Ornamental fish breeder Qian Hu reported Wednesday its third quarter net profit surged 72 percent on-year to S$301,000, despite the long-running dragon fish price war pushing down revenue, on better sales of higher margin edible fish.
Revenue for the quarter ended 30 September dropped 10.2 percent on-year to S$19.24 million on lower sales in the fish and accessories segments, the fish breeder said in a filing to SGX.
“We are encouraged by the continued positive performance of our aquaculture business, in spite of the challenging business landscape across the globe. In the quarters ahead, we also hope to see the positive benefits from restructuring our accessories operations in China,” Kenny Yap, executive chairman and managing director, said in the statement.
“Barring unforeseen circumstances, we remain on track to becoming the world’s largest ornamental fish company,” Yap added.
Fish revenue for the quarter dropped 12.6 percent on-year to S$7.54 million, Qian Hu said.
“With the improved revenue generated from the aquaculture business in the Hainan Province (China), as well as our continuous efforts to increase our export of ornamental fish by diversifying to more customers and more countries around the world from our export hubs in
Singapore, Malaysia, Thailand and Indonesia, it had given rise to a positive growth in our fish revenue contribution,” Qian Hu said in the statement.
“The improvement, however, was offset by the intense price competition from the sales of Dragon Fish since the previous financial year, which had resulted in a continuous decline in its selling price throughout the year,” it added.
However, the fish segment’s operating profit rose 16.7 percent to S$560,000 on higher contributions from the aquaculture business, which had improved margins, the filing said.
On an on-quarter basis, the fish segment revenue slipped 1 percent, Qian Hu said.
“This is mainly due to the summer holidays in Europe, which started in June and will extend till early September. Our ornamental fish export was affected as it has been the norm that our European customers will mostly take off for their own vacation and do not actively make ornamental fish related purchases during the duration of the holiday season,” Qian Hu said.
Accessories revenue dropped 11.4 percent on-year in the quarter to S$8.61 million, after the disposal of the Shanghai subsidiary in the fourth quarter of last year as China operations were streamlines, Qian Hu said.
“Accessories exports were also affected by the weak purchasing sentiments around the world led by the volatility of trading currencies and the on-going trade tension between United States and China,” the fish breeder said.
Those issues also weighed the accessories operating profit, which fell 19.6 percent on-year to S$345,000, Qian Hu said.
Plastics revenue slipped 0.3 percent on-year to S$3.10 million for the quarter, while the segment’s operating profit jumped 60.8 percent on-year to S$299,000 on improved profit margins and a different sales mix, the filing said.
For the nine-month period, Qian Hu reported net profit jumped 61.2 percent on-year to S$574,000 on revenue of S$57.31 million, down 11.8 percent on-year.
In its outlook, Qian Hu said the business landscape remained challenging.
“We will continue to focus on innovation to expand our pipeline of compelling products particularly in the areas of filtration, fish nutrition and genetic breeding of unique Dragon Fish, as well as the sustainable farming of edible fish fingerlings for the China consumer market while actively increasing the number of export markets for seafood products,” the company said.