Chairman's Message

Dear Bosses

FY2022 has been such an unprecedented year. Just as the world had started to recover from two years of pandemic restrictions, the war in Ukraine dealt another severe blow to the global economy amidst supply chain disruptions and escalating inflation brought on by Covid.

THE IMPACT ON BUSINESS

Initially, we were relieved to see many of our export markets normalising as a result of the resumption of air travel and airfreight operations in many parts of the world, which led to improvements in Qian Hu’s exports business. However, the Ukraine war had severely disrupted our sales to Russia and its surrounding regions.

Meanwhile, China’s war on Covid took several twists and turns as lockdowns in various cities, including Shanghai, Guangzhou and Beijing, brought business activities to a virtual standstill.

Apart from geopolitical and public health factors, inflation and rising energy costs continue to add pressure on businesses around the world, and Qian Hu is not an exception. In the year just ended 31 December 2022, Qian Hu posted 18% lower net profit on the back of a 6% decline in sales.

THE NEED TO BE AGILE

We envisage that economic conditions will continue to be uncertain and volatile, and it is imperative that we remain agile and be ever ready to deal with the challenges that lie ahead, while focusing on navigating change.

We are excited about our investment in AquaEasy Pte Ltd (“AquaEasy”), our recent joint venture with Bosch Group and Singapore Economic Development Board, which develops sustainable aquaculture solutions based on artificial intelligence (AI) and Internet-of-Things (IoT) technology to help farmers increase productivity and predictivity.

During the year in review, AquaEasy had made significant headway in the region. Since the middle of 2022, it established partnerships with key aquaculture players in Indonesia and Vietnam which will accelerate the adoption of AquaEasy’s solutions in these countries.

Aquaculture will continue to be a key driver of Qian Hu’s future, poised to be many times bigger than our traditional ornamental fish business. We are pleased to be appointed the exclusive distributors for AquaEasy’s aquaculture systems in Malaysia and Thailand, and we are working towards a Chinese version for the China market shortly.

Meanwhile, we have leased 16 ponds from a third-party farm in Singapore to expand our shrimp farming capacity. It is projected to produce significantly more than our current production at Qian Hu’s farm located in Choa Chu Kang. Our Hainan farms have also increased the production capacity to capture the growing demand for fresh seafood in China and the region.

EXPANSION INTO THE PETS MARKET

Since the start of the pandemic, the dog, cats and small animals segment within the pets industry has been growing significantly, partly due to the work from home trend. As such, we intend to ride on this rising demand by expanding our pet foods, medications and accessories categories for exports and domestic sales. In the last several years, Qian Hu has developed a few brands to cater to these markets but they have largely been complementary to our mainstay ornamental fish business. However, we expect this pet segment to expand further and emerge to be another growth pillar for Qian Hu.

THE WAY FORWARD

Moving ahead, we will continue to work on the strengthening of our fundamentals and to gain further traction with our Group’s cloudbased “One Qian Hu” digitalisation initiative. By the end of June 2023, all of our units in Singapore will have undergone the digitalisation transformation and we will next share our experience in Singapore with our subsidiaries in Malaysia, Thailand, Indonesia and China from the second half of 2023.

Our cloud-based “One Qian Hu” seeks to revolutionise operational efficiency by automating all processes on a single platform across the Group. It will make all of our subsidiaries closer and automate all areas of operations, including export, distribution, inventory control, and management information systems.

Meanwhile, we believe that our operating business model remains intact even as aquaculture moves beyond gestation and we significantly increase our resources to expand the pets accessories business. As always, our focus is on generating healthy cash flows from all aspects of our businesses.

AWARDS

In August 2022, Qian Hu won three awards at the Singapore Corporate Awards jointly organised by Institute of Singapore Chartered Accountants (ISCA), Singapore Institute of Directors (SID) and The Business Times. These awards, which are in the category of companies with less than $300 million in market capitalisation, include the Best Managed Board Award (Gold), Best Annual Report Award (Gold) and Best Investor Relations Award (Bronze). We are honoured that our persistence in pursuing corporate excellence continues to be recognised and affirmed.

APPRECIATION

As the Greek philosopher Heraclitus said it so aptly hundreds of years ago: the one constant since the beginning of time is change. In such volatile times, this cannot be further from the truth. It is also said that the fear of change is also another constant, and that is something we all need to overcome.

We would like to thank Team Qian Hu in our Singapore, Malaysia, Thailand, Indonesia and China hubs for demonstrating such solidarity and agility during such trying times, and for their dedication in transforming our operations and business.

We would also like to express our appreciation to our extended family – our Board of Directors, business partners, customers and other stakeholders – for your unwavering support and contributions, without which all of our efforts would have been futile. It is because of your belief in Qian Hu that we have every reason to be positive and persevere.

Stay safe everyone and have a fantastic year ahead!