Summary: Data from Hebang Biotechnology's semi-annual financial report of 2021 showed that there were rises in its revenue and net profit, with its net profit in H1 2021 increasing by over 1,900%. Additionally, Hebang Biotechnology's 70,000t/a methionine project is now producing finished products for selling, and it is expected to formally yield benefits by the end of this year.

On 27 July, Hebang Biotechnology released its semi-annual financial report of 2021. The report showed that due to the increases in the sales volume and the prices of its main products, the performance of Sichuan Hebang Biotechnology Co., Ltd. (Hebang Biotechnology) (stock code: 603077) grew greatly in H1 2021.

The major items from H1 statistics of Hebang Biotechnology:

• Revenue: USD604.7 million (RMB3.91 billion), up 60.2% HoH;
• Net profit attributable to equity holders of the company: USD141.3 million (RMB914.3 million), up 1,930.7% HoH

Rely on its competitive edge of owning 98 million tonnes of salt mine reserves and abundant natural gas supply in Southwest China, Hebang Biotechnology laid out its business in three fields, including chemical industry, agriculture and new material, establishing four business sectors including combined-soda process, N-(Phosphonomethyl)iminodiacetic acid, glyphosate, glass, and methionine. The company also plans to enter photovoltaic (PV) industry.

As of 30 June, Hebang Biotechnology's main products and capacity for them:

• 1.1 million t/a Sodium carbonate, ammonium chloride
• 2.1 million t/a Salt mine exploiting
• 150,000 t/a N-(Phosphonomethyl)iminodiacetic acid
• 50,000 t/a Glyphosate
• 465,000 t/a Glass/smart special glass
• 4.3 million cubic metres/year Low-E coated glass

Meanwhile, Hebang Biotechnology, relying on its competitive edge of abundant natural gas supply in Southwest China, has established a combined natural gas supply—methionine business chain. Its semi-annual financial report showed that the company invested USD385.7 million (RMB2.5 billion) into its 70,000 t/a methionine project; the construction progress of the project has reached 99.5%. The new production facilities were tested in 2020 and are scheduled to be put into trial operation and start producing qualified methionine products in Dec. 2021. As of 30 June, 2021, the project, expected to yield economic benefits at the end of the year, is still at the final step, which is eliminating deficiencies of the production facilities. On 10 May, Hebang Biotechnology responded to the investors, stating that the total sales of methionine during the period from Jan. to July totalled 1,000 tonnes.

The semi-annual report also revealed that in H1 2021, Hebang Biotechnology conducted a connected transaction with Leshan Giantstar Farming&Husbandry Corporation Limited (Giantstar Farming&Husbandry) (stock code: 603477); this transaction relating to the sales of methionine was worth USD2,441.7 (RMB15,800). It is also revealed publicly that Giantstar Farming&Husbandry (once named Sichuan Zhenjing Co., Ltd. and originally specialising in the R&D and sales of middle–high end natural leather) has completed the acquisition of Giantstar Farming&Husbandry Co., Ltd. (specialising in hog farming, poultry farming and feed production). Giantstar Farming&Husbandry has now expanded its main business by adding hog & poultry farming sector, feed production sector, and the R&D and sales of middle–high end natural leather sector.

The overview of Giantstar Farming&Husbandry's performance in 2020 (the financial statistics of Giantstar Farming&Husbandry Co., Ltd. during the period from July 2021 to Dec. is also included):

• The revenue totalled USD222.4 million (RMB1.44 billion); net profit was USD19.7 million (RMB127.7 million). The sales of feed products were USD33.0 million (RMB213.6 million), accounting for 15.3% of total revenue
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• The hog sales were 213,036 head; the chicken sales were 2.61 million head; annual capacity for feed was 170,230 tonnes.

Up to now, Giantstar Farming&Husbandry owns several feed production bases in the regions like Sichuan, Chongqing, Yunnan. The main raw materials of its feed include corn, soybean meal, fish meal, soybean, amino acid, vitamin and other feed additives. The company is one of the downstream companies of Hebang Biotechnology. In addition, both largest shareholders of Hebang Biotechnology and Giantstar Farming&Husbandry are Sichuan Hebang Investment Group Co., Ltd., which owns 28.23% stakes in Hebang Biotechnology and 25.62% stakes in Giantstar Farming&Husbandry. That means Hebang Biotechnology has a firm downstream company alliance that can ensure the sales of its products.

Currently, the global methionine industry is at a rather high concentration ratio because of excessive technical barriers. Thus it is a typical captive market monopolised by the monopolies. The eight major producers in the industry are Evonik Industries AG (Singapore), Adisseo (Europe, China), Novus International, Inc. (the U.S.), Sumitomo Chemical Co., Ltd. (Japan), Ningxia Unisplendour Tianhua Methionine Co., Ltd. (China), CJ Corp. (South Korea), Zhejiang NHU (China), Volzhsky Orgsynthese JSC (Russia). In 2020, the annual capacity of the monopolies, including Evonik Industries, Adisseo, Novus International, Sumitomo Chemical, roughly accounted for over 80% of the global capacity for methionine. Up to the end of 2020, the domestic capacity for methionine in China totalled 420,000 t/a. It is estimated that there is still 400,000 t/a capacity waiting to be activated until 2022.