Pingtan Marine Enterprise Ltd (NASDAQ:PME) is a low-priced stock in the ocean fishing space that has started to power higher over the past two months after a long trip down a mountain of pain fueled by rising debt and falling sales. The most recent catalyst is the company’s announcement that “it expects financial results for the fourth quarter ended December 31, 2016, to be approximately break-even to a slight profit per diluted share, and to end losses for six consecutive previous quarters. Final fourth quarter results remain subject to the completion of routine year-end closing procedures and audits by the Company’s independent accounting firm. The Company expects to release fourth quarter and full year 2016 results in March 2017.”
The chart shows 23% during the past week in terms of shareholder gains in the listing. Market participants may want to pay attention to this stock. PME has evidenced sudden upward volatility on many prior occasions. Moreover, the listing has registered increased average transaction volume recently, with the past month seeing nearly 220% over the long run average.
Pingtan Marine Enterprise Ltd (NASDAQ:PME) trumpets itself as a company that engages in the ocean fishing business. The company harvests a range of fish species, such as ribbon fish, Indian white shrimp, croaker fish, pomfret, Spanish mackerel, conger eel, squid, and red snapper with its owned or licensed vessels operating within the Indian Exclusive Economic Zone and the Arafura Sea of Indonesia. It operates approximately 135 fishing vessels.
The company serves various customers, including distributors, restaurant owners, and exporters in the People’s Republic of China. Pingtan Marine Enterprise Limited is based in Fuzhou, the People’s Republic of China.
According to company press materials, “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. Pingtan is one of the largest U.S.-listed marine services operating company in China. We engage in ocean fishing through its wholly-owned subsidiaries, Fujian Provincial Pingtan County Ocean Fishing Group Co., Ltd., or Pingtan Fishing. Pingtan Fishing primarily engages in ocean fishing with many of our self-owned vessels operating within the Arafura Sea of Indonesia and the Indian Exclusive Economic Zone. We are a growing fishing company and provider of quality seafood in the PRC.”
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As noted above, the company just announced that it is seeing improving trends ahead. Mr. Xinrong Zhuo, Chairman and CEO of the Company, commented, “We were pleased to quickly deploy 13 vessels to the Indo-Pacific waters, which we anticipate to begin selling fishing products within a very short period of time, and we also deployed 6 vessels to the international waters of the Pacific and Atlantic Oceans for squid and tuna products. We are looking forward to full-load operation of these vessels in the coming months.”
At this time, carrying a capital value in the market of $137.6M, PME is pulling in trailing 12-month revenues of $21.4M and the company has a significant war chest ($266.17k) of cash on the books. However, it all goes wrong from there: that cash must be weighed relative to about $41.2M in total current liabilities.
That is obviously an awful balance sheet, especially considering that the company has seen a huge drop in sales over the past year (-57.4%). To further magnify the negative story here, one also note that debt has been growing over recent quarters.
All of that said, PME is positively ripping of late, more than doubling since the election. When we see something that seems to have no business moving higher acting like this, and that picture is negatively shaped by backward looking data, we are forced to conclude the market is discounting an improvement in that data through a shift in company or contextual trends. That happens to be exactly what the company claims in its latest press release. We will update the story again soon as developments transpire. For continuing coverage on shares of $PME stock, as well as our other hot stock picks, sign up for our free newsletter today and get our next hot stock pick!