Shenghai rebrands in turnaround attempt in midst of COVID-19 battering

Published on
February 26, 2021

The leading player in China’s seafood snacks industry is desperately trying to recover from a hammer-blow dealt to its sales by the COVID-19 pandemic.

Xiamen-based China Shenghai Group Ltd. (formerly Shenghai Food Holdings Company Limited) has changed its logo as it seeks to recoup sales lost due to the country’s COVID-19-related lockdown last year, which resulted in lower sales and a sharp drop in its share price.

A major buyer of shrimp and squid for its dried seafood snacks business, Shenghai has dropped its “Wo Feng” (it also uses the “Wofan” name in Roman letters) branding for a new “Sheng Hai” brand and logo, which it's also using on its premium-priced gift packages, featuring dried cuttlefish, oysters, scallops, and shrimp.

Shenghai, which claims to be the country’s largest producer of dried seafood snacks – with 200 individual snack products – saw its revenues fall by 50.7 percent year-on-year in the first half of 2020, to CNY 135 million (USD 21.6 million, EUR 17.5 million). Its profits fell by 80 percent and the company posted a loss of CNY 15 million (USD 2.8 million, EUR 2.27 million). The fall-off appears linked to the lockdown in China in the first half of 2020, which battered Shenghai’s sales in retail and transport hubs. The company has also struggled to compete with a wave of new competition in the Chinese snack industry.

Listed on the Stock Exchange of Hong Kong under the numerical code #1676, Shenghai’s shares are currently trading at HKD 0.65 (USD 0.08, EUR 0.07) each, having fallen steadily from a 2018 high of HKD 5.00 (USD 0.65, EUR 0.55).

Shenghai’s sinking stock price belies a bull market in Hong Kong and on the mainland Chinese boards, which has sent the market capitalization of many Chinese seafood firms soaring. The mainland’s key stock market index, the CSI3000 Index, grew by 27 percent in volume in 2020. Hong Kong’s Hang Seng index is up 13 percent in 2021 to-date.

However, Shenghai’s troubles began before the COVID-19 pandemic. The group's revenues fell 29 percent to CNY 472.89 million (USD 75.6 million, EUR 61.4 million) in 2019, with profits falling 60 percent to CNY 30.8 million (USD 4.92 million, EUR 4 million). While the firm has blamed the poor results on rising costs and lower consumer confidence due to the Sino-U.S. trade war, it has also spent capital to build a presence in the retailing and cosmetics sectors.

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