Performance overview of listed seed companies in h1 2012


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In H1 2012, the performances of listed seed companies present obvious differentiation, caused by industry changes and operating strategies.

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Performance overview of listed seed companies in h1 2012

  1. 1. Performance overview of listed seed companies in H1 2012Summary: In H1 2012, the performances of listed seed companies present obviousdifferentiation, caused by industry changes and operating strategies.Tags: Variety registration system, revenue, net profit, GM crop breeding, alfalfa, cucumber seed,non-GM soybean, rapeseed, hybrid rice, F-type three-line hybrid wheatIn H1 2012, the performances of listed seed companies present obvious differentiation, causedby industrial changes and operating strategies. Judging from the financial reports of the listedseed companies, industrial competition has been intensified. However, the seed players whichare able to make reasonable adjustments to their operating strategies can often achieve a sounddevelopment, while the conservative players are often at a disadvantage in the competition. Fordomestic seed companies, an excellent variety with great potential usually means handsomeprofits, providing a powerful support for their business growth, according to CCM’s August Issueof Seed China News.The oversupply of corn seeds is becoming more serious in 2012, following the similar situation inprevious years. The homogeneous competition is rather common among domestic corn seedproducers, mainly relying on promoting some old corn varieties which have entered the marketfor years. Mainly owing to the increasing costs of production materials and labor costs, the overallgross profit margin of corn seeds would have shown a downward trend. While for some listedseed companies which try to provide excellent seeds or promote new corn varieties with betterintegrated traits, they would be able to enhance their overall profit margin of corn seeds.Taking Hefei Fengle Seed Co., Ltd. (Hefei Fengle) for example, the profit margin in corn seeds inH1 2012 sees a significant decline over the same period of last year. Actually, the company hascut its corn seed output in its production base of Gansu Province, mainly in view of the increasingproduction costs and the oversupply of corn seeds in national market. In addition, some old cornvarieties such as "Xundan 20" and "Jidan 7" are still Hefei Fengles main sources of revenue incorn seed business.The unsatisfactory performances of Gansu Dunhuang Seed Co., Ltd. (Gansu Dunhuang) andShandong Denghai Seeds Co., Ltd. (Shandong Denghai) in H1 2012 has caused a widespreadconcern in the industry. In previous years, the two companies greatly benefited from theirseparate joint ventures with Pioneer Hi-Bred International Inc., thanks to the sound performanceof corn hybrid "Xianyu 335". Unfortunately, both the sales and profits of "Xianyu 335" seeds
  2. 2. decreased sharply in 2012, which could be primarily attributed to oversupply of corn seeds incurrent market. As a result, Shandong Denghai has a declining performance and GansuDunhuang suffers a net loss in H1 2012.For Yuan Longping High-tech Agriculture Co., Ltd. (Longping High-tech) which has beenenhancing corn seed business, its revenue in corn seeds sees a sharp growth in H1 2012, mainlyowing to the enlarged promotion of corn hybrid "Longping 206". However, its gross profit marginin corn seeds shows a certain decrease, mainly due to the rising production costs in the period.In corn seed business, Winall Hi-tech Seed Co., Ltd. (Winall Hi-tech) has an increasingperformance after acquiring two corn hybrids: "Gaoyu 2067" and "Yangguang 98". As atechnology-oriented hybrid rice company, Winall Hi-tech is actively exploring its corn seedbusiness. In H1 2012, Winall Hi-tech has a sharp growth in corn seed, with the gross profitmargin increasing from 19.05% to 32.36%.Compared with corn seed market, rice seed market has a relatively relaxed situation, reflected inlight of oversupply and upward profit margin. There have been diversified hybrid rice seeds in themarket, thanks to the advanced hybrid rice breeding level at home. Overall, hybrid rice seedcompanies which deliver higher-value rice seeds to farmers are able to make handsome profits.For example, Longping High-tech, Winall Hi-tech and Grand Agriseeds Technology, Inc. (GrandAgriseeds) generate increasing profits from hybrid rice seeds in H1 2012.For Longping High-tech, the revenue and gross profit margin in hybrid rice seeds continue toincrease in H1 2012, mainly attributed to its leading hybrid rice variety: "Y Liangyou 1", which wasbred by Hunan Hybrid Rice Research Center (HHRRC). Moreover, "Shen Liangyou 5814", asuper rice variety approved in 2012, has been well recognized by rice growers, thus contributingrising sales and profits to Longping High-tech.The increasing exports of hybrid rice seeds would provide a force for domestic hybrid seedindustry. As a world leader in developing rice hybrid technology, China has gradually increasedthe exports of hybrid rice seeds or enhanced foreign aid on hybrid rice technology in recentyears. Under such the situation, domestic hybrid rice companies intend to develop or exploreoverseas markets. In terms of export value of hybrid rice seeds, Winall Hi-tech and GrandAgriseeds generate the growth of 91.23% and 88.49% in H1 2012, respectively.The oversupply of hybrid rice seeds should not be ignored at home. Owing to continuouslyupdated hybrid rice varieties and increased seed output, the competition in hybrid rice markets
  3. 3. would be more and more intense in future. It is known that Guangdong Golden Rice Seeds Co.,Ltd., a prominent hybrid rice company in South China, has reduced its hybrid seed productionand promotion of some small varieties, in view of declined sales and intensified competition.Diversified operation in seed products would be a good choice for domestic seed companies. ForLongping High-tech and Winall Hi-tech which are striving to develop corn seed business whilefurther enhancing their core business: hybrid rice seed, both witness a sound performance in H12012. Aiming to reduce the risk of single business, Grand Agriseeds is actively adjusting itsoperating structure of crop varieties, by enhancing the breeding and promotion of new cornvarieties. However, Hefei Fengle which has a performance decline in seed business in H1 2012has expanded other businesses like spice and agrochemical, with sales proportion over 50% ofthe total.It is expected that Longping High-tech and Winall Hi-tech would seed continuous growth in thecoming few years. Its reported that Longping High-tech already signed an agreement with HunanHybrid Rice Research in Nov. 2011, indicating that Longping High-tech will exclusivelycommercially operate all rice varieties bred by the latter by paying USD1.58 million (RMB10million) each year. For Winall Hi-tech which is expert in hybrid rice breeding, its developing cornseed business and wheat seed business will generate more profits in future.Shandong Denghai and Gansu Dunhuang, two leading corn seed producers at home, wouldundertake great pressure in H2 2012. In view of the decreasing performance of "Xianyu 335", thetwo companies will enhance the operation of other corn hybrids in future. For example, GansuDunhuang is striving to promote its new purchased corn hybrid: "Jixiang 1" and ShandongDenghai is strengthening the promotion of self-developed corn hybrids such as "Denghai 605".Source: Seed China News 1209 of Seed China News 1208:Variety registration system expected to be improved or canceledPerformance overview of listed seed companies in H1 2012Origin advances GM and hybrid corn breedingMarket situation of watermelon seed in Guangxi
  4. 4. Stress tolerance of alfalfa to be strengthenedGreenhouse cucumber cultivation rising in northern ChinaHow to save Chinas non-GM soybean?Rapeseed planting area continuously decreasing in Hubei"Y Liangyou 2" with "Y58S" exclusively promoted by Anhui YuanliangF-type three-line hybrid wheat to realize industrializationEx-factory price of DETCL keeps decreasingFor more information about CCM’s Seed China News, please contact us