Chat with Kenny

Hi SI users,

Hope you have a great weekend so far. Thanks for your questions posted over the past week. I am happy to answer your questions online. I will repost the questions in blue italics followed by my comments in black.

Happy New Year and Year Year got fish

Kenny the fish

Against The Gods, you wrote:

Qian Hu profit seems to depend on the price and demand of dragon fish. Is there any industry data on the demand of dragon fish? Is there any index on the price of dragon fish ?

Qian Hu plastics segment profit margin depends on resin price as mentioned in your result report. How can I find information on the changes in resin price? Is it difficult for you to adjust your selling price when the raw material price change?

Thank you very much

Hi Against The Gods,

How are you lately?

Year 2005 was indeed a year we rely on dragon fish but our objective is to have all business activities contribute to the group proportionally. As our industry is a niche industry, certain data is hard to get. However, we envisage the demand of dragon fish will increase especially from China and to certain extend, India.

As we do not sign long term contract with our customer for plastic plus we sell directly to individual company or customers, we can be quite flexible in adjusting our prices.

Happy New Year and Year Year got fish

Kenny the fish

Marcus, you wrote:

Hi Kenny,

congrat on your company's result!

Hi Marcus,

Thank you very much for your kind words. We did not do that well in 2005. Relatively and as compared to 2004 which we had a lower base, we did better in 2005 that's all.

Same thing 5 questions:

1. Why did the company dispose the stake in PT Qian Hu Aquarium and Pets Indonesia & PLC Pet Safari (KL) Sdn Bhd? Were they dormant or unprofitable companies?

A: Our JV partner in Indonesia is a very good businessman. However, he seems not able to follow our corporate culture and values. Qian Hu must have subsidiaries which consistently sharing the same culture and values no matter where we operate. That is the reason we discontinue the JV in Indonesia.

2. Your dragon fish sales continues to be the key revenue driver with improving margins. However in all business it is risky to depend on one product for revenue growth. What other fish type do you see potential to rival the kind of margins you are getting out of dragon fish?

A: Our objective is to have all business activities contribute to our group proportionally. It will not be the case in the future where we heavily rely on dragon fish. Our export of other fish is still growing and our margin for accessories is improving.

3. Fish breeding is an outdoor activity affected by the weather. As in Oceanus Biotech, their stock of fish was wiped out because of cold weather. Are there contingency plans to move stocks should there be an "act of god" like drought or flood?

A: Ornamental fish breeding is very much an environment controlled activity. Many breeding are indoor and outdoor breeding ponds were designed to prevent flooding. In the case of prolong drought, the cost might increase because we might need to use portable water instead of rain water. We only breed two types of fish and the rest are outsource to contract farming.

4. I've noticed tat the company have borrowings amounting to $7.2 million and net cash position of $4.3 million. Would the company consider selling its freehold land to REITS like what Aztech & Hyflux has done to generate cashflow rather then borrow from banks at such high interest rates.

A: Our freehold properties are mainly breeding ponds for our dragon fish in Malaysia. Thus we are fully utilizing our asset and not to applicable to Reits.

5. I've noticed that qian hu is a family run company. Would you consider an outsider to take your place should you retire and nobody in your family is willing or capable enough to take over?

A: I have publicly stated that the best man or woman will take over me regardless of race, Sir Name or religion.

Thank you
Happy Chinese New Year!

Happy New Year and Year Year got fish

Kenny the fish

Gerald, you wrote:

Does qian hu have a branding strategy? How do you ensure brand royalty when all fishes looks the same?

Hi Gerald,

We do have a branding project and it is still going on. We can brand our dragon fish as each have an identity with micro-chip. Other fish are branded under Qian Hu's name which represents quality and service.

Happy New Year and Year Year got fish

Kenny the fish

Nelson, you wrote:

my pet turtle die & i had to pay someone $200 bucks to cremate it with its shell intact. fishes grow old & die, do qian hu provide facilities to cremate or bury dead pet fishes? It seems to be a lubricative business.

Hi Nelson,

We do not provide such service. Our chain stores do provide grooming, dog training, etc. We will add in whatever services when there is demand. Burying fish is still not that prevalent.

Happy New Year and Year Year got fish

Kenny the fish

Jayster, you wrote:

it seems that your plastic accessories business have been giving you a bit of a headache.is it because they look like your competitors? does qian hu engage designers to design the accessories? do you agree that a better designed product will command a higher margin?

Hi Jayster,

Our accessories business is the one that we are transforming from being a wholesaler to manufacturer and retailer. When the whole transformation is completed, the margin will improve and we envisage that that business activity will contribute as much as our fish. We do have in house R&D for manufacturing and dragon fish. We also have in house product designer for our house brands such as Ocean Free, Yi hu aristocrat, Bark, etc. I agree that better design can commensurate higher premium.

Happy New Year and Year Year got fish

Kenny the fish

Thanks again to all the investors who have posted their questions here. I hope I have answered them to your satisfaction. The next chance for us to correspond again will be the time when we announce our First Quarter 2006 results. In the meantime, do feel free to visit our corporate website: http://www.qianhu.com/ and our IR website: http://www.listedcompany.com/ir/qianhu for more information.

Take care and I look forward to our next online Q&A.

Happy New Year and Year Year got fish

Kenny the fish