2014

Pingtan Marine Enterprise Reports Unaudited Financial Results For Its Second Quarter And Six Months Ended June 30, 2013

FUZHOU, China, Aug. 9, 2013 /PRNewswire/ -- Pingtan Marine Enterprise Ltd. (Nasdaq: PME), ("Pingtan," or the "Company") an integrated marine services company in the People's Republic of China (PRC), today announced its unaudited financial results for the second quarter and first six months of 2013.

Update on Potential Sale of Dredging Subsidiary

As previously announced, Pingtan's Board of Directors (the "Board") received an offer from its Chairman and CEO, Mr. Xinrong Zhuo, to acquire the assets of China Dredging Group, or CDGC, and its PRC operating subsidiaries, Fujian Xinggang Port Service Co., Ltd. The Board retained an independent financial advisor and investment banking firm, Duff & Phelps LLC, to provide a fairness opinion in connection with the proposed transaction. Mr. Zhuo has offered to purchase the CDGC business and assets in exchange for (i) writing off the Company's current $155.2 million promissory note (which matures on June 19, 2015 and bears an interest rate of 4%); (ii) the transfer of certain fishing trawlers to the Company (the number of which will be determined by the difference between the enterprise value of CDGC less the $155.2 million promissory note divided by the average value of each fishing trawler). As part of the Proposed Transaction, the Board will also retain, BMI Appraisals Limited ("www.bmi-appraisals.com") to provide an independent valuation report on the vessels that would constitute a portion of the consideration.

Duff and Phelps is currently undergoing its due diligence process and expects to deliver a fairness opinion to the Board in the coming weeks. In addition, BMI Appraisals Limited will also submit a valuation report on additional fishing trawlers.

The Company intends to provide additional information for investors, including financial metrics used by Duff and Phelps in the evaluation of the transaction and will make public all the valuation reports for vessels delivered as part of this potential transaction.

Second Quarter 2013 Management Comments

Mr. Xinrong Zhuo, Chairman and CEO of the Company, stated, "We remain focused on expanding our fishing enterprise in light of China's increasing consumer demand. During the quarter, we negotiated a transaction to add another 46 vessels to the Company's fleet, which will greatly increase our fish harvest volume and carrying volume, resulting in the Company having a total of 86 vessels. In addition, each of our fishing vessels require an approval from the Ministry of Agriculture of the People's Republic of China to carry out ocean fishing projects in foreign territories. The primary barrier to entry into the ocean fishing industry has been obtaining the necessary licenses to operate these vessels because the number of such licenses is limited by government authorities so as to prevent overfishing. The newly acquired vessels are fully licensed to fish in Indonesian waters and a fishing license can be transferred to a new vessel when an old vessel retires. We believe that there are no other companies building a leading market share in the fishing industry in China like Pingtan.  This is a highly-fragmented market, and we believe this market share will help in our negotiations with distributors and exporters, and also open up the possibility of selling downstream directly to end markets directly. This will increase our margins in the long-term. However, we recognize that growing our asset base is only one element of the equation, as we also must hire and train highly qualified captains and crew to successfully operate these vessels. This will be instrumental in ensuring that we continue to deliver a consistent and quality product to our customers. We feel that the Company is operating in a sustainable and growing sector and we look forward to keeping investors apprised of our progress."

Second Quarter 2013 Financial Highlights (A)

 

($ in millions, except per share data)

3 months ended


3 months ended


6 months ended


6 months ended


June 30, 2013


June 30, 2012


June 30, 2013


June 30, 2012

  Dredging Services

$50.5


$59.6


$77.3


$119.1

  Fishing

$21.4


$10.3


$41.0


$25.8

Total Revenue

$71.9


$69.9


$118.3


$144.9

Cost of Revenue

37.5


36.7


67.8


74.5

Gross Profit

34.5


33.2


50.6


70.5

Gross Profit Margin

47.9%


47.5%


42.7%


48.6%

Net Income

24.8


21.3


38.6


48.2

Basic and Diluted Weighted

  Average Shares Outstanding

79.1


79.1


79.1


79.1

EPS

$0.31


$0.27


0.49


0.61









 

Balance Sheet Highlights (A)




6/30/2013


12/31/2012

Cash and Cash Equivalents



$20.8


$175.5

Total Current Assets



65.8


277.7

Total Assets



683.3

 


484.0

Total Current Liabilities



71.3


67.0

Total Long-term Debt



167.4


16.7

Total Liabilities



238.7


83.7

Shareholders' Equity



444.6


400.3

Total Liabilities and Shareholders' Equity



$683.3


$484.0

Book Value Per Share



$5.62


$5.06

(A)

 

Represents the consolidation retrospectively restated as if Pingtan Marine Enterprise Ltd. (formerly known as China Growth

Equity Investment Ltd.) 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.

Consolidated Financial and Operating Review

Revenues

For the three months ended June 30, 2013, revenues increased by 2.8% to $71.9 million from $69.9 million for the same period in 2012.

The Company's revenue from its fishing business increased by 106.8% to $21.4 million compared to $10.3 million in the same period last year. This increase was primarily due to an increase in sales volume as a result of the acquisition of 20 new fishing vessels in 2012, 10 of which were acquired in the second half of 2012, and increased unit selling price.  

On June 20, 2013, the Company's fishing segment expanded its fleet from 40 to 86 through the signing of a "Master Agreement" to purchase 46 fishing trawlers in a transaction totaling approximately $410.1 million. The Company immediately began reporting operating results from this transaction for a short period in the current second quarter, with a full quarter beginning in the third quarter of 2013.

An increase in the revenues from the Company's fishing business was offset by lower volume from the Company's dredging business. For the three months ended June 30, 2013, revenue from dredging services decreased to $50.5 million from $59.6 million in the same period of 2012. This decrease was primarily due a decrease in dredging volume as we terminated the leasing agreements of three dredgers in July 2012 and one in December 2012. As a result, Pingtan completed 23.3 million cubic meters of dredging volume in the second quarter of 2013, compared to 32.8 million cubic meters in the same period of 2012.

For the six months ended June 30, 2013, the Company reported revenues for the first half of 2013 of $118.3 million, compared to $145.0 million in the prior year period. 

Gross Margin

The Company's gross margin was 47.9% in the quarter ended June 30, 2013, compared to 47.5% for the same period last year. The increase was largely due to increased margins at the Company's fishing segment, offset by lower gross margins for the dredging segment, which included $6.1 million in reclamation cost for its BT project.

For the six months ended June 30, 2013, gross margin decreased to 42.7% from 48.6% in the same period of 2012, principally due to lower gross margins for the dredging segment. In addition, the Company incurred $10.3 million in reclamation costs during the period.

Selling, General & Administrative Expenses

For the three months ended June 30, 2013, total selling, general and administrative expenses were $3.3 million, or 4.7% of total revenue, compared to $2.8 million, or $4.0% of total revenue, in the same period of 2012. The increase was mainly due to higher administrative costs associated with the company being a publicly listed company, as well as an expanded scale of operations.

For the six months ended June 30, 2013, total selling, general and administrative expenses decreased to $5.0 million from $5.5 million in the same period of 2012. The lower expenses were primarily attributable to lower revenue taxes for dredging services as a result of a decrease in dredging services revenue.

Net Income

For the three months ended June 30, 2013, the Company's net income was $24.8 million, or $0.31 per basic and diluted share, compared to $21.3 million, or $0.27 per basic and diluted share, in the same period of 2012.

For the six months ended June 30, 2013, the Company's net income was $38.6 million, or $0.49 per basic and diluted share, compared to $48.2 million, or $0.61 per basic and diluted share, in the same period of 2012.

About Pingtan

Pingtan is a marine enterprises group, engaging in dredging services and ocean fishing through its wholly-owned subsidiaries, China Dredging Group and Merchant Supreme, and their respective PRC operating subsidiaries, Fujian Xinggang 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. 

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 may contain forward-looking statements that are subject to the safe harbors created under the Securities Act of 1933 and the Securities Exchange Act of 1934. 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 STATEMENTS OF INCOME (UNAUDITED)

(IN U.S. DOLLARS)

 




For the Three Months Ended June 30,


For the Six Months Ended June 30,




2013


 2012 (A)


2013


 2012 (A)

Revenue


$71,909,988


$69,925,881


$118,318,535


$144,981,615

Cost of revenue

(37,453,696)


(36,743,216)


(67,768,326)


(74,474,445)

Gross profit

34,456,292


33,182,665


50,550,209


70,507,170

Selling and marketing expenses

(174,046)


(252,168)


(368,734)


(461,842)

General and administrative expenses

(3,174,413)


(2,549,009)


(4,582,228)


(5,021,724)











Operating income

31,107,833


30,381,488


45,599,247


65,023,604

Other income/(expense)








   Dividend income

69,071


-


69,071


-

   Interest income

216,768


183,026


386,900


333,295

   Interest expenses

(914,419)


(894,036)


(1,599,796)


(1,358,650)

   Subsidy income

205


-


35,592


-

   Sundry income

11


-


2,014


-

   Gain on investment

-


15,126


-


15,126

   Loss on foreign exchange, net

(428,389)


(82,133)


(220,405)


(30,595)

   (Loss) / gain on derivative

-


(728,720)


1,764,249


(921,677)

Total other income/(expense)

(1,056,753)


(1,506,737)


437,625


(1,962,501)

Income before income taxes

30,051,080


28,874,751


46,036,872


63,061,103

Income tax expense

(5,273,327)


(7,533,940)


(7,476,578)


(14,863,836)

Net income

$24,777,753


$21,340,811


$38,560,294


$48,197,267

Earnings per ordinary share








       - Basic and diluted

$0.31


$0.27


$0.49


$0.61

Weighted average number of ordinary







  shares outstanding







       - Basic and diluted

79,055,053


79,055,053


79,055,053


79,055,053



(A)

 

Represents the consolidation retrospectively restated as if Pingtan Marine Enterprise Ltd. (formerly known as China Growth Equity
Investment Ltd.) 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 COMPREHENSIVE INCOME (UNAUDITED)

(IN US DOLLARS)

 


For the Three Months Ended


For the Six Months Ended

June 30, 

June 30, 


2013


2012 (A)


2013


2012 (A)









Net income 

$24,777,753


$21,340,811


$38,560,294


$48,197,267









Other comprehensive income








Foreign currency translation gain/(loss)

4,202,178


(3,020,912)


5,754,677


(2,928,277)

Total comprehensive income 

$28,979,931


$18,319,899


$44,314,971


$45,268,990









(A)

 

Represents the consolidation retrospectively restated as if Pingtan Marine Enterprise Ltd. (formerly known as China Growth Equity

Investment Ltd.) 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)






30-Jun-13


31-Dec-12


(Unaudited)


(A)

Assets




Current assets




       Cash

$20,806,414


$175,488,715

       Notes receivable (banker's acceptances)




          transferred from related parties

-


3,645,817

       Accounts receivable - third parties

18,603,522


34,924,685

       Cost and estimated earnings in excess of billings 




          on contracts in progress

8,341,705


8,133,021

       Other receivables

10,661,783


34,074

       Advance to related parties

-


49,802,821

       Prepaid expenses

24,000


410,966

       Inventories

7,344,328


5,223,984

Total current assets

65,781,752


277,664,083





Other assets




       Prepaid other deposits

-


4,430

       Prepaid dredger deposits

23,625,640


23,274,105

       Prepaid fishing vessel deposits

410,017,680


-

       Security deposits

18,607,228


25,087,880

       Long-term investment

3,421,644


3,328,789

       Deposit on setting up of Joint Venture

-


6,090,302

       Deposit for BT project

67,862,613


66,852,860

       Property, plant and equipment, net

93,958,771


81,707,388

Total other assets

617,493,576


206,345,754

Total assets

$683,275,328


$484,009,837





Liabilities and equity




Current liabilities




       Accounts payable - third parties

$8,875,293


$3,761,149

                                      - related parties

-


5,765,632

Receipt in advance - third parties

2,452,945


-

                                - related parties

-


12,681,102

       Short-term loans

20,144,510


25,169,260

       Long-term loans - current portion

11,381,041


8,094,308

       Income tax payable

5,395,826


5,333,519

       Accrued liabilities and other payables

13,046,446


3,738,134

       Advance from a shareholder 

480,472


714,177

       Derivative liability

-


1,764,249

       Deferred income

9,522,925


-

Total current liabilities

71,299,458


67,021,530





Other liabilities




       Note payable

155,166,195


-

       Long-term loans, net of current portion

12,195,718


16,689,321

Total other liabilities

167,361,913


16,689,321

Total liabilities

238,661,371


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 June 30, 2013 and December 31, 2012

79,055


79,055

       Additional paid-in capital

141,381,098


141,381,098

       Statutory reserves 

19,770,660


19,386,642

       Retained earnings

255,400,496


217,224,220

       Accumulated other comprehensive income

27,982,648


22,227,971

Total shareholders' equity

444,613,957


400,298,986

Total liabilities and shareholders' equity

$683,275,328


$484,009,837

(A)

Represents the consolidation retrospectively restated as if Pingtan Marine Enterprise Ltd. (formerly known as China Growth Equity Investment Ltd.) 


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 Six Months Ended June 30,  


2,013


 2012 (A) 

 Cash flows from operating activities 




 Net income 

$38,560,294


$48,197,267

 Adjustments to reconcile net income to net 




       cash provided by operating activities 




       Depreciation of property, plant and equipment 

5,347,650


5,555,301

       (Gain)/loss on derivative 

(1,764,249)


921,677

       Available-for-sale financial instrument fair value adjustment 

-


(721)





 Changes in operating assets and liabilities 




       Accounts receivable - third parties 

16,875,326


(14,880)

                                    - related parties 

-


(1,688,997)

       Cost and estimated earnings in excess of billings on contracts in progress 

(85,235)


(5,749,657)

       Other receivables 

(2,957,500)


(4,526,907)

       Prepaid expenses 

394,949


5,165,650

       Inventories 

(2,024,538)


951,295

       Accounts payable - third parties 

5,020,682


1,715,489

                                  - related parties * 

331,367


907,893

       Receipt in advance - third parties 

2,435,603


(1,064,711)

                                   - related parties 

(12,942,680)


-

       Income tax payable 

(18,121)


(712,176)

       Accrued liabilities and other payables 

9,180,577


(177,157)

 Net cash provided by operating activities 

58,354,125


49,479,366





 Cash flows from investing activities 




       Deposit paid for acquisition of fishing vessels 

(200,000,000)


-

       Changes in security deposits 

6,811,085


-

       Payment for long-term investment 

-


(2,992,116)

       Proceeds from disposition of short-term investment 

-


792,286

       Proceeds from deferred income  

1,861,416


-

       Purchase of property, plant and equipment 

(15,360,530)


(5,330,180)

       Advance to related parties 

(8,731,951)


(35,700,532)

 Net cash used in investing activities 

(215,419,980)


(43,230,542)





 Cash flows from financing activities 




       Proceeds from short-term loans 

24,994,395


28,556,774

       Repayment of short-term loans 

(30,680,742)


(30,928,269)

       Proceeds from long-term loans 

-


21,688,883

       Repayment of long-term loans 

(1,884,778)


-

       Advance from related parties 

8,571,161


20,139,296

       Advance from a shareholder 

(233,705)


1,006

 Net cash provided by financing activities 

766,331


39,457,690





 Net (decrease)/increase in cash 

(156,299,524)


45,706,514





 Effect of exchange rate 

1,617,223


(1,275,105)





 Cash at the beginning of period 

175,488,715


114,204,340





 Cash at the end of period 

$20,806,414


$158,635,749

 Supplemental disclosure of cash flow information: 




 Cash paid: 




      Income tax paid 

$7,494,648


$15,576,011

      Interest paid 

$1,395,742


$1,358,650

 

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

 

(A)

Represents the consolidation retrospectively restated as if Pingtan Marine Enterprise Ltd. (formerly known as China Growth Equity Investment
Ltd.) 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.

SOURCE Pingtan Marine Enterprise Ltd.




Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

 

PR Newswire Membership

Fill out a PR Newswire membership form or contact us at (888) 776-0942.

Learn about PR Newswire services

Request more information about PR Newswire products and services or call us at (888) 776-0942.