Dec. 31, 2012
Cash	5,622	5,281
Notes receivable	0	0
Accounts receivable	1,252	2,606
Advances to suppliers	61,804	33,718
Other receivable	2,303	8,760
Inventory	6,246	294
Non-current assets within one year	0	0
Other current assets	2,562	8,709
	------------------	------------------
Current assets	79,789	59,368
Long-term investment	682	682
Fixed assets	511	238
Deferred income tax assets	0	0
Other non-current assets	0	0
	------------------	------------------
Total assets	80,982	60,288
	=============	=============
Short-term loans	0	0
Notes payable	0	0
Accounts payable	1,296	762
Taxes payable	-1,315	-427
Advances from clients	60,142	38,520
Other payable	13,780	13,836
Other current liabilities	0	0
	------------------	------------------
Current liabilities	73,903	52,691
Non-current liabilities	0	0
	------------------	------------------
Total liabilities	73,903	52,691
Equities	7,079	7,597
	------------------	------------------
Total liabilities & equities	80,982	60,288
	=============	=============

Income Statement

Unit: CNY’000	As of Dec. 31, 2012
Revenue	245,593
Cost of sales	240,009
Taxes and surcharges	11
Sales expense	2,562
Management expense	2,887
Finance expense	-311
Income from investments	31
Non-business income	51
Non-business expenditure	0
Profit before tax	518
Less: profit tax	0
Profits	518

Important Ratios

=============

	As of Dec. 31, 2011	As of Dec. 31, 2012
*Current ratio	1.08	1.13
*Quick ratio	1.00	1.12
*Liabilities to assets	0.91	0.87
*Net profit margin (%)	--	0.21
*Return on total assets (%)	--	0.86
*Inventory / Revenue ×365	--	1 day
*Accounts receivable/ Revenue ×365	--	4 days
* Revenue/Total assets	--	4.07
* Cost of sales / Revenue	--	0.98

FINANCIAL COMMENTS

PROFITABILITY: AVERAGE

l The revenue of SC appears average in its line.

l SC’s net profit margin is average.

l SC’s return on total assets is average.

l SC’s cost of sales is fairly high, comparing with its revenue.

LIQUIDITY: AVERAGE

l The current ratio of SC is maintained in a normal level.

l SC’s quick ratio is maintained in a fairly good level.

l The inventory of SC appears small.

l The accounts receivable of SC is maintained in an average level.

l SC has no short-term loans in both years.

l SC’s revenue is in an average level, comparing with the size of its total assets.

LEVERAGE: AVERAGE

l The debt ratio of SC is average.

l The risk for SC to go bankrupt is average.

Overall financial condition of the SC: Fairly Stable.

CONCLUSIONS

SC is considered small-sized in its line with fairly stable financial conditions.

FOREIGN EXCHANGE RATES

Currency	Unit	Indian Rupees
US Dollar	1	Rs.61.48
UK Pound	1	Rs.98.70
Euro	1	Rs.84.48

INFORMATION DETAILS

Report Prepared by :

NLM

RATING EXPLANATIONS

RATING		STATUS	PROPOSED CREDIT LINE
>86	Aaa	Possesses an extremely sound financial base with the strongest capability for timely payment of interest and principal sums	Unlimited
71-85	Aa	Possesses adequate working capital. No caution needed for credit transaction. It has above average (strong) capability for payment of interest and principal sums	Large
56-70	A	Financial & operational base are regarded healthy. General unfavourable factors will not cause fatal effect. Satisfactory capability for payment of interest and principal sums	Fairly Large
41-55	Ba	Overall operation is considered normal. Capable to meet normal commitments.	Satisfactory
26-40	B	Capability to overcome financial difficulties seems comparatively below average.	Small
11-25	Ca	Adverse factors are apparent. Repayment of interest and principal sums in default or expected to be in default upon maturity	Limited with full security
<10	C	Absolute credit risk exists. Caution needed to be exercised	Credit not recommended
----	NB	New Business	----

This score serves as a reference to assess SC’s credit risk and to set the amount of credit to be extended. It is calculated from a composite of weighted scores obtained from each of the major sections of this report. The assessed factors and their relative weights (as indicated through %) are as follows:

Financial condition (40%) Ownership background (20%) Payment record (10%)

Credit history (10%) Market trend (10%) Operational size (10%)