Zhanjiang, China-based shrimp firm Guolian Aquatic has reported a recovery in profitability as investments it made in food processing have begun to pay off.
The firm, which recorded net losses in each of the past two years, is reporting in the first three quarters it made revenues of CNY 3.3 billion (USD 495 million, EUR 429 million), down 4.83 percent, but profits rose 108 percent to CNY 11.1 million (USD 1.6 million, EUR 1.4 million). Profits for the third quarter totaled CNY 991,000 (USD 149,000, EUR 129,000) – up 104 percent year-over-year, which appears modest given the scale of Guolian’s investments in recent years to expand its product ranges in the domestic market.
Guolian has invested heavily in processing capacity seeking to supply convenience dining chains and retailers with products like breaded shrimp burgers and dumplings. It has also sought a share of the growing market for crayfish in China, and has become an importer of shrimp. With China’s shrimp imports rising 72 percent year-on-year in August to 50,000 tons, Guolian is aiming to become a bigger player in China’s domestic shrimp market. In 2020, 52 percent of shrimp imported by China came from Ecuador and 34 percent came from India.
A report on the company published by Guotai Securities earlier this year pointed to the long-term benefits of the Guolian’s investments in increasing its capacity to make products suited to China’s growing e-commerce scene. But the company’s share price is under pressure – it dropped from high of CNY 7.09 (USD 1.06, EUR 0.92) in December 2020 to its current CNY 3.93 (USD 0.58, EUR 0.51) – and the report noted it is still questionable whether Guolian’s capital-intensive investments result in the form of long-term profitability.
Photo courtesy of Guolian Aquatic
