Business Description
We are a marine enterprises group primarily engaging in ocean fishing through
our wholly-owned PRC operating subsidiary and VIE, Fujian Provincial Pingtan
County Ocean Fishing Group Co., Ltd., or Pingtan Fishing. We harvest a variety
of fish species with our owned and licensed vessels operating within the Indian
Exclusive Economic Zone and the Arafura Sea of Indonesia. We provide high quality
seafood to a diverse group of customers including distributors, restaurant owners
and exporters in the PRC.
In June 2013, we expanded our fleet from 40 to 86 through a purchase of 46 fishing
trawlers from a related party for a total consideration of $410.1 million. We
began operating the vessels in the third quarter of 2013 and since then we have
been entitled to their operations and net profits. Each vessel carries crew
of 10 to 15 persons. These vessels have resulted in additional carrying capacity
of approximately 45,000 to 50,000 tons for us.
In September 2013, we further increased our fleet to 106 vessels with the addition
of 20 newly-built fishing trawlers, which were initially ordered in September
2012. These vessels have an expected run-in period of 3 - 6 months, during which
each is placed into the sea for testing prior to full operation. At full operation,
each vessel is capable of harvesting 900 to 1,000 tons of fish.
The fishing vessels can carry up to one-month of supplies. The captains of
the vessels utilize sophisticated technology to identify, among other things,
fishing areas, time to cast and draw in the nets, vessel speed and sailing direction
allowing the vessels to optimize the catch and resource value. Nearby fishing
groups share real-time fishing information through wireless radio equipment.
The catch is separated based on species and sizes, and is frozen immediately.
Once the storage of a fishing vessel is at capacity, it returns to the fishing
base and transfers the catch to a transportation vessels docked at the fishing
base port. We have entered into a contract with Avona Mina Lestari (“Avona”),
which operates a fishing base owned by Mr. Xinrong Zhuo, our founder and chairman,
to obtain access to the base and secure certain services including custom declaration
and fishing permits registrations. We also use the fishing base to repair our
vessels, if necessary.
Transportation
Transportation vessels are responsible for the shipment of fishing supplies
and fish between the fishing areas and China. Pingtan Fishing ships its goods
by contracting with three affiliate marine transportation firms and Avona. The
transportation cycle typically takes no more than 30 days, depending mainly
on the fishing seasons.
Seasonality
The peak season for the fishing industry in Indonesia is from October to January,
which is when harvesting is most productive. During the low season, from May
to July, there are fewer fish as they migrate to different areas. There is no
off season for fishing in Pingtan Fishing’s dedicated fishing zone in
Indonesia.
In addition to seasonality, our annual catches are affected by a number of unpredictable
factors, such as weather patterns and fish migration, which are likely to vary
from year to year.
Fish are stored separately according to different species and sizes for best
practices of cold storage management, goods selectivity and delivery. When Pingtan
Fishing unloads the fish, it places the fish on a wood pallet according to fishing
vessel number, species and size. The cold storage administrator counts the number
of bags on each pallet and weighs each pallet to record the weight. Pallets
with bags of fish are then placed in specified positions within the cold storage
facilities.
We are committed to developing our business to become a global, integrated
seafood company. We plan to enlarge our fishing fleet in the next few years
through organic growth and acquisition opportunities of potential targets, domestically
and abroad.
We are actively seeking opportunities to expand to other fishing grounds worldwide
including North America, South America and the High Sea, which will further
diversify the fish types we harvest as well as decrease our dependence on Indonesia.
We are also planning to extend to fish processing business. If we operate fish
processing plants, our goal is to market processed food products throughout
China and in international markets while achieving forward integration of the
industrial chain.
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