Company Review: Pacific Andes

Pacific Andes is primarily engaged in industrial fishing and the supply chain management of frozen seafood products to customers mostly located in the People’s Republic of China, Japan, South Korea, Europe, North America and Africa.  For the past 2 years, the company has grow its bottom line at a blistering pace of 50%. 
In June 2007, the company restructures with an increase stake of 63.9% in China Fishery Group.  The company is upbeat about global seafood industry especially for industrial fishing for FY2008.

The company net profit margin is approximately 7 – 8% with ROE of 14 – 18%.  To expand its capital base CFG issued US$225 million of 7 years senior notes in Dec 2006 and PAH issued US$93 millions 4% convertible bond due 2012 in Jun 2007.  This results in a net debt to equity ratio of 117%.  Approximately 63% of the shares are held by insiders.

I purchased 10 lots of the counter at a price of $0.765 due to its impressive growth rate.  At this price, it is only trading at a forward PE of 6.6x and it’s trading at a discount to its NAV of $0.91.  What I don’t quite like about the company is its debt structure.  I do not know its ability to handle this huge debt that they carry and also the dilution effect of the convertible bonds comes 2012.  Also, the fishing industry can be quite unpredictable especially due to weather factor.  Having said that, personally feel that it’s a cheap price to buy the counter.

20081Q Results

The company posts a strong first quarter results in August where both revenue and net profit increased by 43%.  It is expected that the company will continue to do well for the rest of the year.