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Chairman's Message

Extracted from Annual Report 2017

Dear bosses,

What an exciting year it has been for us at Qian Hu as we witnessed several new exciting developments in our corporate journey! Ever since we set our sights on our long-term growth strategy a few years ago, we have been working hard to strengthen our foundation whilst honing our technological edge at the same time. This year, we are excited to be able to share with you the results of our hard work and perseverance as we achieved several notable milestones.

ADVANCING WITH AQUACULTURE

As we close the financial year, it was heartening to see that our performance improved all-round and in every business segment. Indeed, we have worked hard to transform ourselves to keep pace with the changing economy, and a case in point is our new aquaculture business which we started in 2016.

From the experience we had amassed over the years in breeding ornamental fish, we knew that we needed a few key ingredients to ensure we had the ideal product mix – the right technology, the right nutrition in the form of healthy fish feed, as well as the right approach to medication using herbal-based antibiotic-free ingredients. Importantly, we also had the right team of subject experts to ensure that we carry through successfully with our plans.

With these in mind, we set out on our pilot aquaculture project in Hainan Province, China back in 2016 which has been operational since early 2017. We are happy to report that the project is now well underway and we have been consistently delivering grouper fingerlings in the Hainan region. Less than a year later in November 2017, we set up another aquaculture farm in Hainan to commence the breeding and farming of shrimp and the import and export of edible fish and other seafood products.

We are moving fast on these plans as we expect this business division to contribute positively to our Group’s results in FY 2018, and we are very optimistic about the prospects of our aquaculture business. In fact, in the next few years, we aim to excel in the sustainable farming of edible fish for the China consumer market so as to build out this business to be many times bigger than our existing businesses.

To achieve our goals, we have bold plans in place and we intend to focus on executing these plans successfully. We refer to our aquaculture growth strategy as the “Triple E” strategy as we look to scale this business substantially in the next few years – namely, to Engineer, Extend and Explore.

On the engineering front, we are looking to replicate our unique RAS (Recirculation Aquaculture System) that can recirculate our water use. When completed, the RAS will redirect the water through the tanks for continuous use, and will definitely improve our water quality many times over. This system will also reduce our environmental footprint by significantly reducing the amount of water we would potentially use otherwise.

Next, we intend to further extend our aquaculture value chain to include not just breeding, but also larval, nursery and growout culture. With the planned breeding and cultivation of edible fish from the fingerling stage all the way through to the adult stage, this will mean more opportunities for us to capture additional selling points throughout the product cycle. As we build out our product offerings in the aquaculture entire value chain, we can also safely ensure that we provide a healthy, end-to-end, product for consumers by doing so.

Looking at our aquaculture pipeline further down the road, we also have plans to utilize our existing experience and put it to the best use. Leveraging what we have learnt from our successful pilot project, we will look at ways to develop potential partnerships and joint ventures with like-minded associates to mutually build on our aquaculture capabilities. Our technology, feed and medication can be applied anywhere in the world, and we are confident of what we can offer.

The production of edible fish on a global scale is expected to continue to expand, and is touted to grow continuously over the next decade. Of this, countries in Southeast Asia are slated to be the main producers, representing approximately 89%1 of total production by 2025. This definitely bodes well for Qian Hu as our major export hubs are already covering the majority of the Southeast Asian arteries.

At the local country level, the growth prospects for aquaculture are also very promising for China, which is slated to account for 62%2 of world aquaculture output by the same period. With our business based in the aquaculture hub of Hainan Province, China, we believe we are in the right place at the right time to capitalize on opportunities for growth.

ADVANCING TOWARDS A SUSTAINABLE FUTURE

Since our public listing in 2000, we are very proud to have built Qian Hu to be a legacy brand that is renowned for our leadership in the aquatic industry.

Our relationships with our customers and suppliers enjoy longevity and good health, having been built over many years and coupled with our lasting commitment to their needs. Our brands and products also enjoy good standing in the markets where we operate as a result of our ethos to evolve with the times and upkeep our product quality. Our lease at the Singapore fish farm will see a long-term tenure until year 2026, which enables us to plan purposefully towards the future.

Even as we continue to make progress on all our business fronts, we also want to do our part for the well-being of our environment. As a heritage brand that is here for the long-term, we hope to be able to leave a lasting legacy while taking an active stance in addressing our environmental challenges. As an organization, we are always looking at new ways to embed sustainable practices across our business operations so as to minimize our environmental tracks.

Sustainability is not something new to us even though this is the first financial year where mandatory reporting is required – Qian Hu started reporting on sustainability issues since as early as 2011, and we have already made strides in various areas which impact our environment as we conduct our operations. This year, we have reported on our key sustainability issues in reference to the GRI-G4 standards, which details our initiatives in this area.

LOOKING AHEAD

We intend to focus our efforts on doing what we do best in the coming years, and that means that we will continue to focus on innovation to expand our pipeline of compelling products particularly in the areas of filtration, fish nutrition and genetic breeding of unique Dragon Fish.

Meanwhile, our exciting new aquaculture business is progressing on track, and we expect that this business is going to keep us very busy for the next few years. With our “Triple E” strategy – “Engineer, Extend and Explore” – and expansion plans to scale the business, we will set our sights on delivering what we have set out to achieve on this front.

To our Board, all of our bosses, partners, customers, and employees – I would like to thank you for your unwavering support and belief in our journey, and see you soon at our Annual General Meeting.

1 The World Bank: “FISH TO 2030: Prospects for Fisheries and Aquaculture”, Dec 2013.
2 Food & Agriculture Organization of the United Nations: “The State of World Fisheries and Aquaculture”, 2016.


Kenny The Fish
Executive Chairman & Managing Director


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