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Extracted from Annual Report 2021

Dear Bosses

As the pandemic situation continued to evolve all over the world in 2021, it is clear that the global business landscape has changed fundamentally. While governments around the world work to get their populations vaccinated and gradually open borders in the hope of resuming some semblance of normality, there is no immediate fix.

We continue to be nimble and are ever ready to adapt to the new normal by putting in place adjusted operational measures to prepare ourselves for these broader macroeconomic developments, and hopefully recovery. Amidst these challenging times, Qian Hu continues to persevere while focusing on our core businesses, as well as our engine of growth – Aquaculture.

RESILIENT PERFORMANCE THROUGH OUR STRONG CORE

Throughout the pandemic, our core businesses have remained resilient, a testament to their enduring strength and versatility, as their solid fundamentals helped to mitigate the turbulent times. In FY 2021, our main core businesses – namely, Fish (which includes Aquaculture) and Accessories, achieved significant recovery, albeit from a lower base in FY 2020.

With the gradual resumption of air freight operations since the latter part of FY 2020, we were able to meet the pentup demand for our fish and accessories products. We have found that as more people were working from home, or in lockdowns, hobbies such as keeping ornamental fish and other pets continue unabated, while the demand for aquarium and pet accessories products continues to grow. This trend underscored our conviction that even in extreme economic situations, people yearned for social and emotional connections through their pets. In the case of the Covid-19 pandemic, the various movement restrictions actually abetted our business, proving the resilience of our industry.

SUSTAINED FOCUS ON GROWTH WITH AQUACULTURE

Aquaculture is a driver of the Group’s future, poised to be many times bigger than our traditional Ornamental Fish business. Based in Hainan province in China, the Aquaculture segment has benefited from the uptick in airfreight operations since the beginning of the year, thereby seeing demand expansion in the trading of edible fish fry, as well as trading of various edible fish in and out of China.

We started a hatchery at our Singapore farm for giant freshwater prawns (GFP) and we have engaged a contract farm in Desaru, Malaysia to farm the GFP fries. Since the fourth quarter of FY 2021, we have commenced harvesting these GFPs and plan to expand our network of contract farmers in Malaysia. We remain focused on developing our edible seafood capabilities closer to home meanwhile, to be in line with the Singapore government’s national food sustainability goal of producing 30% of the country’s food requirements by 2030. Within the edible seafood space, there is also a significant market for Vannamei shrimps, particularly in Southeast Asia. Therefore, in the past few years, we have been working on developing a recirculated aquaculture system for super-intensive shrimp farming using our patented filtration system, which helps to ensure water quality, and nanobubble technology, which optimises water oxygenation. Having successfully moved into the pilot trial stage, we have observed that our system is able to achieve higher output than traditional shrimp farming methods.

In December 2021, we signed a Memorandum of Understanding with AquaEasy Pte Ltd, a unit of the global technology company Bosch Group. AquaEasy is an aquaculture solutions provider which deploys artificial intelligence (AI) and Internet of Things (IoT)-based solutions into shrimp feeding systems to help shrimp farmers increase productivity, predictivity and implement sustainable aquaculture practices while reducing risks and costs.

A venture between Bosch and Singapore’s Economic Development Board, AquaEasy will take Qian Hu’s Aquaculture strategy to a whole new level. Our partnership will see many strategic collaborations in the areas of research & development (R&D) in using AI for ornamental fish and aquaponics.

We intend to integrate AI solutions into the rest of our aquaculture systems and market the technology to our customers globally. We also plan to develop a digital platform, using AquaEasy’s cloud-based IoT capabilities, to instill real-time efficiency and transparency in the aquaculture supply chain so as to enhance traceability and sustainability of local produce. This strategic partnership will transform a traditional aquaculture industry into one that is future proof and sustainable.

POSITIVE TRENDS DRIVING OTHER CORE BUSINESSES

During the pandemic, the industry saw a strong pivot towards direct-to-consumer (DTC) channels such as online sales. This was a strategy that many of our distributors had adopted, which accounted for the larger sales generated during FY 2021.

Our B2C online sales have been limited to Accessories products sold through our QianHuShop.sg portal, as well as third-party apps such as Amazon and Lazada which serve primarily Singapore-based customers. Moving ahead, we intend to expand our product offerings to include edible and ornamental fish. With effect from October 2021, our 1,000 varieties and species of ornamental fish are available for direct online sales via FishyHub.com – a one-stop marketplace and social platform

SUSTAINABILITY, INNOVATION AND DIGITALISATION AS THE WAY FORWARD

The pandemic has indeed transformed the world and consumers’ mindsets. Today, we are not only personally responsible towards how we conduct ourselves for the safety and well-being of others, but how businesses operate also take the spotlight more than ever. Social responsibility towards our employees, how we run our business operations, and our commitment to the environment – these are paramount in our customers’ minds today as we transition to the new normal.

Right from Qian Hu’s inception, R&D has been, and will always be, mission critical to our long-term success. While we recognise that we are not able to control the external economic environment, we can, however, do what we must to renew our products and processes, continue to innovate, and digitalise our operations.

Our key filtration technology, HYDROPURE, serves as the backbone of our latest accessories initiatives and helps to boost efficiency in our ornamental fish and aquaculture operations in all of our hubs. We have also developed nanobubble technology to optimise water oxygenation.

Meanwhile, we continue to differentiate our ornamental fish offerings through our research project with the National University of Singapore by developing a whole new range of ornamental fish using genetic editing.

With our continued focus on innovation, Qian Hu aspires to be the industry’s most value-adding and productive provider of edible fish, ornamental fish and accessories.

Although there are short to medium-term challenges to overcome, we believe we will emerge much stronger than before from this pandemic.

EMBRACING THE NEW NORMAL

Having battled the pandemic for close to two years, the Group is bracing for the many challenges that lie ahead. We intend to capitalise on this opportunity to build closer engagement with our various stakeholders, improve our staff development and tap into new opportunities, so as to allow the Group to emerge from this stronger than before, while continuously upholding good corporate governance. We are also using this opportunity to embark on our digitalisation journey, in order to revolutionise our operational productivity and position our entire Group for the digital age. Through the cloud-based “One Qian Hu” digitalisation project, we are hoping to expand our customer reach across the Group while integrating all of our subsidiaries in one single platform, thereby boosting internal productivity and process automation. To be implemented in phases, this digitalisation project will take approximately 2 years to complete.

We will embrace the new normal with the knowledge that Covid-19 is here to stay. Despite the resurgence of Covid-19 infections in many parts of the world, the encouraging rate of vaccination globally provides hope for further recovery. As the world learns to live with the virus as endemic, Qian Hu’s priority is to position ourselves with a forward-looking spirit. Toughened by what we have overcome together, we look forward to integrating new ways of working and emerging stronger than ever.

APPRECIATION

Our team has worked extremely hard in navigating Qian Hu through a very difficult year. We would like to extend our appreciation to the Board of Directors, our business partners, customers, employees and most of all, our shareholders, for all your steadfast support even as we position Qian Hu for a more sustainable recovery and growth. Resilience is truly a good representation of the endearing spirit we have shown in the past two decades. It shows our ability to recover in difficult times and look ahead towards our goals and vision.

We look forward to journeying with you in 2022 as well!

Kenny The Fish
Executive Chairman

Yap Kok Cheng
Chief Executive Officer