CIMB has downgraded China Fishery Group (B0Z.SG) to Underperform from Neutral, citing dilution risks from potential fund-raising, prospect of more acquisitions of expensive fishmeal operations, view that fishmeal prices have peaked, according to Dow Jones.

CIMB says while fishing group confident of its financial ability to acquire assets, any additional fund-raising will dilute earnings given high net gearing of 0.8s. Notes unfavourable weather conditions in China, world's largest importer of fishmeal, has affected country's aquaculture industry, resulting in lower demand, implying limited upside for fishmeal prices.

Cuts target price to $1.60 from $2.30, based on 7.6x FY11 P/E vs 11x P/E previously.

Shares off 1.6% at $1.91.