Fish dealer Qian Hu 3Q18 revenue declines blamed on World Cup, trade war

Singapore one dollar bill

Ornamental and edible fish dealer Qian Hu said on Tuesday that its net profit for the third quarter rose 23.6 percent on-year to S$175,000, despite a drop in revenue, blamed in part on the World Cup, amid higher margins.

Revenue for the quarter ended 30 September fell 4.7 percent on-year to S$21.44 million due to declines in contributions from the fish and accessories segments, partially offset by higher revenue from the plastics segment, it said in a filing to SGX after the market close on Tuesday.

But the fish purveyor said its net profit margin rose to 1.3 percent from 1.2 percent in the year earlier period.

“We have continued to focus on driving efficiency as well as boosting margins. Considering the challenging business landscape, we have done reasonably well,” Kenny Yap, executive chairman and managing director of Qian Hu, said in the statement.

Fish vs World Cup

The fish segment’s revenue in the quarter fell 4.0 percent on-year to S$8.62 million, it said.

“The FIFA World Cup football tournament held in June to July this year has affected the export of our ornamental fish to many countries over the world as it has been the norm that customers do not actively make ornamental fish related purchases during the duration of the tournament,” Qian Hu said in the statement.

It also pointed to Dragon Fish competition.

“The intense price competition from the sales of Dragon Fish since the beginning of the year has resulted in a continuous decline in its selling price, albeit our concerted marketing efforts to sell more quantity of these fish,” Qian Hu added. “This has, to some extent, affected the overall fish revenue contribution.”

Fish revenue also declined 3.9 percent on-quarter, Qian Hu said, noting the summer holidays in Europe affected ornamental-fish sales, as was the norm.

But operating profit from the fish segment rose 9.3 percent on-year in the quarter to S$480,000, while accessories operating profit rose 21.5 percent on-year to S$429,000 and plastics operating profit fell 35.9 percent on-year to S$186,000, it said.

The fish segment profit growth was on “the difference in sales mix, coupled with the reliance and resilience of our ornamental fish export business, which continued to generate respectable profit margins,” Qian Hu said, adding the accessories profit growth was on the effort to sell more of its proprietary-brand products with better margins.

Trade war hits accessories?

Revenue from the accessories segment fell 7.0 percent on-year in the quarter to S$9.71 million, it said.

“Despite our conscientious efforts made to focus on selling more of our proprietary brand of innovative products, our revenue from the accessories export activities was affected by the weakening purchasing sentiments experienced globally,” Qian Hu said.

“Our customers grew to be more vigilant in their procurement requirements citing the volatility of the trading currencies and sentiments were further compounded by the unpredictability on the outcome of the on-going trade war,” it added.

Revenue from the plastics segment rose 1.2 percent on-year in the quarter to S$3.10 million, it said.

For the nine-month period ended 30 September, Qian Hu said its net profit climbed 75.4 percent on-year to S$356,000, while revenue slipped 1.2 percent on-year to S$64.99 million. Its net profit margin for the nine-month period rose to 0.8 percent from 0.7 percent in the year-ago period, it said.

Outlook

Executive Chairman Yap issued an optimistic outlook.

“Moving ahead, we continue to be optimistic about our export business for ornamental fish and accessories, even as we intensify our efforts on achieving excellence in our new edible fish aquaculture business in China,” Yap said. “In addition, we remain steadfast on innovation as we expand our product portfolio through our cutting-edge filtration technology, fish nutrition and genetic breeding of unique varieties of
Dragon Fish.”

In a separate filing on Tuesday, Qian Hu said it had reviewed its options to meet the minimum trading price (MTP) criteria to exit the Singapore Exchange watch-list with 36 months from June 2017, considering current tepid market conditions and global economic uncertainty.

“The board is of the view that it is not the appropriate time to make a decision as to which option will best serve the interests of the shareholders of the company at this point in time,” it said.

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