Exhibit 99.1

 

 

pingtan marine enterprise Reports UNAUDITED FINANCIAL RESULTS

for the six months ended June 30, 2022

 

FUZHOU, China, October 26, 2022– Pingtan Marine Enterprise Ltd. (Nasdaq: PME) (“Pingtan,” “we” or the “Company”), a fishing company based in the People’s Republic of China (PRC), today announced the unaudited financial results for the six months ended June 30, 2022.

 

First Half 2022 Financial Highlights (Year-on-Year Comparisons)

 

Revenue was $72.2 million, representing a year-on-year increase of 10.8%.

 

Gross profit was $13.5 million, as compared to gross loss $1.2million in the first half of 2021.

 

Net loss was $8.6 million, as compared to $12.6 million in the first half of 2021.

 

Net loss attributable to owners of the Company was $8.0 million, or $(0.09) per basic and diluted share, as compared to $12.0 million, or $(0.14) per basic and diluted share in the first half of 2021.

 

Management Comments

 

Mr. Xinrong Zhuo, Chairman and CEO of the Company, commented, “In the first half of 2022, COVID-19 resurged in multiple locations in China, particularly in several key cities where prolonged controls impacted the overall market consumption capacity. Albeit multiple challenges, we achieved a 10.8% year-on-year growth in revenue and a 46.4% year-on-year increase in sales volume in the first half of 2022, though this was below our overall forecast for the first half of 2022 at the end of last year.

 

Our management has stayed positive to cope with the impact and has adjusted our business strategies, including adjusting fields of inputs and product mix, broadening new sales channels, and exploring the direct sales model. With the recent improvement of the epidemic situation in several regions in China, we maintain a positive attitude and expectation for our overall performance in 2022.”

 

Factors Affecting Pingtan’s Results of Operations

 

COVID-19 pandemic

 

The COVID-19 pandemic has adversely affected the global economy, our markets in the PRC, and our business.

 

In reaction to the pandemic, a few provinces and municipalities in the PRC, where our business is currently conducted, activated some responses to the emergency public health incident. Emergency quarantine measures and travel restrictions have had a significant impact on some sectors across China, which has also adversely affected our operations, including the fishing industry. We will continue to actively monitor the situation and may take further actions that alter our business operations as may be required by local authorities or that we determine are in the best interests of our employees, customers, partners, suppliers, and other stakeholders. If a significant portion of our workforce is affected directly by COVID-19, or due to government closures, or otherwise, associated work stoppages or facility closures would halt or delay production, which could have an adverse impact on our business and financial performance.

 

The pandemic has had and continues to have an adverse impact on our customers. Some of our customers are fish processing plants that export processed fish products to foreign countries. These customers reduced or postponed their purchases from us and adjusted their business strategies in relation to exportation or domestic sale in light of the development of the pandemic. This change in strategy may cause a decrease in our unit selling price and an increase in inventory. If the economic effects caused by the pandemic continue or increase in the PRC, overall customer demand may continue to decrease, which could have an adverse effect on our business, results of operations and financial condition.

 

 

 

 

Pingtan Marine Enterprise, Ltd.   Page 2
October 26, 2022    

 

We anticipate that our results of operations will continue to be impacted by this pandemic in 2022. However, the extent of the impact on our financial condition and results of operations is still highly uncertain and will depend on future developments, such as the ultimate duration and scope of the pandemic, its continuing impact on our customers, how quickly normal economic conditions, operations, and the demand for our products can resume and whether the pandemic leads to recessionary conditions in the PRC, the United States or globally. We may continue to experience the effects of the pandemic even after it has waned, and our business, results of operations, and financial condition could continue to be affected.

 

The Company’s Fishing Fleet

 

As of June 30, 2022, the Company had 142 vessels, among which 100were located in international waters, 12 were located in the Bay of Bengal in India, 13 were located in the PRC, 14 were in the modification and rebuilding projects, and 3 were located in the Arafura Sea in Indonesia and not in operation.

 

First Half 2022 Selected Financial Highlights (Unaudited)

 

($ in millions, except for per share data)  Six Months Ended June 30, 
   2022   2021 
         
Revenue  $72.2   $65.2 
Cost of Revenue  $58.7   $66.4 
Gross Profit (loss)  $13.5   $(1.2)
Gross Margin   18.7%   (1.8)%
Net Loss  $(8.6)  $(12.6)
Basic and Diluted Weighted Average Shares (in millions)   85.9    83.9 
EPS (in $)  $(0.09)  $(0.14)

 

Balance Sheet Highlights (Unaudited)

 

($ in millions, except for book value per share)  As of
June 30,
2022
   As of
December 31,
2021
 
         
Cash and Cash Equivalents  $4.1   $5.8 
Total Current Assets  $215.6   $240.4 
Property, plant and equipment, net  $287.1   $272.2 
Total Assets  $556.0   $576.2 
Total Current Liabilities  $288.6   $243.4 
Long-term bank loans, non-current portion  $185.6   $240.8 
Total Liabilities  $474.2   $484.1 
Shareholders’ Equity  $81.8   $92.1 
Total Liabilities and Shareholders’ Equity  $556.0   $576.2 
Book Value Per Share (in $)  $0.78   $0.89 

 

Consolidated Financial and Operating Review

 

Revenue

 

Revenue increased by 10.8% from $65.2 million for the six months ended June 30, 2021 to $72.2 million for the six months ended June 30, 2022, primarily due to a 46.4% increase in sales volumes from 41.0 million kilograms in the six months ended June 30, 2021 to 60.0 million kilograms in the six months ended June 30, 2022, as more vessels were in operation, partially offset by a 24.3% decrease in the average unit selling price.

 

 

 

 

Pingtan Marine Enterprise, Ltd.   Page 3
October 26, 2022    

 

Cost of revenue

 

Cost of revenue decreased by 11.6% from $66.4 million for the six months ended June 30, 2021 to $58.7 million for the six months ended June 30, 2022, primarily due to the adjustment of our business strategy to suspend the operation of high-cost, high-priced products to accommodate the declining market consumption capacity in the first half of 2022.

 

Gross Profit (loss)

 

Our gross profit was primarily affected by changes in the average unit selling price and production costs. Fuel cost, depreciation, and labor cost in an aggregate accounted for approximately 64.9% and 77.9% of the cost of revenue for the six months ended June 30, 2021 and 2022, respectively. Fluctuations of fuel prices and labor costs may significantly affect our costs and gross profit.

 

We recorded gross profit of $13.5 million for the six months ended June 30, 2022, representing a gross profit margin of 18.7%, as compared to gross loss of $1.2 million for the six months ended June 30, 2021. The increase was primarily due to the decrease in our unit production cost.

 

Selling Expenses

 

Selling expenses increased by 3.1% from $3.1 million for the six months ended June 30, 2021 to $3.2 million for the six months ended June 30, 2022, primarily due to the increases in shipping and handling fees, insurance and other miscellaneous selling expenses of an aggregate of approximately $371,000, partially offset by the decreases in storage fees and customs clearance charges of an aggregate of approximately $273,000.

 

General and Administrative Expenses

 

General and administrative expenses increased by 29.0% from $3.9 million for the six months ended June 30, 2021 to $5.0 million for the six months ended June 30, 2022, primarily due to an increase in inventory impairment provision of approximately $1.6 million and an increase in depreciation of approximately $259,000, partially offset by a decrease in bad debt expense of approximately $382,000, a decrease in professional fees of approximately $364,000, and a decrease in travel and entertainment of approximately $139,000.

 

Net (Loss) Income

 

As a result of the factors described above, our net loss decreased by 32.0% from $12.6 million for the six months ended June 30, 2021 to $8.6 million for the six months ended June 30, 2022.

 

Net (Loss) Income Attributable to Owners of the Company

 

Net loss attributable to ordinary shareholders of the Company was $8.0 million, or $(0.09) per ordinary share (basic and diluted), for the six months ended June 30, 2022, as compared to net loss attributable to ordinary shareholders of the Company of $12.0 million, or $(0.14) per ordinary share (basic and diluted), for the six months ended June 30, 2021.

 

About Pingtan

 

Pingtan is a 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 4
October 26, 2022    

 

Business Risks and Forward-Looking Statements

 

This press release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical or current fact included in this press release are forward-looking statements, including but not limited to statements regarding our business development, financial outlook, beliefs and expectations. Forward-looking statements include statements containing words such as “expect,” “anticipate,” “believe,” “project,” “will” and similar expressions intended to identify forward-looking statements. 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. Such risks and uncertainties are related to anticipated growth and growth strategies; need for additional capital and the availability of financing; delays in deploying vessels; conducting fishing operations and locating or re-locating vessels in foreign waters and the related license requirements; actions taken by government regulators, such as the Indonesian moratorium, or reports or allegations of illegal activity by us, related parties or those with which we conduct business; our ability to successfully manage relationships with customers, distributors and other important relationships; technological changes; competition; demand for our products and services; operational, mechanical, climatic or other unanticipated issues; the deterioration of general economic conditions, whether internationally, nationally or in the local markets in which we operate; global or national health concerns, including the outbreak of pandemics or contagious diseases, such as the COVID-19 pandemic; the impact of COVID-19 on our financial condition, business operations and liquidity; the impact of COVID-19 on our customers and distributors; legislative or regulatory changes that may adversely affect our business; and other risk factors contained in our SEC filings available at www.sec.gov, including our most recent annual report on Form 20-F. 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. We undertake no obligation to update or revise any forward-looking statements for any reason, except as required by law.

 

CONTACT:

 

LiMing Yung (Michael)

Chief Financial Officer

Pingtan Marine Enterprise Ltd.

Tel: +86 591 87271753

michaelyung@ptmarine.net

ir@ptmarine.net

 

INVESTOR RELATIONS

 

PureRock Communications Limited

PTmarine@pure-rock.com

 

 

 

 

Pingtan Marine Enterprise, Ltd.   Page 5
October 26, 2022    

 

PINGTAN MARINE ENTERPRISE LTD. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(IN U.S. DOLLARS) 

 

   For the Six Months Ended
June 30,
 
   2022   2021 
         
REVENUE  $72,224,097   $65,172,293 
COST OF REVENUE   58,686,575    66,365,166 
           
GROSS PROFIT (LOSS)   13,537,522    (1,192,873)
           
OPERATING EXPENSES:          
Selling   3,234,769    3,136,795 
General and administrative   4,598,158    3,732,007 
General and administrative - depreciation   404,270    144,854 
Subsidy   (812,432)   (3,603,797)
Impairment loss   -    975,366 
Loss on fixed assets disposal   281,794    - 
           
Total Operating Expenses   7,706,559    4,385,225 
           
INCOME (LOSS) FROM OPERATIONS   5,830,963    (5,578,098)
           
OTHER INCOME (EXPENSE):          
Interest income   919,517    49,453 
Interest expense   (8,244,912)   (7,664,914)
Foreign currency transaction (loss) gain   (7,120,926)   549,661 
Dividend from cost method investment   622,964    605,178 
Loss on equity method investment   (561,397)   (456,180)
Other income (expense)   1,623    (76,856)
           
Total Other Expense, net   (14,383,131)   (6,993,658)
           
(LOSS) BEFORE INCOME TAXES   (8,552,168)   (12,571,756)
INCOME TAXES   -    - 
           
NET (LOSS)  $(8,552,168)  $(12,571,756)
           
LESS: NET (LOSS) ATTRIBUTABLE TO THE NON-CONTROLLING INTEREST   (525,297)   (831,491)
           
NET (LOSS) ATTRIBUTABLE TO ORDINARY SHAREHOLDERS OF THE COMPANY BEFORE PREFERRED DIVIDENDS   (8,026,871)   (11,740,265)
LESS: PREFERRED SHARE DIVIDENDS   -    (300,000)
NET (LOSS) ATTRIBUTABLE TO ORDINARY SHAREHOLDERS OF THE COMPANY  $(8,026,871)  $(12,040,265)
           
COMPREHENSIVE INCOME (LOSS):          
NET INCOME (LOSS)   (8,552,168)   (12,571,756)
OTHER COMPREHENSIVE (LOSS) INCOME          
Unrealized foreign currency translation gain (loss)   (1,699,296)   (1,028,656)
COMPREHENSIVE (LOSS) INCOME   (10,251,464)   (13,600,412)
LESS: COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO THE NON-CONTROLLING INTEREST   (705,869)   (896,307)
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO ORDINARY SHAREHOLDERS OF THE COMPANY  $(9,545,595)  $(12,704,105)
           
NET (LOSS) PER ORDINARY SHARE ATTRIBUTABLE TO ORDINARY SHAREHOLDERS OF THE COMPANY          
Basic and diluted  $(0.09)  $(0.14)
           
WEIGHTED AVERAGE ORDINARY SHARES OUTSTANDING:          
Basic and diluted   85,940,965    83,854,623 

 

 

 

 

Pingtan Marine Enterprise, Ltd.   Page 6
October 26, 2022    

 

PINGTAN MARINE ENTERPRISE LTD. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(IN U.S. DOLLARS)

 

   June 30,   December 31, 
   2022   2021 
   (Unaudited)     
ASSETS        
CURRENT ASSETS:        
Cash and cash equivalents  $4,053,646   $5,789,508 
Restricted cash   27,426,764    14,831,138 
Accounts receivable, net of allowance for doubtful accounts   24,462,490    26,861,827 
Accounts receivable-related parties   4,581,470    5,660,857 
Inventories, net of reserve   72,336,726    54,969,973 
Prepaid expenses   12,492,260    18,559,252 
Other receivables   70,208,183    113,765,721 
           
Total Current Assets   215,561,539    240,438,276 
           
OTHER ASSETS:          
Cost method investment   3,129,004    3,293,756 
Equity method investment   27,648,118    29,674,764 
Prepayment for long-term assets   22,350,031    30,114,340 
Right-of-use asset   272,680    465,016 
Property, plant and equipment, net   287,068,164    272,249,346 
           
Total Other Assets   340,467,997    335,797,222 
           
Total Assets  $556,029,536   $576,235,498 
           
LIABILITIES AND SHAREHOLDERS’ EQUITY          
           
CURRENT LIABILITIES:          
Accounts payable  $66,606,204   $54,153,711 
Accounts payable - related parties   3,185,728    4,960,300 
Short-term bank loans   74,053,104    72,305,786 
Long-term bank loans - current portion   99,966,579    76,856,590 
Accrued liabilities and other payables   35,084,396    27,531,333 
Lease liability- current   240,382    400,557 
Due to related parties   9,466,039    7,175,988 
           
Total Current Liabilities   288,602,432    243,384,265 
OTHER LIABILITIES:          
Lease liability   -    32,161 
Long-term bank loans - non-current portion   185,588,689    240,729,193 
           
Total Liabilities   474,191,121    484,145,619 
           
COMMITMENTS AND CONTINGENCIES          
           
SHAREHOLDERS’ EQUITY:          
Equity attributable to owners of the Company:          
Ordinary shares ($0.001 par value; 125,000,000 shares authorized; 85,940,965 shares issued and outstanding at June 30, 2022 and December 31, 2021)   85,941    85,941 
Additional paid-in capital   89,279,792    89,279,792 
Retained earnings   (29,869,729)   (21,842,858)
Statutory reserve   15,878,174    15,878,174 
Accumulated other comprehensive loss   (8,438,606)   (6,919,882)
Total equity attributable to owners of the Company   66,935,572    76,481,167 
Non-controlling interest   14,902,843    15,608,712 
           
Total Shareholders’ Equity   81,838,415    92,089,879 
           
Total Liabilities and Shareholders’ Equity  $556,029,536   $576,235,498 

 

Note: Restricted cash consists of cash deposits held by the Export Import Bank of China to secure its bank loans, among which $6.6 million is for the bank loans of Hong Long and $20.9 million is for Global Deep Ocean, which is the Company’s related party.

 

 

 

 

Pingtan Marine Enterprise, Ltd.   Page 7
October 26, 2022    

 

PINGTAN MARINE ENTERPRISE LTD. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

(IN U.S. DOLLARS)

 

   For the Six Months Ended
June 30,
 
   2022   2021 
         
CASH FLOWS FROM OPERATING ACTIVITIES:        
Net loss  $(8,552,168)  $(12,571,756)
Adjustments to reconcile net income from operations to net cash provided by operating activities:          
Depreciation   5,589,402    7,192,857 
Increase in allowance for doubtful accounts   127,864    510,358 
(Decrease) in reserve for inventories   (15,278,601)   (5,682,073)
Loss on equity method investment   561,397    143,015 
Impairment loss of fishing vessels   -    975,366 
Income from fixed assets disposal   281,794    - 
Changes in operating assets and liabilities:          
Accounts receivable   953,577    3,005,729 
Inventories   (5,544,819)   (3,149,808)
Prepaid expenses   5,323,181    (499,082)
Prepaid expenses - related party   -    2,024,445 
Due from related parties   824,223    - 
Other receivables   39,209,497    1,038,544 
Accounts payable   16,617,459    21,802,289 
Accounts payable - related parties   (1,580,118)   (3,361,279)
Accrued liabilities and other payables   8,314,170    6,794,010 
Due to related parties   (651,161)   127,597 
           
NET CASHPROVIDED BY OPERATING ACTIVITIES   46,195,697    18,350,212 
           
CASH FLOWS FROM INVESTING ACTIVITIES:          
Purchase of property, plant and equipment   (35,242,624)   (22,687,255)
Proceeds from government grants for fishing vessels construction   5,703,864    - 
Prepayments made for long-term assets   -    (46,191,388)
           
NET CASH USED IN INVESTING ACTIVITIES   (29,538,760)   (68,878,643)
           
CASH FLOWS FROM FINANCING ACTIVITIES:          
Proceeds of short-term bank loans   56,450,990    44,809,790 
Repayments of short-term bank loans   (50,898,434)   (42,028,493)
Proceeds from long-term bank loans   32,930,533    68,956,984 
Advances from related party   2,290,051      
Repayments of long-term bank loans   (49,643,119)   (23,063,682)
Proceeds from Issue of Ordinary Shares   -    4,351,243 
Proceeds from issuance of series A preferred shares   -    3,698,273 
Proceeds from related party   -    1,450,000 
Repurchase of preferred shares   -    (1,450,000)
           
NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES   (8,869,979)   56,724,115 
           
EFFECT OF EXCHANGE RATE ON CASH, CASH EQUIVALENTS AND RESTRICTED CASH   3,072,806    (1,553,231)
           
NET INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH   10,859,764    4,642,453 
           
CASH, CASH EQUIVALENTS AND RESTRICTED CASH - beginning of period   20,620,646    10,604,599 
           
CASH, CASH EQUIVALENTS AND RESTRICTED - end of period  $31,480,410   $15,247,052 
           
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:          
Cash paid for:          
Interest  $9,354,994   $8,640,280 
Income taxes  $-   $- 
           
RECONCILIATION TO AMOUNTS ON CONSOLIDATED BALANCE SHEETS:          
Cash and cash equivalents   4,053,646    2,197,774 
Restricted cash   27,426,764    13,049,278 
TOTAL CASH, CASH EQUIVALENTS AND RESTRICTED CASH  $31,480,410   $15,247,052 
NON-CASH INVESTING AND FINANCING ACTIVITIES:          
Acquisition of property and equipment by decreasing (increasing) prepayment for long-term assets   6,477,983   $(46,191,388)