English translation of an NBD Article on Yangtze River Port & Logistics

1. From a market cap of tens of billions to its
downfall. What happened to this Wuhan
company listed on the US stock market?
Daily Economic News 2019-03-19 19:29:48
At the end of December 2018, after being targeted by short-selling institutions, Wuhan Newport
Logistics market value “dove”, shrinking to a current value of about 100 million US dollars.
Summary: After the annual report of Wuhan Newport Logistics was released on March 2, a “Daily
Economic News” reporter made a visit and started an investigation. The reporter found out that the
logistics industry park depicted by the company for many years has been suspended for a long time.
In addition, the land and assets involved have been frozen by the court. The court documents even
claimed that the company had no properties available for execution. More importantly, in order to
keep telling the story of its logistics park, the company must have sufficient land resources. Wuhan
Newport Logistics claimed it had 1.2 million square meters of leased land. However, the person in
charge of Wuhan Chunfeng Village repeatedly emphasized to reporters that the lease agreement did
not exist at all. What is the real truth?
“Daily Economic News” reporter Zhibang Wu, “Daily Economic News” editor: Haini Zhang
On April 19, 2017, Wuhan Yangtze River Newport Logistics Co., Ltd. (NASDAQ: YRIV) (hereinafter
referred to as Wuhan Newport Logistics) is listed on the Nasdaq market, and its market value at one
point reached over 4 billion dollars. It was a little bit unique among all the technology and internet

2. stocks in Nasdaq. However, at the end of December 2018, after being targeted by short-selling
institutions, the company’s marked cap “dove”, since shrinking to about 100 million US dollars. There
have been several 10% fluctuations in the stock in the past few trading days.
Reporters from "Daily Economic News" noted that the "diving" of the stock price was because the
outside world started to have doubts about Wuhan Newport logistics’ finances. After Wuhan Newport
Logistics officially released its annual report on March 2nd, the reporter visited and investigated the
company. The reporter found that the company’s proud logistics industry park had been suspended
for many years, and the land and assets involved were also frozen by the court. The court documents
even claim that the company has no properties to execute judgements against. More importantly, in
order to keep telling the story of its logistics park, there must be sufficient land resources. Wuhan
Newport Logistics claimed it has a 1.2 million square meter land lease. However, the village secretary
and committee member of Wuhan Chunfeng Village repeatedly emphasized to reporters that the lease
agreement did not exist at all.
With investors suing and the risk of investigation by foreign regulators, how will the fate of Wuhan
Newport Logistics turn out? The relevant US stock lawyers said: "Right now, the investors have filed
lawsuits in US courts, and the company may also face investigations by foreign regulators."

3. March 7th, 2019, Chunfeng Village Committee. Photo shot by Daily Economic’s reporter:
Zhibang Wu
The “Abandoned Piece“ of a Wealthy Man’s Steel Trading Business
Becomes a Chinese Stock on NASDAQ
On December 23th, 2009, the predecessor of the shell used by Wuhan Newport Logistics was
incorporated in Nevada, USA, and was named Ciglarette International, which mainly engaged in
smokeless cigarettes, though the business at that time was not really profitable. On March 1st, 2011,
the company completed a reverse takeover transaction through the exchange of shares with British
Virgin Islands company Kirin China, which was involved in operating and developing domestic real
estate, and was traded on the US OTC stock market.
On December 19th, 2015, the company became the sole shareholder of Fuying Capital (Hong Kong)
Co., ltd. through a share swap. Fuying Capital (Hong Kong) Co., ltd. also holds 100% of the equity of
Wuhan Yangtze River Newport Logistics Co., ltd. Through the clever "reverse acquisition + transfer

4. listing", Wuhan Newport Logistics officially became a "logistics" stock on the Nasdaq market.
The "Daily Economic News" reporter noted that the predecessor of Wuhan Newport Logistics was
Wuhan Huazhong Iron and Steel Trading Center Co., Ltd., whose shareholders were Wuhan Renhe
Group Co., Ltd., a well-known conglomerate business enterprise in Wuhan whose controller was Geng
Wang, the president of the Shanxi Chamber of Commerce in Hubei Province. He was once named
by the media as one of the four richest people in the Chinese steel trading industry.
According to several media reports, Geng Wang decided to start his business in the early 1990s. He
joined the steel logistics and steel trade industry, and earned his first money by working as an agent
for Wuhan Iron and Steel (Group) Corp. After that, he extended his reach to real estate, culture and
education, steel, energy and high technology. By relying on the steel trade industry, he built Wuhan
Renhe Group Co., ltd. to assets of 5 billion CNY and annual sales of 10 billion CNY.
On the official website of Wuhan Renhe Group Co., Ltd., people can still see information about the
opening of the Wuhan Huazhong Steel Trading Center Co., Ltd. As reported on February 22nd, 2012,
the first phase of the Huazhong Steel Trading Center was building the largest steel logistics base in
Central China. The report indicated that the first phase was completed and would soon be “opening
to customers”. It would be side by side with the Shanghai Baoshan Iron and Steel Exchange Center
and Guangdong Shunde Steel Trading Center as the country's three major steel logistic bases.
On March 7th, the reporter for "Daily Economic News" drove to the Huazhong Iron and Steel
Trading Center located in Xinzhou District of Wuhan City and visited the site. The staff at the door
told the reporter: "This place was indeed called 'Huazhong Steel' before. However, the steel market
was sluggish, so there was no foreign trade here. It was sold to a Hong Kong company later."

5. On March 7th, 2019, the view outside of Huazhong Iron and Steel Trading Center. Photo
Source: photo taken by "Daily Economic News" reporter, Zhibang Wu
There are almost no enterprises in the park that covers hundreds of
acres.
According to records, Wuhan Newport Logistics was originally named Wuhan Huazhong Iron and
Steel Trading Center Co., Ltd. and the Huazhong Steel Trading Center project was officially launched
and pre-sold in 2011.
According to Xinhuanet's report in June 2011, the project had a planned area of 3,200 acres with a
total investment of 3 billion CNY. It planned to integrate steel processing, warehousing, e-commerce,

6. logistics and trading all together as a “five in one” model. The project had eight categories, including
a trading market, indoor and outdoor storage, steel machining, logistics distribution, special docks,
railway express lines, business office centers, and living services. It would implement models such as
“big-shed”, “store-style booth” and “pre-storage and post-storage” for the professional market of the
basic steel industry.
According to further media reports, based on the original plan, the annual steel throughput of
Huazhong Iron and Steel Trading Center aimed to reach 12 million tons with a processing capacity of
1.2 million tons. It planned to accommodate nearly 2,000 steel distributors and add 15,000 new jobs.
Before 2006, the steel market was very prosperous in China, and many steel markets had reached a
point where it was hard to even get in. It was under this background that the Huazhong Steel Trading
Center project was established in 2008. It aimed to build the largest professional steel trading market
in Central China. The market was positioned as one of the top three Chinese steel logistics bases. At
that time, as the king of steel trade, Geng Wang also had high hopes for this project.
However, the Hubei media "Chutian Metropolis Daily" and court judgments show that the Wuhan
Newport logistics project (the Huazhong Steel Trading Center project) should have been opened for
operation on December 18th, 2012. However, there weren’t any steel trading enterprises moving into
the logistics base. Investors who put money into real estate shops were left empty handed, which also
directly led to litigation by many owners and companies. At the end of 2018 there were several lawsuits
involving sales contract disputes.
Looking back at the issue, the company recognized the need to transform as early as 2015. The
company turned its business focus towards “logistics” and transformed the steel trading center into
the Yangtze River Port Logistics Center. According to the Wuhan Newport Logistics official website,
the company is committed to providing office space, professional logistics, bonded logistics, waterway,
railway, and road transport, collective transportation, warehousing and machining, information
processing, trade circulation, logistics and finance. The company combined all these as a whole to
provide a comprehensive service.

7. On March 7th, the reporter saw that the real estate project mentioned by Wuhan Newport Logistics
had been vacant for many years. The project site was located in the south of Hanshi Road in the
Yangluo Economic Development Zone, and at the opposite side the Wuhan Institute of
Bioengineering. The gate of the building was locked by rusty chains. Walking into the sales center next
to the park, giant writing with “Yangtze River Newport Logistics Center” came into the reporter’s
view, but the reporter did not see any salespersons. Some parts of the floor even appeared broken.
The empty hall only had plan drawings and billboards, showing the vision of its construction to the
outside world.
March 7th, 2019, the sales center of the Yangtze River Newport Logistics Center
Photo Source: Photo taken by “Daily Economic News” reporter, Zhibang Wu
Court documents claimed that they have no executable properties
In fact, not only was the logistics park covering hundreds of acres almost stagnant, even worse was
that the company has been involved in many lawsuits and had been included in the list of
untrustworthy companies.
The Xinzhou District Court of Wuhan City, Hubei Province issued an implementation enforcement
ruling in December 2018. According to the ruling documents, the court found that the executor was

8. not at home for a long period of time, and Wuhan Newport Logistics had no executable properties.
Land and other property were frozen by the court and there was no property available for execution.
The "Daily Economic News" reporter noted that the judgements in the cases involving Wuhan
Newport Logistics ranged from several hundred thousand CNY to several hundred million CNY. A
lawyer familiar with the project in Wuhan told the reporter: "Some of the debt disputes involving this
company were caused by the original shareholders, and the amounts are very large. The whole situation
is quite complicated."
The court judgment and commercial documents showed that in addition to the debt problems of
Wuhan Newport Logistics itself, the company has been involved in debt disputes of its former
shareholders including Wuhan Renhe Group Co., Ltd. and its affiliates. For example, in the “Financial
Loan Contract Dispute between China Construction Bank Wuhan Gangcheng Sub-branch and Wuhan
Renhe Real Estate Co., Ltd., Wuhan Yangtze River Newport Logistics Co., Ltd.” issued by the court
on December 8, 2017, China Construction Bank Wuhan Gangcheng Sub-branch issued 5 loans
totaling 180 million CNY to Wuhan Renhe Real Estate Co., Ltd. from May 28th, 2014 to October
31st, 2014. Wuhan Newport Logistics provided guarantees for the above-mentioned borrowings,
stipulating that Wuhan Newport Logistics would use the land use rights in the south of Hanshi Road
in Wuhan Yangluo Economic Development Zone as the mortgage of Wuhan Renhe Real Estate Co.,
Ltd., for all debts under its contract.
Wuhan Newport Logistics claimed in their information disclosures that the former shareholders
promised to take full responsibility for all these loans without seeking assistance from Wuhan Newport
Logistics and had signed a repayment plan with their creditors. However, judging from the court and
business information, Wuhan Renhe Real Estate Co., Ltd., Wuhan Renhe Group Co., Ltd. and others
were all debt-ridden. Because of the large number of debts, they had been listed as untrustworthy
enforcers, and the amount ranges from millions to billions CNY. Whether these shareholders can
fulfill their commitments requires further attention.

9. The Predicament of the Land Lease
According to Wuhan Newport Logistics financials, based on US accounting standards, the company's
current shareholders' equity attributable to the parent company amounted to approximately 171
million US dollars. That number is mainly composed of the commercial real estate that had been built
and the value of untapped land. The company stated that due to land appreciation its value has reached
nearly 600 million US dollars. In addition, in response to the short-selling report much focus has been
placed on Wuhan Newport Logistics land lease agreement of 1.2 million square meters with
“Chunfeng Village, Yangluo Economic Development Zone, Wuhan City, Hubei Province”.
In its clarification announcement the company stated that the initial registration fee for the land use
rights of the six commercial sites totaling 515,600 square meters was 308 million US dollars. The
company calculated the value of its 515,600 square-meters land use right certificate based on its cost.
However, due to the significant appreciation of the local real estate market, the company estimated its
value to be nearly 600 million US dollars. From a geographical perspective, the project was not located
in the commercial areas of the Yangluo Development Zone. According to the information released
by the land transfer network on January 8th this year, the offer for “a commercial and residential land
with 667 acres (about 444,200 square meters) in Wuhan Xinzhou Yangluo” that had 70-year owner
right was 910 million CNY ($135 million US).
Wuhan Newport Logistics also stated in its 2018 annual report that Wuhan Newport Logistics signed
an amended agreement (numbered HZ20150427) with the Wuhan Chunfeng Village on October 8th,
2016. In addition, the company claimed it paid its first year's rent to Chunfeng Village on June 3rd,
2017 or within 5 days after the company's port terminal was approved by the government. The lease
period was claimed to be 20 years and the land area involved was 1.2 million square meters. The lease
not only included the land form Chunfeng Village, but also included the land from Jumin Village and
Jiangdi villages, where Chunfeng village worked as the agent for these two villages.
However, contradicting Wuhan Newport Logistics claims, in the village committee of Chunfeng
Village the secretary of the village and the villagers of Wuhan Chunfeng Village made a different claim
after reading the business information and legal representations of Wuhan Newport Logistics. They

10. told the reporter that “the village has never signed any agreement with the company, and never rented
land to the company. There is no need to help any company falsify claims. Some parts of the village
have already been used by other companies, such as power plants and ‘Wuhan Iron and Steel (Group)
Corporation’."
In fact, the outside world is not only concerned about the authenticity and real asset value of Wuhan
Newport's logistics. What's worse is that in the case of Wuhan Newport Logistics' deep debt dispute,
the company's land and property are waiting to be frozen by the courts. How will these high-value
assets of the company be revitalized in the future, reflecting the company’s claimed value?
Assets are questioned, and the market value is "shrinking"
Let us return to the performance of Wuhan Newport Logistics in the Nasdaq market. After Wuhan
Newport Logistics listed on the Nasdaq market with the “logistics” aura, the company’s share price
soared to 25.47 dollars per share in the fourth quarter of 2017. And the total market value once passed
the 4-billion-dollar mark.
However, with the announcement in December 2018 that Hindenburg Research and other groups
accused the company of undisclosed important information and damages to the interests of the listed
company by its major shareholders and management, the company's share price plummeted. As of 4
o'clock in Beijing time today (March 19th), the company's share price has fallen to 0.621 dollars /
share, with the total market value of 107 million dollars. It is worth mentioning that, previously, the
stock price of Wuhan Newport Logistics has fluctuated around 12 dollars per share for a long time,
with the total market value reaching about 2 billion dollars. According to this calculation, its market
value has shrunk by more than 90%.
Unlike the securities litigation claims in which A shares need to be punished in advance, US stock
investors can file a lawsuit in court without the conclusion of the regulatory authorities. Lawyer Junbo
Hao, who specializes in US stock securities claims told reporters: “Now there are investors filing a
lawsuit in US court."

11. The "Daily Economic News" reporter noted that in its annual report on March 2nd
, Wuhan Newport
Logistics claimed the following: In response to the Hindenburg report, the company filed a lawsuit
for defamation in the New York State Supreme Court on January 23rd, 2019, accusing relevant
institutions and brokers involved of market manipulation. The company claims these institutions
caused damage to the company's reputation.
Junbo Hao said: "Sometimes it’s possible for the lawsuit to be overturned, because now everyone only
has the basic evidence, such as the short seller report in this case. If you want to file a lawsuit, you
need more accurate, concrete legal evidence (such as financial fraud records, important undisclosed
information, etc.) to show that the company has violated the US securities laws. During this process,
it may be found that the original accusation is untenable, then the lawsuit may get rejected or the
investor may withdraw the lawsuit."
It is worth noting that while the market value of Wuhan Newport Logistics has been “diving”, James
Coleman, the company's executive director and chief representative of the company in the United
States, also chose to sell a large number of shares from January to February this year. The selling price
was between 0.33 dollars per share and 2.04 dollars per share.
On March 8, the reporter asked for interviews with Wuhan Newport Logistics on issues related to
land lease, land value and investor litigation. In the office location of Wuhan disclosed by the company
the reporter failed to see any staff from this listed company. There were only a few people who were
at the property, and they seemed very vigilant. They asked the reporter: "Why are you looking for
company staff? What is your purpose?" After that, the reporter requested an interview by phone and
email, but there weren’t any replies by the time of press release.

12. March 7th, 2019, Wuhan Newport Logistics' office in Wuhan
Photo source: photo taken by “Daily Economic News” reporter, Zhibang Wu
Original source: http://www.nbd.com.cn/articles/2019-03-19/1311791.html