Baiyang diversifies further away from tilapia, buying education group

Published on
June 7, 2017

China’s leading tilapia exporter continues its diversification strategy with the announcement this week that it’s completed the CNY 560 million (USD 82.4 million, EUR 73.2 million) purchase of digital education group Huo Xing Shi Dai.

With the deal, Baiyang Investment Group, which changed its name from Baiyang Aquatic two years ago as part of a diversification strategy, is moving further away from its one-time core aquaculture business. The acquisition is being paid for by a share issue to controlling shareholder Sun Zhongzi and 10 other leading shareholders –these are not named, but the company’s minority shareholders include several key executives and leading state lenders Bank of China and the Industrial and Commercial Bank of China. 

Seafood stocks appear in favor with Chinese securities brokers this summer. Trading this week at CNY 19.5 (USD 2.87, EUR 2.55) as of 7 June, leading tilapia exporter Baiyang Investment is outperforming the rest of the Shanghai exchange. Its price was up 4.05 percent compared to a 1.02 percent average rise for all stocks on the exchange. 

But Baiyang earnings per share were slack at CNY 0.34 versus CNY 0.47 for the Shanghai average. And the price to earnings ratio for Baiyang stock is an alarming 57.1 compared to an average 13.91 for the overall Shanghai exchange. But crucially Baiyang’s performance also looks very good next to averages for Shanghai-listed engineering and construction firms – many of which have in recent years been piling into seafood distribution in chase of higher margins as the Chines economy gradually slows.  

Rising Chinese consumption of seafood is one reason why most analysts have a “buy” recommendation on Baiyang stock. Guo Jin Securities has a target price of CNY 30.5 (USD 4.49, EUR 3.98) on the stock, suggesting confidence in future growth. 

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