The selling is merciless ... in the same second there can be many transactions, which look suspiciously like computerised trading. That feared monster! At 10 cents --- this bugger is at 50% discount to Taiwan TDR price of 20 Singapore cents. Blur?
....the Group is expected to record a loss for Q3 and year to date, as compared with a profit for the corresponding period in 2010, largely due to the following:
i. Losses arising from change in fair value of biological assets due to high mortality of abalones in third quarter 2011. The PRC subsidiary reported a loss of 42m units of abalones from its land based farms.
ii. High production costs.
iii. The scientific analysis on the farms has been completed and detailed recommendations made, acceptance and implementation at the PRC subsidiary has been delayed.
The high mortality rate should be covered by insurance, no?
Someone should query the management becos there is no mention of insurance coverage in the announcement. I remember they took up insurance and that Dr Ng was so confident (cocky) that insurance was not needed. [url=http://www.nextinsight.net
/story-archive-mainmenu-60/32-2008/752-oceanus-now-insured-against-disease-natural-disasters-theft]OCEANUS: Now insured against disease, natural disasters, theft[/url]
Can Ng Cher Yew pull it off? Something major happened to the abalones?
Oceanus hopes to be profitable again in 2013
Business Times - 19 Nov 2011
Oceanus hopes to be profitable again in 2013
Group aims for bigger farm yields and lower production costs, and also plans to grow sea cucumbers
By LYNETTE KHOO
OCEANUS Group hopes to return to profitability in 2013 by raising farm yields, lowering production costs and growing sea cucumbers for the first time.
But the largest land-based abalone producer is also faced with the daunting task of verifying its abalone numbers after millions of them died mysteriously.
Its existing stock is contained in over 30,000 tanks at 50 farms spanning two provinces, Fujian and Guangdong, in China.
Group executive chairman Ng Cher Yew said he has sent seven to eight people from the finance team in Singapore to take a stock-take of the abalones.
'The actual counting of abalones will take two to three weeks,' he said yesterday. This has to be done with the help of the Chinese staff on the farms.
As an indication of how vast the job is, Oceanus' auditors Deloitte & Touche typically require more than 20 people spending three weeks to cover a 5 per cent sample of the total abalone population, Dr Ng added.
The group has also sent security personnel to supervise the farms and new mortality of abalones from now has to be matched by new empty shells.
Dr Ng declined to speculate how the 42 million units of abalone died in the third quarter, preferring to explain how he is steering the group forward.
'We want to strongly focus on sales as a breeding company,' Dr Ng said. The current problem is the company is not harvesting the abalones at the right time, he added.
To improve its cash cycle, Oceanus will sell its existing abalone stock in each year to gain regular cash flows to acquire high-quality brood stock and to grow sea cucumbers in February next year.
The move into growing sea cucumbers takes advantage of the breeding cycle of abalones as the breeding period of sea cucumbers coincides with the lull period of breeding abalones.
Dr Ng said the group will also be 'more scientific' in deciding which abalones to sell, by off-loading its juvenile stocks in January and holding back the faster-growing ones for eventual sale at a higher price.
While the existing abalone stock still needs to be verified, some 500 tonnes of abalones that are three to four years old are expected to be sold early next year. This is expected to generate cash of 150 million yuan (S$30.5 million) to 200 million yuan by the first half of next year.
Oceanus is also looking at lowering the cost of running the farms from more than 200 million yuan per year to 100 million yuan by raising breeding density for its tanks.
Dr Ng noted that the tanks are currently breeding abalones at low densities, an area he hopes to address. By working with good abalone breeders in China through profit sharing, yields can be improved and the number of tanks required for abalone breeding can be reduced to 10,000, down from over 30,000 currently, he said.
The excess tanks could be used for sea cucumbers or be rented out. The lowest annual rental rate in China for tanks, according to Dr Ng, is about 2,000 yuan per tank.
Given these plans, the group is confident of returning in the black in 2013.
Oceanus had suffered a net loss of 725 million yuan for the third quarter ended Sept 30, compared to a net profit of 68.6 million yuan a year ago. This was due to a fair value loss of 642.6 million yuan on biological assets as some 42 million abalones died.
Dr Ng called the mortality rate as 'just not acceptable' as most of the abalones that died were larger-sized ones. The mortality rate of abalones typically reduces as they mature.
The group has formed a working committee consisting of board members and key finance staff since the fourth quarter of last year to study the reasons behind the increased mortality of abalones.
Chief executive officer Yu De Hua agreed to step down as CEO and legal representative of the Chinese subsidiaries and the handover is expected to complete soon.
Dr Ng said he would like to have two different persons for the role of the legal representative and that of the CEO.
