Caixin reported on August 28 (Reporter: Liu Jian) that the revitalization of the seed industry is continuing, but domestic seed companies still face significant challenges in the increasingly intense market competition. According to the semi-annual financial reports of listed seed companies, many of them have experienced a certain decline in net profits in the first half of the year, but yuan longping high-tech agriculture (000998.SZ) achieved a turnaround from losses to profits.

However, Caixin reporters noticed that during the reporting period, the company's investment income from the disposal of a stake in Longping Biology amounted to 3.4 billion yuan. The company's non-recurring net profit in H1 has expanded compared to the same period last year, and expenses and debt ratios remain high.

After the market closed today, yuan longping high-tech agriculture released its 2024 interim report, with the company achieving an operating income of approximately 258.2 billion yuan during the reporting period, a decrease of 1.28% year-on-year. The net profit attributable to the shareholders of the listed company is approximately 11.1 billion yuan, compared to a net loss of approximately 16.1 billion yuan in the same period last year.

Specifically, the company's revenue from rice seeds during the reporting period amounted to 83.7 billion yuan, an increase of 19.61% compared to the same period last year; revenue from corn seeds amounted to 122.8 billion yuan, a decrease of 9.87% compared to the same period last year; revenue from vegetable and fruit seeds amounted to 8.7 billion yuan, a decrease of 31.03% compared to the same period last year.

The company, however, suffered a non-recurring net loss of 25.8 billion yuan in the first half of the year, a significant increase compared to the same period last year, which had a loss of 638.3 million yuan. In fact, the company generated investment income of 34.7 billion yuan in the first half of this year, mainly from the disposal of a stake in Longping Biology, which resulted in investment income of 3.4 billion yuan.

Against the backdrop of intensified competition in the seed industry in recent years, the company is actively pursuing the path of 'reducing debt' and 'trimming and reducing costs to increase efficiency.' However, at present, the progress may still face challenges. The company's sales expenses during the reporting period amounted to 31.1 billion yuan, an increase of 11.45% compared to the same period last year; management expenses amounted to 44.1 billion yuan, an increase of 6.69% compared to the same period last year; and financial expenses amounted to 44.1 billion yuan, a significant increase of 167.46% compared to the same period last year.

In the semi-annual report, yuan longping high-tech agriculture stated, 'Affected by the continuous interest rate hikes by the Federal Reserve, there have been significant fluctuations in the exchange rates of overseas currencies, resulting in a substantial year-on-year increase in exchange losses from long-term foreign currency loans of overseas subsidiaries, leading to a year-on-year increase in financial expenses.'

In addition, as of the end of the reporting period, the company's asset-liability ratio was 65.10%, higher than the industry average, an increase of 1.6 percentage points from the end of last year. The balance of monetary funds on hand is 2.331 billion yuan, short-term borrowings are 5.587 billion yuan, and non-current liabilities due within one year are 0.898 billion yuan.

Yuan Longping High-tech Agriculture has begun seeking solutions to a series of issues including the high debt ratio. Previously, Yuan Longping High-tech Agriculture announced that it plans to issue shares to its controlling shareholder, CITIC Agriculture, at a price of 7.87 yuan per share, raising no more than 1.2 billion yuan, all of which will be used to repay bank loans and supplement working capital. The proposal was approved by the company's shareholders' meeting on August 27.