Dow Jones received a payment from EQS/DGAP to publish this press release.
EQS-News / 28/08/2017 / 23:54 UTC+8
To: Business Editor
To: Business Editor Date: 28 August 2017
*Global Bio-chem Gross Profit Quadrupled to HK$356.8 Million with EBITDA of
HK$85.0 Million in 1H2017 *
Global Bio-chem Technology Group Company Limited ("Global Bio-chem" or "the
Company", stock code: 00809) together with its subsidiaries (the "Group")
reported its unaudited interim consolidated results for the six months ended
30 June 2017 (the "Period") with recorded revenue of HK$2,017.1 million
(2016: HK$2,062.3 million). Benefiting from lower raw material costs,
recovery of the lysine business and optimisation of operation, the Group's
gross profit surged by 325 per cent year-on-year to HK$356.8 million, and
reported a EBITDA of HK$85.0 million as compared to LBITDA of HK$24.9
million for the corresponding period in 2016, which marked a significant
improvement in the Group's performance.
Despite the improved operation performance, due to the low utilisation rate
of the Xinglongshan site and high debt level of the Group, the Company still
recorded a net loss of HK$333.0 million (2016: HK$599 million) for the
Period, which was nevertheless substantially narrowed by 44.5% as compared
to last year.
The board of directors of Global Bio-chem does not recommend the payment of
any interim dividend for the Period.
During the Period, the Group's upstream business recorded a revenue of
approximately HK$675.4 million (2016: HK$737.2 million). As the direct
subsidies to local corn farmers gradually took effect coupled with the
provincial subsidies to corn refiners since October 2016, the Group's cost
of raw materials for the Period had been substantially lowered. As a result,
the Group's upstream business recorded a gross profit of approximately
HK$90.5 million for the Period as compared to a gross loss of HK$71.5
million for the corresponding period last year.
The amino acids segment recorded a revenue of approximately HK$1,006.0
million (2016: HK$1,033.6 million) during the Period. Despite a slight
decrease in sales volume, benefiting from the cost savings resulting from
the facility upgrade and the re-adjustment of product mix to suit market
needs, the gross profit of amino acids segment increased by 80.7% to
approximately HK$208.5 million (2016: HK$115.4 million), with a gross profit
margin of 20.7% (2016: 11.2%) during the Period.
The widened cost advantage of corn sweeteners versus cane sugar in China had
enhanced the competitiveness of corn sweeteners. Customers were increasingly
convinced to switch from cane sugar to corn sweeteners, coupled with the
resumption of downstream production in the Group's Jinzhou sites since
November 2016, sales volume of corn sweeteners increased by 26.7% , with
revenue increased by 14.6% to approximately HK$332.8 million (2016: HK$290.5
million). As a result, the corn sweeteners segment recorded a gross profit
of approximately HK$55.1 million (2016: HK$40.6 million).
During the Period, due to the increase in demands of anti-freeze products,
the revenue of polyol chemicals segment increased by 190.0 per cent to
approximately HK$2.9 million (2016: HK$1.0 million). As substantial
provision in relation to the closing inventories of polyol chemicals had
been made in previous years, the polyol chemicals segment recorded a gross
profit of approximately HK$2.7 million (2016: gross loss: HK$0.6 million).
During the Period, as a result of the decrease in raw material price which
enhanced the competitiveness of the Group's products, the export sales of
upstream corn refined products, amino acids, polyol products and corn
sweeteners amounted to approximately HK$111.2 million (2016: HK$56.9
million), HK$460.0 million (2016: HK$381.6 million), HK$64,000 (2016: nil)
and HK$0.2 million (2016: HK$0.7 million) respectively, altogether accounted
for 28.3% of the Group's revenue.
In March 2017, the Company announced a change in shareholding structure of
its controlling shareholder. Immediately after the restructuring, Jilin
Agricultural Investment Group Co., Ltd. ("Nongtou"), an entity controlled by
the State-owned Assets Supervision & Administration Commission of the
People's Government of Jilin Province, has become an indirect controlling
shareholder of the Company. The involvement and participation of Nongtou not
only provide support to the Group's operation, but also create synergies
between the Group and the other investments of Nongtou in the agricultural
sector. The Group has received a written confirmation from Nongtou that it
would provide financial support to the Group for its operation on a going
concern basis. In addition, the Group also signed a corn purchasing
agreement with Jilin Jiliang Assets Supply Chain Management Co., Ltd., a
subsidiary of Nongtou in May 2017, to ensure a stable supply of corn kernels
and allow longer credit period to ease the pressure of the Group's cash
flow.
On 21 July 2017, the Group entered into an agreement (the "S&P Agreement")
with Global Sweeteners Holdings Limited ("GSH") and together with its
subsidiaries ( the "GSH Group") for the purchase of the entire equity
interest of two subsidiaries of GSH, namely Changchun Dihao Foodstuff
Development Co., Ltd. ("Dihao Foodstuff") and Changchun Dihao Crystal Sugar
Industry Development Co., Ltd. ("Dihao Crystal Sugar", together with Dihao
Foodstuff, the "Target Companies") (the "Transaction"). The Target Companies
are both situated in Changchun, where the major production facilities of the
Group are situated while all other production facilities of the GSH Group
are situated elsewhere in the PRC. As such, the Transaction would enable the
Target Companies to be managed under the ambit of the Group in Changchun,
which could enhance the cost and operational efficiency, and create
potential synergies between the Group and the GSH Group. As the Target
Companies own part of land which accounts for approximately one-fifth of the
total site area in Luyuan District, it would be more efficient for the Group
to be in charge of the negotiation, valuation of land and execution of the
land transfer as quicker decision making process and less administrative
hurdles are expected if only one party is involved. The management is
expected that the purchase of the Target Companies could help expedite the
process of negotiation with the potential purchaser, as well as the process
of completion as such transaction would only be handled by the management of
the Group without involving the management of the GSH Group.
To strengthen the financial position of the Group, following the publication
of the "Opinions on Stabilising the Leverage Rate of Enterprises"
«????????????????», (the "Opinions") by the State Council of the PRC in
October 2016, which aimed at promoting the long-term sustainable economic
development of the State, the Group and the GSH Group have been actively
studying the feasibility of the debt-equity swap. A proposal of debt-equity
swap had been submitted to the Jilin Provincial Government for
consideration. During the Period, the management of the Group had been
working with relevant professional parties on fine-tuning the proposal. The
management believes that the Group's financial position will improve
substantially if the proposal is materialised.
Looking forward, Mr. Kong Zhanpeng, the Chief Executive Officer of Global
Bio-chem, said: "To improve the financial performance and financial position
of the Group, our management focused their efforts in accelerating the
relocation of the production facilities from Luyuan District, Changchun to
the Xinglongshan site in order to free up the land for disposal and to
optimise operation efficiency in the Xinglongshan site, actively studying
the feasibility of the debt-equity swap to lower the debt level of the
Group, and lowering the cost of raw material through collaboration with
Jiliang by the entering of the corn procurement contracts. In order to
maintain the competitiveness of the Group, the Group will strive to maintain
its market position, diversify its product range and enhance its capability
in developing high value-added products and new applications through
in-house research and development efforts and strategic business alliance
with prominent international market leaders."
*About Global Bio-chem*
Global Bio-chem (stock code: 00809.HK) has been listed on the Main Board of
the Stock Exchange of Hong Kong Limited since 2001. The Group is principally
engaged in the manufacture and sale, research and development of corn-based
biochemical products in the People's Republic of China ("PRC").
Headquartered in Hong Kong and with its production facilities based in
various provinces in the PRC, Global Bio-chem is one of the leading
corn-based biochemical product manufacturers worldwide. Global Bio-chem is
also the parent company of Global Sweeteners Holdings Limited (stock code:
03889.HK), one of the largest corn sweeteners producers in the PRC, which is
also listed on the Main Board of The Stock Exchange of Hong Kong Limited.
- End -
Issued by: Global Bio-chem Technology Group Company Limited
Through: CorporateLink Limited
Media Enquiry: CorporateLink Limited
Lorna Wong Tel: 2801 7761 Email: lorna@corporatelink.com.hk
Kathryn Lu Tel: 2801 6045 Email: kathryn@corporatelink.com.hk
Document: http://n.eqs.com/c/fncls.ssp?u=BOJIUBXYEF [1]
Document title: GLOBAL BIO-CHEM GROSS PROFIT QUADRUPLED TO HK$356.8 MILLION
WITH EBITDA of HK$85.0 Million in 1H2017
28/08/2017 Dissemination of a Financial Press Release, transmitted by EQS
Group.
The issuer is solely responsible for the content of this announcement.
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(END) Dow Jones Newswires
August 28, 2017 11:55 ET (15:55 GMT)
