Qian Hu Reports $357K Profit in FY2024, Proposes 0.4 Cent Dividend

Qian Hu FY2024 Financial Analysis: Net Profit Growth of \$356,656

Business Description

Qian Hu Corporation Limited is an integrated ornamental fish service provider listed on the Singapore Mainboard. The company operates in three primary segments:

Fish: Distribution of ornamental fish, including over 1,000 species and varieties. It also includes aquaculture of antibiotic-free edible fish.
Accessories: Manufacturing and distribution of aquarium accessories, pet foods, and medications.
Plastics: Production and sale of plastic products, including sustainable and biodegradable options.

Geographically, the company operates in Singapore, Malaysia, Thailand, and has expanded into Indonesia and China. Its market competitors vary by segment but include other ornamental fish exporters, pet product manufacturers, and plastics producers.

Qian Hu’s competitive advantage lies in its proprietary technologies like the Recirculating Aquaculture System (RAS) and Aqua-Ring Technology (ART) for bio-secure fish production, as well as its established reputation for transparency and governance.

Revenue Streams and Financial Performance

The company derives its revenue from fish exports, accessories sales, and plastics. As of FY2024, the revenue breakdown is as follows:

Fish: \$29.3 million (41% of total revenue, up 6.1% YoY).
Accessories: \$34.0 million (48% of total revenue, down 1.8% YoY).
Plastics: \$8.1 million (11% of total revenue, flat YoY).

The Group’s customer base includes ornamental fish retailers, pet product distributors, and industrial clients for plastics. It maintains a healthy supply chain with a focus on bio-secure and sustainable products.

Key Financial Statement Analysis

Income Statement

Revenue: Increased by 1.6% YoY to \$71.4 million.
Net Profit: Turned profitable with \$356,656 in FY2024, reversing a \$9.3 million loss in FY2023.
Earnings Per Share (EPS): Improved to 0.31 Singapore cents, up from a loss of 8.17 Singapore cents in FY2023.
Segment Profitability:
- Fish: Pre-tax profit declined by 2.6% to \$2.0 million due to lower transhipment fees.
- Accessories: Pre-tax profit surged by 121% to \$1.0 million, boosted by a one-time compensation of \$0.7 million from land expropriation.
- Plastics: Pre-tax profit improved by 18.9% to \$524,000, supported by higher-margin products.

Balance Sheet

Cash and Cash Equivalents: Healthy at \$14.6 million as of 31 December 2024.
Net Asset Value (NAV) Per Share: Increased to 35.04 Singapore cents, reflecting improved financial stability.

Cash Flow Statement

The report does not explicitly detail cash flow figures but indicates strong cash reserves, enabling dividend payouts and future investments.

Dividend Announcement

The Directors proposed a first and final dividend of 0.4 Singapore cents per ordinary share, subject to approval at the AGM on 3 April 2025. If approved, the dividend will be disbursed on 30 April 2025.

Key Strategic Initiatives

Launch of bio-secure fish using RAS and ART technologies.
Development of an antimicrobial pet product line in collaboration with N&E Innovations, targeting sustainable pet care solutions.
Expansion into new markets like Indonesia for pet products and Malaysia for biodegradable plastics.
Operational ramp-up at a new aquaculture farm in Malaysia for Marble Goby and other edible seafood.

Strengths and Risks

Strengths

Turnaround to profitability in FY2024.
Diversified revenue streams across fish, accessories, and plastics.
Commitment to sustainability through innovative products and technologies.
Strong cash reserves and dividend payout.

Risks

Decline in Accessories segment revenue due to global weakened purchasing sentiment.
Flat growth in the Plastics segment, with reliance on new product innovation to drive future growth.
Geopolitical risks such as trade tensions and inflationary pressures.

Recommendations

For Existing Investors: Hold the stock. The company’s return to profitability and dividend payout indicate stability and potential for growth. The focus on sustainable products and geographic expansion further strengthens its prospects.

For New Investors: Consider a cautious buy. While the turnaround is promising, risks in revenue variability across segments and external macroeconomic factors should be weighed. Monitor the company’s FY2025 performance closely.

Disclaimer: This recommendation is based on the FY2024 report and the company’s current strategies. Investors should conduct their own due diligence and consider their risk tolerance before making investment decisions.

Report Details

Date of Report: 15 January 2025
Financial Year: FY2024 (ended 31 December 2024)