Turmoil continues to engulf Chinese seafood firm Zoneco Aquatic Group (also known as Zhangzidao), once the most valuable firm in the sector on China’s stock market.
The company, with activities spanning the range from scallops farming to distribution of imported seafood, announced revenues of CNY 2.72 billion (USD 391.1 million, EUR 352.7 million) for 2019 with a loss of CNY 399 million (USD 57.3 million, EUR 51.7 million) representing a collapse in profitability of 1,341 percent.
Now, an ugly row has cropped up between Zoneco lawyers and a key shareholder seeking to oust management at an extraordinary general meeting scheduled for this week. Investment firm Beijing Ji Rong Yuan Tong Investment Management Co. holds an 8 percent stake in Zoneco through its Dao Yi Hao Securities Investment Fund, but said that it has lost confidence in Zoneco Chairman Wu Hougang after the value of its investment dropped 75 percent. Ji Rong Yuan Tong invested CNY 467 million (USD 67.2 million, EUR 60.5 million) in Zhangzidao in 2016 at a share price of CNY 7.89 (USD 1.13, EUR 1.02), but Zoneco shares are now trading at a 10-year low of around CNY 2.46 (USD 0.35, EUR 0.32) on 2 March.
Zoneco, which is listed as Zhangzidao Group Co., has been on a financial rollercoaster ride in recent years stemming from several die-offs of its scallop seedlings. The first major catastrophe befell Zoneco in 2014, when it lost nearly all of its scallops in the water, blaming high water temperatures. And Zoneco flagged additional losses in November, announcing up to 80 percent of its scallop stocks had been lost due to changes in water temperature.
Zoneco’s financial results in recent years have become “too terrible to endure,” a Ji Rong Yuan executive said in a briefing to financial media late last year.
Zoneco’s troubles have turned many private investors in China away the seafood sector, with state-owned conglomerates buying up troubled private seafood firms in recent months.
