Qian Hu sinks into red for H2 FY23 on disposal loss on broodstock, allowance for obsolete inventories

MAINBOARD-LISTED fish vendor Qian Hu : BCV 0% has sunk into the red with a net loss of S$9.3 million for the second half of the financial year ended Dec 31, 2023.

This is in contrast to a net profit of S$584,299 in the year-ago period, the company said in a bourse filing on Friday (Jan 12).

This was largely attributed to a S$7.4 million loss on disposal of a substantial portion of its Asian arowana – also known as dragon fish – broodstock, said Qian Hu, explaining that the group had made a strategic decision to reduce breeding activities of the fish, due to “oversaturation and declining prices” faced by certain mass-market varieties.

It added that the disposal of broodstock was to free up valuable resources and redeploy land for new business activities that would generate better value for the group.

“Nevertheless, the group is still optimistic about the premium arowana segment and will focus on the production of higher-value albino varieties, as well as implement new strategies to grow its arowana trading business,” it said.

Besides disposal loss of the brooders, there was also an allowance for obsolete and slow-moving inventory of about S$1.5 million. This arose from an inventory profiling and assessment exercise undertaken by the group to streamline and optimise its inventory holding, it said.

GET BT IN YOUR INBOX DAILY

Start and end each day with the latest news stories and analyses delivered straight to your inbox.

Sign UpVIEW ALL

Qian Hu’s revenue fell 3.2 per cent to S$36 million in H2 FY2023, down from S$37.2 million a year ago.

This was due to lower consumer demand for fish exports as a result of the Russia-Ukraine conflict and trade tensions, the group said.

However, the drop in revenue was mitigated by a recovery of its aquaculture business in FY2023 which saw a “stable flow” of orders from customers, as well as the stabilisation of its accessories business.

Loss per share for the half year stood at 8.2 Singapore cents, compared to earnings per share of 0.51 cent a year ago.

For the full year ended Dec 31, 2023, the group posted a net loss of S$9.3 million, compared to a net profit of S$1.4 million in the year-ago period. Its total revenue fell 6.6 per cent to S$70.3 million, down from S$75.3 million.

Loss per share stood at 8.17 Singapore cents, compared to earnings per share of 1.23 cents a year ago.

The group’s directors are proposing a first and final dividend of 0.3 cent per ordinary share, subject to approval at the next annual general meeting set for Mar 27. If approved, the dividend will be paid out on Apr 24.

Looking ahead, Qian Hu said it is expecting consumer sentiment to remain weak against “an evolving macroeconomic backdrop fuelled by uncertainties and geopolitical events”, noting the decline in exports for China’s economy, manufacturing sector slowdown and a property slump weighing on consumer spending.

Its customers in North America and Europe have also taken a “conservative stance” and are holding back their procurement amid inflation woes and the spectre of a global recession on the horizon, it added.

Shares of Qian Hu last traded at S$0.165 on Jan 9.