China distant-water flagship Kaichuang soars back to profitability, but subsidy cuts loom
One of China’s leading distant-water fishing firms has confirmed a larger-than-expected 492 percent rise in net profits for the first three quarters of 2018.
Shanghai Kaichuang Marine International Co. Ltd. reported an 11.3 percent year-on-year rise in revenue in the period, to CNY 1.42 billion (USD 209.2 million, EUR 184.4 million). The firm had projected an 11 percent rise in revenues for the first three quarters of 2018 and a 347 percent rise in profit to CNY 122.5 million (USD 18.1 million, EUR 15.9 million).
Yet there are clouds on the horizon for Kaichuang, which received CNY 85.3 million (USD 12.6 million, EUR 11.1 million) in state subsidies in 2017 for its distant-water fishery operations. China’s government has indicated that it will reduce future subsidies to 40 percent of 2014 levels, starting in 2019.
That might explain the company’s diversification into valued-added businesses. The state-owned enterprise recently raised CNY 599 million (USD 88.2 million, EUR 77.8 million) in a non-public issuing of shares, which it could potentially use to continue its move to broaden its base of operations, according to Guotai Junan Securities.
Last year, Kaichuang purchased a majority stake in Canadian seafood processing firm French Creek Seafood Ltd. for USD 5.5 million (EUR 4.7 million).