Tianma reports higher profits on expansion into eel aquaculture

Fujian Tianma Science and Technology Group Co. booked a 49 percent increase in revenue in 2020, with sales totaling CNY 3.63 billion (USD 544 million, EUR 471 million).

The company, China’s leading producer of eel feed, also reported that its profitability rose by 21 percent to CNY 68.9 million (USD 10.3 million, EUR 8.9 million).

The data appears to justify Tianma’s expansion of its eel-cultivation business, with the firm seeking to diversify away from the highly competitive feed business by producing eels for a growing domestic market. The company also produces chicken and pig feed.

China’s aquaculture feed output dropped by 3.6 percent in 2020, totaling 21.3 million metric tons (MT). China’s overall feed output – which reached 252.7 million MT in 2020 – was up 10.4 percent, of which pig feed accounted for 89.2 million MT, up 16.4 percent year-on-year, reflecting a rebound in China’s pig sales and prices after a devastating outbreak of African swine flu.

Tianma also produces feed for other premium niche species like yellow croaker, but in its annual report, its feed business remains low margin, according to Lu Jia Rui, an analyst at Guosen Securities.

“More and more poultry feed companies are entering the aquaculture sector. It’s very, very competitive,” Lu told SeafoodSource.

Consolidation is inevitable, according to Lu. He has a “buy” recommendation on the Tianma stock and, in a recent analysis, he pointed to the space for eel consumption to grow as the rationale for his bullish outlook. Margins for eel production are high at 30 percent, according to Lu. A shortage of quality seed will limit the growth in eel output, keeping a floor under prices and demand. 

Last October, Tianma raised CNY 560 million (USD 84 million, EUR 72.8 million) on the Shanghai Stock Exchange to add 3,850 MT of extra farmed eel per year to its aquaculture output. 

Tianma’s annual report paints a bleak picture of the Chinese seafood processing sector, pointing to low profitability, overcapacity, and an absence of powerful brands to push consumption. The sector is “very fragmented” and a focus on costs means a “low capacity for quality assurance,” the company said in its report.

Photo courtesy of Fujian Tianma Science and Technology Group Co.

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