Qian Hu Corporation has reported earnings of $816,000 for the 1HFY2022 ended June, 4.8% lower than earnings of $857,000 for the corresponding period in the year before.
Earnings per share (EPS) for the period stood at 0.72 cent.
Group revenue similarly fell by 4.0% y-o-y to $38.1 million. The lower figure was attributable to the lower fish and accessories exports, which were affected by the Covid-19-induced lockdowns in Chinese cities, as well as the Russo-Ukraine war.
During the half-year period, Qian Hu’s fish segment saw revenue fall by 6.0% y-o-y to $14.5 million. The segment’s aquaculture business was affected by the lockdowns in China, which dampened domestic demand and depressed fish fry prices. The reduction in air cargo capacity and lower flight frequencies had also “hindered” Qian Hu’s export business activities from China.
In addition, Russia’s invasion of Ukraine had affected the group’s ornamental fish exports to Russia and the surrounding regions in Europe.
The lower revenue for the business was, however, mitigated by increased activities in Malaysia and Singapore after the easing of Covid-19 restrictions.
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The fish segment, however, saw its pre-tax profit increase 27.7% y-o-y to $1.7 million due to higher handling fees in the transhipments for its aquaculture business.
Qian Hu’s accessories segment also declined 3.5% y-o-y to $19.8 million.
This was due to China’s zero-Covid-19 policies on top of the poor consumer sentiments globally on the back of the ongoing macroeconomic conditions such as trade disruptions and geo-political tensions.
The accessories segment logged a pre-tax profit of $582,000, down 27.6% y-o-y, in line with the lower revenue.
Qian Hu’s plastics revenue was the only bright spot in the six-month period, with a marginal 1.0% y-o-y increase to $3.8 million.
The slightly higher y-o-y revenue was thanks to the stabilisation of its customer base as the group focused on selling products with sustainable margins such as essential items used to enhance hygiene protocols for the food and beverage (F&B) packing and healthcare sectors.
The segment, however, registered a 44.5% y-o-y decline in its pre-tax profit to $248,000 due to higher raw material prices and a gradual increase in operational costs.
As at June 30, Qian Hu’s net asset value (NAV) per share stood at 42.88 cents. Its cash and cash equivalents stood at $20.4 million during the same period.
“Moving into the second half of FY2022, we anticipate that the overall business environment will be even more challenging, given the global supply chain disruptions brought about by the war in Ukraine and China’s zero-Covid policy,” says CEO Yap Kok Cheng.
“The inflationary pressures arising from these widespread disruptions, along with higher energy, inventory and finance costs, will continue to affect our short-term profitability,” he adds.
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Looking ahead, the group says it will “continue to seize opportunities for growth, develop new capabilities and become more competitive while focusing on its core strengths and long-term business prospects”.
Barring unforeseen circumstances, Qian Hu expects its revenue to grow while achieving profitability in the second half of FY2022.
Shares in Qian Hu closed 2 cents higher or 10.26% up at 21.5 cents on July 19.
