In the first half of the year, the net income of the animal protection industry generally declined, with pulike biological engineering,inc. falling by more than 30%, but the year-on-year decline in net income in Q2 narrowed compared to Q1. Looking ahead to the second half of the year, some industry experts believe in an interview with reporters that when the profits of the downstream farming industry rebound, the profits of the upstream animal protection enterprises will also show a certain upward trend.
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According to Caixin News on August 29th, the animal protection industry is facing severe competition, and the net income of relevant animal protection enterprises in the first half of the year has declined year-on-year. Among them, the revenue and net income of pulike biological engineering,inc. (603566.SH) have both declined, but with the recovery of the hog farming market, the year-on-year decline in net income in Q2 has narrowed compared to Q1. In addition, the breakthrough in the pet track in the first half of the year may become a new growth point for the company's performance.
Tonight, pulike biological engineering,inc. released the semi-annual report for 2024, with a total operating income of 0.483 billion yuan, a year-on-year decrease of 21.82%; the net income attributable to shareholders of the company was 73.94 million yuan, a year-on-year decrease of 36.28%.
The pressure on the company's performance is closely related to the previous losses and low profitability in the hog farming industry. In the first half of 2024, due to the long-term low position of the hog farming industry, its operating losses and financial pressure have brought huge impact and challenges to the upstream animal protection industry. In addition, with the intensification and scale of the downstream farming industry, the bargaining power of downstream customers is constantly improving, which has also brought severe competition to the animal protection industry.
However, Caixin News reporters have noticed that with the gradual recovery of the hog farming market in the second quarter of this year, the pressure on relevant animal protection enterprises has begun to improve. Looking at the quarterly financial reports of pulike biological engineering,inc., the net income in Q1 was 27.31 million yuan, a year-on-year decrease of 57.36%; the net income in Q2 was 46.64 million yuan, a year-on-year decrease of 10.33%. The year-on-year decline in net income in Q2 has significantly narrowed compared to Q1.
In terms of product breakdown, the revenue from biological products for pigs in the reporting period was 0.147 billion yuan, a year-on-year decrease of 30.17%; the revenue from biological products for pets was 6.73 million yuan, which was zero in the same period last year; the revenue from chemical drugs for pets was 7.61 million yuan, a year-on-year increase of 14.16%; the revenue from functional health products for pets was 5.71 million yuan, a year-on-year increase of 68.12%.
Although the pig track is sluggish, the breakthrough in the pet track may become a new support for the company's performance in the future. pulike biological engineering,inc. also stated, 'During the reporting period, since the launch and sales of the cat triple inactivated vaccine at the end of April, it has covered more than 3,000 pet hospitals, with monthly sales ranking among the top in the industry. With the launch of the cat triple inactivated vaccine and rabies inactivated vaccine in the first half of the year, the company's pet vaccines will become a new growth point in performance.'
It is worth mentioning that on the same day, China Animal Husbandry Industry (600195.SH), Wuhan Keqian Biology (688526.SH) and other companies also released the 2024 interim financial report. During the reporting period, the net income of these companies showed a decreasing trend, with year-on-year decreases of 76.65% and 36.19% respectively. Shanghai Shen Lian Biomedical Corporation (688098.SH) saw its net income turn into a loss. Even earlier, Tianjin Ringpu Bio-technology (300119.SZ) and Wuhan Hvsen Biotechnology (300871.SZ) reported a decreasing trend in net income as well.
Looking ahead to the second half of the year, the hog market continues to warm up, breeding profits are rising, and the animal protection industry may be approaching a turning point. An expert interviewed by a reporter from Caixin Global stated, "When the profits of downstream breeding industry are on the rise, profits of upstream animal protection enterprises will also show some upward trends. Once the breeding market improves, the mentality of breeders will change, they will be more willing to invest, and this will immediately be reflected in the market. However, how long this positive trend will last, and to what extent, still needs to be observed whether the high level of breeding profits can be maintained."
However, a certain executive from a listed company was interviewed by reporters and expressed a less optimistic view, telling Caixin Global, "Although things have improved somewhat in the past two months, the pressure is still very high. Especially with overwork, because everyone has similar products, if there is no differentiation, and the competitive advantage is not significant, when the other party starts a price war, it actually makes us quite uncomfortable overall."