FUZHOU, China, May 14, 2013 /PRNewswire/ -- Pingtan Marine Enterprise Ltd. (Nasdaq: PME), ("Pingtan," or the "Company") a provider of dredging services in the People's Republic of China (PRC) and territorial sea fishing globally, today announced its unaudited financial results for the first quarter of 2013.

Operating Highlights

• Completed landmark business combination in February 2013, creating Pingtan Marine Enterprises, one of the largest U.S.-listed marine services operating company in China
• Currently operates a fleet that consists of 9 dredgers and 40 fishing vessels (see attached asset table)
• Dredging segment ("China Dredging") continues transition to primary contractor with a backlog of $214.5 million as of March 31, 2013
• Fishing segment ("Merchant Supreme") reported 26.4% growth in revenues during Q1 2013 and launched 20 vessels during December 2012 (with revenues beginning to ramp up on those vessels in the second quarter of 2013)

First Quarter 2013 Financial Highlights (A)

Balance Sheet Highlights (A)

(A) Represents the consolidation retrospectively restated as if Pingtan Marine Enterprise Ltd. (formerly known as China Growth Equity Investment Limited) completed its merger with China Dredging Group Co., Ltd. and the share purchase of Merchant Supreme Co., Ltd. on January 1, 2012, rather than on February 25, 2013.

Management Comments

Mr. Xinrong Zhuo, Chairman and CEO of the Company, stated, "The last several weeks have been a monumental period in our Company's history, as we believe our team has created a diversified entity in the global marine service market.  We remain very optimistic about the growth opportunity in both of our dredging and fishing segments.  We are very pleased to have generated strong cash flow from operations and profitability in our first quarter during a transitional period for our Company."

Dredging Segment Operating and Financial Review

Mr.  Zhuo continued, "In our dredging business, we continue to leverage our long-term customer relationships, many of whom have worked with China Dredging since its inception. One of our goals in the coming years will be to build upon this strong base of projects and further diversify by transitioning from a sub-contractor for projects in the PRC to the role of a general contractor.  We have invested considerably in our Build-Transfer (BT) strategy, which will expand the pipeline and give China Dredging more control over its projects. Our first project in Kemen Industrial Zone of Lianjiang County, Fujian Province, began in January 2013 and is estimated to continue for 18 months.  While this investment directly affected our first quarter financial results, as a result of incurring advanced payments with minimal revenue contribution, we expect to begin realizing the full impact from this project in the second quarter of 2013." 

For the three months ended March 31, 2013, revenue from our dredging services decreased to $26.7 million from $59.5 million in the same period last year.  This was primarily as a result of decreased dredging volume caused by the Company's termination of the leasing agreement for three dredgers in July 2012 and one in December 2012, as these four dredgers were  not fit for the Company's new BT project, which has a higher unit price.   In addition, four of the Company's vessels working on a project in northern China were operated at only 30% of their dredging capacity due to unusually inclement weather conditions during the first quarter of 2013.  The Company does not believe there will be any impact in future quarters; however, as a result of these factors, China Dredging completed 12.7 million cubic meters of dredging volume in the first quarter of 2013 compared to 32.5 million in the same period last year, a decrease of 60.9%. As of March 31, 2013, the Company has a backlog of $214.5 million, which included $15.6 million in new contracts for the first quarter of 2013.

Fishing Segment Operating and Financial Review

Mr. Zhuo continued, "We are very pleased with the development of our fishing business, and are currently selling approximately 30 different species of fish, primarily from India and Indonesia, to over 300 distributors and retailers.  We currently own and operate 38 single trawling vessels and 2 drift netters.  Our goal in the coming months is to continue to opportunistically purchase assets and expand our fleet while diversifying our customer base." 

In the first quarter of 2013, The Company's revenue from its fishing business increased by 26.4% to $19.7 million compared to $15.6 million in the same period last year.  The Company also acquired 20 new fishing vessels in 2012, which began operation in December 2012 and began operating at full capacity in the current second quarter of 2013 after a breaking in period.  The Company and the Company's independent directors have also agreed with Mr. Zhuo, that $48.3 million (due to the Company in accordance with the terms of the share purchase agreement pursuant to which the Company acquired its fishing business) can be repaid with fishing vessels from Fujian Honglong Ocean Fishery Co., Ltd., or Hong Long, a Company owned by Mr. Zhuo.  Hong Long's fishing vessels currently have licenses that will enable the Company's fishing business to increase its harvest volume, revenue and net income rapidly. The fair value of such fishing vessels to be contributed to the Company will be determined by an independent appraisal company hired by the independent directors of Pingtan's Board of Directors.  On May 13, 2013, Pingtan entered into an engagement letter with BMI Appraisals Limited for the performance of such appraisals, which it expects to complete in the next two months. 

Consolidated Financial Review

Revenues

The Company reported revenues during the period of $46.4 million, compared to $75.1 million for the same period in 2012.  An increase in the revenues from the Company's fishing business was offset by lower volume from the Company's dredging business.

Gross Margin

The Company's gross margin decreased to 34.7% in the quarter ended March 31, 2013 from 49.7% for the same period last year, principally due to lower gross margins for the dredging segment.  The Company incurred $4.1 million in advanced fees during the period as part of reclamation for its BT project.  These advanced payments were included in cost of goods sold.  In addition, the Company incurred lower margins in its fishing segment, as 20 vessels launched by the Company in December 2012 did not immediately operate at full capacity.

Selling, General & Administrative Expenses

Total selling, general and administrative expenses were $1.6 million for the three months ended March 31, 2013, or 3.4% of total revenue, compared to $2.7 million, 3.6% of total revenue, for the same in 2012.

Net Income

Net income for the three months ended March 31, 2013 was $13.8 million, or $0.17 per basic and diluted share, compared to $26.8 million, or $0.34 per basic and diluted share, in the same period in 2012.

Outlook for 2013

Mr. Zhuo concluded, "We benefit from having a team of dedicated employees that has considerable experience in operating an integrated company, and believe that we have the right management team in place to continue developing both segments of our business.  The Company's financial position is very strong, with approximately $206 million in cash as of March 31, 2013 and cash from operations during the period of $31.5 million.  We expect to leverage this free cash flow to continue growing our fleet of fishing vessels and expanding our dredging capabilities as a general contractor. We look forward to the future with confidence and will keep shareholders apprised of our progress."

About Pingtan

Pingtan is a marine enterprises group, engaging in dredging services and ocean fishing through two wholly-owned subsidiaries, China Dredging Group, or CDGC, and Merchant Supreme, and their respective PRC operating subsidiaries, Fujian Xing Gang Port Service Co., Ltd., or Fujian Service, PingTan XingYi Port Service Co., Ltd., or PingTan XingYi and Fujian Provincial Pingtan County Ocean Fishing Group Co., Ltd., or Pingtan Fishing.

Fujian Service provides specialized dredging services exclusively to the PRC marine infrastructure market and is, based on the number and capacity of the dredging vessels it operates, one of the leading independent (not state-owned) providers of such services in the PRC. Since its inception, it has functioned exclusively as a specialist subcontractor, performing dredging services for other companies licensed to function as general contractors.  PingTan XingYi's Build-Transfer ("BT") strategy, commenced in 2012, is expected to expand the pipeline and provide more control over its projects as it assumes the role of a general contractor.

Pingtan Fishing primarily engages in ocean fishing with many of its self-owned vessels operating within the Indian Exclusive Economic Zone and the Arafura Sea of Indonesia. Pingtan Fishing is a growing fishing company and provider of high quality seafood in the PRC.

Business Risks and Forward-Looking Statements

This press release contains forward-looking statements that are subject to the safe harbors created under the Securities Act of 1933 and the Securities Exchange Act of 1934. These include statements regarding Pingtan's ability to accelerate growth of its business segments, Pingtan's future financial position, the impact of weather on the dredging business, diversification of customer base, and leverage of free cash flow, Readers are cautioned that actual results could differ materially from those expressed in any forward-looking statements. In addition, please refer to the 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 and Definitive Proxy Statement. 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 87271753
[email protected]

INVESTOR RELATIONS:

The Equity Group Inc.
Adam Prior, Senior Vice President
(212) 836-9606
[email protected]

In China
Katherine Yao, Associate
86 10 6587 6435
[email protected]

SOURCE Pingtan Marine Enterprise Ltd.