Chat with Kenny

Dear Investors,

Thank you very much for the questions and the opportunities to clarify them.

Your questions will be reposted in blue followed by our replies in black.

Rgds,
Kenny the fish
Qian Hu Corporation Limited

Dear Soyaboy, you wrote:

One question I like to ask.

Dear Mr Yap, the future on Qian Hu now hinges on the viability of the retail stores as your other business segments in ornamental fishes and accessories doesn't seem to grow anymore.

How long will it take for shareholders to see any full scale results from your retail pet stores? Currently, your financials is marred by a lot of start up costs in this business.

Secondly, noticed in your annual report that instead of fishes, lots of focus is now into pets like rabbits or cats etc. How much % of your turnover do you expect from non-fish pets in the near future? And how is the margin of non fish pets versus fishes products?

Hi Soyaboy,

Just call me Kenny or fish will do.

We are half way through the transformation and experimentation. We shall see some result end of the year but full result will be many years as it will be a continuous journey of opening retail stores according to our cash flow, location, and most important of all, right people.

Pet contribute about 5% of our total sales and the margin is similar to fish.

Rgds,
Kenny the fish

Dear Annie Chan, you wrote:

Hi Kenny,

Personally, I do hold some of Qian Hu's shares. I believe in the direction Qian Hu is moving. Just wish to understand more on how QianHu is going to establish its new branding and direction in the market. We can see that OSIM is doing well in establishing its fitness focus. I do hope to see one day when people speaks about pets purchase and grooming, Qian Hu is the name that comes to their mind.

Sincerely,
Annie Chan

Hi Annie,

Thank you for believing in our direction.

There are several ways we build our brands, so it be company brand, product brands or retail brand.

We position ourselves to be the only ornamental fish exporter that able to export to 60 countries around the world from 5 countries. That differentiates us from current competitors which operate only from one or two countries.

We have several brands of accessories products. By manufacturing quality products with participation in major trade shows around the world, we should be overtime built some visible brands in our industry.

Retail activity is another way we further promote ourselves as an integrated ornamental fish and pet company. When we are closer to the end consumers, the effect is more direct.

Rgds,
Kenny the fish

Dear Natural Born Gambler, you wrote:

Hi Kenny

What is the number of staff in Q1 2005 and Q1 2004 ?

Do you plan reduction in staff in light of increasing expense but not much improvement in turnover ?

Thanks

Hi Natural Born Gambler,

Our staff strength as of December 31, 2004 was 766. As of March 31, 2005, the number was about 5% lower.

Although the turnover might not be increasing right now, but we need to train enough staffs for our retail activities. Also, as we expand our China domestic distribution network, we will have to recruit more people. Having to say that, we will put the resources, especially human resource to places where we want to grow and reduce the number of employees where the turnover is stagnant.

Rgds,
Kenny the fish

Dear Against The Gods, you wrote:

Hi Kenny

What is QianHu aim/mission this year?

Is there any plan to reduce expenses?

Thank you.

Hi Against the Gods,

Our Mission is always there but this year our strategy is more about managing cash than growth. We have invested enough and are half way through the transformation, thus we should start managing cash and monitor the transformation.

Once the transformation is over, the expenses should be more in tune with growth or perhaps come down.

Rgds,
Kenny the fish

Dear Tony Ho, you wrote:

Great opportunity to ask Kenny Yap question. Thanks!

1. Seems like the main difference in financials for 1Q this year and last is the "General & Admin" expenses which grew a fair bit. May I know why is this increase and whether its going to be recurring henceforth?

Hi Tony,

I am glad to have the opportunity to answer your questions.

A: The increase in G&A expenses are mainly due to retail activities and our expansion in our China factory. It should stay somewhere there until the whole transformation is over.

2. I noticed a Fixed Asset item in your balance sheet called Brooder Stock. May I ask how do you derive the value of this fixed asset as I think this is a very subjective and tricky area. Also, does these FA draw any depreciation charge? (ie if the fishes die etc etc)

A: The brooder stock has been valued based on market price which we have disclosed when we listed the company. Yes we do depreciate that as we would have depreciate an asset although the older the brooder stock, the more productive they become. We always keep certain percentage of our fries to replenish brooder stock and occasionally exchange brooder stock to enhance their gene pool.

Thanks!

You are most welcome!!

Rgds,
Kenny the fish

Dear Jacole, you wrote:

Hi Kenny,

Have you thought of selling/involving marine fishes? Marine aquarium are getting more and more popular recently and has become and has not only become an art (Marine fishes and corals are extremely colorful) and a way of relaxation. We can see that many offices and shopping malls are starting to keep marine aquarium!

Marine aquarium need lots of attention on the temperature and the water salt level so they need more equipment than the fresh water fishes. My friend's company is spending a few thousands for people to maintain their marine fish tank, because fish is good for their office 'Feng Shui' and marine fish is ideal for Caucasians bosses.

I would like to also give feedback regarding your website. Qian Hu's website is indeed very Hi-tech and we can definitely see that the person doing this website is very "IT" orientated. The website is equipped with functions like forum, online doctor etc.. they are all very "IT" based and lacking on the beauty aspect. I'm not sure if you keep tracks on people returning to the website, maybe you can look at the forum page for an example, the rate of people returning are slow. Website is a great marketing tools and people are making $$ out of it (people place order online, look at the company's stock, have great discussions etc..). It will a such a pity with all the existing great features on your websites but only a few people are using it.. or perhaps even not returning!

So I suggest you get a good web designer(Not programmer) to  revamp it.

Hi Jacole,

You are very kind to suggest some improvement on our website and you are very correct to point out that our Website designer is very IT. They are indeed very professional in IT and I am very pleased with their work. However, I am also bringing in our corporate brand consultant to help to improve the feel and look on the website.

Go back to marine fish. We do export marine fish but the fish was packed by another company and we take a cut on the profit. We do sell marine fish in some of our retail stores. Marine fish constitutes only 5 to 10% of the world ornamental fish trade.

Rgds,
Kenny the fish

Dear Alchemist, you wrote:

Mr Kenny Yap.

The name "Qian Hu" means fried/frying fish in Hokkien. It does not sound very good leh. How about changing the name?

Hi Alchemist, noticed one question you posted earlier.

In Chinese, Qian Hu means thousand lakes and it is a very appropriate name. It is also a very meaningful name to us and we feel a lot sentiments in it.

To change a name simply because the pronunciation of a small ethnic group sounds bad is not a wise choice. In the whole of China, Hokkien is not the prevalent language although I am hokkien.

Rgds,
Kenny the fish

Hi all!

Thanks everyone once again for your questions. I hope my replies have given you a better understanding of Qian Hu. On behalf of the team at Qian Hu, I wish everyone a good Labour Day holiday.

Best rgds,
Kenny the fish