Shenghua Biok: revenue of pesticides -34.2% in 2016

 

The large rise in net profit can be mainly attributed to rises in profit made by the affiliated companies Caitong Fund Management Co., Ltd. and Qingdao Yebio Bio-engineering Co., Ltd., and the investment principle and interest collected from the equity investment.

 

Specifically, Shenghua Biok recorded a significant fall in the revenue from its pesticide business, by 34.2% YoY to USD20.6 million. Here are key reasons:

 

1. The sales of abamectin technical declined by about USD8.7 million.

 

2. Key dicamba competitors including Zhejiang Yangnong Chemical Group Co., Ltd. and Jiangsu Changqing Agrochemical Co., Ltd. put new production lines into operation, which was a big threat to its sales: sales price down by 23.8% YoY on average.

 

“Our plant is located in the Taihu basin, for which the production capacity expansion has been restricted by environmental policies in recent years,” stated Shenghua Biok, “Our market share of dicamba has decreased from 50%+ in 2013 to <10% currently, and the production capacity down from the 1st place to the 3rd place. Now our pricing and bargaining capabilities are weakened and great declines in profit and even deficits are seen.”

 

3. In 2015, Shenghua Biok transferred its shares in Ningxia Gerui Fine Chemicals Co., Ltd. (Ningxia Gerui) which is mainly producing PMIDA, an intermediate for glyphosate. Hence, Ningxia Gerui’s financial figures have been removed from Shenghua Biok’s consolidated financial report since 30 April, 2015.

 

In April 2016, Shenghua Biok released the Future Strategic Development Plan (2016-2020), stressing the focus on the “pan-entertainment (based on intellectual property)”. Currently, the proposal to purchase assets by issuing shares and paying in cash and to raise supporting funding is progressed.

 

Table: Revenue and gross margin of main business of Shenghua Biok, 2016

Item		Revenue, million USD	YoY change	Gross margin	YoY change, percentage points
By product	Pesiticdes	20.6	-34.2%	3.6%	-5.2
	Zirconium-based  products	32.7	9.8%	6.2%	-0.52
	Veterinary drug	62.2	-4.4%	17.4%	-0.1
	Chemicals	12.4	25.2%	8.3%	-1.4
	Electricity  and steam	7.8	12.9%	25.8%	-4.7
	Others	6.5	300.8%	14.8%	-23.5
By region	Domestic	94.5	16.7%	10.8%	-1.6
	Overseas	47.8	-25.0%	15.5%	0.2

Source: Shenghua Biok