CHINA FISHERY FY2007 NET PROFIT SOARS 84.5%; EXPECTS STRONGER FY2008 AHEAD
Continued top- and bottom-line growth with enlarged trawling fleet in the Pacific Ocean and fishmeal operations in Peru
• Proposes final dividend of 2.19 Singapore cents per share, on top of interim dividend of 3.29 Singapore cents per share; total payout represents one third of FY2007 earnings
• Expects stronger FY2008 with higher catch volumes in existing fishing grounds and contribution from new South Pacific Ocean operations
Singapore, 14 February 2008 – Singapore Exchange Mainboard-listed industrial fishing company China Fishery Group Limited ("China Fishery" or the "Group") (SGX: B0Z.SI) announced today strong results for the financial year ended 31 December 2007 ("FY2007") that underlined the successful execution of its expansion strategies in FY2007 amidst continued strong global demand for fish and fishery products.
In FY2007, China Fishery more than doubled Group earnings before interests, tax, depreciation and amortisation with a 111.4% year-on-year increase to US$147.5 million from US$69.7 million. This was achieved on the back of a revenue growth of 160.4% to US$406.4 million from US$156.0 million. After accounting for all expenses, net profit soared 84.5% to US$88.5 million from US$48.0 million a year ago.
With this result, the Group posted three-year revenue and net profit compounded annual growth rates of 111.8% and 69.9%, respectively. These results reflect the effects of the growth initiatives undertaken by China Fishery in FY2007, which included enlarging the scale of its trawling operations, as well as acquisitive activities in its Peruvian fishmeal processing business. The Group’s trawling and fishmeal operations accounted for 71.3% and 28.7% of FY2007 revenue respectively. The People’s Republic of China (the "PRC") remained China Fishery’s largest market, accounting for 53.7% of total revenue.
The Group increased its trawling capacity in FY2007 through signing on its 3rd and 4th Vessel Operating Agreements ("VOAs") in January 2007. These VOAs enlarged China Fishery’s trawling fleet size from 14 to 23 supertrawlers, and also significantly increased its harvesting capacity in the Pacific Ocean.
Riding on acquisition opportunities in the world’s largest wild-catch fishery – Peru – the Group also expanded its Peruvian fishmeal operations with the acquisition of 3 fishmeal plants and 16 purse seine fishing vessels in FY2007. These acquisitions boosted the Group’s fish hold capacity from 5,228 m3 as at the end of FY2006 to 9,395 m3 at present, representing 5.3% of the total industry steel vessel fishing capacity in Peru. The Group also increased its fishmeal processing capacity from 381 tons/hr to 545 tons/hr in the same period, representing 6.1% of the total processing capacity in Peru.
In line with the China Fishery’s dividend policy, the Board of Directors is proposing a final dividend of 2.19 Singapore cents per ordinary share, on top of an interim dividend of 3.29 Singapore cents, bringing total dividend to be paid out for FY2007 to 5.48 Singapore cents, or one third of China Fishery’s full-year earnings.
Commenting on the Group’s performance, Group Managing Director Mr Ng Joo Siang said, "We are pleased to have delivered yet another year of strong revenue and profit growth. We endeavour to consistently introduce new growth drivers to our business, so as to create more long-term value for both our equity and bond holders."
Group Outlook
The Group sees that global demand for ocean-caught fish will remain strong in FY2008 and beyond. In particular, demand for Alaskan Pollock – one of the Group’s key fish species – is expected to continue rising due to its versatility and relative affordability.
In its trawling operations, the Group expects to deliver a higher volume of fish catch from the fishing grounds that it currently operates in this year. The Group is also in active negotiation to restructure the terms of the 4th VOA from a daily rental hire to a prepaid charter hire basis. When concluded, this will bring about significant annual savings to charter hire attributable under the 4th VOA.
At the same time, China Fishery will continue to execute its strategy of securing more long-term access to fishery resources, by enlarging its fishing fleet through more VOAs or acquisitions, or by making inroads to relatively unexplored new fishing grounds, such as those in the South Pacific Ocean.
To this end, the Group expects to deploy 3 upgraded supertrawlers for fishing operations in the South Pacific Ocean in the second quarter of FY2008 and gain early mover advantage in this fishing ground.
"Apart from opening up a new and potentially important revenue stream, we hope to realise our objective of promoting the consumption of relatively underutilised fish species, especially in developing markets where there is a growing need for affordable and accessible animal protein," said Mr Ng.
With respect to its fishmeal business, the Group expects needs from animal-farming and aquaculture industries in the PRC to continue to sustain demand for fishmeal in 2008. Fishmeal is an essential component of animal and aquaculture feeds.
Following the rapid expansion of China Fishery’s Peruvian operations in FY2007, management focus for these operations in FY2008 will be on increasing production volumes and enhancing operational efficiencies. The Group’s now-larger purse seiner fleet will allow it to harvest more fish for raw material purposes, while having more fishmeal plants will increase the number of discharging locations that the Group’s fleet can have access to during fishing activities, thereby reducing fishing turnaround time and enhancing fleet efficiency, giving the Group greater competitive edge under Peru’s fishing system.
