Bump in sales, earnings for China’s aquatic feed firms

Published on
July 29, 2014

China’s aquaculture sector appears to be bullish about production this year, judging by fish feed consumption in the first six months. Two of China’s key aquatic feed producers look set to announce positive half-year results, helped by strong demand from a recovering shrimp aquaculture sector as well as strong prices for fish.

Tongwei will announce an expansion in sales in the region of 20-25 percent, with earnings growth of 70 percent while Guangdong Haid has lifted its sales volume by 10-15 percent and will announce earnings growth of 49 percent year on year for the first half of this year — that’s according to a report in the Nangfang Ribao (Southern Daily), an authoritative daily published in Guangzhou, home base of Guangdong Haid and a key sales center for Tongwei, which is headquartered in southwesterly Sichuan province.

Profits of aquaculture producers are up by 20-30 percent according to the Nan Fang Ribao article, which also drew on interviews with analysts at securities firm Shenyin & Wanguo. “Shrimp prices remain high due to shorter supply in the wake of the EMS disease outbreak…this has encouraged farmers to boost production...This is encouraging a very positive outlook for the rest of the year for makers of feed,” according to the Nanfang Ribao.

The note of optimism was echoed in a research note emailed to reporters this week by Shengyin Wanguo. “After two years of losses, optimism appears to be returning to agricultural stocks,” said the note, pointing to an average rise in first-half earnings of 23 percent in 32 listed firms in the agricultural and aquaculture sectors.

New data from authorities in the southern island province of Hainan (a key cultivation zone for tilapia and shrimp) meanwhile offers further evidence of what’s driving demand for aquatic feed. Production of freshwater seafood rose 6 percent year on year in the first half of 2014, according to the provincial agricultural bureau. This means freshwater output now accounts for 22.6 percent of the island’s production of aquatic products. Product landed from local seas meanwhile grew by less than 1 percent in the first half of this year.

Aquatic feed production grew faster than any other category in the first half of the year in the key feed production and consumption region of Guangdong, according to data from the provincial feed producers association under the provincial agricultural department. Aquatic feed accounted for 1.6 million tons of a total 11.1 million tons of feed produced in the first six months of this year. Total Aquatic feed production was up 11.8 percent year on year whereas output of pig feed grew 10.7 percent to 5.5 million tons.

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