China Fishery

China Fishery: (Key Feature in The Edge) Refutes Moody’s red flags and pledges stronger performance. Recall moody cited 8 red flags on Co, among other things, including negative free cash flows, high customer concentration, unusually low tax rates and a family share holding structure.

CEO refutes Moody’s claims, calling it unfair, as Negative cash flows due to aggressive expansion, on back of strong rev growth and steadily increasing asset base, while high concentration of customers allows Co. to solidify its partnership with clients and attributes Co’s success to acute mgt by Family. Co. recently reported 3Q11 results, which saw rev at US$109m, -19% yoy and net profit at US$37.4m, -5% yo. Lower yoy performance due to En Nino, which brought warmer waters to Pacific Ocean and affected migratory patterns of fishes.

Going forward, CEO positive on outlook, tip the South Pacific Fleet to realise potential when fishing season reopens nxt yr. SCB and UOB maintains Buy call with $1.75 and $1.82 TP.