Pingtan Marine is betting it can increase its earnings by eliminating distribution middlemen and selling directly from a new processing and distribution center it is nearly finished building in southern China.
The company, which is listed on the NASDAQ stock exchange, operates 89 trawlers globally through a subsidiary, Fujian Provincial Pingtan County Ocean Fishing Group Co. Ltd. It owns a 20 percent stake in Global Deep Ocean Fishing (Pingtan) Industry Co. Ltd. (GDOF), which is nearly finished with its construction of the Pingtan International Marine Industry and Logistics Park, located in the Pingtan Comprehensive Experimental Zone in Fujian Province. When complete, the facility will have a subzero and low-temperature freezing center, a fish processing plant, a distribution center, and an office complex. The firm announced in 2018 that the project would cost CNY 517 million (USD 71 million, EUR 67 million) to build. The 40,000-square-meter space will give Pingtan capacity to process 100,000 metric tons of seafood annually.
“The Marine Industry Park will become the consigned fish processing base of Pingtan, responsible for processing, packaging, and distributing Pingtan's retail products,” Pingtan Marine Chairman and CEO Xinrong Zhuo said in a press release. “The park will have a significant positive impact on our earnings in 2021."
Vertical integration has been a long-term goal of Pingtan, and the new facility helps accelerate that effort, Zhuo said, with the goal of moving products from catching to processing to selling directly to consumers. Zhuo said he expected the move to help the company’s earnings – in August, it reported a loss of USD 1.7 million (EUR 1.42 million) for the first half of 2020 on revenues of USD 23.5 million (EUR 19.7 million).
The new distribution center will help the company move into the direct-to-retail market, with Pingtan planning to directly sell its processed catches to Chinese consumers through online and offline channels, Zhuo said.
"Pingtan International Marine Industry and Logistics Park is a key step of the company's long-term growth strategy and an important link to start the direct-to-retail business,” he said. “We have spent years in preparing for the company's vertical integration. We have reached a consensus with GDOF that the Marine Industry Park will become the consigned fish processing base of Pingtan, responsible for processing, packaging and distributing Pingtan's retail products.”
Pingtan will soon have more products coming in, as it recently received permission to reenter Indonesian waters, following a change in the Indonesian government’s policy. Pingtan vessels also recorded hauls of squid from off the Ecuadorian coast this summer.
Pingtan owns 21 of the vessels near the Galápagos, “almost all built in 2019,” according to a report from the El Universo newspaper. The vessels, most sized at over 55 meters in length, were located off Peru last year, but this year have congregated around the Galápagos exclusion zone, said Alfonso Miranda, president of Calamasur, a representative body for Latin American fishery firms. Miranda told El Universo he considers the Chinese fleet “permanently bad students” of the international organizations regulating fishing. Of the longline fleet overseen by the International Tropical Tuna Convention (CIAT), 413 vessels are Chinese, while 193 are South Korean, 189 are Japanese, and 22 are Ecuadorian.
Photo courtesy of Pingtan Marine
