GLOBAL BIO-CHEM’S 1H 2011 NET PROFIT SURGED BY 5 TIMES TO HK$626.5 MILLION

Date:2011-08-31lile  Text Size:

Capitalising on favourable operating environment in the PRC and improvement in the sales volume and selling prices of its products, Global Bio-chem Technology Group Company Limited (“Global Bio-chem” or the “Company” stock code: 00809) together with its subsidiaries (the “Group”) reported increases of 77 per cent and 158 per cent in revenue and gross profit respectively for the first half of 2011. Net profit attributable to owners of the Company amounted to HK$626.5 million, representing a 502 per cent upsurge from that of the corresponding period last year. Basic earnings per share for the period under review amounted to HK19.3 cents.

The board of directors has resolved to declare an interim dividend of HK1.5 cents per share for the six months ended 30 June 2011 (2010 same period: Nil).

In the first half of 2011, revenue and gross profit of the Group’s upstream corn refined products reached HK$1.8 billion and HK$100.4 million respectively, representing increases of approximately 71 per cent and 21 per cent respectively from those of the same period last year. The increase in revenue and gross profit was mainly attributable to a year-on-year increase of approximately 37 per cent in sales volume of all upstream products and a 24 per cent increase in the average selling price. The increase in sales volume was achieved on the back of 600,000 metric tonnes additional corn processing capacity of the corn refinery in Xinglongshan since the second half of 2010.

Revenue and gross profit of the Group’s downstream products, including amino acids (the Group’s major business), polyol chemicals, modified starch, and corn sweeteners, in the first half of 2011, amounted to approximately HK$4.9 billion and HK$1.5 billion respectively, representing year-on-year increases of 83 per cent and 179 per cent respectively. The substantial increase in revenue and gross profit was attributable to the rise in sales volume and selling prices of the Group’s downstream products, which offset the impact of the increased average cost of corn kernels during the Period.

Strong demand for food and necessities such as meat and egg in the first half of 2011 drove demand and selling prices of amino acids, leading to upsurges in the revenue and gross profit of amino acids of 97 per cent and 199 per cent to approximately HK$3.3 billion and HK$1.2 billion respectively as compared with those of the same period last year.

In view of the continuous rise in living standards in the PRC, the Group has been striving to increase its lysine production capacity to meet the robust demand for lysine products.

The Group attained some major breakthroughs on the research and development of protein lysine products, namely, lysine 80 per cent and lysine 75 per cent, as well as improvements in its fermentation process. With the use of the newly developed technology, cost of production will be reduced. The Group has commenced construction work of modification of its production facilities, which will result in a substantial increase of 60 per cent in its annual production capacity of lysine products from the current 500,000 metric tonnes to 800,000 metric tonnes.

“We understand success in our industry lies in the constant process of invention and re-invention. Therefore, the Group has always placed immense focus on research and development. As the world’s largest lysine products supplier, we will maintain our leading position through technological upgrade, capacity expansion and continued focus on research and development. We believe the increase in lysine production capacity, together with the increase in demand for feed products driven by accelerating consumption of meat and eggs will further consolidate the Group’s leading position in the lysine market,” said Mr Liu Xiaoming, Co-chairman of Global Bio-chem.

Meanwhile, the Group will also start to produce ammonia, one of the major raw materials of lysine, with expected annual production capacity of 120,000 metric tonnes at its Xinglongshan facility by end of 2011. The in-house production of ammonia will provide the Group with sufficient raw materials for its lysine production and lower its production cost.

Benefiting from the rebound of market prices of chemical products and crude oil price since 2010, the Group’s polyol chemicals division generated revenue of approximately HK$556 million (2010 same period: HK$347 million) and contributed gross profit of approximately HK$100 million (2010 same period: HK$30 million). In addition, no additional provision of closing inventories of polyol chemical by-products as at 30 June 2011 was made (2010 same period: HK$9 million).

“Given the stability of crude oil price and the image of green products, we believe that our polyol chemicals division would continue to operate steadily and profitably in the second half of 2011 and in the foreseeable future. Meanwhile, the second phase of the polyol chemicals facilities in Xinglongshan currently under construction is expected to be completed in 2012. The capacity expansion of polyol chemicals in Xinglongshan will precipitate polyol chemicals business to become the main growth driver of the Group in the near future,” Mr Liu added

Corn sweeteners market conditions were favourable during the first half of 2011 as sugar price reached historical high. Operated through a listed subsidiary, the sales volume and revenue of this division increased by approximately 23 per cent and 62 per cent respectively compared with those of the same period last year. The gross profit from this division rose to approximately HK$184 million (2010 same period: HK$97 million) during the period under review.

Despite the presence of economic uncertainties in the United States and certain European countries, the Group successfully attained a moderate growth in export sales. Revenue from export sales was approximately HK$1,364 million, representing an increase of HK$365 million as compared to that of the same period last year.

Looking into the second half of 2011, Mr Xu Zhouwen, Co-chairman of Global Bio-chem, said: “Although the global economy is most likely to see further uncertainties and fluctuations, we are prepared to respond to any market changes brought by possible global economic slowdown. Global Bio-chem will strive to maintain its market share and increase diversity in its product mix, as well as enhance its capability in developing high value-added downstream products through research and development and forming strategic business alliances with prominent international market leaders.”

2005-2011 www.researchinchina.com All Rights Reserved 京ICP备05069564号-1