In March 2016, Shenghua Biok released its 2015 financial figures. Revenue from tryptophan
business decreased out of the drops in both sales volume and price. In 2016,
Shenghua Biok will focus on "pan-entertainment" business to hunt for
new profit growth.
In
March 2016, Zhejiang Shenghua Biok Biology Co., Ltd. (Shenghua Biok) released
its 2015 financial figures. Its revenue was USD154.49 million (RMB1.01
billion), down by 24.84% over 2014, while the net profit reached USD21.39
million (RMB139.88 million), up by 68.73% YoY. This is mainly because the
company had sold its loss-making subsidiary.
Particularly,
Shenghua Biok's revenue from veterinary drug business (mainly tryptophan)
reduced by 12.03% to USD68.66 million (RMB448.95 million), due to:
According to CCM's price monitoring, the market price of 98% tryptophan
continued sliding in 2015: from USD18,793/t in Jan. to USD7,581/t in Dec.,
shrinking by 60%.
-
Fall
in production and sales volume
Accordingly, both figures were down compared with 2014:
-
Production:
1,171.50 tonnes, down by 23.11%
-
Sales
volume: 966.12 tonnes, down by 31.04%
-
Stock
(by 31 Dec. 2015): 346.02 tonnes, up by 146.03%
This slump was mainly affected by the price downturn in soybean meal, a raw
material for protein feed. CCM's data showed that the market price of soybean
meal was USD417/t, declining by 17% compared with Jan. As a substitute for
tryptophan, downstream feed industry chose the cheaper soybean meal to reduce
cost, which led to the sluggish sales and falling price of tryptophan.
For
this, Shenghua Biok optimized its manufacturing techniques to lower the cost.
The gross profit margin thus rose to 17.41%, up by 5.49 percentage points,
which, however, couldn't offset the negative effect from the slump in
tryptophan's price.
Shenghua Biok's
financial performance, 2012-2015
Source: Zhejiang Shenghua Biok Biology Co., Ltd.
Monthly market price
of 98% tryptophan in China, Jan. 2014-Dec. 2015
Source: CCM
Shenghua
Biok has stood firm in China's tryptophan market by enlarging scale. According
to CCM's research, domestic tryptophan enterprises able to realize mass
production include Meihua Holdings Group Co., Ltd., Henan Julong Bioengineering
Co., Ltd. and Shenghua Biok, taking up 65%+ of the sales. Shenghua Biok's
output of tryptophan was merely around 200 tonnes in 2013, but to 1,000 tonnes
in 2015.
At
present, the tryptophan business was the biggest contributor to Shenghua Biok.
Other products, with low gross profit margin and small scale, can't bring any
new growth point of profit. Therefore, in 2016 Shenghua Biok will:
-
Innovate
in techniques to reduce production cost and boost profits
-
Speed
up to abolish businesses and sections with serious losses and weak
competitiveness
-
Hunt
for new engines of growth by focusing on pan-entertainment business* as a
strategic business
Notably, "We will restart the plan to acquire 100% of shares in Chengdu Blaze
Loong Technology Co., Ltd., which will enhance our profitability,' Shenghua
Biok mentioned in the 2015 financial report (Please see Shenghua Biok fails
in reconstructing in Amino Acids China E-News 1602).
*Pan-entertainment
business: first put forward by Tencent, it makes profits on Internet by
attracting fans in fields of online computer games, literature, comics, movie,
etc. Shenghua Biok is attempting to step into online games industry by
acquiring Chengdu Blaze Loong Technology Co., Ltd.
About CCM:
CCM is the leading
market intelligence provider for China's agriculture, chemicals, food
& ingredients and life science markets. Founded in 2001, CCM offers a
range of data and content solutions, from price and trade data to
industry newsletters and customized market research reports. Our clients
include Monsanto, DuPont, Shell, Bayer, and Syngenta.
We will
attend FIC in this week. If you would like to meet us for consultancy in
FIC, please get in touch with us directly by emailing econtact@cnchemicals.com or calling +86-20-37616606.
Tag: Shenghua Biok, tryptophan