Monday, January 27, 2014

Anhui Huilong to increase proportion of its pesticide business to 20%-30%

Deng Dingliang, the chairman secretary of Anhui Huilong Agricultural Means of Production Co., Ltd. (Anhui Huilong) revealed that the company's business structure is in transition and the proportion of fertilizer revenue will be reduced to 60%, with that of pesticide business increased to 20%-30%, seed and other business to 10%, according to Insecticides China News issued by CCM in Junary.

Anhui Huilong is the biggest chain enterprise for the distribution of agricultural production means in Anhui Province, its main business includes fertilizer, pesticides, agricultural produces and chemical products, among which, revenue of fertilizer business accounting for over 70% of its total revenue at present.  

In recent years, revenue of Anhui Huilong has experienced sharp increase, however, its net profit is decreasing. Compared with 2010, the total revenue of the company in 2012 was USD1,827 million, up by 101%, while its net profit was USD11 million, down by 49%. The main reason for the decrease in the profit of Anhui Huilong is the severe over capacity of fertilizer in China, the continuous weak market, which leads to the decreasing gross profit margin. The gross profit margin of fertilizer business in the company was 7.05% in 2010, however, it decreased to 3.84% in 2012 and further decreased to 3.08% in H1 2013.  

Unlike fertilizer unit, the company's sales revenue of pesticide business obtained large growth and meanwhile, its gross profit margin kept at a relatively high level. This is the important reason for the company's determination of focusing on the pesticide business.  

The company's revenue of pesticides was USD122 million in 2012, up by 41.03% compared with the same period of 2011 and its gross profit margin was 8.15%, being the top among all of its businesses. In H1 2013, the revenue of the company decreased by 9.55% year-on-year, however, that of pesticides kept increasing, with the growth of 13.22% compared with the same period of 2012, reaching USD72 million.

In fact, Anhui Huilong comes across some opportunities in the field of agricultural produces sales. Recently, the willing of the Chinese government in promoting land transformation is clear and as the agricultural distribution chain enterprise, Anhui Huilong is closely related with land transformation that it attracts lots of attention from investors. The company's share price increased from about USD1 per share in July 2013 to the highest of USD2.3 per share in Oct. 2013.  

Investors believe that land transformation has two benefits to the company. On one hand, the company directly takes part in land transformation. Anhui Huilong took part in land transformation in Quanjiao County of Anhui Province and leased more than 1333 ha of land, actively exploring efficient ecological agriculture.

What's more, after land transformation, the subject of agricultural production will change from small scale farmers to large scale farming and rural cooperatives, which will largely improve the demand for specific agriculture service. Such demand will benefit large enterprises with agriculture service abilities.

Table of Contents of Insecticides China News 1401:
China returns several batches of GM corn containing MIR162
Technology marketing helps crop protection in China goes green
Domestic market of seed treatment products continues to develop rapidly
Agricultural application of methyl bromide to banned from Jan. 2015 in China
Minimum of 1.8 billion mu arable land: true or false propositions?
China's export volume of diafenthiuron technical and formulations in Jan.-Oct. 2013 up 42.53% YoY
China's export volume of malathion technical and formulations in Jan.-Oct. 2013 up 23.75% YoY
Fengshan Group to build 5,000t/a chlorpyrifos TC production line
Anhui Huilong to increase proportion of its pesticide business to 20%-30%
Registration of fosthiazate becomes popular
Spirodiclofen registration becoming popular
China stops accepting applications of chlorpyrifos and triazophos registered for vegetables
Lanfeng Import and Export obtains its commercial registration on Dec. 16, 2013
Registered product announcement system to be implemented from Jan. 1, 2014
Bayer, CITIC Trust to jointly establish land transfer platform
Hentin Chem-tech marches into bio-pesticide industry
China's output of insecticide TC down 12.35% YoY in Nov. 2013
China's export volume of pesticide formulations up 18.20% YoY, Jan.-Oct. 2013
First phase of Jiangu Repont's relocation project to be completed soon 24
China's total profit of pesticide industry soars 39.1% YoY, Jan.-Oct. 2013

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