China’s leading tilapia player Baiyang Aquatic Group has moved to change its name to reflect a shift from seafood to healthcare products.
An investors’ meeting called by the listed aquaculture and feed group approved a name change from Baiyang Aquatic Group to the Baiyang Industrial Investment Group Co – a move which reflects the company’s move into other industries such as healthcare products.
An official note from the company to the stock market pointed to the declining profitability as a reason for increased focus on the production of healthcare solutions such as collagen as well as ammonia capsules. The company also said it hopes that its new name will attract a wider pool of investors to its shares.
Baiyang also announced it is raising CNY 290 million through a private placing of shares to fund the expansion of its new healthcare subsidiary, Guangxi Jia Ying Biotech Co. The move was welcomed by stocks analysts with Pingan Securities issuing a note predicting that “increased scale” and diversification would offer “new points of growth” and shield the company from exposure to weak seafood export markets.
In its own announcement of the name change Baiyang point to 2014 results: the firm had revenues of CNY 1.78 billion, up 31.95 percent year on year but profits for the year fell 0.83 percent – a figure the firms blamed on weaker export demand.
The change in focus and name by Baiyang will pose questions over the viability of China’s tilapia sector, which has attempted to move away from a dependency on exports to expanding the domestic market. Baiyang earlier reported that profits for the third quarter fell 20 percent to CNY 29 million – a figure the firm blamed on higher inventories.
While Baiyang has invested in the costly process of expanding cold chain distribution networks the firm hasn’t been able to see an immediate pay-back in its financial results. But the firm’s fish feed business has proven profitable: Baiyang’s overall third quarter (2015) revenues 11 percent to CNY 128.5 million thanks to strong sales for fish feed, according a document sent to investors.
Some industry watchers will nonetheless be puzzled by Baiyang’s name change move given that Baiyang last year announced a significant expansion of its tilapia operations. As part of its stated goal to become the world’s dominant tilapia integrated player, Baiyang set up a wholly owned subsidiary, Bai Jia Co, to operate a new plant with 15,400 tons annually of tilapia processing capacity.
Located in the city of Beilu in Guangxi province, the RMB10.8 million plant is part of company boss Sun Zhongyi’s stated goal of building up the company’s competitiveness though increased scale. Sun said at the Bailu plan’t opening that he wants to capitalize by locating the plant on the border of Guangxi and Guangzhou provinces, tapping key tilapia farming regions like Luchuan and Bobai in easterly Guangxi and Gaozhou and Xinyi in westerly Guangzhou.