Sales: USD182.96 million (RMB1.20 billion), up by 31.36% YoY

Net profit: USD6.26 million (RMB40.95 million), up by 79.76% YoY

                                                            Baolingbao's financial performance, 2011-2015

                                                                        Source: Baolingbao Biology Co., Ltd.

Baolingbao witnessed significant rises in both sales and net profit in 2015. Specifically, its net profit came back basically to the level in 2013 (= USD6.29 million – RMB41.10 million). This is mainly because its performances in high fructose corn syrup (HFCS) and erythritol businesses were improved distinctly.

HFCS

In 2015, Baolingbao made the sales of USD58.75 million (RMB384 million) from the HFCS business, up by 42.07% YoY. Its gross profit margin was 15.12%, up by 2.01 percentage points.

Accordingly, 2 reasons should be highlighted for this growth:

- Decreased prices of raw materials, corn and corn starch. In 2015, the market price of corn starch in northern China was USD460/t, down by 7% YoY. This is mainly because the price of corn for temporary storage was down-regulated by 11%, which led to the fall of 8% YoY in average market price, at USD358/t nationwide.

- Increased sales of HFCS. “Both production and sales of HFCS increased this year,” stated Baolingbao in its financial report. This can be further attributed to the market recovery, according to CCM’s research. In 2015, the market price of white sugar rose by 12% YoY. However, the market price of F55 HFCS for example, declined by 8% YoY. This resulted in the increased use of HFCS in downstream food industries.

Sugar alcohol (mainly erythritol)

In 2015, Baolingbao made the sales of USD13.73 million (RMB89.79 million) from the sugar alcohol business, up by 80.88% YoY. Its gross profit margin was +14.29% (vs. -0.78% in 2014).

First, this can be ascribed to the decreased price of corn, which helped cut down the production cost for sugar alcohol. More importantly, it is the increased sales of erythritol. Specifically, Baolingbao exported 3,460 tonnes of erythritol in full-year 2015, up by 35% over 2,560 tonnes in 2014.

In 2014, Baolingbao recorded the net profit of USD3.48 million (RMB22.78 million) only, the lowest level in the past five years. Accordingly, the high price of corn pushed up the production costs for HFCS and erythritol. In order to grasp the sales, the company adopted low-pricing strategy, which pulled down the gross profit margins and further drew back the full-year financial performance.

                                         Baolingbao's financial performance by product, 2015

                                                            Source: Baolingbao Biology Co., Ltd.

In 2016, Baolingbao is expected to continue stable rises. In view of raw material, the Chinese government will maintain the low price of corn for temporary storage. Probably, this figure will stay at about USD305.16/t (RMB2,000/t), expected to be down-regulated even.

Also, Baolingbao will also vigorously develop its futures business of corn and corn starch, to avoid the impact from their price fluctuations. This will be favourable for it to reduce the production costs and improve the profit.

In 2016, the price of white sugar possibly will be stable and will rise. Downstream enterprises, in light of cost, are of great possibility to continue increasing the use of HFCS. This is beneficial to Baolingbao’s sales of HFCS.

This article comes from Sweeteners China News 1603, CCM

About CCM:

CCM is the leading market intelligence provider for China’s agriculture, chemicals, food & ingredients and life science markets. Founded in 2001, CCM offers a range of data and content solutions, from price and trade data to industry newsletters and customized market research reports. Our clients include Monsanto, DuPont, Shell, Bayer, and Syngenta. CCM is a brand of Kcomber Inc.

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Tag: Baolingbao  HFCS  sugar alcohol

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