Nanjing Tanker Corporation (NJTC), the Shanghai-listed tanker operator controlled by China Merchants Group, reported net profit attributable to shareholders of RMB1.138 billion (approximately US$171 million) for the first nine months of 2026, up 20.15% year on year. Revenue increased 14.68% to RMB4.895 billion (US$736 million). Behind that cumulative growth, however, third-quarter margins weakened as operating costs rose faster than revenue. The company is continuing to invest in MR and LR2 tankers while integrating Yangtze River logistics assets, committing capital to fleet renewal and a broader liquid bulk transportation network.

Nine-month growth masks a softer third quarter

NJTC’s nine-month net profit excluding non-recurring items reached RMB1.066 billion (US$160 million), an increase of 14.00%. This represented more than 90% of reported attributable profit, indicating that recurring business remained the principal source of earnings. The faster growth in reported profit nevertheless reflected an additional contribution from vessel disposals and other non-recurring items.

The third quarter showed a different pattern. Revenue rose 6.00% year on year to RMB1.586 billion (US$239 million), while attributable net profit fell 13.54% to RMB325.8 million (US$49.0 million). Net profit excluding non-recurring items declined 9.46% to RMB333.8 million (US$50.2 million). Compared with the second quarter, reported attributable profit fell approximately 14.3%, while earnings excluding non-recurring items decreased about 12.1%.

Vessel sales also matter when comparing the three quarters. NJTC completed the disposal of four older MR tankers in the first quarter, boosting reported earnings. Quarterly profit excluding non-recurring items was approximately US$53 million, US$57 million and US$50 million in the first, second and third quarters, respectively. That sequence shows an improvement in the second quarter followed by a retreat in the third. A comparison based solely on reported net profit would give greater weight to the disposal gains recognised early in the year.

Operating costs squeeze quarterly margins

The clearest explanation for the third-quarter earnings pressure emerges from the relationship between revenue and operating costs.

For the first nine months, operating costs increased approximately 13.32%, below revenue growth of 14.68%. On a consolidated basis, gross margin improved to approximately 28.86%, compared with 28.00% a year earlier. The cumulative figures therefore still showed an improvement in profitability.

Subtracting the first-half figures from the nine-month results reveals a weaker third quarter. Operating costs were approximately RMB1.162 billion (US$175 million), up about 13.05% year on year—more than twice the rate of revenue growth. Gross margin consequently declined from approximately 31.35% to 26.78%, a reduction of about 4.57 percentage points. Quarterly gross profit fell by approximately RMB44.3 million (US$6.7 million).

The additional revenue generated during the quarter was insufficient to cover the increase in operating costs. This provides a direct financial explanation for part of the earnings decline. The available quarterly disclosures, however, do not provide enough detail to allocate the increase precisely between bunkers, charter hire, drydocking or other expenses. Changes in trading patterns and business mix also mean that higher total costs should not automatically be interpreted as higher costs per tonne transported.

Product tanker strength varies by region and business

NJTC’s results need to be understood within its particular operating structure. The company transports refined products, crude oil, chemicals and gas, with its international product tanker business concentrated mainly east of Suez. Different cargoes, routes and contract arrangements respond differently to the same market disruption. High earnings in the large crude tanker market therefore do not translate directly into equivalent profit growth for an operator with a substantial MR presence.

According to the third-quarter report, international product tanker freight rates were substantially higher year on year during the first nine months, but remained volatile. MR rates softened in July and August compared with the second quarter before rising sharply in September. The Singapore–Australia east coast TC7 route cited by the company averaged approximately US$31,362 per day in time-charter-equivalent earnings over the first nine months, up 56.89% year on year. Its third-quarter average of approximately US$34,333 per day was broadly unchanged from the second quarter.

A strong September market and lower quarterly company earnings can therefore coexist. A route benchmark is a market reference; realised earnings depend on actual voyages, contract pricing, operating days and vessel deployment. The company also reported competitive pressure in other businesses: domestic crude transportation capacity remained generally oversupplied, competition intensified among smaller vessels, and domestic chemical freight rates retreated from earlier highs. These different market conditions feed into the same consolidated income statement.

Cash generation remains positive as capital spending increases

Operating cash flow provided another perspective on the results. Net cash generated from operations was RMB1.295 billion (US$195 million) for the first nine months, down 14.02% year on year, although it remained above attributable net profit.

Cash payments for goods and services increased by approximately US$59.5 million, while tax payments rose by about US$25.9 million. Operating cash outflows grew faster than inflows, explaining why cash generation declined despite higher reported profit. Payment timing and accounting recognition differ, so these cash movements need to be assessed separately from expenses in the income statement.

Capital expenditure increased substantially. Payments for property, plant, equipment, intangible assets and other long-term assets reached RMB969 million (US$146 million), compared with approximately US$35.6 million a year earlier. Construction in progress stood at RMB914 million (US$137 million) at the end of September, up from approximately US$32.2 million at the beginning of the year.

NJTC ended September with cash and bank balances of approximately RMB4.842 billion (US$728 million). Total liabilities represented approximately 11.78% of total assets, leaving financial capacity to support further investment. As construction programmes advance, the relationship between operating cash generation, instalment payments and vessel deliveries will become increasingly important.

MR renewal continues alongside a larger LR2 presence

NJTC’s fleet investment is following two related paths: renewing its established MR fleet and adding larger tankers.

In July, the company approved investment of up to US$182.8 million in four 50,000-dwt MR product and chemical tankers at Guangzhou Shipyard International. The construction contracts were signed on 29 July, with deliveries expected during 2028–2029. The order followed an earlier four-vessel MR package signed with the same yard in September 2024.

On 27 October, the board approved a further proposal for four 115,000-dwt LR2 tankers at Dalian Shipbuilding. The Singapore subsidiary would invest up to RMB1.96 billion (US$295 million), with deliveries scheduled between June and December 2029. The proposal remains subject to shareholder approval. If implemented, it would expand NJTC’s LR2 newbuilding programme at Dalian from the two vessels ordered in 2025 to six.

Larger vessels provide more options for handling different parcel sizes and voyage distances, while increasing the demands on cargo sourcing, customer development and voyage coordination. Both the latest MR programme and the proposed LR2 package incorporate methanol-ready designs, preserving a future conversion option. Any conversion decision will still depend on fuel availability, technical requirements and economics. With deliveries extending into 2029, investment returns will ultimately depend on utilisation, freight markets and operating costs when the vessels enter service.

Yangtze acquisition connects fleet investment with inland logistics

Alongside its seagoing fleet programme, NJTC is strengthening its inland transportation business.

The company completed the acquisition of Nanjing Changjiang Oil Transportation Logistics on 30 October for RMB683.7 million (approximately US$103 million). The transaction brought the business into NJTC’s wholly owned subsidiary structure and ended the previous entrusted-management arrangement. It was completed after the third-quarter reporting period and should therefore be assessed separately from the earnings reported for January–September.

The acquisition is linked to another newbuilding proposal approved on 27 October: ten 4,000-dwt crude oil barges at Hunan Jinhang Shipbuilding. The project carries an investment ceiling of RMB191.72 million (US$28.8 million), with deliveries expected in batches during 2027, subject to shareholder approval. The barges will be equipped with cargo oil pumps to meet self-unloading requirements from petrochemical and refinery customers along the Yangtze River.

The LR2 programme and the river investments address different parts of the transportation chain. Larger tankers broaden the company’s seaborne carrying capability, while the logistics acquisition and new barges strengthen connections to inland refinery customers. Their combined value will depend on how effectively commercial contracts, vessel scheduling and terminal operations are coordinated across those links.

NJTC’s nine-month growth has provided earnings and liquidity to support this investment cycle. The third-quarter margin decline also demonstrates how quickly higher revenue can be absorbed by additional operating costs. As new capacity approaches delivery, the company’s next challenge will be to convert a broader fleet and transportation network into sustained cash generation and competitive returns.

US dollar equivalents are indicative, using RMB6.65 per US$1, rounded from the cross-rate implied by European Central Bank reference rates dated 30 October 2026. Growth rates refer to reported renminbi figures. Quarterly cost and margin calculations use nine-month results less first-half results.