Recently, there has been a change in the actual controller of seed listed companies. The seed industry can't make quick money, growth is slow, and looking for the blessing of powerful major shareholders can ensure safety.
Dunhuang Seed Industry announced in November that the controlling shareholder's equity was transferred to Jiugang Group, and the major shareholder of Fengle Seed Industry also changed at the end of last month, SDIC Seed Industry will become the controlling shareholder of the company, and the State-owned Assets Supervision and Administration Commission will become the actual controller of the company.
Previously, Longping Hi-Tech was owned by CITIC Group in January 2016, and the ultimate controller was the Ministry of Finance. In 2019, the controlling shareholder of Winwin Hi-Tech was changed to Sinochem Modern Agriculture, a subsidiary of Sinochem Group, and now belongs to Syngenta's seed sector.
In the agriculture, forestry, animal husbandry and fishery industry, seeds are one of the few industries that can produce sustainable returns, and there are many seed companies listed, but this industry has a characteristic, that is, the investment is large and the returns are low. It is difficult for seed companies to generate stable profits, taking Longping Hi-Tech as an example, profits have been climbing before 2018, and in recent years, profits are meager, and losses are more and more are earningsThe Dunhuang seed industry is in a state of big losses and small profits most of the time;Denghai Seed Industry's profits were relatively stable before 2016, and it has been repeated in recent years.
The capital market is quite bullish on seed companies, and the valuations given are generally higher than the market average. This is because the seed industry is very important, seeds are a hard demand, related to the national economy and people's livelihood, now the competition is fierce, the profit is thin, but there is a possibility of stable profits in the future.
Large companies are also interested in this and are willing to invest, such as CITIC Group, which has been working in this field for a long time. Sinochem's acquisition of Syngenta will also accumulate a lot of germplasm resources.
Recently, it has attracted more attention than SDIC Seed Industry, which is a wholly-owned subsidiary of SDIC Group, aiming to extend the biological breeding industry chain, build a large-scale seed industry group with international competitiveness, and better serve the national food security strategy.
In addition, SDIC Chuangyi Industry Management is a wholly-owned enterprise of SDIC Group, with a fundraising scale of 4836.3 billion yuan, in recent years, it has also made many layouts in the field of biological breeding, investing in Dabeinong Biology, Hangzhou Ruifeng, Liangyuan Biology, Longping Biology, etc. In addition to Fengle Seeds, it also holds Guofeng Biology and Guorui Biology. SDIC Chuangyi has obtained 13 of the 16 GMO safety certificates issued by the Ministry of Agriculture and Rural Affairs for major crop varieties.
SDIC Chuangyi has a banknote capacity that ordinary seed companies cannot have. This is because seed companies have a limited amount of money to come up with. With the help of strong money capabilities, new entrants can firmly control the genetically modified outlet.
For example, Longping Hi-Tech is a frequent visitor in the M&A market, acquiring a number of seed companies, becoming the main shareholder of Hangzhou Ruifeng, promoting overseas mergers and acquisitions, and bringing the company's corn seed business to a new level.
The seed industry needs long-term investment and slow cultivation, and this process is easy to persist and fall behind, and it needs the support of powerful shareholders.
Judging from the cases that have occurred, listed seed companies are rarely acquired by peers, and they are all trying to become bigger and stronger within a certain system. The reason may be as mentioned above, seed companies are generally not profitable, it is difficult to accumulate, and there are relatively few strengths, and another reason is that they do not want to stay warm with their peers, and are more willing to find backers who can provide resources.