Guolian investors celebrate despite company’s high debt load
China’s top shrimp exporter has improved its attractiveness to investors as low prices collapse the earnings of China’s giant meat companies, usually the key target for investors in China’s food sector.
An average compiled from data China’s Shanghai and Shenzhen stock markets shows Guolian scored a return on assets of 5.9 percent for the third quarter of 2017, compared to an average of 1.6 percent for the entire “agriculture, forestry, livestock, fisheries” category into which Guolian is considered a part of by China’s securities regulators. This compares to a figure of 3.5 percent in the same period last year for Guolian and 4.1 percent for the overall category. Noticeably, China’s huge pork sector has suffered from a cyclical trough in pig prices this year, turning investors in to the sector on to alternatives like Guolian.
However, the company’s debt load has doubled since 2015, inflating its debt to assets ratio. Guolian’s debt now stands at CNY 1.84 billion (USD 277 million, EUR 236 million) on revenue of CNY 3.01 billion (USD 454.1 million, EUR 387.1 million).