Nutrichem: The international pesticide market has entered a "dark horse"
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- Time of issue:2019-11-29
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(Summary description)The Nutrichem Biological Office Building, located in Changping Life Science and Technology Park, Zhongguancun, Beijing, has 18 large brown columns standing at the entrance, which represent the 18 founders of the company. Most of the 18 founders have pesticide majors or international trade backgrounds, and 9 of them have masters and doctorates from prestigious universities. Nutrichem Bio was brought to the development path of promoting trade with research and development and driving production with trade, and became a "dark horse" in the industry.
Nutrichem: The international pesticide market has entered a "dark horse"
(Summary description)The Nutrichem Biological Office Building, located in Changping Life Science and Technology Park, Zhongguancun, Beijing, has 18 large brown columns standing at the entrance, which represent the 18 founders of the company. Most of the 18 founders have pesticide majors or international trade backgrounds, and 9 of them have masters and doctorates from prestigious universities. Nutrichem Bio was brought to the development path of promoting trade with research and development and driving production with trade, and became a "dark horse" in the industry.
- Categories:Company News
- Author:
- Origin:
- Time of issue:2019-11-29
- Views:0
The Nutrichem Biological Office Building, located in Changping Life Science and Technology Park, Zhongguancun, Beijing, has 18 large brown columns standing at the entrance, which represent the 18 founders of the company. Most of the 18 founders have pesticide majors or international trade backgrounds, and 9 of them have masters and doctorates from prestigious universities. Nutrichem Bio was brought to the development path of promoting trade with research and development and driving production with trade, and became a "dark horse" in the industry.
However, as the threshold for pesticide manufacturing in China increases and international trade relations change, Nutrichem Bio will encounter a brutal survival of the fittest. Can it stand up to the challenge and become the industry leader in the end? In mid-November, the Shanghai Securities News' "2019 New Third Board Long Journey" research team walked into Nutrichem Bio to learn about the growth process and future strategy of this "dark horse".
Grab a few waves of bonuses and be the first
Wang Rong, chairman of Nutrichem Bio, recalled that since the establishment of Nutrichem Bio, it has seized several waves of industry development dividends. Nutrichem Bio was established in 2003, just from 2003 to 2015, a large number of international manufacturing industries were transferred to China, and the production capacity of China's pesticide manufacturing industry exploded. Since most of the founders have pesticide majors or international trade experience, Nutrichem Biology quickly became trading partners with internationally renowned agrochemical companies such as ADAMA (after being acquired by China National Chemical Corporation, which was renamed ADAMA) and Dow Chemical. Once the international market demand is found, Nutrichem Bio will first do research and development in its own laboratory, and then find a domestic company for OEM. The asset-light and rapid development model makes Nutrichem a running "dark horse".
R&D capability is the competitive advantage of Nutrichem Bio. The 18 founders of the company graduated from China Agricultural University, Chinese Academy of Agricultural Sciences, Peking University, Fudan University, China University of International Business and Economics and other famous schools, including 1 postdoctoral fellow, 5 doctors and 3 masters. Strong R&D capabilities enable Nutrichem Bio to integrate the requirements and standards of international customers into the entire R&D and design process, and achieve mass production. The first pesticide GLP laboratory in China built by the company in 2006 is still one of the GLP laboratories with the most extensive qualifications and the strongest service capabilities in my country. Nutrichem Bio also attaches great importance to the introduction of external talents. The company built a world-class R&D center in 2016, attracting 404 R&D personnel, including 183 doctors, masters and returnees, including many who have worked for Monsanto, Syngenta, Chief scientists and experts of multinational companies such as DuPont and Dow.
In 2011, Winbond Health acquired a 77.26% stake in Nutrichem Bio. After entering the Winbond department, Nutrichem Bio took advantage of the capital market to build and deploy production bases: In 2016, it acquired 100% equity of Shandong Fuer, a subsidiary of Winbond Health, by way of fixed increase and share exchange; in 2017, the company invested and controlled Heyi Chemical and Jiangsu Changlong. Nutrichem Biological's acquisition of Heyi Chemical was one of the largest mergers and acquisitions on the New Third Board. At present, Nutrichem Biological has production bases in the national economic development zone, Zhejiang Shangyu Economic Development Zone and the tenth national chemical industry park, Jiangsu Taixing Economic Development Zone.
Driven by the development idea of promoting trade with research and development and driving production with trade, Nutrichem Bio has grown rapidly. In 2018, the sales revenue of Nutrichem Biological ranked first in China's agrochemical industry (excluding ADAMA and Syngenta, which were acquired by ChemChina), and ranked tenth in the world.
The financial report shows that in 2018, Nutrichem Bio achieved operating income of 6.232 billion yuan, a year-on-year increase of 1.51%; net profit was 443 million yuan, a year-on-year increase of 52.07%. Wang Rong explained that the main reason for the sharp increase in net profit was the increase in the proportion of self-produced pesticides. In 2018, the company's self-produced pesticides accounted for more than two-thirds of its operating income for the first time.
The end of the capacity transfer bonus
But now, the domestic and foreign industry background that Nutrichem Bio is facing is undergoing major changes.
First of all, China, which accounts for more than 50% of the global pesticide production capacity, has greatly increased the threshold for pesticide supply after the environmental storm. In the first three quarters of this year, Nutrichem Bio achieved an operating income of 3.919 billion yuan and a net profit of 194 million yuan, a year-on-year decrease of 14.67% and 45.19% respectively. The decline in performance was relatively large, mainly due to the loss of production suspension in the south of Yancheng and the lower-than-expected return on foreign investment.
Secondly, industry experts judged that after the domestic and international supply-side drastic changes, the dividend period for the transfer of the international pesticide manufacturing industry to China has come to an end. In 2018, China's pesticide exports hit a record low of 1.4054 million tons, a year-on-year decrease of 13.5%. Wang Rong believes that the demand of China's pesticide industry will not have the previous substantial growth. Due to the survival of the fittest after oversupply, the final winner may be 5 to 7 leading agrochemical companies, which will capture most of the industry's profits. What about Nutrichem Biology? Wang Rong analyzed that the core competitiveness of Nutrichem Biotechnology lies in the rich product portfolio with advanced technology. In the process of cooperating with international customers, the company has gradually formed its own product characteristics, that is, it does not do bulk pesticides such as glyphosate and dicamba, but does some non-patented sub-categories with an annual global sales volume of less than 10,000 tons, such as There are 70 to 80 varieties of tebuconazole and azoxystrobin with competitive advantages. For some of these varieties, Nutrichem Biology occupies 50% of the Chinese market. In the next two to three years, Nutrichem Bio will fully focus on 30 to 40 varieties of them, making them the leading products in the industry. "There is a basket of API products with rich combinations, so we will have a very strong lock-in for customers." Wang Rong said confidently.
In the future, Nutrichem Biotechnology, which is mainly based on pesticides, will expand the downstream formulation industry. Another "dark horse" in the pesticide industry, Shandong Weifang Runfeng Chemical Co., Ltd. (hereinafter referred to as "Runfeng Co., Ltd."), an IPO delisted company from the New Third Board, has a competitive advantage in the downstream preparations of APIs, and has a relatively high registration threshold in Brazil. Waiting for the South American market, Runfeng Co., Ltd. has worked hard for many years, and the sales channel has even penetrated to the last mile of the end. In 2015, China's pesticide industry began to be oversupplied, and Runfeng, which has few intermediate links and fast response, grew especially fast. Wang Rong introduced that the success of Runfeng has opened a door for other domestic pesticide companies to expand the international formulation market. Nutrichem Bio has started to catch up with Runfeng, strengthen cooperation with international customers in formulations, increase direct registration abroad, and cultivate registration advantages, but sales are still handed over to international customers. In 2016, Nutrichem Biological obtained the first registration certificate for pesticide preparations in Brazil. At present, the advantages of license resources in Brazil are very obvious.
Independent listing is the goal
As of the end of the third quarter, the listed company Winbond Health and its wholly-owned subsidiary Winbond Huiyi Investment Co., Ltd. held a total of 823 million shares in Nutrichem Bio, accounting for 73% of the total share capital.
For a company like Nutrichem Biotech with an annual profit of over 400 million yuan, investors inevitably ask a question: Will the company go through an independent IPO? In this regard, Wang Rong said that the company is working with financial, auditing, legal counsel and other professional intermediaries to fully demonstrate the conditions for spin-off and listing, and actively promote the spin-off and listing work. Major shareholders also support this.
Previously, it was reported that Nutrichem Bio will be benchmarking on the Science and Technology Innovation Board. Wang Rong said that as the deepening reform policies of the capital market will be launched one after another, the company's listing channels include multiple options including the Science and Technology Innovation Board, ChiNext, and the New Third Board.
At present, Nutrichem Bio is preparing for the selection layer of the NEEQ, and hopes to complete the public offering of shares to unspecified qualified investors after the implementation of the NEEQ reform policy.
Wang Rong expects that the spin-off and listing will allow the company to have a more independent development platform and expand the company's financing channels.
(Original source: Shanghai Securities News, author: Ruan Xiaoqin)
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