Jinhe Biotechnology announces results for 2022 and Q1 2023 06-23-2023

Summary: In 2022, Jinhe Biotechnology's revenue edged up but net profit dropped slightly. In Q1 2023, it saw increases in revenue and net profit but also mounting liabilities.

On 21 April, Jinhe Biotechnology Co., Ltd. (Jinhe Biotechnology) released its annual report for 2022.

The company reported revenue of USD307.4 million (RMB2.12 billion), a gain of 2.15%, and net profit attributable to shareholders of the listed company of USD10.94 million (RMB75.54 million), a decrease of 19.63%.


There were a number of factors resulting in the net profit decline. The high production costs caused by the high corn prices and the rising prices of coal and electricity squeezed the company's profit margin; demand for animal protection products was reduced as the weakening domestic pork market severely hurt the profitability of the industry, which restricted the price and sales increases of Jinhe Biotechnology's products; sales volume of veterinary drugs fell due to the mounting downward economic pressure and inflation in overseas markets. But during the reporting period, foreign exchange earnings generated by the stock of creditor's rights and debts between the company and its overseas subsidiaries increased due to the solid uptrend of the US dollar.


Its operating cost rose 5.75% YoY to USD218.51 million (RMB1.51 billion). As the increase in operating cost was greater than that of the revenue, the overall gross profit margin was down 2.42 percentage points YoY.

Table Jinhe Biotechnology's revenue in 2022 by product category
Product category 2022 2021 YoY change
Revenue, million USD Percentage of total revenue Revenue, million USD Percentage of total revenue
Veterinary drugs 142.49 46.35% 154.38 51.30% -7.71%
Veterinary vaccines 47.81 15.55% 42.24 14.04% 13.19%
Medical feed additives 2.83 0.92% 4.68 1.55% -39.42%
Environmental protection services 15.58 5.07% 12.46 4.14% 25.07%
Starch and its co-products 82.00 26.68% 74.03 24.60% 10.76%
Others 16.69 5.43% 13.13 4.36% 27.05%

Source: Jinhe Biotechnology

Table Products contributing over 10% of revenue or operating profit, 2022
Product Operating costs, million USD YoY change Gross profit margin YoY change
Veterinary drugs 102.49 -0.04% 28.07% down 5.51 percentage points
Veterinary vaccines 15.51 34.09% 67.56% down 5.06 percentage points
Environmental protection services 8.20 20.65% 47.35% up 1.93 percentage points
Starch and its co-products 74.26 6.42% 9.44% up 3.69 percentage points

Source: Jinhe Biotechnology

As for the agricultural products segment, the recovery of the demand for corn gluten meal and germ drove an over 20% YoY increase in the average selling prices of starch and its co-products. When the market was doing well, Jinhe Biotechnology seized the opportunity to boost sales. The increase in sales volume and selling prices offset the high corn prices. But the incomplete release of production capacity caused by pandemic controls led to a rise in production costs. During this period, the gross profit margin for this segment went up slightly.

However, the company recorded gross profit margin decreases in veterinary drugs, veterinary biologic products and medical feed additives segments as the production costs were higher and it was unable to raise prices. On one hand, rising prices of raw materials and energy and the incomplete release of production capacity pushed up production costs. On the other, there was less demand for veterinary drugs, vaccines and animal nutrition products as the weak pork prices resulted in the poor profitability of farming companies, which made it hard for Jinhe Biotechnology to raise the prices.

R&D investment and major projects for 2022

  • Jinhe Biotechnology's spending on R&D soared 39.78% YoY to USD17.67 million (RMB122.01 million).
  • It invested USD22.7 (RMB156.77 million) in the 52,000 t/a veterinary chlortetracycline and 1,000 t/a chlortetracycline hydrochloride active pharmaceutical ingredient project and has completed 35% of the work.
  • USD7.37 million (RMB50.87 million) were invested in the 1,000 t/a doxycycline hyclate project and 80% of this project was done.

    Business plans for 2023

  • For veterinary drugs, it is necessary to adjust and balance the product mix in a timely manner, adapt to market changes and demands and try to avoid putting itself in a reactive position.
  • In terms of veterinary vaccines, it will continue to increase the market share of major varieties and quicken its steps in the registration and development of new products. Moreover, it will improve the production technology and process for a further decrease in production costs and better product quality.
  • As for corn processing, it will continue to enhance support for the main business and produce high-quality starch and liquid sugar. In the meantime, it will further extend the corn processing industrial chain according to the market demand and improve the added value and profit margin of products.

On 27 April, Jinhe Biotechnology Co., Ltd. (Jinhe Biotechnology) released its report for Q1 2023.

Compared to the year-ago quarter, Jinhe Biotechnology's revenue grew 1.45% to USD76.36 million (RMB527.29 million) and net profit attributable to shareholders of the listed company rose 16.20% to USD5.35 million (RMB36.92 million). But it also had a higher debt burden at the same time. Its interest-bearing liabilities was USD244.44 million (RMB1.69 billion), surging 56.49% YoY. In addition, the company also had poor operating cash flow quality and cash flow crunch as its net cash flow from operating activities came in at -USD3.09 million (-RMB21.35 million), slumping by 158% YoY or USD8.42 million (RMB58.16 million) compared to the same period a year ago.


More information can be found at CCM Corn Products China Monthly Report.

About CCM:

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