Profitability at Shanghai Kaichuang Marine International Co. Ltd has taken a hit due to softer global tuna prices.
Revenues for the first three quarters of 2019 combined rose 17.5 percent year-on-year to CNY 1.67 billion (USD 233 million, EUR 209 million), but profits attributable to shareholders dropped 17.1 percent in the same time frame to CNY 101.44 million (USD 14.1 million, EUR 12.6 million). The company’s share price has gone from an April peak of CNY 13.70 (USD 1.91, EUR 1.71) to currently trade at CNY 10.26 (USD 1.43, EUR 1.28).
Guolian Aquatic, a major producer of shrimp in China, saw a collapse in profits, down 92 percent year-on-year in the first three quarters of 2019, even as revenues rose 8.62 percent over the same period last year. Shares have fallen from CNY 7.24 (USD 1.01, EUR 0.90) to CNY 4.76 (USD 0.66, EUR 0.59). Profits at the firm look skimpy at CNY 18.1 million (USD 2.53 million, EUR 2.27 million) on revenues of CNY 3.76 billion (USD 526 million, EUR 473 million).
Increased costs related to the firm’s expansion into online and fast food supply networks are the cause of Guolian’s fall in profitability, according to Wu Li at Tianfeng Securities, who has a “buy” recommendation on the stock. He sees such a surge in costs as “short-term.
Kaichuang returned profits of CNY 8.6 million (USD 1.20 million, EUR 1.08 million) in the first half of 2019 on revenues of CNY 1.05 billion (USD 147 million, EUR 132 million). In a note to investors, Kaichuang blamed weaker prices for tuna in its export markets as well as expenditures on new vessels for its fall in profitability. It reported it lost CNY 9 million (USD 1.26 million, EUR 1.13 million) on Pantai Foods, its subsidiary in the Marshall Islands, in the first half of 2019. And it acknowledged that its processing arm remains a low-margin business; The firm returned a margin of two percent at Zhoushan Huan Tai Yang Food Processing Co, Kaichuang’s flagship processing concern.
In the face of softer global tuna prices, Kaichuang said it has identified Nigeria as a growth market for its mackerel catch.
