On April 9, Guangdong
based Star Lake Bioscience released its financial report for 2017, which
revealed a revenue of more than USD100 million, up by over 1% compared to 2016.
With this number, the company made losses of about USD25 million last year. The
reasons for the financial loss, according to company representatives, was the
increases in the costs of environmental protection and raw material.
According
to the research of market intelligence firm CCM, Star Lake Bioscience has been
making losses for the last years in a row.
It
is worth mentioning that nucleotide and amino acid production is traditionally
the main source of profit for the enterprise. However, the success of those
products is going down rapidly. For example, last year's share of the amino
acid business was only 10.63%. As a result, amino acid feed additives
contribution to the company's revenue went down by 46.44% YoY.
Star
Lake Bioscience’s amino acid business also realised a small output in 2017.
According to CCM, the enterprise produced 252 tonnes of amino acid feed
additives, up by 62% YoY, and 662 tonnes of amino acid APIs and intermediates,
down by 40% YoY. However, the production of nucleotide additives reached 5,975
tonnes, and that of APIs and intermediates of nucleosides and nucleotides was
1,561 tonnes.
Star
Lake Bioscience now produces only valine and leucine and has not yet made a
further restructuring of its amino acid business.
Business
Expansion may achieve a turnaround
Despite
the poor financial performance last year, Star Lake Bioscience is still
planning to expand in 2018. This expansion might be the way for the company to
achieve a financial turnaround.
The
company is planning to buy all shares in a company engaged in the R&D,
production and sale of pharmaceutical intermediates. Notably, Star Lake
Bioscience's shares were falling in the two months before a trade suspension
related to the announcement. The acquisition, once finished, will possibly
convince the public that Star Lake Bioscience will make a financial turnaround.
About the company
Star
Lake Bioscience manufactures and sells APIs, as well as food and feed additives
in the and global markets. The company offers various APIs, such as inosine,
guanosine, and L-proline. In addition, the company offers L-Threonine, a feed
additive used in pre-mixtures, and pig and poultry feed. Star Lake Bioscience
was founded in 1964 in the People’s Republic of China.
Star
Lake Bioscience achieved sales of biochemical APIs of USD46.36 million, down by
24.14%, and of USD62.29 million of food and feed additives, up by 35.63% YoY.
Despite the YoY increase, the gross profit margin of the food and feed
additives business was -0.03%. Given that the environmental policies in China
are getting stricter, and the bio-fermentation and biochemical industries,
which Star Lake Bioscience is involved in, are rapidly expanding, the company
is not likely to improve its financial performance in the short term.
About the article
The
information for this article comes from CCM, China’s leading market
intelligence provider for the fields of agriculture, chemicals, food and feed.
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