China Fishery

China Fishery: Company announced dismay results 1Q13 results, with revenues down 14% y/y to US$108m and earnings declining by 43% to US$13.6m. However, issues were well-flagged from FY12, due mainly to lower contribution from China Fishery Fleet (low inventory held from North Atlantic processing activity), and higher interest costs. In addition, there was no significant inventory carry over from the previous quarter as was the case in the comparable period last year. No dividends have been declared. Net debt to equity ratio increased from 64.7% to 70.9%. Mgmt stated that 1Q13 is traditionally a low fishing season, and was affected by a significant reduction in the total allowable catch of Peruvian Anchovy. The lower-than-expected processing volume in the North Atlantic Ocean last quarter also meant a lower level of inventory carried forward for sale in this quarter. HSBC maintains OW with TP of $0.88, based on 5.9x forward P/E.