Aquatic Foods Group

The fourth company from my screener, Aquatic Foods Group is a Jersey holding whose main operating subsidiary, Yantay Kanwa, is a Chinese company processing, producing and supplying seafood and marine foods inside and outside China, with a market capitalisation of £14.23 million, a dividend rate of 7.20%, a debt to total capital ratio of less than 6%, and a PCF ratio of 1.2, according to the FT screener.

The company’s main products are processed frozen seafood, seaweed based foods, and marine snack foods. It’s product categories are fish, sea cucumbers, cephalopods, shrimp & shellfish, and others.

When I opened the FT profile on the company, the first thing I noticed was that the shares have not traded since June. Going further down the page I see several announcements regarding an update on accounts publication (it still has not published the 2016 annual report and says it will do so this month), the resignation of the finance director on June 30, and temporary suspension of trading on AIM (a sub-market of the London Stock Exchange for smaller companies) on June 29. The ‘Financials’ tab only shows data up to 2015, so the ratios in the first paragraph are out of date. Needless to say these are all major red flags.

Coupled with the fact that it’s a Chinese company (not very reassuring due to several instances of fraud by Chinese companies in the past), that two Finance Directors have resigned in the past two years, and that I’m unable to read and analyse their 2016 annual report, this company goes straight to the ‘No’ tray (which is a shame since according to their last trading update for the quarter ended March 31, 2017, the company is profitable and has £54 million in cash – 3.8 times its market capitalisation – if one could trust their statements).

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