DJ EQS-News: GLOBAL SWEETENERS SEES 28.1% INCREASE IN 20171H REVENUE TO HK$597.7 MILLION GROSS PROFIT ROSE SUBSTANTIALLY BY 109.4%
Dow Jones received a payment from EQS/DGAP to publish this press release.
EQS-News / 29/08/2017 / 00:04 UTC+8
To: Business Editor Date: 28 August 2017
*Global Sweeteners Sees 28.1% Increase in 20171H Revenue to HK$597.7 Million
Gross Profit Rose Substantially by 109.4%*
Global Sweeteners Holdings Limited ("Global Sweeteners" or the "Company",
stock code: 03889) together with its subsidiaries (the "Group") reported its
unaudited consolidated interim results for the six months ended 30 June 2017
(the "Period") with recorded revenue and gross profit of HK$597.7 million
(six months ended 30 June 2016: HK$466.5million) and HK$82.7 million (six
months ended 30 June 2016: HK$39.5 million) respectively.
Benefiting from the improvement of upstream market sentiment and the
introduction of agricultural subsidies in Liaoning province since the fourth
quarter of 2016, the Group saw a substantial gross profit increase of
approximately 109.4%. During the Period, the Group recorded EBITDA of HK$5.4
million as compared to the LBITDA of HK$ 26.0 million for the corresponding
period last year. In spite of the improved operation, the high finance cost
and the low utilisation rate of the Group's downstream production facilities
in Jinzhou as a result of intermittent production and the suspension of the
Group's production facilities in Changchun pending for the relocation to the
Xinglongshan site have dragged down the Group's profitability. As a result,
the Company still recorded a net loss during the Period, though
substantially narrowed by 22.0% year on year to HK$53.5 million. .
The Board has resolved not to recommend the payment of any interim dividend
for the Period (six months ended 30 June 2016: Nil).
Capitalising on the agricultural subsidies from the provincial government
since the fourth quarter of 2016 and the lower raw material cost as a result
of the PRC agricultural policy reform, the overall performance of the
Group's upstream business improved with segment gross profit turned around
to HK$30.3 million during the Period (six months ended 30 June 2016: gross
loss: HK$2.4 million).
During the Period, revenue of corn syrup increased by 21.6% to approximately
HK$247.5 million (six months ended 30 June 2016: HK$203.5 million). Such
increase was mainly attributable to the increase in sales volume by 33.3% as
a result of the resumption of Jinzhou production facilities since the last
quarter of 2016. Although domestic sugar price retreated from its peak of
RMB7,119 per metric tonne ("MT") in 2016, the PRC sugar price continued to
stay high at RMB6,654 per metric tonne ("MT") at the end of June 2017. The
increased sugar price in contrast with the decreased corn price has widened
the cost difference between cane sugar and corn sweeteners, thus raising
customers' incentive to switch to corn sweeteners. The cost advantage of
corn sweeteners over cane sugar further improved the performance of the
Group's downstream segments. As such, the corn syrup segment recorded a
gross profit of approximately HK$45.7 million (six months ended 30 June
2016: HK$33.9 million), representing a 34.8% increase when compared to that
of the previous year, with an increased gross profit margin of 18.5% (six
months ended 30 June 2016: 16.7%).
No sales of crystallised glucose were recorded during the Period as a result
of the suspension of the Changchun production facilities. As such, sales of
the Group's corn syrup solid for the Period were contributed by the sales of
maltodextrin. With the drop in the average selling price of maltodextrin,
the revenue and gross profit of corn syrup solid segment decreased by
approximately 4.1% and 20.5% respectively to HK$83.4 million and HK$6.2
million respectively (six months ended 30 June 2016: HK$87.0 million and
HK$7.8 million respectively).
During the Period, revenue and gross profit of the amino acids trading
segment increased by 34.8% and 150.0% respectively to approximately HK$6.2
million and approximately HK$0.5 million respectively (six months ended 30
June 2016: HK$4.6 million and HK$0.2 million respectively), with a gross
profit margin of 8.1% (six months ended 30 June 2016: 4.3%). The trading
business has created synergistic effects to the Group's business and allowed
the Group to offer more diversified product mix to its customers.
During the Period, the Group's export sales of upstream corn refined
products and corn sweeteners amounted to approximately HK$35.9 million and
approximately HK$0.2 million respectively (six months ended 30 June 2016:
HK$39.5 million and HK$0.7 million respectively). As the Group recorded a
28.1% increase in sales revenue during the Period, export sales to the
Group's revenue dropped to 6.0% (six months ended 30 June 2016: 8.6%). The
normalised corn price in China enhanced the competitiveness of Chinese corn
refined products and other related downstream products in the overseas
market, which could help ease the pressure from overcapacity in the domestic
market.
On 21 July 2017, the Group entered into an agreement (the "S&P Agreement")
with Global Bio-chem Technology Group Company Limited and together with its
subsidiaries ( the "GBT Group") for the disposal of the entire equity
interest of two subsidiaries of the Group, 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 GBT
Group are situated while all other production facilities of the Group are
situated elsewhere in the PRC. As such, the Transaction would enable the
Target Companies to be managed under the ambit of GBT Group in Changchun,
which could enhance the cost and operational efficiency, and create
potential synergies between the Target Companies and the GBT Group. The
Target Companies have been loss-making since 2014 and the Group has
suspended/ optimised operation of the Target Companies since then. The
Transaction will relieve the Group's financial burden from relocation of the
production facilities in Changchun and the uncertainties as the result of
the New Financial Guarantee Contracts, and will also enable the Group to
direct its resources to high value-added markets.
In March 2017, 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, became the indirect
controlling shareholder of the Group's parent company Global Bio-chem. 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 agriculture sector. The Group has received a
written confirmation from Nongtou that it will 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.
The Group's relocation of production facilities in Luyuan District to
Xinglongshan is in progress. The construction of the 60,000 mtpa glucose/
maltose production facilities has completed in March 2017 and commenced
trial run during the Period. Other relocation projects are still in the
process of obtaining the necessary approvals from the relevant bodies and
finalising facilities designs. Subject to the completion and finalisation of
the Transaction, the Group will take the opportunity of the relocation to
re-adjust its product mix and capacity. It is the long-term goal of Global
Sweeteners to seek continuous improvement through engaging in continuous
research and development to enhance operation efficiency and diversify
product mix to suit market needs.
Looking into the future, Mr. Kong Zhanpeng, Chairman of Global Sweeteners,
said: "Although the Company still recorded net loss during the Period, it is
encouraging to see substantial improvements in operating results and
operating cash flows. Continuous efforts will be made to enhance the
financial position of the Company as well as operation efficiency. In the
short run, the Group will consolidate its resources towards the development
of the Shanghai production base, leveraging on the synergistic effect with
the Jinzhou production base for the supply of raw materials and sweeteners
products to serve the respective Huadong market. However, the Group will
continue to strengthen its market position leveraging on its brand name and
add value to the current product mix through the introduction of new high
value-added products in the long run."
*About Global Sweeteners*
Global Sweeteners (stock code: 03889.HK) is listed on the Main Board of The
Stock Exchange of Hong Kong Limited in September 2007 and is principally
engaged in the production and sale of corn refined products (including corn
starch, corn oil, gluten meal and fibre); and various corn sweeteners
(including glucose and maltose syrup, HFCS, crystallised glucose and
maltodextrin) for food and beverage, chemical, confectionery, daily,
cosmetics and pharmaceutical products manufacturers. Global Sweeteners is a
non-wholly owned subsidiary of Global Bio-chem Technology Group Company
Limited (stock code: 00809.HK), the issued shares of which are listed on the
Main Board of the Stock Exchange of Hong Kong Limited.
- End -
Issued by: Global Sweeteners Holdings Limited
Through: CorporateLink Limited
Media Enquiry: CorporateLink Limited
Tel: 2801 6198 / 9029 Email:
Shiu Ka Yue 1865 sky@corporatelink.com.hk
Tel: 2801 7761 / 9086 Email:
Lorna Wong 8623 lorna@corporatelink.com.hk
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