Oceanus

Oceanus: likely to underperform in an expected weak market after the abalone farming co says it expects to record a loss for 2Q11 vs net profit of Rmb 71.9m in 2Q10, largely due to losses arising from a change in fair value of biological assets. Says this change is mainly due to mortality of abalones in Jun ’11, arising from an operational misstep in managing the flow of abalones from sea-based farms to the processing plant, which meant large sized abalones were kept for longer than intended at sea, resulting in overcrowding and high mortality rates. It also cites delayed sales of dried abalone, which command higher margins, while live sales were further curbed to channel more stock for in-house processing; it expects its dried inventory to be sold in 2H11.
Oceanus shares fell 13% last week, ending down 6.5% Friday at $0.174, and are currently trading at their lowest level since Apr’ 09