Leading Chinese seafood firm Zhangzidao Group Co., Ltd has disclosed that it was questioned on its stated profit levels for the first half of 2015 by the Shenzhen Stock Exchange, on which the firm has listed. Zhangzidao posted revenues of CNY 13.01 billion (USD million, EUR million) for the first six months of the year – up 4.36 percent – while its gross margin at 16.5 percent was down 5.5 percent. But net profit attributable to shareholders tumbled by 95.81 percent on the same period last year.
Zhangzidao has disclosed in a statement to investors the list of questions in an “inquiry letter” received from the exchange in late September and has also listed the replies to said questions. As for the collapse in net profit, Zhangzidao said this was due to the ongoing recovery of its maritime scallop farms as well as ongoing investments in online sales channels and exchange rate fluctuations. Likewise, bank loans increased year on year, resulting in a massive CNY 372 billion (USD 58.6 billion, EUR 51.4 billion) increase in financial expenses, which now stand at CNY 1.1 billion (USD 173.4 million, EUR 151.9 million).
Asked to contextualize its performance with other similar companies in the seafood industry, Zhangzidao stated in its reply (also released to investors) that its revenue for the period was within 0.71 percent of the average for similar companies while the company’s profit margin was within 14.05 percent of the average for similar companies.
Its reply to a question on the company’s corporate structure also reveals the scale and complexity of Zhangzidao. While the main Zhangzidao Group Limited focuses on farming scallops and seedlings another firm Zhangzidao Group (Rongcheng) Co., Ltd focuses on sea cucumber cultivation along with abalone and seaweed farming. Zhangzidao Fishery Group Co., Ltd handles the company’s business in the Korean Peninsula – it lost CNY 590 million (USD 93 million, EUR 81.5 million) in the first half of the year.
Among the new businesses set up by the group, Zhangzidao Central Refrigerated Logistics Co., Ltd was set up in February 2014. Its customers “grew steadily” though the firm lost CNY 401 million (USD 63.2 million, EUR 55.4 million) in the past half year. Zhangzidao Yamaha (Dalian) Co., Ltd meanwhile is a joint venture with Japan-based Yamaha focused on shipbuilding and engines.
Among the several new cold chain logistics firms set up by the group Zhangzidao Kam Tong (Dalian) Cold Chain Logistics Limited made a total of CNY 1.44 million (USD 226,920, EUR 198,947), an increase of 37.76 percent, in the first half of the year. Zhangzidao’s venture into sea-themed tourism in recent years hasn’t yet worked out. Dalian Changshan Islands Ferry Co Ltd and Dalian Changshan Islands Changhai County Tourism Co lost CNY 442 million (USD 69.7 million, EUR 61.1 million) and CNY 404 million (USD 63.7 million, EUR 55.8 million), according to the firm’s reply to the Shenzhen exchange.
Dalian Zhangzidao Fishery Co Ltd deals with processing while a separate subsidiary Dalian Xiang Xiang Food Co., Ltd is mainly engaged in tuna processing. The firm’s seafood importing operation, Dalian Zhangzidao-Yuan Food Co Ltd made a profit of CNY 8.22 million (USD 1.3 million, EUR 1.1 million). Among the other firms in the group Zhangzidao Group Shanghai Ocean Food Co Ltd is responsible for sales of Boston lobster, Dungeness crab and other foreign live seafood.
