Nanjing Red Sun is a company listed on the Shanghai
Stock Exchange that focuses on scientific research and manufacturing of green
pesticides, animal nutrition, and upstream and downstream pharmaceutical
intermediates. On September 13, in response to questions by investors, a spokesperson
from Red Sun stated that it is actively developing a project aimed at producing
an annual output of 300 tons of cosmetic grade nicotinamide, which is expected
to be put into operation at the end of December 2021. The spokesperson stated
that the company is developing this new project with a goal of creating new
sources of profit.
Prior to starting the new nicotinamide project, the
company's wholly-owned subsidiary Anhui Redpont Biotechnology had an annual
production capacity of 20,000 tons of nicotinamide, but the nicotinamide
produced by this project only included food-grade and animal feed-grade
nicotinamide, and not cosmetic-grade nicotinamide project. According to a
spokesperson from Red Sun in an interview with a reporter from China Times, with
the advantages of the nicotinamide industrial chain and product quality, the
company is confident and determined to gain a foothold in the cosmetic-grade
nicotinamide market.
As a chemical substance, nicotinamide
has a wide range of uses. It can not only be used as a drug to prevent
pellagra, stomatitis, glossitis and other diseases, but it can also be used as
an essential nutrient for mammals, and it is also used in food and animal feed.
As an additive, nicotinamide is most widely used as a cosmetic product
additive.
New nicotinamide project to diversify use of Anhui
Redpont's raw materials amid economic stagnation
Nicotinamide produced by Anhui Redpont Biotechnology mainly includes two kinds,
which are food grade and animal feed grade. Due to the impact of the COVID-19
pandemic and fluctuations in the live pig market in the recent years, Anhui
Redpont Biotechnology has an annual production capacity of 20,000 tons of
nicotinamide that has not been fully utilized.
In order to improve the company's industrial
diversification, deal with the impact of fluctuations in the single market, and
increase the company's reputation and other strategic considerations, Anhui
Redpont Biotechnology has added a brand-new cosmetic grade nicotinamide project
on the basis of the original nicotinamide production line.
The project, which has an annual output of 300 tons of
cosmetic grade nicotinamide, uses the same raw materials as the current animal
feed-grade and food-grade nicotinamide production lines, but it has an
independent production line for separation, purification, drying, and
packaging, which is different from the normal nicotinamide production process.
Economic expert questions profitability of new
nicotinamide project
However, the profit that cosmetic
grade nicotinamide may bring to Red Sun is limited. According to Qinghui Song,
a Chinese economic expert, there are relevant national standards for cosmetic
grade nicotinamide in China, but these standards are still lax, and thus the
craftsmanship and entry threshold for cosmetic grade nicotinamide are not high.
Therefore, the selling price for cosmetic grade nicotinamide may be rather low.
According to a quote from Lonza, the world’s largest
manufacturer of nicotinamide, cosmetic-grade nicotinamide is often sold for
less than RMB100 per kilogram, while the DSM cosmetic grade nicotinamide
supplied to Procter & Gamble is also RMB100 per kilogram. Therefore, if Red
Sun’s annual 300-ton cosmetic-grade nicotinamide project is put into
production, and the production capacity is fully utilized, then the annual
revenue will be less than 30 million. After taking into account costs and
market fluctuations, the net profit will be limited.
The annual report shows that in 2020, Red Sun achieved
an operating income of RMB 4,201,995,200 and a net profit attributable to
listed shareholders of RMB -153.8134 million.
For more information, please check our Amino
Acids China E-News and Vitamins China E-News.
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