Pingtan Marine Enterprise Reports Financial Results for the Second Quarter and Six Months Ended June 30, 2018

Company to Hold Conference Call on Friday, August 10, 2018, at 8:30 AM ET

FUZHOU, China, Aug. 10, 2018 /PRNewswire/ -- Pingtan Marine Enterprise Ltd. (Nasdaq: PME), ("Pingtan" or the "Company") a global fishing company based in the People's Republic of China (PRC), today announced its unaudited financial results for the second quarter and six months ended June 30, 2018.

The Company's recent notable events are as follows:

• May 31, 2018: The Company announced that Chairman and Chief Executive Officer, Mr. Xinrong Zhuo has advised the Company that he intends to continue to purchase ordinary shares of Pingtan from time to time, subject to market conditions.
• July 17, 2018: The Company announced a quarterly cash dividend of $0.01 per ordinary share outstanding, which will be paid on or about August 15, 2018 to shareholders of record on July 31, 2018. This marked the fifteenth consecutive quarterly dividend paid by the Company.

Management Comments

Mr. Xinrong Zhuo, Chairman and CEO of the Company, commented, "In the second quarter 2018, our overall financial results declined compared to the same period last year. On the one hand, five of our large-scale vessels were sent to shipyard for maintenance; on the other hand, both the sale volume and the unit selling price dropped for this quarter, especially the prices of species with high added value, which were significantly lower than last year.  Once the vessels that were sent to shipyard complete maintenance and are put into operation, which should be by the end of this year, along with the addition of the anticipated operation of the 27 rebuilt new vessels, the Company expects that there will be a significant increase in both fishing capacity and sale volume."

Factors Affecting Pingtan's Results of Operation – The Indonesian government's moratorium on fishing licenses renewals:  

As previously disclosed in our Forms 10-K and 10-Q filed since 2015, in early December 2014, the Indonesian government introduced a six-month moratorium on issuing new fishing licenses and renewals so that the country's Ministry of Maritime Affairs and Fisheries ("MMAF") could combat illegal fishing and rectify ocean fishing order. In February 2015, Pingtan ceased all fishing operations in Indonesia.  During the moratorium, the Company was informed that fishing licenses of four vessels operated through PT. Avona, one of the local companies through which Pingtan conducts business in Indonesia, and the fishery business license of PT. Dwikarya, the other local company through which the Company conducts business in Indonesia, were revoked. As a result and because license renewal was prohibited due to the general moratorium, all local fishing licenses of the Company's vessels in Indonesia are presently inactive. The MMAF has not yet restored license issuing or renewal process for vessels built abroad.

In November 2015, the Indonesian government announced that the moratorium had concluded. As the MMAF has not implemented new fishing policies and resume the license renewal process, the Company does not know when exactly licensing and renewal will start.  Since the Company historically derived a majority of its revenue from this area, this ban has caused a significant drop in production.

In September 2017, the Company was informed that the fishing licenses of 13 vessels deployed to the Indo-Pacific waters were suspended and the vessels were docked in the port by the Ministry of Agriculture and Fisheries ("MAF") of the Democratic Republic of Timor-Leste. The MAF alleged and investigated whether false statements were made during the licensing process and the vessels were simultaneously registered in Indonesia.  The Company disputed these allegations and the government of Timor-Leste eventually agreed to release these vessels as no evidence was presented to support such allegations. The 13 vessels have returned to China for regular maintenance.

As of June 30, 2018, among the Company's 140 vessels, 12 are located in the Bay of Bengal in India; 6 are located in international waters; 5 vessels (including 1 refrigerated transport vessel) are licensed to operate in international waters but returned to China for maintenance; 13 have returned to China from the Democratic Republic of Timor-Leste due to the reason described above; and 27 vessels are in the modification and rebuilding project. The remaining 77 vessels are licensed by the MOA to operate in the Arafura Sea in Indonesia. The vessels in Indonesian waters, however, are not in operation because the licenses are currently inactive due to either the moratorium discussed above, the revocation of the fishery business license of the local entity through which the vessels operate, or, with respect to four vessels, the revocation of the local fishing licenses.

Second Quarter 2018 Financial Highlights (all results are compared to prior year period)

• Revenue was $13.6 million, gross profit was $7.0 million and gross margin was 51.1%, compared to revenue of $35.7 million, gross profit of $12.3 million and gross margin of 34.5%.
• Net income attributable to owners of the Company was $2.9 million, or $0.04 per basic and diluted share, compared to net income attributable to owners of the Company of $9.0 million, or $0.11 per basic and diluted share. 

Second Quarter 2018 Selected Financial Highlights

Balance Sheet Highlights

Consolidated Financial and Operating Review

Revenues

Revenues for the three months ended June 30, 2018 were $13.6 million and decreased 61.9% from $35.7 million of the same period in 2017. The decrease was mainly attributable to sales volume decrease of 30.2%, as well as the average unit sale price decrease of 45.2% for the three months ended June 30, 2018 as compared to the three months ended June 30, 2017.

For the six months ended June 30, 2018, the Company's revenues were $24.5 million compared to $41.4 million in the first half of 2017. The decrease was primarily due to a decrease in sales volume because fewer vessels are under operation, as well as lower average unit sale price due to the different sales mix.

Gross Margin

The Company's gross margin was 51.1% for the three months ended June 30, 2018, compared to 34.5 % in the prior-year period.  The significant increase was primarily attributable to the decrease in the unit production cost of fish.

For the six months ended June 30, 2018, gross margin increased to 51.3% from 32.8% in the same period of 2017. The increase was primarily due to the same reasons described above.

Selling Expenses

Selling expenses were $0.4 million for the three months ended June 30, 2018, compared to $0.2 million in the prior-year period.

The increase was due to increase in shipping and handling fees as a result of an increased number of deliveries from Customs to warehouse, and the storage fees occurred during the processing of products to be sold to JD.com compared to prior year period.

For the six months ended June 30, 2018, selling expenses were $0.9 million compared to $0.6 million in the same period of 2017. The increase was primarily due to the same reasons described above.

General & Administrative Expenses

For the three months ended June 30, 2018, general and administrative expenses were $3.0 million, compared to $2.4 million in the prior-year period. The increase was due to an increase in professional fees, compensation and related benefits and other general and administrative expenses, offset by a decrease in travel and entertainment expense and recorded bad debt recovery as compared to bad debt expense in the prior year period.

For the six months ended June 30, 2018, general and administrative expenses were $6.1 million compared to $4.7 million in the same period of 2017. The increase was primarily due to the same reasons described above.

Net Income

Net income for the three months ended June 30, 2018 was $3.3 million compared to net income of $9.8 million in the same period of 2017.

For the six months ended June 30, 2018, net income was $4.3 million, compared to $20.7 million in prior year period.

Net Income Attributable to Owners of the Company

For the three months ended June 30, 2018, net income attributable to owners of the Company was $2.9 million, or $0.04 per basic and diluted share, compared to net income attributable to owners of the Company of $9.0million, or $0.11 per basic and diluted share, in the same period of 2017. The decrease was primarily due to the factors described above.

For the six months ended June 30, 2018, net income attributable to owners of the Company was $3.8 million, or $0.05 per basic and diluted share, compared to net income attributable to owners of the Company of $18.9 million, or $0.24 per basic and diluted share, in the same period of 2017.

Conference Call Details

Pingtan also announced that it will discuss financial results in a conference call on Friday, August 10, 2018, at 8:30 AM ET.

The dial-in numbers are:

Live Participant Dial In (Toll Free): +1 877-407-0310
Live Participant Dial In (International): +1 201-493-6786

To listen to the live webcast, please go to http://www.ptmarine.com and click on the conference call link at the top of the page or go to: http://ptmarine.equisolvewebcast.com/q2-2018. This webcast will be archived and accessible through the Company's website for approximately 30 days following the call.

About Pingtan

Pingtan is a global fishing company engaging in ocean fishing through its subsidiary, Fujian Provincial Pingtan County Ocean Fishing Group Co., Ltd., or Pingtan Fishing.

Business Risks and Forward-Looking Statements

This press release may contain forward-looking statements that are subject to the safe harbors created under the Securities Act of 1933 and the Securities Exchange Act of 1934.  Although forward-looking statements reflect the good faith judgment of our management, such statements can only be based on facts and factors currently known by us. Consequently, forward-looking statements are inherently subject to risks and uncertainties and actual results and outcomes may differ materially from the results and outcomes discussed in or anticipated by the forward-looking statements. Risks include the ability to successfully finish the modification and rebuilding of the 27 vessels, complete the maintenance of the large-scale vessels and begin fishing operations as expected; unanticipated delays in the modification, rebuilding and maintenance process; need for additional capital and the availability of financing; our ability to successfully manage relationships with customers, distributors and other important relationships; technological changes; competition; demand for our products and services; the deterioration of general economic conditions, whether internationally, nationally or in the local markets in which we operate; legislative or regulatory changes that may adversely affect our business and operations, including suspension or revocation of licenses;  operational, mechanical, climatic or other unanticipated issues that adversely affect the production capacity of the Company's fishing vessels and their ability to generate expected annual revenue and net income;  inability to sell products to the end-customer at the levels anticipated; and other risk factors  contained in Pingtan's SEC filings available at www.sec.gov, including Pingtan's most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q.   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
ryu@ptmarine.net

Maggie Li
Investor Relations Manager
Pingtan Marine Enterprise Ltd.
Tel: +86 591 8727 1753
mli@ptmarine.net

INVESTOR RELATIONS COUNSEL:

The Equity Group Inc.
Adam Prior, Senior Vice President
Tel: (212) 836-9606
aprior@equityny.com

Katherine Yao, Senior Associate
Tel: +86 10 5661 7012
kyao@equityny.com

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