In H1 2012, the performances of listed seed
companies present obvious differentiation, caused by industrial changes and
operating strategies. Judging from the financial reports of the listed seed
companies, industrial competition has been intensified. However, the seed
players which are able to make reasonable adjustments to their operating
strategies can often achieve a sound development, while the conservative
players are often at a disadvantage in the competition. For domestic seed
companies, an excellent variety with great potential usually means handsome
profits, providing a powerful support for their business growth, according to
CCM’s August Issue of Seed
China News.
The oversupply of corn seeds is becoming more
serious in 2012, following the similar situation in previous years. The
homogeneous competition is rather common among domestic corn seed producers,
mainly relying on promoting some old corn varieties which have entered the
market for years. Mainly owing to the increasing costs of production materials
and labor costs, the overall gross profit margin of corn seeds would have shown
a downward trend. While for some listed seed companies which try to provide
excellent seeds or promote new corn varieties with better integrated 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 in H1 2012 sees a
significant decline over the same period of last year. Actually, the company
has cut its corn seed output in its production base of Gansu Province
The unsatisfactory performances of Gansu
Dunhuang Seed Co., Ltd. (Gansu Dunhuang) and Shandong Denghai Seeds Co., Ltd.
(Shandong Denghai) in H1 2012 has caused a widespread concern in the industry.
In previous years, the two companies greatly benefited from their separate
joint ventures with Pioneer Hi-Bred International Inc., thanks to the sound
performance of corn hybrid "Xianyu 335". Unfortunately, both the
sales and profits of "Xianyu 335" seeds decreased sharply in 2012,
which could be primarily attributed to oversupply of corn seeds in current
market. As a result, Shandong Denghai has a declining performance and Gansu
Dunhuang suffers a net loss in H1 2012.
For Yuan Longping High-tech Agriculture Co.,
Ltd. (Longping High-tech) which has been enhancing corn seed business, its
revenue in corn seeds sees a sharp growth in H1 2012, mainly owing to the
enlarged promotion of corn hybrid "Longping 206". However, its gross
profit margin in 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 increasing performance after acquiring two
corn hybrids: "Gaoyu 2067" and "Yangguang 98". As a
technology-oriented hybrid rice company, Winall Hi-tech is actively exploring
its corn seed business. In H1 2012, Winall Hi-tech has a sharp growth in corn
seed, with the gross profit margin increasing from 19.05% to 32.36%.
Compared with corn seed market, rice seed
market has a relatively relaxed situation, reflected in light of oversupply and
upward profit margin. There have been diversified hybrid rice seeds in the
market, thanks to the advanced hybrid rice breeding level at home. Overall,
hybrid rice seed companies 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. (Grand Agriseeds) 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 to increase in H1 2012, mainly
attributed to its leading hybrid rice variety: "Y Liangyou 1", which
was bred by Hunan Hybrid Rice Research Center (HHRRC). Moreover, "Shen
Liangyou 5814", a super rice variety approved in 2012, has been well
recognized by rice growers, thus contributing rising sales and profits to
Longping High-tech.
The increasing exports of hybrid rice seeds
would provide a force for domestic hybrid seed industry. As a world leader in
developing rice hybrid technology, China
The oversupply of hybrid rice seeds should
not be ignored at home. Owing to continuously updated hybrid rice varieties and
increased seed output, the competition in hybrid rice markets 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 production and 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. For Longping High-tech and Winall
Hi-tech which are striving to develop corn seed business while further
enhancing their core business: hybrid rice seed, both witness a sound
performance in H1 2012. Aiming to reduce the risk of single business, Grand
Agriseeds is actively adjusting its operating structure of crop varieties, by
enhancing the breeding and promotion of new corn varieties. However, Hefei
Fengle which has a performance decline in seed business in H1 2012 has expanded
other businesses like spice and agrochemical, with sales proportion over 50% of
the total.
It is expected that Longping High-tech and
Winall Hi-tech would seed continuous growth in the coming few years. It's
reported that Longping High-tech already signed an agreement with Hunan Hybrid
Rice Research in Nov. 2011, indicating that Longping High-tech will exclusively
commercially operate all rice varieties bred by the latter by paying USD1.58
million (RMB10 million) each year. For Winall Hi-tech which is expert in hybrid
rice breeding, its developing corn seed business and wheat seed business will
generate more profits in future.
Shandong Denghai and Gansu Dunhuang, two
leading corn seed producers at home, would undertake great pressure in H2 2012.
In view of the decreasing performance of "Xianyu 335", the two
companies will enhance the operation of other corn hybrids in future. For
example, Gansu Dunhuang is striving to promote its new purchased corn hybrid:
"Jixiang 1" and Shandong Denghai is strengthening the promotion of
self-developed corn hybrids such as "Denghai 605".
Source: Seed
China News 1209
Content
of Seed China
Variety registration system expected to be
improved or canceled
Performance overview of listed seed
companies in H1 2012
Origin advances GM and hybrid corn breeding
Market situation of watermelon seed in
Guangxi
Stress tolerance of alfalfa to be
strengthened
Greenhouse cucumber cultivation rising in
northern China
How to save China
Rapeseed planting area continuously
decreasing in Hubei
"Y Liangyou 2" with
"Y58S" exclusively promoted by Anhui Yuanliang
F-type three-line hybrid wheat to realize
industrialization
Ex-factory price of DETCL keeps decreasing
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