On 23 Sept., 2016, the Stock Exchange of
Hong Kong Limited (HKEX) made an announcement censuring Global Bio-Chem
Technology Group Co., Ltd. (Global Bio-Chem) for breaching regulations of the Rules
Governing the Listing of Securities on the Stock Exchange of Hong Kong Limited.
Source: Baidu
Specifically, the company and its subsidiaries each granted a guarantee in
favour of the Bank of China for the benefit of a long term supplier (Supplier
Guarantees) for a maximum guaranteed amount of USD373.09 million-447.71 million
(RMB2.50 billion-3.00 billion). Yet, it neither made any disclosure in its
2010-2014 financial reports nor issued any announcement, circular or sought
independent shareholders' approval for the Supplier Guarantees.
“There was no proper risk assessment carried out in respect of Supplier
Guarantees, despite the fact that when the Supplier Guarantees were first
entered into, the company's financial position was stronger than present. The
company will be exposed to substantial financial risk if the supplier defaulted
on the significant loans,” stated the HKEX.
Just a week before the denouncement (15
Sept., 2016), Global Bio-Chem released its interim financial report for 2016,
showing the company was still in the red despite the improvements.
-
Total revenue: +USD265.80 million (+HKD2.06
billion), up 30% YoY
-
Gross profit: +USD10.81 million (+HKD83.90
million)
-
Net profit: -USD77.27 million (-RMB599.50
million), vs. -USD132.37 million (-RMB1.03 billion) in H1 2015
* Exchange rate: USD1.00=HKD7.7588 on 11 Oct., 2016, sourced from hexun.com,
similar hereinafter
Global Bio-Chem's financial
performance, H1 2015 & H1 2016
Source: Global Bio-Chem Technology Group Co., Ltd.
The company mainly involves in production
and sale of:
-
Upstream products: corn starch, corn gluten
meal, corn oil and other corn refineries
-
Amino acids: mainly lysine, protein lysine
and threonine
-
Polyol chemicals: mainly anti-freezing
products and liquid ammonia
-
Corn sweeteners: mainly corn syrup, malt
syrup, high fructose corn syrup, crystalline dextrose and maltodextrin
- Upturn in amino acid business
In H1 2016, Global Bio-Chem’s amino acid segment, in the place of upstream
products which used to be the core business, was the largest contributor to the
total financial performance:
-
Revenue: +USD133.22 million (+HKD1.03
billion), significantly up 183% YoY, 50.12% (H1 2015: 23.03%) of the company’s
total
-
Sales volume: 18,800 tonnes, up 261.50%
YoY, thanks to the resumption of lysine production in Nov. 2015
-
Gross profit: +USD14.87 million (+HKD115.00
million), vs. -USD15.65 million (-HKD121.00 million) in H1 2015
-
Gross profit margin: +11.20%, vs. -33.20%
in H1 2015
- Increased loss from upstream products
-
Revenue: +USD95.01 million (+HKD737.00
million), almost unchanged over the same period last year
-
Gross profit: -USD9.21 million (-HKD71.50
million), vs. -USD7.36 million (-HKD57.10 million) in H1 2015
Despite the rises in sales volume – corn starch rose by 24% YoY to 144,000
tonnes and other corn refineries up by 40% YoY to 188,000 tonnes, the company
continued suffering loss from upstream products. This was mainly due to the
decreased sales prices. According to the company’s report, its sales prices for
corn starch and other corn refineries averaged USD308.55/t (HKD2,394/t) and
USD270.27/t (HKD2,097/t), down 25.30% and 20.40% respectively.
Global Bio-chem's revenue by product
structure, H1 2015 & H1 2016
Source: Global Bio-Chem Technology Group
Co., Ltd.
This article comes from Amino Acids China E-News 1610, CCM
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Tag: amino acid