Company update: Global Bio-Chem 2011

Net profit attributable to owners of the Company reached a record high of HK$1.31 billion (€127.2m) , representing a 295% upsurge from 2010.

 

Revenue and gross profit of the Group’s downstream products, including amino acids, polyol chemicals, modified starch, and corn sweeteners, in 2011, rose substantially by 61% and 140% respectively when compared with those of the previous year.

 

The increase in revenue and gross profit was mainly attributable to a year-on-year rise in the average selling prices and sales volume of most of the Group’s downstream product series of 44% and 12% respectively.

Amino acids – the Group’s major business – remained the largest contributor to the Group’s total revenue and gross profit for the Year, accounting for 49% and 78% respectively.

During the Year, revenue and gross profit of amino acids soared by 76% and 169% year-on-year respectively.

The remarkable growth was mainly attributable to the significant increase in the prices of meat and egg, resulting in upsurges in both demand and selling price of amino acids.

The operating environment in the animal feed industry improved significantly during 2011, driven by the strong demand for food and agricultural products, which was favourable to the Group’s amino acid business.

 

To cater to rising demand for amino acids, the Global Bio-Chem enhanced its full designed capacity by 20% to 600,000 metric tonnes through technological improvement in the conversion ratio of bacteria during 2011.

The enhanced production process is part of the Group’s technical modification plan for lifting its total lysine capacity to 800,000 metric tonnes in 2012.

The Group’s corn sweeteners business, operated through a listed subsidiary, also reported satisfactory results.

This division contributed a gross profit of HK$387 million, representing a 80% year-on-year growth, to the Group during 2011.

Looking into 2012, Liu Xiaoming, Co-chairman of Global Bio-chem, said: "The current market conditions are likely to persist, with a gradual improvement in the global economy. With the implementation of the Twelfth Five-Year Plan in the PRC, where it is envisaged to increase fiscal spending and ease credit policy to support domestic demand, a stable growth is anticipated in the country.

“We will continue to strive to enlarge our market share and maintain market leadership through diversification of our product portfolio, forging strategic alliance with prominent market players and strengthening our research and development capability with respect to operations, raw materials and new product development."

With respect to amino acids, Global Bio-Chem will push ahead with the development of new products such as arginine and protein lysine products with various concentrations.

A newly-built facility for the production of ammonia, one of the important chemicals used in the fermentation process of the Group’s amino acids products, has been operating since the second half of 2011 and is expected to commence production in the first half of 2012.

By supplying its own chemical raw material in the fermentation process, the Group will be able to effectively trim down its production costs in the long run.