Zhangzidao claims winds damage seafood; second case of weather woes in less than a year
Leading domestic aquaculture company Zhangzidao Group Co announced on Wednesday that some of its sea farms had been hit by another natural disaster, nine months after it claimed that a rare cold water current had wiped out most of its scallop stocks.
Zhangzidao said that its marine farms in Changhai county in Northeast China's Liaoning Province were hit by strong winds on August 6, according to a filing to the Shenzhen Stock Exchange.
The company did not disclose a figure for the losses caused by the winds, but it said that it had already made a claim for insurance coverage.
The announcement put Zhangzidao back in the media spotlight. Last time the company claimed it had been hit by a natural disaster, it took a large write-off on its scallop stocks.
In October 2014, the company unexpectedly announced a loss of 860.8 million yuan ($126.34 million) for the third quarter, a dramatic contrast with a net profit of 47.96 million yuan in the first half of last year.
The company said that a rare natural phenomenon - a cold water current - had swept into the northern Yellow Sea from June to August in 2014, wiping out most of its scallop stocks there. Scallops are one of its key products.
Some investors raised concerns of fraud, noting that nearby sea farms did not report any impact from such a current.
At the time, some media reports claimed that the company had never seeded the scallop beds in the first place. The company denied such charges.
Other media reports suggested that the company had lost money on undisclosed property investments and concocted the story about a cold water current to cover up its losses.
Local securities authorities started an investigation into the matter and said in December that the company was not found to have engaged in fraud.
However, authorities noted that the company should have disclosed the risks related to cold water currents.
Zhangzidao said in the stock exchange filing on Wednesday that the local meteorological department in Changhai had verified the damage caused by the storm.
"It is very possible for extreme weather such as strong winds and heavy rains to cause damage to aquaculture firms, but I think the losses this time will be less than those from the cold water currents last year," Ma Wenfeng, a senior analyst at Beijing Orient Agribusiness Consultant, told the Global Times on Wednesday.
Jia Fangyi, director of Beijing Jia Fangyi Law Firm, said that the company should invite third-party specialists to evaluate the losses and announce the findings to the public, as investors are entitled to know what really happened.
If investors are not convinced by the evaluation results, they can demand hearings to obtain further explanation, because such changes in the company's circumstances are closely related to investors' interests, Jia told the Global Times on Wednesday.
Trading in the company's shares has been halted since June 1 this year as it is considering a private placement of shares. In a filing on Tuesday, it said that trading in its shares would remain suspended.
"I'll keep a close eye on this case and offer help to the minority shareholders of the company if necessary," Jia said.
