Shandong
Denghai Seeds Co., Ltd. (Shandong Denghai) achieves sharp growth in both
revenue and net profit during H1 2013, mainly owing to the increasing sales of corn
variety Denghai605 and the contribution from key subsidiaries, according to CCM’s latest issue, Seed China News 1308.
According
to Shandong Denghai's semi-annual financial report released on 26 Aug., the
company generated USD98.81 million (RMB610.64 million) of revenue and USD24.81
million (RMB153.33 million) of net profit during H1 2013, an increase of 90.45%
and 121.85% respectively year on year.
Shandong
Denghai primarily attributes its sharp growth in H1 2013 to the increased sales
of Denghai605, a leading variety bred by the company itself. As a national
approved corn variety released in 2010, the variety has seen rapid growth in
the past few years. With prominent advantage of lodging resistance and high
yield, Denghai605's promotion area is estimated to reach over 533,333 ha. (8
million mu), mainly covering the summer corn growing regions, such as Shandong,
Henan and Hebei.
Better
performance of Denghai605 in last summer due to favorable weather has promoted
its seeds sales in the marketing season of 2012/2013. (Editor: Shandong
Denghai, a leading corn seed supplier for summer corn regions, usually takes
the marketing season from Nov. to next June). Moreover, the lucrative rebates
that Shandong Denghai provides for distributors has also greatly promoted the
sales of Denghai605.
Good
performance of the subsidiaries' also contributed to Shandong Denghai's sharp
growth in H1 2013. Take for example Shandong Denghai-Pioneer Seeds Co., Ltd.
(Denghai-Pioneer). The 51:49 joint venture of Shandong Denghai and DuPont
Pioneer achieved four times YoY growth in net profit, reaching USD20.12 million
(RMB124.33 million) in H1 2013 (Note: Denghai-Pioneer adjusted the marketing
strategy in the marketing season of 2012/2013 by reducing the seed sales to
distributors in Q4 2012 and increasing the carry-over ratio for the latter half
of marketing season, which help promote its performance in H1 2013).
Xianyu335,
the leading corn variety of Denghai-Pioneer, has shown a slight rebound after
the sales decrease in the previous year, with an promotion area estimated to be
around 1.53 million ha. (23 million mu) by Denghai-Pioneer this year. To make
profits under the serious oversupply of corn seeds in the market,
Denghai-Pioneer has greatly reduced the output of Xianyu335 to clear its
inventories and slightly raised the selling price when the demand increased for
the variety. After all, Xianyu335 has obvious performance advantages over most
corn hybrids in the market.
Besides,
Dandong Denghai Liangyu Seed Industry Co., Ltd. (Denghai Liangyu), another
51%-holding subsidiary of Shandong Denghai, also maintains a performance growth
in H1 2013 following the sound performance in previous year, mainly relying on
the leading variety Liangyu99, which has seen rising sales in the northeast
market. With the outstanding traits covering lodging resistance, anti-plaque
resistance and strong resistance to stem borer, the variety has become hot
among corn growers in Northeast China, despite a higher selling price in single
grain.
Shandong
Denghai's leading corn variety Denghai605 is expected to see a further rapid
growth in the coming 2-3 years, bringing profit growth to Shandong Denghai.
During H1 2013, Denghai605 was successfully introduced to Shaanxi and Shanxi,
two important provinces in the summer corn planting regions of Huang-Huai-Hai
Plain. Besides, Shandong Denghai is making efforts to promote Denghai605 in the
spring corn planting regions such as Inner Mongolia, located in Northeast
China.
However,
there are also still some challenges or risks affecting the further growth of
Denghai605—serious oversupply in corn seed market, extreme weather conditions
in these regions, etc. Moreover, Denghai605 variety has some shortcomings such
as late maturing and slow dehydration, revealed by Zhang Shihuang, Chief
Scientist of National Corn Industrial Technology System.
Nevertheless,
the strong variety breeding capacity will stimulate the long-term development
of Shandong Denghai. Apart from Denghai605, some other new varieties have also
been developed by the company, such as Denghai618 and Denghai3737, which
already passed the approval by Shandong Province. The company has invested
annually over RMB4.05 million (RMB25 million) in R&D in the past few years,
much higher than the most domestic rivals.
Recently,
Shandong Denghai has been rather frequently setting up subsidiaries for
business expansion. After setting up a subsidiary named Shandong Denghai Huayu
Seeds Co., Ltd. in this June (for more details please refer to Shandong Denghai
to set up another corn seed subsidiary in Seed China News 1306, Page 11),
Shandong Denghai on 22 August, 2013
announce its plan to establish a wholly-owned subsidiary. The new subsidiary,
temporarily named Qingdao Denghai Seeds Co., Ltd. that was established with
USD16.18 (RMB100 million) of registered capital in Qingdao, Shandong's
developed coastal cities,, is expected to act as a high-tech breeding plateform
of Shandong Denghai by absorbing top talents and cutting-edge technical
resources.
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Seed
China News, a monthly publication issued
by CCM at the end of every month, mainly covers a diversity of topics,
including market dynamic, company dynamic, crops, seed market, etc. With the
latest news in seed industry and in-depth analysis on government direction and
market competition, Seed China News can provide you with valid information
which would help you make rational decisions in investment, production,
marketing, etc.
About
CCM
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