Li Yang Aquatic results show strength of demand in China shrimp inputs sector

Published on
September 1, 2020

Guangdong, China-based aquaculture feed and antibiotics producer Li Yang Aquatic has announced its results for 2019, as it also brings a new automated manufacturing plant online and expands its presence in Vietnam.

The company grew its revenues in 2019 by 25 percent to CNY 379 million (USD 53 million, EUR 45.4 million), while profit attributable to shareholders was up 120 percent year-on-year to CNY 27.9 million (USD 3.9 million, EUR 3.3 million). The data is in line with the company’s ambitious expansion of sales teams in key aquaculture regions of China.

However, Li Yang’s results also contains a line that “profits after exceptional deductions” was down 6.5 percent at CNY 26.7 million (USD 3.73 million, EUR 3.20 million). Sales costs were up sharply due to performance-related bonuses paid to sales staff, according to a note to investors.

Li Yang, which is listed on China’s enterprise board for high-growth firms, has borrowed to expand its distribution networks for feed, medicines, and seedlings. It currently operates more than 200 stores in the key southern Chinese shrimp production region of Guangdong, and is seeking to build that network into Southeast Asia.

This summer, the company opened a new highly automated plant in Qingyuan, in the shrimp-farming region of Guangdong. It also established a subsidiary and opened a new distribution center in Longan Province, in Vietnam’s aquaculture belt. The company described the move as one to “increase competitiveness,” while also “sticking to the spirit of the Belt and Road Initiative, China’s blueprint to expand its global footprint.”

In a speech addressing a breeding and nutrition workshop for shrimp farmers in the southerly city of Zhuhai, Li Yang Chairman Ma Jia Hao said the company aims to build on demand for quality shrimp seedlings in China as demand for shrimp continues to recover in the country.

Aside from high growth in revenue, leverage is another feature of Li Yang’s accounts in recent years. Ma Jia Hao, who is also the company’s controlling shareholder, has pledged company shares against borrowings from the Bank of China and Shanghai-based Pudong Development. The bank’s acceptance of shares as collateral suggests a confidence in Liyang’s prospects; however, the extended leverage may prove costlier to service for Liyang should it fail to hit its sales targets.

Photo courtesy of Victor Wu/Shutterstock

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