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Seed major posts 31.53% surge in FY net profit

By Diao Ying (China Daily)
Updated: 2009-04-09 07:46

Yuan Longping High-tech Agriculture Co Ltd, China's leading seed company, reported a 51.85 percent increase in revenue and a 31.53 percent net profit surge last year, according to its annual report to the Shanghai Stock Exchange yesterday.

Although the increase in revenue came mainly from higher seed sales, a good chunk of its net profit was from its property business, analysts said.

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The company's revenue last year was 1.08 billion yuan. It made a net profit of 64.88 million yuan. But the company gained 118 million yuan from selling its shares twice in a property project last year. That meant it actually made little profit from its main business, analysts said.

The company was named after Yuan Longping, the 79-year-old agricultural scientist known for developing the first hybrid rice varieties in China during the 1970s. Around 60 percent of the rice grown in China comes from Yuan's hybrid rice variety. Yuan is the honorary chairman of the company and holds 1.59 percent of its shares.

Apart from the property deal, revenue from its seed business also contributed to its income. For instance, the revenue from hybrid rice seeds reached 477 million yuan, up 36.94 percent.

The company said the increase was due to a growing demand for hybrid rice and high grain prices last year. Grain prices went up 50 percent worldwide during the first eight months of 2008. The grain shortage in African and Southeast Asian countries raised demand for hybrid rice seeds.

Analysts gave the company a "neutral" rating, saying that the seed sector still had growth potential.

The company's research and development center in the Philippines has become operational, and it also plans to set up branches in other countries to expand its business worldwide, the company said.

Zheng Wenqi, an analyst with Orient Securities, said the company would see increase in income this year due to climbing seed prices and steady rice prices. But he said the company would face a tough task in improving its core business, given the fact that much of its profit last year came from the sale of real estate projects.