Pingtan Marine Enterprise Ltd.
Q2 2017 Earnings Call Transcript

Published: 10 Aug 2017

[Operator:]

Greetings and welcome to the Pingtan Marine Enterprise Second Quarter 2017 financial results. At this time all participants are in a listen-only mode. A brief question-and-answer will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Katherine Yao, Senior Associate of the Equity Group. Thank you Ms. Yao, you may begin.

[Katherine Yao:]

Thanks, Delphine and good morning everyone. Thank you for joining us. [Foreign Language - Chinese] [Interpreted] Copies of the press release announcing the 2017 second quarter financial results are available on Pingtan Marine's website at www.ptmarine.com. [Foreign Language - Chinese] [Interpreted] You are also welcome to contact our office at 212-836-9600 and we will be happy to send you a copy. In addition, this broadcast will be made available at Pingtan Marine's website. [Foreign Language - Chinese] [Interpreted] Before we get started, I would like to remind everyone that this conference call and any accompanying information discussed herein contains certain forward-looking statements within the meaning of the Safe Harbor provision of the Private Securities Litigation Reform Act of 1995. [Foreign Language - Chinese] [Interpreted] Investors are cautioned that such forward-looking statements involve risks and uncertainties that may affect Pingtan Marine's business and prospects and results of operation. Such risks are fully detailed in Pingtan Marine's filings with the Securities and Exchange Commission. [Foreign Language - Chinese] [Interpreted] I would now like to take a moment to outline the format for today's call. In order to take care of all conference call participants, this call will be conducted in both English and Chinese. First of all, the company's Chairman and CEO, Mr. Xinrong Zhuo, will read a prepared opening statement in Mandarin, which I will then read in English. I will then turn the conference call to Mr. Roy Yu, Pingtan Marine's CFO, who will continue with the presentation. When he is finished, we will open the floor for questions. [Foreign Language - Chinese] [Interpreted] For the question-and-answer session, please allow us a moment to translate the questions and then we will respond to everyone on the call in both English and Chinese. [Foreign Language - Chinese] [Interpreted] With that, I would now like to invite Pingtan Marine's Chairman and CEO Mr. Xinrong Zhuo.

[Xinrong Zhuo:]

[Foreign Language - Chinese] [Interpreted] Good morning. Thanks for joining our 2017 second quarter conference call. [Foreign Language - Chinese] [Interpreted] We are pleased to continue to deliver strong operating and financial results through our increased operating fishing vessels, and the business expansion since the second half of 2016. And we have consecutively exceeded our previous provided EPS guidance for the quarter of between $0.08 and $0.10 with EPS of $0.11. [Foreign Language - Chinese] [Interpreted] The second quarter of 2017 was a milestone for Pingtan. As we recently announced that Pingtan signed a strategic co-operation framework agreement with one of China's largest e-commerce retailer JD.com. Through this strategic co-operation Pingtan will serve as an exclusive supplier for ribbonfish, tiger prawn and conger eel products harvested from the Arafura Sea, the Bay of Bengal and the Indo-Pacific Waters for JD's fresh food. And, we'll work together with JD on the continuous innovation of online seafood retail business model. We believe the cooperation with JD will lay a solid foundation for Pingtan to further penetrate into the food consumer market, and JD's vast online platform would generate tremendous publicity for Pingtan's brand nationwide. [Foreign Language - Chinese] [Interpreted] Meanwhile, we remain focused on expanding our fishing business by continuously seeking new fishing territories and new types of fishing vessels that harvest higher margin products. As, always we keep our investors apprised of our development and we welcome any open suggestions and introduction. [Foreign Language - Chinese] [Interpreted] On July 15, we have announced 2017 second quarter cash dividend as our eleventh consecutive quarterly dividend of $0.01 per share of common stock outstanding to shareholders have record on July 31, 2017 and the dividend will be paid on cash, on or above August 15 next week. [Foreign Language - Chinese] [Interpreted] Pingtan intends to continue paying quarterly cash dividend to share our confidence and commitment to steady reward our investor and expect to adjust the quarterly dividend grade in accordance with our earning performance. [Foreign Language - Chinese] [Interpreted] With that I would like to turn the call over to our CFO, to report 2017 second quarter financial results. On behalf of our company, I look forward to meeting our investors in person and as always welcome to our facilities in Fuzhou and take a tour. Thank you.

[Katherine Yao:]

I would now like to turn the call over to Mr. Roy Yu, Chief Financial Officer, of Pingtan Marine Enterprise. [Foreign Language - Chinese]

[Roy Yu:]

Thanks, Katherine. Good morning and welcome everyone. Today I will discuss Pingtan Marine's 2017 second quarter operation and financial results. [Foreign Language - Chinese] We currently operate 140 fishing vessels, 13 are operating in the Pacific waters, 12 are operating in Bay of Bengal in India, nine are operating in international waters, two are under renovation and will be replaced with two new vessels and the remaining vessels are in Indonesia, but temporarily not operating due to the moratorium. [Foreign Language - Chinese] Now, I would like to move to financial results. [Foreign Language - Chinese] For the second quarter of 2017, our sales volumes were 8.81 million kilograms, increased 1,069% from 0.75 million kilograms in the second quarter of 2016. [Foreign Language - Chinese] Pingtan reports its revenues for three months ended June 30, 2017 at $35.7 million, increased 1,596% from $2.1 million for the same period in 2016. The increase was mainly attributable to our business expansion resulting from more fishing vessels placed in operation. [Foreign Language - Chinese] For the second quarter of 2017, gross profit was $11.1 million compared to gross loss of $3 million in the prior year period. [Foreign Language - Chinese] The gross margin increased to 31.2% for three months ended June 30, 2017, from minus 144.5% in the same period in the prior year. The significant increase was primarily due to the decrease in our unit production cost for fish resulting from the increase in our fishing activities by deploying more fishing vessels into operation. [Foreign Language - Chinese] Our selling expense mainly include shipping and handling fees, insurance, customs service charge, storage fees and advertising expenses. Our sales activities are conducted through direct selling by our internal sales staff. Because of the strong demand for our products and services, we do not have to aggressively market and distribute our products. As a result, our selling expenses have been relatively small as a percentage of our revenue. [Foreign Language - Chinese] For the second quarter of 2017, selling expenses was $ 0.2 million, compared to $0.1 million in the prior year period. [Foreign Language - Chinese] For the three months ended June 30, 2017, our general and administrative expenses were $1.3 million, compared to $0.9 million in the prior year period. [Foreign Language - Chinese] Pingtan reported a net income attributable to owners of the company of $9 million for the second quarter of 2017 or $0.11 for basic and diluted share compared to net loss attributable to owners of the company of 4.2 million or minus $0.05 per basic and diluted shares in the prior year period. [Foreign Language - Chinese] For the six months ended June 30, 2017, Pingtan's revenues were $41.4 million compared to $6.2 million in the first half of 2016. [Foreign Language - Chinese] Net income attributable to owners of the company for the first half of 2017 was $18.9 million or $0.24 per basic and diluted share compared to net loss attributable to owners of the company of $9.3 million or minus $0.12 per basic and diluted share in the first half of 2016. [Foreign Language - Chinese] On the balance sheet, as of June 30, 2017, Pingtan's cash and cash equivalents were $11.4 million, total assets were $213.7 million, total long-term debt was $19.5 million and shareholder's equity was $132.4 million, compared to $0.8 million, $226.5 million, $21.9 million and $139.7 million respectively at December 31, 2016. [Foreign Language - Chinese] We remain focused on all aspects of business extension to further solidify our industry leading position by expanding our fishing territory, to increase production capacity and extend product categories, to speed up the construction of our processing factory to enter the sea food deep processing market, and to further export e-commerce retail business model to reach directly to end customers, while addressing existing customers to avail new distribution channels across China. [Foreign Language - Chinese]

[Katherine Yao:]

With that operator let's start the Q&A. For the question-and-answer session, please allow us a moment to translate the questions and then we will respond to everyone on the call in both English and Chinese. [Foreign Language - Chinese]

[Operator:]

Thank you. We will now be conducting a question-and-answer session. [Operator Instructions] It appears we have no questions at this time. I'd like to turn this call over to management for closing comments.

[Roy Yu:]

Okay, thanks again to all of you for joining us today. We look forward to speaking with you again in November, after we report our third quarter financial results. [Foreign Language - Chinese] As always, we welcome any visitors to our office in Fuzhou, China. Thank you very much. [Foreign Language - Chinese]

[Operator:]

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.