SINGAPORE - 20 January 2003 - Mainboard-listed integrated ornamental fish service provider Qian Hu Corporation Limited today reported that higher sales volume from its local and overseas operations led to an 84% leap in net earnings to $6.6 million for the full year ended 31 December 2002.
Group turnover rose by 52.0% to $62.7 million, boosted by sales improvements on all of its core businesses, particularly the manufacture and sale of aquarium and pet accessories, as well as breeding and distribution of ornamental fish.
Qian Hu also announced that it has signed a definitive agreement today to acquire a 65% stake in Kim Kang Aquaculture Sdn Bhd ("Kim Kang"), a Dragon Fish breeder in Batu Pahat, Malaysia, for a total purchase consideration of S$7.7 million (RM16.9 million).
As consideration, Qian Hu will pay 50% in cash from its cash reserves and the remaining 50% through the issue of new Qian Hu shares at 96 Singapore cents each.
As Kim Kang has more than 15 years track-record, reputation and experience in breeding and trading Dragon Fish, Qian Hu will pay $2.1 million as goodwill premium for the acquisition provided the Vendor achieves a profit before tax of not less than S$1.4 million in FY2003 and S$2.2 million in FY2004.
The acquisition is subject to the completion of all legal and financial due diligence on Kim Kang as well as relevant regulatory and government approvals.
Kenny Yap, Qian Hu's Executive Chairman and Group Managing Director said, "This acquisition marks another significant leap in our growth strategy of continually extending value to our ornamental fish operations."
"The demand for Dragon Fish has increased substantially over the last few years, and we expect such demand to continue, particularly in our new markets in Taiwan and the PRC, in the coming years. Customers who buy Dragon Fish are invariably well to do and belong to a niche market that is not susceptible to economic cycles."
"Kim Kang has the requisite operational capacity, land, infrastructure, and brooder stock to supply a substantial number of Dragon Fish to the market, as well as a management and operations team with many years of experience in breeding and trading Dragon Fish."
"Therefore, this acquisition will enhance our Group's ability to ride the growth in Dragon Fish demand in the current year as well as in the coming years," he said.
For the 12 months of FY2002, the Group's accessories manufacture and distribution business surged 91.9% to $31.9 million in sales, due mainly to significant improvement in market share in Malaysia and Thailand. With a 174.2% jump in net profit to $7.3 million, its accessories business is the main profit contributor for the Group.
Meanwhile, Qian Hu's ornamental fish reported a 31.2% improvement in turnover to $24.0 million, buoyed by increased sales of ornamental fish to a growing number of retail outlets in Singapore, including Qian Hu's in-house store at its fish farm in Sungei Tengah Agrotechnology Park. In addition, the Group managed to increase its export of ornamental fish from Singapore and China to more countries around the world.
The Group's plastics business, however, experienced a modest growth of 7.1% to $6.7 million as a result of local market competitiveness which was mitigated by the Group's efforts to focus on selling more high-value items and expanding its distribution channels overseas.
Based on the Group's latest audited full-year results, earnings per share on a fully diluted basis increased to 6.6 Singapore cents from 3.9 cents previously, while net tangible asset backing per share rose to 27.4 cents from 20.8 cents. Return on equity increased from 20.7% to 23.5% while the Group's debt-to-equity ratio was reduced from 0.11 to 0.04.
Qian Hu is proposing a first and final dividend of 6% gross per share and a 6% special dividend, which if approved, will be paid to shareholders on 10 April 2003.
Comparing 4Q2002 with the year-ago period, its net profit improved 30.7% to $1.7 million, while turnover gained 50.2% to $17.4 million.
For FY2002, ornamental fish sales accounted for 38% of the Group's turnover, while aquarium and pet accessories comprised 51%. The manufacturing and distribution of plastic bags made up for the remaining 11%. In terms of geographical contribution, Singapore accounted for 55% of Group turnover, while overseas markets contributed 45%.
On prospects for the current FY2003, Kenny said, "We expect our Group to maintain a healthy growth in our turnover and overall profitability for the current year as we continue to grow our direct export sales in ornamental fish and accessories in Singapore and our overseas markets."
"We will optimise our sales of ornamental fish, especially the Dragon Fish, and accessories through our well-established regional distribution network, and take advantage of the import deregulation of ornamental fishes in Taiwan to further penetrate and build up increasing market presence there."
A substantial part of our growth for the current year will be driven by our overseas operations," he added.