Top tilapia firm Baiyang Aquatic fails 2014 profit target
Baiyang Aquatic Group, China’s leading processor and exporter of tilapia has reported total revenue for 2014 of CNY 1.78 billion (EUR 254 million; USD 289 million), a year-on-year increase of 31.95 percent. Net profit attributable to shareholders of CNY 57.69 million (EUR 8.07 million; USD 9.23 million) was up a mere 1.45 percent.
The firm has blamed two factors for failing to hit its net profit targets and revenue growth: Multiple new projects in the initial operation failed to fully release capacity while “integrated processing costs and expenses are high and had an impact on the company's overall profitability.”
Meanwhile in the second half of 2014, particularly the fourth quarter, which is peak season for tilapia exports, “some key markets’ currencies depreciated sharply, resulting in weaker purchasing power in the short term. Some customers for tilapia moved to the sidelines, the market price of the orders as a whole fell, and also affected the company's profitability in the second half of the year,” according to the firm in a statement to investors Friday night.
Baiyang reported revenues of CNY 657 million (EUR 91.8 million; USD 105 million) in the first half of the year, an increase of 31.69 percent, while net profit attributable to shareholders totaled CNY 19.34 million, an increase of 26.17 percent on the same period last year. This compares with full-year results for 2013: China’s leading tilapia processor has reported CNY 1.34 billion in revenues, up 15.2 percent year on year. Profits at Baiyang Aquatic however slipped 32.8 percent to CNY 56.8 million in 2013. Baiyang Aquatic in 2012 saw its revenues jump 15.5 percent to CNY 1.2 billion while profits jumped 59 percent to CNY 84 million.
Basic earnings per share of CNY 0.327 were up 1.45 percent in 2014. But investors will continue to watch the debt load at Baiyang. In 2013 growth in revenue, profits and output at Baiyang were all trumped by growth in costs: Operating expenses at Baiyang rose 32.96 percent year-on-year in the first six months. But financial expenses during the period soared by 156.83 percent — a sign of the bank borrowings taken on board by Baiyang as it ramps up capacity.
The firm, which has added significant new processing capacity in the past two years, has pointed to overall “business scale” to support its optimistic view on future revenue and profit growth. Headquartered on Chuangxin Xi Road in Nanning’s New & High-tech Development Zone, the Shenzhen-listed Baiyang Aquatic Group manufactures and sells frozen tilapia products and aquatic feeds but like many Chinese corporations it hedges its bets with investments in real estate and in lending to other corporations and real estate developers.
Baiyang has positioned itself to capitalize on rising demand for aquaculture feed: Feed sales were up 10.91 percent in the first half of the past year at Baiyang, which has a 14.07 percent market share.
Likewise Chinese stock market analysts have been bullish on Baiyang, seeing room to boost production of tilapia, which accounts for over 10 percent of China’s overall food exports. The CNY 2.06 billion-capitalized firm has pledged to remain China’s No. 1 tilapia player. In its 2013 annual report the firm stated its long-term outlook is bright, predicting a long-term substitution of cod and other overfished species by tilapia. It points to the strength of tilapia in the make-up of China's total aquatic exports: Its 403,600 metric tons frozen tilapia counted as the single-biggest species of fish shipped from China in 2013.