Pingtan Marine Enterprise Reports Unaudited Financial Results for its First Quarter Ended March 31, 2013

May 14, 2013, 16:29 ET from Pingtan Marine Enterprise Ltd.

FUZHOU, China, May 14, 2013 /PRNewswire/ -- Pingtan Marine Enterprise Ltd. (Nasdaq: PME), ("Pingtan," or the "Company") a provider of dredging services in the People's Republic of China (PRC) and territorial sea fishing globally, today announced its unaudited financial results for the first quarter of 2013.

Operating Highlights

  • Completed landmark business combination in February 2013, creating Pingtan Marine Enterprises, one of the largest U.S.-listed marine services operating company in China
  • Currently operates a fleet that consists of 9 dredgers and 40 fishing vessels (see attached asset table)
  • Dredging segment ("China Dredging") continues transition to primary contractor with a backlog of $214.5 million as of March 31, 2013
  • Fishing segment ("Merchant Supreme") reported 26.4% growth in revenues during Q1 2013 and launched 20 vessels during December 2012 (with revenues beginning to ramp up on those vessels in the second quarter of 2013)

First Quarter 2013 Financial Highlights (A)

($ in millions, except per share data)

3 months ended

3 months ended

March 31, 2013

March 31, 2012

  Dredging Services

$26.7

$59.5

  Fishing

$19.7

$15.6

Total Revenue

$46.4

$75.1

Cost of Revenue

30.3

37.7

Gross Profit

16.1

37.3

Gross Profit Margin

34.7%

49.7%

Net Income

13.8

26.9

Basic and Diluted Weighted Average Shares Outstanding

79.1

79.1

EPS

$0.17

$0.34

Balance Sheet Highlights (A)

3/31/2013

12/31/2012

Cash and Cash Equivalents

$206.1

$175.5

Total Current Assets

297.5

277.7

Total Assets                                                                               

505.7

484.0

Working Capital

225.1

210.6

Total Long-term Debt

17.7

16.7

Shareholders' Equity

415.6

400.3

Book Value Per Share

$5.25

5.06

(A) Represents the consolidation retrospectively restated as if Pingtan Marine Enterprise Ltd. (formerly known as China Growth Equity Investment Limited) completed its merger with China Dredging Group Co., Ltd. and the share purchase of Merchant Supreme Co., Ltd. on January 1, 2012, rather than on February 25, 2013.

Management Comments

Mr. Xinrong Zhuo, Chairman and CEO of the Company, stated, "The last several weeks have been a monumental period in our Company's history, as we believe our team has created a diversified entity in the global marine service market.  We remain very optimistic about the growth opportunity in both of our dredging and fishing segments.  We are very pleased to have generated strong cash flow from operations and profitability in our first quarter during a transitional period for our Company."

Dredging Segment Operating and Financial Review

Mr.  Zhuo continued, "In our dredging business, we continue to leverage our long-term customer relationships, many of whom have worked with China Dredging since its inception. One of our goals in the coming years will be to build upon this strong base of projects and further diversify by transitioning from a sub-contractor for projects in the PRC to the role of a general contractor.  We have invested considerably in our Build-Transfer (BT) strategy, which will expand the pipeline and give China Dredging more control over its projects. Our first project in Kemen Industrial Zone of Lianjiang County, Fujian Province, began in January 2013 and is estimated to continue for 18 months.  While this investment directly affected our first quarter financial results, as a result of incurring advanced payments with minimal revenue contribution, we expect to begin realizing the full impact from this project in the second quarter of 2013." 

For the three months ended March 31, 2013, revenue from our dredging services decreased to $26.7 million from $59.5 million in the same period last year.  This was primarily as a result of decreased dredging volume caused by the Company's termination of the leasing agreement for three dredgers in July 2012 and one in December 2012, as these four dredgers were  not fit for the Company's new BT project, which has a higher unit price.   In addition, four of the Company's vessels working on a project in northern China were operated at only 30% of their dredging capacity due to unusually inclement weather conditions during the first quarter of 2013.  The Company does not believe there will be any impact in future quarters; however, as a result of these factors, China Dredging completed 12.7 million cubic meters of dredging volume in the first quarter of 2013 compared to 32.5 million in the same period last year, a decrease of 60.9%. As of March 31, 2013, the Company has a backlog of $214.5 million, which included $15.6 million in new contracts for the first quarter of 2013.

Fishing Segment Operating and Financial Review

Mr. Zhuo continued, "We are very pleased with the development of our fishing business, and are currently selling approximately 30 different species of fish, primarily from India and Indonesia, to over 300 distributors and retailers.  We currently own and operate 38 single trawling vessels and 2 drift netters.  Our goal in the coming months is to continue to opportunistically purchase assets and expand our fleet while diversifying our customer base." 

In the first quarter of 2013, The Company's revenue from its fishing business increased by 26.4% to $19.7 million compared to $15.6 million in the same period last year.  The Company also acquired 20 new fishing vessels in 2012, which began operation in December 2012 and began operating at full capacity in the current second quarter of 2013 after a breaking in period.  The Company and the Company's independent directors have also agreed with Mr. Zhuo, that $48.3 million (due to the Company in accordance with the terms of the share purchase agreement pursuant to which the Company acquired its fishing business) can be repaid with fishing vessels from Fujian Honglong Ocean Fishery Co., Ltd., or Hong Long, a Company owned by Mr. Zhuo.  Hong Long's fishing vessels currently have licenses that will enable the Company's fishing business to increase its harvest volume, revenue and net income rapidly. The fair value of such fishing vessels to be contributed to the Company will be determined by an independent appraisal company hired by the independent directors of Pingtan's Board of Directors.  On May 13, 2013, Pingtan entered into an engagement letter with BMI Appraisals Limited for the performance of such appraisals, which it expects to complete in the next two months. 

Consolidated Financial Review

Revenues

The Company reported revenues during the period of $46.4 million, compared to $75.1 million for the same period in 2012.  An increase in the revenues from the Company's fishing business was offset by lower volume from the Company's dredging business.

Gross Margin

The Company's gross margin decreased to 34.7% in the quarter ended March 31, 2013 from 49.7% for the same period last year, principally due to lower gross margins for the dredging segment.  The Company incurred $4.1 million in advanced fees during the period as part of reclamation for its BT project.  These advanced payments were included in cost of goods sold.  In addition, the Company incurred lower margins in its fishing segment, as 20 vessels launched by the Company in December 2012 did not immediately operate at full capacity.

Selling, General & Administrative Expenses

Total selling, general and administrative expenses were $1.6 million for the three months ended March 31, 2013, or 3.4% of total revenue, compared to $2.7 million, 3.6% of total revenue, for the same in 2012.

Net Income

Net income for the three months ended March 31, 2013 was $13.8 million, or $0.17 per basic and diluted share, compared to $26.8 million, or $0.34 per basic and diluted share, in the same period in 2012.

Outlook for 2013

Mr. Zhuo concluded, "We benefit from having a team of dedicated employees that has considerable experience in operating an integrated company, and believe that we have the right management team in place to continue developing both segments of our business.  The Company's financial position is very strong, with approximately $206 million in cash as of March 31, 2013 and cash from operations during the period of $31.5 million.  We expect to leverage this free cash flow to continue growing our fleet of fishing vessels and expanding our dredging capabilities as a general contractor. We look forward to the future with confidence and will keep shareholders apprised of our progress."

About Pingtan

Pingtan is a marine enterprises group, engaging in dredging services and ocean fishing through two wholly-owned subsidiaries, China Dredging Group, or CDGC, and Merchant Supreme, and their respective PRC operating subsidiaries, Fujian Xing Gang Port Service Co., Ltd., or Fujian Service, PingTan XingYi Port Service Co., Ltd., or PingTan XingYi and Fujian Provincial Pingtan County Ocean Fishing Group Co., Ltd., or Pingtan Fishing.

Fujian Service provides specialized dredging services exclusively to the PRC marine infrastructure market and is, based on the number and capacity of the dredging vessels it operates, one of the leading independent (not state-owned) providers of such services in the PRC. Since its inception, it has functioned exclusively as a specialist subcontractor, performing dredging services for other companies licensed to function as general contractors.  PingTan XingYi's Build-Transfer ("BT") strategy, commenced in 2012, is expected to expand the pipeline and provide more control over its projects as it assumes the role of a general contractor.

Pingtan Fishing primarily engages in ocean fishing with many of its self-owned vessels operating within the Indian Exclusive Economic Zone and the Arafura Sea of Indonesia. Pingtan Fishing is a growing fishing company and provider of high quality seafood in the PRC.

Business Risks and Forward-Looking Statements

This press release contains forward-looking statements that are subject to the safe harbors created under the Securities Act of 1933 and the Securities Exchange Act of 1934. These include statements regarding Pingtan's ability to accelerate growth of its business segments, Pingtan's future financial position, the impact of weather on the dredging business, diversification of customer base, and leverage of free cash flow, Readers are cautioned that actual results could differ materially from those expressed in any forward-looking statements. In addition, please refer to the risk factors contained in Pingtan's SEC filings available at www.sec.gov, including Pingtan's most recent Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Definitive Proxy Statement. Readers are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date on which they are made. Pingtan undertakes no obligation to update or revise any forward-looking statements for any reason.

CONTACT:

Roy Yu Chief Financial Officer Pingtan Marine Enterprise Ltd. Tel: +86 591 87271753 ryu@ptmarine.net

INVESTOR RELATIONS:

The Equity Group Inc. Adam Prior, Senior Vice President (212) 836-9606 aprior@equityny.com

In China Katherine Yao, Associate 86 10 6587 6435 kyao@equityny.com

 

PINGTAN MARINE ENTERPRISE LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)

(IN U.S. DOLLARS)

For the Three Months Ended March 31,

2013

2012 (A)

Revenue

$ 46,408,547

$ 75,055,734

Cost of revenue

(30,314,630)

(37,731,229)

Gross profit

16,093,917

37,324,505

Selling and marketing expenses

(194,688)

(209,674)

.

General and administrative expenses

(1,407,815)

(2,472,715)

Operating income

14,491,414

34,642,116

Other income/(expense)

   Subsidy income

35,387

-

   Interest income

170,132

150,269

   Interest expenses

(685,377)

(464,614)

   Sundry income

2,003

-

   Gain on foreign exchange, net

207,984

51,538

   Gain/(loss) on derivative

1,764,249

(192,957)

Total other income/(expense)

1,494,378

(455,764)

Income before income taxes

15,985,792

34,186,352

Income tax expense

(2,203,251)

(7,329,896)

Net income

$ 13,782,541

$ 26,856,456

 Earnings per ordinary share

    - Basic and diluted

$ 0.17

$ 0.34

 Weighted average number of ordinary shares outstanding

    - Basic and diluted

79,055,053

79,055,053

 

 

PINGTAN MARINE ENTERPRISE LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

(IN US DOLLARS)

 For the Three Months Ended March 31,

2013

2012 (A)

Net income

$                    13,782,541

$                         26,856,456

Other comprehensive income

   Foreign currency translation gain

1,552,499

92,635

Total comprehensive income 

$                     15,335,040

$                        26,949,091

(A) Represents the consolidation retrospectively restated as if Pingtan Marine Enterprise Ltd. (formerly known as China Growth Equity Investment Limited) completed its merger with China Dredging Group Co., Ltd. and the share purchase of Merchant Supreme Co., Ltd. on January 1, 2012, rather than on February 25, 2013.

 

 

PINGTAN MARINE ENTERPRISE LTD. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(IN U.S. DOLLARS)

March 31, 2013

December 31, 2012

(Unaudited)

(A)

Assets

Current assets

Cash

$

206,108,221

$

175,488,715

Notes receivable (banker's acceptances)

transferred from related parties

-

3,645,817

Accounts receivable - third parties

6,594,416

34,924,685

Cost and estimated earnings in excess of billings

on contracts in progress

9,531,476

8,133,021

Other receivables

8,868,730

34,074

Advance to related parties

60,318,092

49,802,821

Prepaid expenses

1,444,979

410,966

Inventories

4,647,929

5,223,984

Total current assets

297,513,843

277,664,083

Other assets

Prepaid other deposits

4,830

4,430

Prepaid dredger deposits

23,346,429

23,274,105

Security deposits

21,204,998

25,087,880

Long-term investment

3,381,207

3,328,789

Deposit on setting up of Joint Venture

-

6,090,302

Deposit for BT project

67,060,604

66,852,860

Dredger, fishing vessel, motor vehicle, machinery and equipment, net

93,225,303

81,707,388

Total other assets

208,223,371

206,345,754

Total assets

$

505,737,214

$

484,009,837

Liabilities and equity

Current liabilities

      Short-term loans

$

12,020,599

$

25,169,260

      Long-term loans - current portion

7,499,034

8,094,308

      Accounts payable - third parties

7,462,804

3,761,149

      Accounts payable - related parties

4,956,093

5,765,632

      Advance from related parties

19,147,153

714,177

      Derivative liability

-

1,764,249

      Receipt in advance - third parties

793,244

-

      Receipt in advance - related parties

4,908,426

12,681,102

      Income tax payable

1,584,914

5,333,519

      Accrued liabilities and other payables

4,645,682

3,738,134

      Deferred income

9,410,382

-

Total current liabilities

72,428,331

67,021,530

Other liabilities

        Long-term loans, net of current portion

17,674,857

16,689,321

Total other liabilities

17,674,857

16,689,321

Total liabilities

90,103,188

83,710,851

Shareholders' equity

      Ordinary shares, 225,000,000 shares authorized with $0.001 authorized             with $0.001 per share; 79,055,053 shares issued and outstanding             as of March 31, 2013 and December 31, 2012

79,055

79,055

      Statutory reserves

19,481,703

19,386,642

      Additional paid-in capital

141,381,098

141,381,098

      Retained earnings

230,911,700

217,224,220

      Accumulated other comprehensive income

23,780,470

22,227,971

Total shareholders' equity

415,634,026

400,298,986

Total liabilities and shareholders' equity

$

505,737,214

$

484,009,837

(A) Represents the consolidation retrospectively restated as if Pingtan Marine Enterprise Ltd. (formerly known as China Growth Equity Investment Limited) completed its merger with China Dredging Group Co., Ltd. and the share purchase of Merchant Supreme Co., Ltd. on January 1, 2012, rather than on February 25, 2013.

 

 

PINGTAN MARINE ENTERPRISE LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(IN U.S. DOLLARS)

For the Three Months Ended March 31,

2013

2012 (A)

Cash flows from operating activities

Net income

$

13,782,541

$

26,856,456

Adjustments to reconcile net income to net

cash provided by operating activities

Depreciation of dredger, fishing vessel, motor vehicle,    machinery and equipment

2,648,376

2,701,825

(Gain)/loss on derivative

(1,764,249)

192,957

Changes in operating assets and liabilities

Accounts receivable - third parties

28,555,829

2,247,242

Accounts receivable - related parties

-

(2,168,154)

Cost and estimated earnings in excess of billings on contracts

 in progress

(1,371,834)

6,956,820

Other receivables

(8,825,504)

(24,668)

Prepaid expenses

(1,026,911)

3,703,227

Inventories

594,162

(1,593,977)

Accounts payable - third parties

3,685,453

750,194

Accounts payable - related parties*

5,280,689

4,822

Receipt in advance - third parties

792,465

(1,162,810)

Receipt in advance - related parties*

(7,964,540)

-

Income tax payable

(3,761,484)

(958,004)

Accrued liabilities and other payables

883,230

(1,260,362)

Net cash provided by operating activities

31,508,223

36,245,568

Cash flows from investing activities

Deposit paid for other fixed assets

(386)

-

Changes in security deposits

3,956,956

-

Proceeds from deferred income**

9,401,148

-

Purchase of dredger, fishing vessels, motor vehicle

machinery and equipment

(13,342,866)

(1,587,377)

Advance to related parties

(9,962,327)

(9,096,655)

Net cash used in investing activities

(9,947,475)

(10,684,032)

Cash flows from financing activities

Proceeds from short-term loans

9,727,422

9,117,597

Repayment of short-term loans

(23,259,126)

(7,607,248)

Advance from related parties

22,355,241

12,330,083

Net cash provided by financing activities

8,823,537

13,840,432

Net increase in cash

30,384,285

39,401,968

Effect of exchange rate

235,221

(32,402)

Cash at the beginning of period

175,488,715

114,204,340

Cash at the end of period

$

206,108,221

$

153,573,906

 

PINGTAN MARINE ENTERPRISE LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - CONTINUED

(IN U.S. DOLLARS)

 For the Three Months Ended March 31,

2013

2012 (A)

Supplemental disclosure of cash flow information:

Cash paid:

Income tax paid

$

5,964,685

$

8,287,901

Interest paid

$

685,377

$

464,614

Supplemental disclosures of non-cash transactions:

Deferred income

$

7,550,451

$

-

*Note 1: Deposit on setting up Joint Venture netted off with accounts payable – related parties.

**Note 2: Deferred income relates to government grants to construct new fishing vessels.

(A) Represents the consolidation retrospectively restated as if Pingtan Marine Enterprise Ltd. (formerly known as China Growth Equity Investment Limited) completed its merger with China Dredging Group Co., Ltd. and the share purchase of Merchant Supreme Co., Ltd. on January 1, 2012, rather than on February 25, 2013.

 

 

Pingtan Marine Enterprises, Ltd. Asset Summary

Pingtan Dredgers (as of March 31, 2013)

Trailer suction hopper dredger

Capacity (cubic meters per hour)

Leased/Owned

Purchase/Lease Date

Hengshengjun #88

3500

Leased

January 2008

Liya #10

6500

Leased

June 2010

Non-Self-Propelling Cutter Suction Dredgers

Capacity (cubic meters per hour)

Leased/Owned

Purchase/Lease Date

Xinggangjun #3

2000

Owned

May 2008

Xinggangjun #66

3500

Owned

March 2008

Xinggangjun #6

2500

Owned

May 2008

Xinggangjun #9

2500

Owned

June 2008 (1)

Honglinjun #19

3800

Leased

April 2011

Grab dredgers

Capacity (cubic meters per hour)

Leased/Owned

Purchase/Lease Date

Hengshunda #1

350

Leased

June 2011

Hengshengjun #10 (formerly known as Liya #2)

350

Leased

June 2011

(1) Company commenced leasing Xinggangjun #9 in June 2008 and acquired it in January 2011.

Pingtan Fishing Vessels (as of March 31, 2013)

Trawlers

Fishing Area

Carrying Tonnage

Capacity (KW)

FuYuanYu 135

India

264

441

FuYuanYu 136

India

264

441

FuYuanYu 137

India

264

441

FuYuanYu 138

India

264

441

FuYuanYu 139

India

264

441

FuYuanYu 140

India

264

441

FuYuanYu 151

Indonesia

230

441

FuYuanYu 152

Indonesia

230

441

FuYuanYu 155

Indonesia

272

441

FuYuanYu 156

Indonesia

274

441

FuYuanYu 725

Indonesia

297

698

FuYuanYu 726

Indonesia

297

698

FuYuanYu 727

Indonesia

297

698

FuYuanYu 728

Indonesia

297

698

FuYuanYu 729

Indonesia

297

698

FuYuanYu 730

Indonesia

297

698

FuYuanYu 731

Indonesia

297

698

FuYuanYu 732

Indonesia

297

698

FuYuanYu 733

Indonesia

297

698

FuYuanYu 734

Indonesia

297

698

FuYuanYu 735

Indonesia

236

368

FuYuanYu 736

Indonesia

236

368

FuYuanYu 737

Indonesia

192

441

FuYuanYu 738

Indonesia

192

441

FuYuanYu 739

Indonesia

292

810

FuYuanYu 740

Indonesia

292

810

FuYuanYu 741

Indonesia

292

810

FuYuanYu 742

Indonesia

292

810

FuYuanYu 743

Indonesia

292

810

FuYuanYu 745

Indonesia

292

810

FuYuanYu 746

Indonesia

292

810

FuYuanYu 747

Indonesia

292

810

FuYuanYu 748

Indonesia

292

810

FuYuanYu 749

Indonesia

292

810

FuYuanYu 750

Indonesia

270

441

FuYuanYu 751

Indonesia

270

441

FuYuanYu 791

Indonesia

266

552

FuYuanYu 792

Indonesia

266

552

Drifters

FuYuanYu 793

Indonesia

210

287

FuYuanYu 794

Indonesia

207

434

SOURCE Pingtan Marine Enterprise Ltd.