Pingtan expands fleet with six licensed fishing vessels

GLOBAL fishing company Pingtan Marine Enterprise Ltd (Nasdaq: PME) has recently purchased six fishing vessels in line with plans to expand its fleet.

The vessels, which will be used for catching tuna and squid, will boost the company’s carrying capacity, with each vessel expected to generate approximately $800,000 to $1 million in annual net income. They were purchased for about RMB 344.4 million ($56.3 million) from Fuzhou Yishun Deep-Sea Fishing Co. Ltd (Yishun) and Fuzhou Honglong Ocean Fishery Co. Ltd. , owned by Pingtan chairman and CEO Xinrong Zhou. The licenses that come with the purchase account for the bulk of the total asset value, as indicated by the Western and Central Pacific Fisheries Commission (WCPFC).

The pre-owned vessels are currently licensed and sanctioned by the Chinese Fisheries Management Bureau  under the Ministry of Agriculture of China, which allows the vessels to operate and fish in the Western and Central Pacific Ocean of the International Waters. They will use the longline method of fishing and the squid jigging technique. The longline method uses a long line with baited hooks attached at intervals through branch lines to target fish species. The squid jigging technique, meanwhile, attracts squid using a lead sinker with a hook molded into it.

Pingtan plans to finance the purchase completely through cash on its balance sheet consisting of $67.4 million as at March 31, 2015. It expects to have sufficient capital to service existing debt while continuing to explore further expansion initiatives.

The China-based company will also diversify its asset base in light of the moratorium issues by the Indonesian government, which is currently undertaking a licensing check for all vessels previously operating in the area. The moratorium prohibits the operation of Pingtan’s 117 licensed vessels in Indonesian waters.