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Thursday, October 22, 2020

Pingtan Marine Enterprise Ltd (NASDAQ:PME) Explodes Higher as Trends Connect

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Pingtan Marine Enterprise Ltd (NASDAQ:PME) is an interesting growth play in the marine fishing space that has continued to demonstrate some explosive potential in recent months. It deserves a little attention, as I’m sure you can see from the chart. The company recently provided updated guidance for Q1 2017, noting that trends appear to point to a clear bottom line profit of about $0.08-0.10 per diluted share. The company also voiced its continued expectation that the books will close on Q4 2016 as a breakeven period.

The stock has been exploding higher of late, and the bottom line inflection is an easy explanation for the move. Coming into Q4, the company had not posted a profit for a fiscal trailing year. However, as the numbers shake out now, we see a clear trend, with things improving in Q3, getting to breakeven in Q4, and now being guided to a solid profit in Q1 of this year. The market likes the simple stuff, and the PME story is coming together as a growth story right now with improving cost controls that suggest management is finding answers.

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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Pingtan currently operates 135 fishing vessels; 12 of which are operating in the Bay of Bengal in India, 13 vessels are operating in Indo-Pacific Waters, 2 vessels have been operating the international waters of Southwest Atlantic and Southeast Pacific Oceans since late December 2016, and 4 large-scaled fishing vessels are expected to be put into operation in the first quarter of 2017. The Company expects to recover approximately 30% of its production capacity in 2017 first quarter, and to increase its sales volume of fish products harvested from these fishing territories.

Mr. Xinrong Zhuo, Chairman and CEO of the Company, commented, “We were pleased to start receiving cargos of fish products from our recently deployed vessels, and have seen trends continue to move positively over the past three months. We have begun to deliver our products to many of Pingtan’s historical customers, which have not seen any decrease in demand from China’s growing population. As a result of these trends and feedback from these customers, we felt it appropriate to update the market on the Company’s bottom line expectations for the current calendar quarter. We are very optimistic for the first quarter 2017, as we expect the Chinese New Year will drive stronger sales. We continue to focus on leveraging our asset base to further expand our fishing territories, and to diversify our product mix with high-quality fishing products.”

The chart shows 72% added to share values of the company over the past month of action. Market participants may want to pay attention to this stock. PME has a track record that includes a number of dramatic bounces. What’s more, the name has seen interest climb, with an increase in recent trading volume of just shy of 230% above its longer-run average levels. Since we last covered the name, the stock has moved 35%.

At this time, carrying a capital value in the market of $185.8M, Pingtan Marine Enterprise has a significant war chest ($4.6M) of cash on the books, which compares with about $41.2M in total current liabilities. One should also note that debt has been growing over recent quarters. PME is pulling in trailing 12-month revenues of $21.4M. However, the company is seeing declines on the top line on a quarterly y/y basis, with revenues falling at -57.4%. That said, the top line dive is more likely a seasonal story in this case. This is a very interesting play right now, and we look forward to a follow-up chapter as events 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!

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