Pingtan Marine Enterprise Ltd.
Q3 2017 Earnings Call Transcript

Published: 11 Nov 2017

[Operator:]

Greetings and welcome to the Pingtan Marine Enterprise Third Quarter 2017 financial results. [Operator Instructions]. It is now my pleasure to introduce your host, Ms. Katherine Yao of the Equity Group. You will read a safe harbor statement and an introduction. Thank you. You may begin.

[Katherine Yao:]

Thanks, and good morning everyone. Thank you for joining us. Copies of the press release announcing the 2017 third quarter financial results are available on Pingtan Marine's website at www.ptmarine.com. 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. 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. 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. 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. 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. With that, I would now like to read the opening statements from Pingtan Marine's Chairman and CEO Mr. Xinrong Zhuo. Please go ahead.

[Xinrong Zhuo:]

Good morning and thanks for joining our 2017 third quarter conference call. We are pleased to continue deliver strong operating and financial results despite a longer summer fishing offseason this year and we were able to achieve quarter EPS of $0.08. These results are outcome of management's dedication to business expansion benefited from increasing or operating vessels and fishing territory. Pingtan also continue to explore new sales channel and secure a number of strategic cooperation agreements with major restaurant chain and e-commerce entities including one of the China's top ecommerce retailer, JD.com. As was announced to this [indiscernible] strategic cooperation with JD.com, Pingtan will serve as an exclusive sole-supplier of JD vessels for [indiscernible] products harvested from our [indiscernible] sea and the Bay of Bengal and the Indo-Pacific. Pingtan and the cooperation with JD on the continuous generation of our retail business model where we're now working closely with JD's chain to finalize all the cooperation work to launch our fishing products online and we anticipate achieving good performance from e-commerce sales in the next quarter period. The second largest aquatic fish vessel [ph] in China, Pingtan also faces various challenges due to various factors that we didn’t complete [indiscernible]. Despite these challenges we continue to be dedicated to expanding our fishing business with respect of the nature and environmental by seeking into -- developed quarter. As always we will keep all investors updated of our development and will work on any helpful suggestions and introduction. Pingtan is committed to steady rewards to our investors and we will continue paying dividend on a quarterly basis to reflect Pingtan's operation and financial strength as well as the confidence in growing demand for natural fish products in equally mature market. We expect to announce our next quarterly dividend in the upcoming week. With that I would like to turn the call over to our CFO, to report 2017 third 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 will now like to turn the call over to Mr. Roy Yu, Chief Financial Officer of Pingtan Marine Enterprise.

[Roy Yu:]

Thanks, Katherine. Good morning and welcome everyone. Today I will discuss Pingtan Marine's 2017 third quarter and nine months operation and financial results. As we previously disclosed Pingtan's financial results was still affected by the initial governments, our [indiscernible] and renewables so that the country's Ministry of Marinetime Affairs and Fisheries could combat illegal fishing and rectify ocean fishing order. In November 2015, the Indonesian government announced that the moratorium had concluded. As the government has not implemented new fishing policies and received the license renewal process we do not know when exactly licensing and renewable will start. The company has paying close attention to any new trends in fishing policy and has been actively inquiring new operation models. In September 2017, the company was informed that the fishing licenses of 13 vessels deployed to Indo-Pacific waters was suspended and the vessels were docked in the port that our Ministry of Agriculture and Fisheries of the Democratic Republic Timor-Leste. The [indiscernible] false statements were made during the licensing process and the vessel was simultaneously registered in Indonesia. The company disputes these allegations. The company's 140 vessels 12 are located in the Bay of Bengal in India, nine are located in international waters and 13 are located in the Indo-Pacific waters. Two fishing [ph] vessels finished renovation in October 2017 and will be deployed to international waters. The remaining vessels are temporarily not operating due to the important discussed above. Now I would like to move to financial results. For the third quarter of 2017 our sales volume were 1.54 million kg increased 234% from 0.46 million kg in the third quarter of 2016. Pingtan reports its revenue for the three months ended September 30, 2017 as $5.5 million increased 367% from $1.2 million in the same period in 2016. The increase was mainly attributable to our business expansion resulting from our fishing vessels in operation. For the third quarter of 2017 gross loss was $1.3 million compared to gross loss of $12.3 million in the prior year period. The gross margin increased to minus 24% for three months ended September 30, 2017 from 153% minus in the same period in the prior year. The significant increase was primarily attributable to the decrease in our unit production cost of fish resulting from the increase in our harvest volume by deploying more fishing vessels into operation. Our selling expense mainly including shipping and handling fees, insurance, custom related charges, storage fees and other expenses. Our sales activities are conducted through direct selling our internal sales staff because of the strong demand for our products and services we do not have aggressively market and distribute our products. As a result our selling expenses has been relatively small as a percentage of revenue. For the third quarter 2017 selling expenses were $0.2 million compared to $0.1 million in the prior year period. For the three months ended September 30, 2017 our general and administrative expenses were $1 million compared to $0.7 million in the prior year period. Pingtan reported net income attributable to owners of the company of $6 million for the third quarter of 2017 or $0.08 per basic and diluted share increased 146.4% from net loss attributable to owners of the company of $12.8 million or minus $0.16 per basic and diluted share in the prior year period. For the nine months ended September 30, 2017 Pingtan's revenues were $46.8 million increased 533.7% from $7.4 million in the same period in 2016. Net income attributable to owners of the company for the nine months of 2017 was $24.8 million $0.31 per basic and diluted share increased 212% from net loss attributable to owners of the company of $22.2 million or minus $0.28 per basic and diluted share in the same period of 2016. On the balance sheet as of September 30, 2017 Pingtan's cash and cash equivalent were $22.3 million. Total assets were $218.8 million, total long term debt was $19.9 million and shareholder's equity was $140.2 million compared to $0.8 million, $226.5 million, $21.9 million and $139.7 million respectively at December 31, 2016. To conclude we will continue and be obligated to cooperate with the government authorities in hopes of accelerating implementation of new fishing policies in Indonesia and the investigation of our vessels by Timor-Leste. Meanwhile we remain focused on all aspects of business expansion to further celebrated [ph] by our industry position by expanding our fishing territories 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.

[Katherine Yao:]

With that operator let's start the Q&A session. 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.

[Roy Yu:]

Thanks again to allow of you for joining us today. We look forward to speaking with you again in next March when we report our fourth quarter and year-end financial results. As always, we welcome any visitors to our office in Fuzhou, China. Thank you.

[Operator:]

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