Qian Hu Q4 profit jumps on lowered expenses

QIAN Hu Corp chief executive Kenny Yap has no illusions about his company's size relative to the pantheon of listed companies, but he knows its place within its particular arena.

"Qian Hu is forever going to be an SME, because we are in a niche industry...But if you look at ornamental fish industry, I think by doing certain things, we can be world Number 1 exporters of ornamental fish," Mr Yap said as Qian Hu posted a sharp rise in fourth-quarter profit on the back of lower expenses that lifted the fish ornaments and accessories supplier from a revenue drop.

Qian Hu said profit attributable to shareholders for the three months ended December rose to S$176,000, or 0.04 Singapore cents per share, from S$69,000 a year ago. The company is recommending a first and final dividend of 0.1 Singapore cents per share.

The stock closed at 7.7 Singapore cents on Monday, up by 4.1 per cent or 0.3 Singapore cents before the results were announced.

Gross profit margin slipped to 22.5 per cent from 27.8 per cent a year ago. Gross profit fell 20 per cent to S$4.8 million from revenue of S$21.3 million, which was down 1.2 per cent year-on-year.

But the bottom line was brought back into the black as the company shaved a quarter off its general and administrative expenses, to S$3.8 million from S$5.2 million. The decline was mainly from lower depreciation charge as the company's leasehold properties were fully depreciated in fiscal 2013, as well as efforts to contain operating costs.

For the full year, net profit rose 29.8 per cent to S$392,000 as revenue gained by 0.1 per cent to S$83.5 million.

Mr Yap said the focus in 2015 will be on innovative accessories that have the potential to disrupt the industry. Examples include fish feed that can replace live feed or water filtration and treatment systems that can make it easier for beginners to keep marine fish.

Revenue from accessories slipped 0.7 per cent to S$9.8 million in the fourth quarter. Mr Yap said that the company is currently going from country to country to convince retailers to accept an Asian brand as a top-notch accessory.

The fish segment saw sales increase by 0.4 per cent in the fourth quarter to S$8.7 million, while the plastics business declined by 7.7 per cent to S$2.8 million.

Mr Yap expects the plastics business to benefit from lower costs as a result of the recent slump in oil prices.