Zoneco reports huge losses that suggest loss of scallop harvest
Zoneco Group (Zhangzidao Group) may have suffered a catastrophic loss of scallops similar to an event it experienced in 2014, according to Chinese media reports.
Listed on the Shenzhen Stock Market, Zoneco, which is one of China’s largest listed seafood firms by capitalization, has flagged to investors that it expects full-year losses of CNY 530 million to 720 million (USD 84.1 million to 114.2 million, EUR 67.5 million to 91.6 million) for 2017.
With Zoneco valuing its scallops at CNY 2.20 (USD 0.35, EUR 0.28) each, the company’s potential 2017 losses are similar to its revenues for its entire yesso scallop crop in 2015 and 2016. These figures are based on the collateral for a loan Zoneco took from the Agricultural Bank of China for CNY 698 million (USD 110.8 million, EUR88.9 million), which is secured on Yesso scallop mariculture zones near Dalian in northern China.
The company's losses for 2017 are similar to those when the company claimed a mass wipe-out of its scallop crop in 2014 and suggests Zonceco has suffered another "scallop catastrophe," a Beijing News article on the current difficulties posited.
One factor playing in Zoneco's favor is the firm's government roots; its main shareholder is effectively a local government-run investment firm.