Factory Sale Boosts Qian Hu Profits 40 Percent

Qian Hu Corp. Ltd's sale of its aquarium and pet accessories factory Guangzhou, China, in December helped boost its fourth quarter net profit 39.7 percent, the company reported.

The effort to divest its Chinese manufacturing efforts and focus on research and development of higher-margin products resulted in a $900,000 net gain for Singapore-based Qian Hu, which sold its Guangzhou Qian Hu Aquarium and Pets Accessories Manufacturing Co. to entrepreneur Liow Soon Kian for $10,000 (about S$13,000) and the assumption of about $1 million in "negative net assets."

Overall, Qian Hu reported net earnings of S$886,000 (about $685,000) on revenues of S$19.3 million (about $14.9 million) for its fourth quarter ended Dec. 31, 2011, compared with earnings of S$634,000 (about $490,000) on revenues of S$22.2 million (about $17.2 million) in the previous year.

For the year, the company reported net earnings of S$3.5 million (about $2.7 million) on revenues of S$88.3 million (about $68.3 million) compared with earnings of S$4.2 million (about $3.3 million) on revenues of S$91.2 million (about $70.6 million) in the previous year.

Weaker demand in the European market coupled with prolonged flooding in Thailand, which began in August and continued into December, contributed to a 27.5 percent decline in ornamental fish revenue in the fourth quarter of 2011 to S$7.4 million (about $5.7 million)  from S$10.2 million (about $7.9 million) in the year-ago period.

Revenue from aquarium and pet accessories was essential flat at S$9.1 million (about 7.0 million) for the quarter, the company reported. Its plastics unit, which produces bags for the electronics and ornamental fish sectors, saw revenues fall 4.5 percent to S$2.8 million (about $2.2 million), largely due to slumping demand in the electronics sector, the company reported.

"The protracted slowdown as a result of the Eurozone crisis, coupled with unseasonal weather in Thailand, has dented our performance in 2011," said Kenny Yap, Qian Hu's executive chairman and managing director. "For the next few years, there will be more uncertainties ahead. Even though Asia has generally achieved healthy growth at the present moment, it will still take Asia a few more years to catch up in terms of reaching the kind of market demand generated from European Union."

Qian Hu's exports of ornamental fish to Europe declined about 35 percent during the quarter due to the economy there, the company reported, and the Thai flooding disrupted Qian Hu's ornamental fish operations in Thailand.

Qian Hu plans to continue building distribution networks in China and India for both ornamental fish and aquarium and pet accessories. It also plans to open an ornamental fish subsidiary in Vietnam in the next three years.

Qian Hu has set a goal of doubling its market share in the world ornamental fish market to an estimated 10 percent. At 5 percent, the company believes it already is the region's largest ornamental fish exporter.