Seed China News 1305 (12 issues per year)

Date: May 31, 2013
Pages: 28
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US$ 3,564.00
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Publisher: Guangzhou CCM Information Science & Technology Co., Ltd. (CCM)
Report type: Strategic Report
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ID: SA9D0B9CFF2EN
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Seed China News 1305 (12 issues per year)
Editor Notes

Listed seed companies in China had a mixed blessing performance in 2012, judging from their annual financial reports successively released from late April. Among the eight companies listed on domestic stock market,four reported a large growth (over 10%) in net profit, namely Yuan Longping High-tech Agriculture Co., Ltd., Hefei Fengle Seed Co., Ltd., Shandong Denghai Seeds Co., Ltd. and Da Bei Nong Group (its seed business is undertaken by its subsidiary Beijing Jinse Nonghua Seed Technology Co., Ltd.). Three of them (Wanxiang Doneed, Grand Agriseeds and Winall Hi-tech) witnessed a slight growth of net profit or even maintained the same level compared with the previous year. Gansu Dunhuang was even worse, suffering a huge net loss as high as USD20.66 million!

Despite the growth of net profit, some players actually underperformed in their seed businesses. For example, Hefei Fengle's net profit was largely contributed by its non-seed businesses like spices and agrochemicals, with almost no growth in corn seed business. Besides, Longping High-tech actually suffered a 46.01% year-on-year decline in net profit after deducting irregular gains, mainly owing to the heavy losses in its extended industrial chain and the significant decline in gross profit margin of seed products.

Compared with the significant fluctuation in net profit, listed companies overall faced a flat growth of revenue in 2012. Moreover, the growth rate seemed to have slightly slowed down in the past two years, merely judging from their annual financial reports. Obviously, the supply glut of domestic seed industry has posed an increasing pressure on domestic seed companies, which can be reflected in the shrinking profit margin of seed products in general. The competition would be tougher for those who have insufficient R&D capability or lack excellent outsourced varieties.

Luckily, listed seed companies can continuously obtain powerful support from the government, such as various preferential policies, supporting funds and direct subsidies, since all of them are approved as the seed enterprises in an operation mode of 'breeding, production and promotion'. With the favorable external support, these companies have been striving to enhance their R&D capability in variety breeding to achieve higher core competitiveness in the future. Meanwhile, stripping inferior businesses and developing diversified seed businesses would be sensible approaches for some companies, just like Longping Hi-tech and Winall Hi-tech did.

Headline

The amount of subsidies on improved seed varieties in 2013 stays roughly the same with the one last year. USD3.18 billion (RMB19.9 billion) has been issued by the Chinese Central Government up to early May.

By integration of resources, rich capital and technology advantage, multinational seed companies have entered the Chinese market successfully and grabbed a higher market share, especially the corn seed market.

Though still small now, the market share of pink tomato in Northeast China will enhance year by year under the enlargement of consumption groups.

GM corn seeds sent from the US were seized in Harbin (the capital of Heilongjiang Province), which once again arouses the public's concern on GM crops in China.

The 2012 annual report of Longping High-tech revealed that the company in 2012 suffered a significant decline of 46.01% over the previous year in net profit after deducting irregular gains.

Hefei Fengle reported its favorable performance of 2012 marked by an increase in both revenue and profit in its major business segments including seeds, agrochemicals and spices.

Dragged down by its corn business, Wanxiang Doneed achieved lackluster performance in 2012.

Gansu Dunhuang suffered huge losses in 2012, owing to the dismal performance in major business (corn seeds, cotton, food processing).

The planting area of alfalfa in Shandong Province witnesses a dramatic growth, which is mainly distributed in the saline land of Dongying City and Binzhou City.

China is stepping toward an era of mechanized cultivation and harvesting of rapeseed, which will promote the development of the domestic rapeseed industry.

Twelve domestic hybrid rice seed companies are planning to jointly set up a molecular breeding platform for hybrid rice, aiming at enhancing the commercial breeding capacity of domestic hybrid rice seed companies.
Subsidies on improved crop seed varieties in 2013 similar with 2012
Corn varieties from seed multinationals grab large market share in China

Market share of pink tomato will increase in Northeast China
GM corn seeds from the US uncovered in Harbin

Longping High-tech suffers sharp drop in net profit excluding irregular gains in 2012
Hefei Fengle reports sound performance in 2012
Wanxiang Doneed attains lackluster performance in 2012
Gansu Dunhuang suffers huge losses in 2012

Shandong: alfalfa planting increasing in saline land
China's rapeseed cultivation and harvesting entering mechanization era

Hybrid rice molecular breeding platform to be founded by seed companies

COMPANIES MENTIONED

Yuan Longping High-tech Agriculture Co., Ltd.
Hefei Fengle Seed Co., Ltd.
Wanxiang Doneed Co., Ltd. Beijing Doneed Seed Co., Ltd.
Gansu Dunhuang Seed Co., Ltd.
Shandong Tianrui Ecological Agriculture Co., Ltd.
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