Pacific Andes Hooks Fishery Venture With Chinese State Firmff

Pacific Andes Holdings has partnered China International Fisheries Hong Kong Limited (CIFHK) - an overseas wholly owned subsidiary of China's state-owned national fishing corporation - in a joint venture to further tap the growing demand in the mainland for fishery products.

The joint-venture company Zhonggang Fisheries - 70 per cent owned by mainboard-listed Pacific Andes - has an authorised capital of US$15 million and a paid-up of US$ 10,000.

The deal means Pacific Andes will go into active fishery operations from its current role as a frozen fish supplier, a move seen by analysts as likely to boost the bottom line.

CIFHK's parent CNFC International Fisheries Corp, which controls and operates more than 240 fishing vessels worldwide, is the largest off-shore fishery in China.

Speaking to BT from China, Pacific Andes finance director Joe Cheng said that Zhonggang will embark on fishing operations and invest in global fisheries when opportunities arise.

“The US$15 million will be the budget to spend over the next few projects,' he said. 'But we have not worked out a clear division of the (proportion of) money to be spent on buying fishing vessels or investment at this point. Pacific Andes will now be able to integrate its current operations into the JV.”

As a frozen fish supplier, Pacific Andes now has a market share of some 25 per cent of China's US$800-plus million fish import market.

Pacific Andes managing director Frank Ng said in a statement that the JV is a “first but very important step that will pave the way for more business opportunities in the near future for both partners”.

Mr. Cheng said that he cannot see the JV losing money as Pacific Andes was very 'careful when conducting due diligence' on the deal. He added that the JV will be looking at a 15 per cent rate of returns from its capital outlay.

Phillip Securities said in November last year that such a venture would not only ensure a steady supply of fish but also boost Pacific Andes profit margins. It predicted that Pacific Andes would post a 24 per cent growth in earnings for the year ending March 31, 2004.

Pacific Andes shares rose a cent to 35 cents last week.