Shares in China Fishery Group and related company Pacific Andes Resources Development fell after both companies posted weaker-than-expected quarterly results.
China Fishery, which is part-owned by Pacific Andes Resources, fell 13% to $0.595, while Pacific Andes dropped 8% to $0.137. China Fishery has plunged nearly 35% since the start of the year while Pacific Andes has fallen 21.5%.
China Fishery posted a fourth-quarter net loss of US$15 million ($18 million) compared with a profit of US$0.8 million a year ago. Pacific Andes Resources made a net profit of HK$627.7 million ($98.9 million for the year ended September, a slight increase from HK$622.8 million last year.
DMG & Partners downgraded China Fishery to ‘neutral’ from ‘buy’ and cut its target price to $0.65 from $1.00, citing disappointing fourth-quarter results due to poor performance in its fleet operations.
Going forward, the brokerage expects China Fishery’s shares to be weighed by poor earnings visibility from its fleet and Peru fishmeal business. It lowered its 2013 earnings estimates for China Fishery by 46%.
OCBC Investment Research downgraded Pacific Andes Resources Development, citing earnings that were below expectations in the fourth quarter, due to poor results at China Fishery.
Average selling price also fell 3%, leading to a sharp decline in operating margins, which dropped to 6.4% in the fourth quarter, compared with 10.2% a year ago.
“The key challenge is the lower activity in the South Pacific, which is unlikely to pick up any time soon,” said OCBC, adding that a cut in fishing quota in Peru for the upcoming fishing season will also hurt both companies.
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