CCM: Yongan Pharmaceutical: significant rise in H1 2016 net profit

  On 19 Aug., 2016, Qianjiang Yongan Pharmaceutical Co., Ltd. (Yongan Pharmaceutical) released its financial figures for H1:

  
•     Revenue: USD44.06 million (RMB292.00 million), down 3.04% YoY   

  
•     Net profit: USD5.28 million (RMB35.00 million), up 180.65% YoY   

  
•     Net profit with extraordinary items deducted: USD3.47 million (RMB23.00 million), up 462% YoY   

                                                                                            Source: Baidu

   Specifically, the revenue from ethylene oxide wet down by 51.9% YoY to USD4.98 million (RMB33.00 million), dragging down the total revenue. On the contrary, the company's sales of taurine reached USD35.01 million –RMB234.00 million (80% of the total), up 14.4% YoY. Thanks to the increased sales volume and price of taurine and the reduction in financial loss brought by ethylene oxide business (gross profit margin at -55.9%), Yongan Pharmaceutical realised great growth in net profit.

  Taurine, a non-protein amino acid, is not only widely applied in milk powder, dairy products, functional drinks, healthcare products and composite monosodium glutamate, but also started to be used in the fields of agriculture, aquaculture and chemical industry. It is largely demanded in European and American countries / regions as well as Japan. Every year, around 50,000 tonnes of taurine is needed in Europe and America, of which 45% were for drinks, 30% for pet food, 14% for healthcare food, 8% for feed and 2% for pharmaceuticals.

  The Chinese taurine market is of great potential. At present, merely 5,000-6,000 tonnes were consumed in China every year. This figure can mount to 40,000 tonnes, if the annual consumption per capita among the 1/3 of the 380 million Chinese children reaches 300 g (vs. 500+ g among Japanese children).

  So far, European and American countries / regions have stopped production of taurine out of environmental concerns. China and Japan are the two leading producers – global production capacity stands at 80,000-90,000 t/a, output at around 70,000 tonnes, of which 10,000+ tonnes were produced Japan and approximately 50,000 tonnes by China.

  According to CCM's research, over 40 Chinese enterprises obtained production licenses for taurine. Yet, the production is highly concentrated: the top three manufacturers account for 90%+ of the national output. Besides Yongan Pharmaceutical (50%+ of the global sales, about 80% of its products exported), other leading producers include Jiangsu Yuanyang Phamaceutical Co., Ltd. and Huibei Grand Fuchi Pharmaceutical & Chemicals Co., Ltd.

  As the taurine market further develops and increasing consumers incline to healthy diets, demand for taurine increases year by year. As a result, market supply started to get tight, directly pushing up the market price. According to CCM's price monitoring, the taurine market price went up steadily in Q1 2016 and to Aug., the figure mounted to USD3,018-3,319/t (RMB20,000-21,000/t), up 15% over the average price in 2015.

  Prior to this, taurine price stayed low in the past few years. Yongan Pharmaceutical quoted as low as USD2,188/t – RMB14,500/t (tax excluded) in 2015. Thanks to the increased taurine price in H1 2016, Yongan Pharmaceutical's gross profit margin of taurine business rose by 6.9 percentage points to 35.1%.

    Top 3 taurine manufacturers in China, as of Aug. 2016   

  Yongan Pharmaceutical's core competitiveness lies in its patented production technique for taurine through introduction of ethylene oxide. This high-tech preparation method, different from the traditional interval production technique that requires normal temperature and pressure, realised consecutive production under specific temperature and pressure. It not only lowers production costs and improves product quality and production efficiency, but also reduces influence on the environment.

  
In Sept. 2015, the company upgraded this technique and obtained a patent named Method for Preparing Taurine through Solid Isethionic Acid Sodium Salt (patent No.: CN201510410992.X). Thanks to this new method, taurine content in crude products reaches 93%+ and the mother liquid can also be well utilized.

  
Notably, Yongan Pharmaceutical has vigorously developed taurine healthcare products. In H1 2016, the company's wholly-owned subsidiary in charge of this business, Yongan Kangjian Pharmaceutical (Wuhan) Co., Ltd.,

  
•     Obtained the High-Tech Enterprise Certificate in March   

  
•     Finished renewing business range of its healthcare product production license   

  
•     Launched its key taurine healthcare products "Yongan Kangjian®Yijia Effervescent Tablet', and taurine powder   

  
•     Applied for production licenses for 11 healthcare products, of which 3 was obtained, 3 in technical review, 3 under evaluation by the Inspection Centre of the China Food and Drug Administration and 1 in preparation of application materials   

  
•     Applied for 13 trademarks and had obtained 37 (in 12 categories)   

  
At present, the nation is imposing stringent environmental regulations. In this context, the heavily polluting taurine producers may cut down their output. Therefore, analyst CCM predicted that the tight supply of taurine may go on and its market price is likely to continue rising.

  Top 10 insecticide mixtures for rice plant hopper in China, as of Aug. 2016

  Source: Institute for the Control of Agrochemicals, Ministry of Agriculture

  This article comes from Amino Acids China E-News 1608, 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.

  For more information about CCM, please visit www.cnchemicals.com or get in touch with us directly by emailing econtact@cnchemicals.com or calling +86-20-37616606.

  Tag: Amino acids  Pharmaceutical  dairy