Workers dump boxes of infant scallops into the sea. File Photo: IC

China's leading seafood enterprise replied to inquiries over its recent losses, saying that it will eliminate its risks caused by "a reduction of scallop output", but Chinese shareholders are not convinced, and some have questioned whether it's profit manipulation to avoid delisting.

Shenzhen-listed seafood company Zhangzidao Group (Zoneco) released its first-quarter financial report in late April, showing a loss of 43.14 million yuan ($6.25 million), due to poor scallop output. Since Zoneco announced similar incidents in previous years, it has drawn scrutiny from the Shenzhen Stock Exchange.

"Again? How could such a big aquaculture zone not have protective facilities, and just let its scallops starve to death or even run away?" said a posting on Weibo."It's the same reason that [Zoneco] previously offered as a reason for its losses," another netizen said.

From 2014 to 2018, the company made substantial losses, citing similar reasons. However, this never happened before 2012 and the business back then was generally stable with rising net profit, changjiangtimes.com reported Tuesday.

Wu Hougang, chairman of Zoneco, has cashed out 407 million yuan worth of shares in the secondary market since 2011, the report said.

Shares of Zoneco peaked at 34.59 yuan in November 2010, but they have been falling since then. The shares closed at 3.63 yuan in Shenzhen Thursday.

"Zoneco itself holds over 45 percent of its shares now, and institutional investors of the company have pulled out since the third quarter of 2017," a researcher at a Beijing-based securities company surnamed Zhu told the Global Times Thursday.

"It is possible that the company might write down its inventory this year, and write it up next year, so it could turn a loss into a gain and avoid being classified as a special treatment issue by the stock exchange," Zhu said.


Newspaper headline: Seafood enterprise hits headlines again over falling scallop output