Exhibit 99.1

 

 

pingtan marine enterprise Reports FINANCIAL RESULTS

 

for the first quarter ended march 31, 2017; exceeds previous provided eps guidance

 

Company Reports First Quarter EPS of $0.13; Exceeds Previous Announced 2017 First Quarter EPS Guidance of Between $0.08 and $0.10

 

Company to Hold Conference Call Tuesday, May 16, 2017, at 8:30 AM ET

 

FUZHOU, China, May 15, 2017 – Pingtan Marine Enterprise Ltd. (Nasdaq: PME) (“Pingtan” or the “Company”), a global fishing company based in the People’s Republic of China (PRC), today announced financial results for its first quarter ended March 31, 2017.

 

The Company's recent notable events are as follows:

 

March 15, 2017: The Company announced that it will enter the consumer food market in that its invested entity has begun development of a new processing factory in Pingtan Comprehensive Experimental Area, Fujian, PRC.
   
March 29, 2017: The Company announced it has expanded its fleet through the purchase of 5 internationally licensed vessels, including 1 refrigerated transport vessel and 4 squid jigging vessels, from Fuzhou Honglong Ocean Fishery Co., Ltd.
   
April 13, 2017: The Company announced a quarterly cash dividend of $0.01 per ordinary share outstanding, payable in cash on or about May 15, 2017 to shareholders of record on April 30, 2017. This marks the tenth consecutive quarterly dividend paid by Pingtan. The Company intends to continue paying a cash dividend on a quarterly basis, and expects to adjust its quarterly dividend rate in accordance to its earnings performance.
   
May 12, 2017: The Company announced it has taken a second step to enter the consumer food market, and has signed a tripartite framework agreement with Shanghai City Supermarket Co., Ltd and Shenzhen Honglicun Restaurant Co., Ltd to provide its fish products.

 

Management Comments

 

Mr. Xinrong Zhuo, Chairman and CEO of the Company, commented, “We were pleased to deliver strong operating and financial results, as our previous deployed fishing vessels have begun to harvest a steady stream of fish and we have exceeded our previously provided first quarter EPS guidance of between $0.08 and $0.10 with EPS of $0.13. In the first quarter, as a result of our team’s continued unremitting efforts, Pingtan has achieved two major success towards entering the food consumer market. The first major step is that the company in which we have an equity investment has finally begun construction of a fish processing factory in Pingtan Comprehensive Experimental Area of Fujian Province and we expect that construction will be completed in 2018. The processing factory  will be used for cold storage, processing and distribution of the deep ocean fish landings of Pingtan's vessels. Secondly, we recently announced that Pingtan has signed a tripartite framework agreement with 2 major companies to enter directly the e-commerce and restaurant chain. This marks the introduction for Pingtan brand products to be sold through a major e-commerce platform to consumers across China, and will allow us to expand more into the South China region and cooperate with a major catering business. We are convinced that the rapid growth of the Chinese market demand will drive us to move forward to become a large integrated fishery enterprise.”

 

 

 

 

Pingtan Marine Enterprise, Ltd.   Page 2
May 15, 2017    

 

Factors Affecting Pingtan’s Results of Operation – The Indonesian government's moratorium on fishing licenses renewals:  

 

As previously disclosed in our Forms 10-K and 10-Q filed since 2015, in early December 2014, the Indonesian government introduced a six-month moratorium on issuing new fishing licenses and renewals so that the country’s Ministry of Maritime Affairs and Fisheries (“MMAF”) could monitor the operations of existing fleets and fight illegal fishing activities. As a result, all licensed fishing vessels operating in Indonesian waters were informed by the Indonesian government to operate within strict guidelines and subsequently to cease operation, in order to avoid potential enforcement actions by the Indonesian Navy, such as boat seizures. To cooperate and comply with the Indonesian government’s fishing license check procedures, the Company reduced its operations in January 2015. Since February 2015, Pingtan has ceased operations of its vessels in Indonesian waters. Since the Company derives a majority of its revenue from this area, this ban caused a significant drop in production.

 

In November 2015, the Indonesian government announced that the moratorium had concluded. The Company’s expectation is that the MMAF will implement new fishing policies and resume the license renewal process, although this has not yet occurred. In the interim, the Company’s financial results will continue to be materially adversely affected by this moratorium.

 

In the meantime, the Company deployed 13 vessels to the Indo-Pacific waters and 2 squid jigging vessels to the international waters of Southwest Atlantic and Southeast Pacific Oceans in the second half of fiscal 2016. In the first quarter of 2017, the Company deployed 4 longline fishing vessels, 2 squid jigging vessels and 1 refrigerated transport vessel to international waters, and expects to deploy 2 more squid jigging vessels after regular maintenance.

 

Among the Company’s 140 vessels, 13 are operating in Indo-Pacific waters; 12 are operating in the Bay of Bengal in India; 9 are operating in international waters, 2 will be deployed to international waters after regular maintenance and the remaining vessels are licensed to operate in the Arafura Sea in Indonesia but are temporarily not operating due to the moratorium discussed above.

 

First Quarter 2017 Financial Highlights (all results are compared to prior year period)

 

As a result of increase in the Company’s fishing vessels put in operation, revenue increased 37.6% to $5.66 million from $4.12 million.
   
  Gross profit was $63,333 compared to gross loss of $3.31 million.
     
Net income attributable to owners of the Company was $9.92 million, or $0.13 per basic and diluted share, compared to net loss attributable to owners of the Company of $5.10 million, or ($0.06) per basic and diluted share. The increase was primarily due to the same reasons described above.

 

First Quarter 2017 Selected Financial Highlights

 

 

($ in millions, except shares and per share)

  Three Months ended
March 31,
 
   2017   2016 
Fishing Business          
Revenue  $5.7   $4.1 
Cost of Revenue   5.6    7.4 
Gross Profit (Loss)   0.1    (3.3)
Gross Margin   1.1%   (80.5)%
           
Net Income (Loss)   10.8    (5.5)
Basic and Diluted Weighted Average Shares   79.1    79.1 
EPS (in $)  $0.13   $(0.06)

 

 

 

 

Pingtan Marine Enterprise, Ltd.   Page 3
May 15, 2017    

 

Balance Sheet Highlights 

 

($ in millions, except for book value per share)

  3/31/2017   12/31/2016 
         
Cash and Cash Equivalents  $0.6   $0.8 
Total Current Assets   38.5    60.8 
Total Assets   213.5    226.5 
Total Current Liabilities   70.2    64.9 
Total Long-term Debt, net of current portion   22.0    21.9 
Total Liabilities   92.1    86.8 
Shareholders’ Equity   121.3    139.7 
Total Liabilities and Shareholders’ Equity   213.5    226.5 
Book Value Per Share (in $)  $1.53   $1.77 

 

Consolidated Financial and Operating Review

 

Revenues

 

Revenues from the fishing business for the three months ended March 31, 2017 was $5.66 million, an increase of $1.54 million, or 37.6%, from $4.12 million for the same period in 2016.

 

The increase was primarily due to an increase in sales volume resulting from business expansion of more fishing vessels put in operation, as well as an increase in average unit sale price from the different sales mix.

 

Gross Margin

 

The Company’s gross margin was 1.1% for the three months ended March 31, 2017, compared to (80.5)% in the prior year period.

 

The increase was primarily due to a significant decrease in unit cost of fish resulting from the increase in fishing activities by deploying more fishing vessels into operation.

 

 

 

 

Pingtan Marine Enterprise, Ltd.   Page 4
May 15, 2017    

 

Selling Expenses

 

For the three months ended March 31, 2017, selling expenses for the fishing business was $0.39 million compared to $0.34 million in the prior year period.

 

General & Administrative Expenses

 

For the three months ended March 31, 2017, general and administrative expenses for the fishing business was $1.09 million, compared to $1.47 million in the prior year period.

 

Net Income (Loss) Attributable to Owners of the Company

 

Net income attributable to owners of the Company for the three months ended March 31, 2017 was $9.92 million, or $0.13 per basic and diluted share, compared to net loss attributable to owners of the Company of $5.10 million, or $(0.06) per basic and diluted share, in the same period of 2016. The increase was primarily due to the reasons described above.

 

Conference Call Details

 

Pingtan also announced that it will discuss financial results in a conference call Tuesday, May 16, 2017 – 8:30 a.m. ET.

 

The dial-in numbers are:

 

Live Participant Dial In (Toll Free): 877-407-0310
   
Live Participant Dial In (International): 201-493-6786

 

To listen to the live webcast, please go to http://www.ptmarine.com and click on the conference call link at the top of the page, or go to: http://ptmarine.equisolvewebcast.com/q1-2017 . This webcast will be archived and accessible through the Company’s website for approximately 30 days following the call.

 

About Pingtan

 

Pingtan is a global fishing company engaging in ocean fishing through its subsidiary, Fujian Provincial Pingtan County Ocean Fishing Group Co., Ltd., or Pingtan Fishing.

 

 

 

 

Pingtan Marine Enterprise, Ltd.   Page 5
May 15, 2017    

 

Business Risks and Forward-Looking Statements

 

This press release may contain forward-looking statements that are subject to the safe harbors created under the Securities Act of 1933 and the Securities Exchange Act of 1934. Such forward looking statements include, but are not limited to, expectations to continue paying quarterly cash dividends and recognizing sales and commencing fishing activities in the first quarter of 2017. Although forward-looking statements reflect the good faith judgment of our management, such statements can only be based on facts and factors currently known by us. Consequently, forward-looking statements are inherently subject to risks and uncertainties and actual results and outcomes may differ materially from the results and outcomes discussed in or anticipated by the forward-looking statements. Risks include anticipated growth and growth strategies; need for additional capital and the availability of financing; our ability to successfully manage relationships with customers, distributors and other important relationships; technological changes; competition; demand for our products and services; the deterioration of general economic conditions, whether internationally, nationally or in the local markets in which we operate; legislative or regulatory changes that may adversely affect our business; operational, mechanical, climatic or other unanticipated issues that adversely affect the production capacity of the Company's fishing vessels and their ability to generate expected annual revenue and net income; construction delays, cost overruns and inability to obtain proper permits for the processing factory; inability to sell products to the end-customer at the levels anticipated; and other risk factors contained in Pingtan's SEC filings available at www.sec.gov, including Pingtan's most recent Annual Report on Form 10-K, Quarterly Reports on Form 10-Q. . Readers are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date on which they are made. Pingtan undertakes no obligation to update or revise any forward-looking statements for any reason.

 

CONTACT:

 

Roy Yu

Chief Financial Officer

Pingtan Marine Enterprise Ltd.

Tel: +86 591 8727 1753

ryu@ptmarine.net

 

INVESTOR RELATIONS COUNSEL:

 

The Equity Group Inc.

Katherine Yao, Senior Associate

Tel: +86 10 6587 6435

kyao@equityny.com

 

 

 

 

Pingtan Marine Enterprise, Ltd.   Page 6
May 15, 2017    

 

PINGTAN MARINE ENTERPRISE LTD. AND SUBSIDIARIES UNAUDITED

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(IN U.S. DOLLARS)

 

   For the Three Months Ended
March 31,
 
   2017   2016 
REVENUE  $5,661,140   $4,115,098 
           
COST OF REVENUE   5,597,807    7,427,810 
           
GROSS PROFIT (LOSS)   63,333    (3,312,712)
OPERATING EXPENSES:          
Selling   388,718    343,020 
General and administrative   1,087,872    1,467,471 
           
Total Operating Expenses   1,476,590    1,810,491 
           
LOSS FROM OPERATIONS   (1,413,257)   (5,123,203)
           
OTHER INCOME (EXPENSE):          
Interest income   147,383    2,367 
Interest expense   (703,076)   (522,265)
Foreign currency transaction gain   98,451    20,797 
Grant income   12,719,275    154,447 
Loss on equity method investment   (6,252)   (10,316)
Other expense   -    (264)
           
Total Other Income (Expense), net   12,255,781    (355,234)
           
INCOME (LOSS) BEFORE INCOME TAXES   10,842,524    (5,478,437)
           
INCOME TAXES   -    413 
           
NET INCOME (LOSS)  $10,842,524   $(5,478,850)
           
LESS: NET INCOME (LOSS) ATTRIBUTABLE TO THE NON-CONTROLLING INTEREST   922,370    (378,471)
           
NET INCOME (LOSS) ATTRIBUTABLE TO OWNERS OF THE COMPANY  $9,920,154   $(5,100,379)
           
COMPREHENSIVE INCOME (LOSS):          
NET INCOME (LOSS)   10,842,524    (5,478,850)
OTHER COMPREHENSIVE GAIN          
Unrealized foreign currency translation gain   641,048    879,423 
COMPREHENSIVE INCOME (LOSS)  $11,483,572   $(4,599,427)
LESS: COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO THE NON-CONTROLLING INTEREST   973,026    (309,448)
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO OWNERS OF THE COMPANY  $10,510,546   $(4,289,979)
           
NET INCOME (LOSS) PER ORDINARY SHARE ATTRIBUTABLE TO OWNERS OF THE COMPNAY          
Basic and diluted  $0.13   $(0.06)
           
WEIGHTED AVERAGE ORDINARY SHARES OUTSTANDING:          
Basic and diluted   79,055,053    79,055,053 

 

 

 

 

Pingtan Marine Enterprise, Ltd.   Page 7
May 15, 2017    

 

PINGTAN MARINE ENTERPRISE LTD. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(IN U.S. DOLLARS)

 

   March 31,   December 31, 
   2017   2016 
   (Unaudited)     
ASSETS        
CURRENT ASSETS:        
Cash  $571,305   $820,396 
Restricted cash   3,362,660    2,911,922 
Accounts receivable, net of allowance for doubtful accounts   11,215,424    11,322,726 
Inventories, net of reserve for inventories   16,829,601    8,811,111 
Advances to suppliers   2,508,289    3,969,351 
Prepaid expenses   -    8,145 
Prepaid expenses - related party   1,126,753    522,337 
Other receivables   2,142,573    31,835,456 
Other receivables - related party   705,296    639,917 
Total Current Assets   38,461,901    60,841,361 
OTHER ASSETS:          
Cost method investment   3,043,787    3,027,245 
Equity method investment   28,932,614    28,493,273 
Prepayment for long-term assets   10,964,418    11,913,912 
Property, plant and equipment, net   132,050,274    122,196,594 
Total Other Assets   174,991,093    165,631,024 
Total Assets  $213,452,994   $226,472,385 
LIABILITIES AND SHAREHOLDERS' EQUITY          
CURRENT LIABILITIES:          
Accounts payable  $949,344   $916,737 
Accounts payable - related parties   4,452,059    2,560,760 
Short-term bank loans   23,578,267    21,554,636 
Long-term bank loans - current portion   17,393,069    17,298,544 
Accrued liabilities and other payables   5,757,308    4,399,536 
Accrued liabilities and other payables - related party   16,856,783    18,147,152 
Due to related parties   1,203,354    43,354 
Total Current Liabilities   70,190,184    64,920,719 
OTHER LIABILITIES:          
Long-term bank loans - non-current portion   21,958,749    21,839,412 
Total Liabilities   92,148,933    86,760,131 
COMMITMENTS AND CONTINGENCIES          
SHAREHOLDERS' EQUITY:          
Equity attributable to owners of the company:          
Ordinary shares ($0.001 par value; 225,000,000 shares authorized; 79,055,053 shares issued and outstanding at March 31, 2017 and December 31, 2016)   79,055    79,055 
Additional paid-in capital   81,906,871    111,008,085 
Retained earnings   26,567,818    17,438,215 
Statutory reserve   9,391,827    9,391,827 
Accumulated other comprehensive loss   (12,288,659)   (12,879,051)
Total equity attributable to owners of the company   105,656,912    125,038,131 
Non-controlling interest   15,647,149    14,674,123 
Total Shareholders' Equity   121,304,061    139,712,254 
Total Liabilities and Shareholders' Equity  $213,452,994   $226,472,385 

 

 

 

 

Pingtan Marine Enterprise, Ltd.   Page 8
May 15, 2017    

 

PINGTAN MARINE ENTERPRISE LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(IN U.S. DOLLARS)

 

    For the Three Months Ended March 31, 
    2017    2016 
           
CASH FLOWS FROM OPERATING ACTIVITIES:          
Net income (loss)  $10,842,524   $(5,478,850)
Adjustments to reconcile net income (loss) from operations to net cash provided by operating activities:          
Depreciation   2,112,525    1,682,985 
Increase in allowance for doubtful accounts   96,399    277,982 
Increase in reserve for inventories   277,017    1,550,335 
Loss on equity method investment   6,252    10,316 
Changes in operating assets and liabilities:          
Accounts receivable   73,099    3,406,211 
Inventories   (8,262,638)   (2,967,993)
Advances to suppliers   1,485,594    170,802 
Prepaid expenses   8,205    1,266 
Prepaid expenses - related party   (602,715)   1,860,757 
Other receivables   29,923,685    (17)
Other receivables - related party   -    (97)
Accounts payable   27,651    (37,895)
Accounts payable - related parties   1,880,905    656,067 
Accrued liabilities and other payables   677,512    (507,011)
Accrued liabilities and other payables - related party   (18,281,290)   - 
Due to related parties   (20,000)   - 
           
NET CASH PROVIDED BY OPERATING ACTIVITIES   20,244,725    624,858 
           
CASH FLOWS FROM INVESTING ACTIVITIES:          
Purchase of property, plant and equipment   (9,763,774)   (113,479)
Payment made for acquisition of fishing vessels from related party   (12,252,689)   - 
Prepayments made for long-term assets   -    (20,108,663)
Payments for equity method investment   (290,440)   - 
Proceeds from transferring equity method investment share   -    15,291,759 
           
NET CASH USED IN INVESTING ACTIVITIES   (22,306,903)   (4,930,383)
           
CASH FLOWS FROM FINANCING ACTIVITIES:          
Proceeds from short-term bank loans   5,100,335    3,156,505 
Repayments of short-term bank loans   (3,190,832)   (7,214,044)
Increase in restricted cash   (435,660)   (611,670)
Advances from related parties   1,180,000    200,000 
Payments made for dividend   (790,551)   - 
           
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES   1,863,292    (4,469,209)
           
EFFECT OF EXCHANGE RATE ON CASH AND CASH EQUIVALENTS   (50,205)   (90,453)
           
NET DECREASE IN CASH AND CASH EQUIVALENTS   (249,091)   (8,865,187)
           
CASH AND CASH EQUIVALENTS - beginning of period   820,396    11,448,684 
           
CASH AND CASH EQUIVALENTS - end of period  $571,305   $2,583,497 
           
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:          
Cash paid for:          
Interest  $587,221   $556,138 
Income taxes  $-   $- 
           
NON-CASH INVESTING AND FINANCING ACTIVITIES:          
Acquisition of property and equipment by decreasing prepayment for long-term assets  $1,016,541   $10,551,314 
Property and equipment acquired on credit as payable  $658,827   $- 
Fishing vessels acquired on credit as payable - related party  $16,889,095   $- 
Offset other receivables - related parties against due to related parties  $-   $1,560,000