Origin Agritech doubles as China approves corn seeds

Origin Agritech Ltd., China’s third- biggest seed producer, more than doubled in Nasdaq trading after the company won approval to sell the nation’s first genetically modified corn seed (AgroNews 2009-11-24).

Origin rose $5.24 to $10.45 at 4:29 p.m. in Nasdaq Stock Market trading, the biggest intraday gain since the shares were first sold to the public in March 2004. Origin has climbed nearly five-fold this year.

China’s Ministry of Agriculture gave final approval to sell corn engineered to produce phytase, a feed additive that helps animals absorb phosphorous and reduce polluted runoff into waterways, Beijing-based Origin said in a Nov. 21 statement. China is the world’s second-biggest corn producer after the U.S.

Phytase corn approval is “a potentially game-changing event that should have a materially positive impact to shareholders,” Joe Giamichael, a New York-based analyst at Rodman & Renshaw, said today in a report. “This product will be expected to contribute to both revenue growth and margin expansion as the rollout gains traction domestically.”

Giamichael raised his rating on the stock to “market outperform” from “market perform” with a 12-month to 18-month price target of $15. He raised his estimate for 2011 earnings per share to $1.41, from 60 cents.

A limited amount of the new seed will be available to Chinese growers in 2010, Irving Kau, vice president of finance, said today in an e-mailed message. As many as 100,000 acres may be planted in the first year, he said, repeating a Sept. 17 estimate.

Landmark’ Approval

"With this landmark seed approval, we are not only the first GM corn-seed product in China, but we are actively leading the new genetically modified generation of agricultural products for China and will continue to do so in the future,” Origin Chairman Gengchen Han said in the statement.

Chinese farmers spend $200 million a year on phytase for animal feed and $1.1 billion on corn seed, Kau said in September. The company plans to combine phytase production and glyphosate herbicide tolerance in a so-called double-stack corn seed once the herbicide technology is approved, probably in late 2010 or 2011, Kau said.

Origin has an exclusive global license from the Chinese Academy of Sciences and Sichuan Biotech Engineering Ltd. to use the glyphosate-resistance gene in corn, soybeans, cotton, rice and canola. The technology allows plants to tolerate Monsanto Co.’s Roundup herbicide.

The company hopes to start commercial sales of herbicide- resistant corn at 500,000 acres in the first year after approval, with an increase to 3 million to 5 million acres in subsequent years, Kau said in September. Origin also may distribute the technology outside China through licensing agreements, he said.