AHB(SH:688639) Xin Lang Zheng Quan·2025-11-20 08:59Core Viewpoint - Huaheng Biological has submitted a listing application to the Hong Kong Stock Exchange for an "A+H" dual listing, with Huatai International as the sole sponsor. The company specializes in the research, production, and sales of bio-based products, holding the largest global market share for L-alanine and L-valine as of 2024. However, it faces significant challenges including declining product prices, sharply reduced profit margins, and intensified industry competition [1][2]. Financial Performance - From 2022 to 2024, Huaheng Biological's revenue is projected to grow from 1.419 billion to 2.178 billion yuan, indicating a strong growth trend. However, net profit is expected to drop from 319 million yuan in 2022 to 185 million yuan in 2024, reflecting a year-on-year decline of 58.67%. In the first three quarters of 2025, revenue reached 2.194 billion yuan, a year-on-year increase of 42.53%, but net profit still fell by 5.1% to 159 million yuan [2][3]. - The company's gross margin has significantly decreased from 40.4% in 2023 to 24.8% in 2024, and further down to 23.5% in the first three quarters of 2025, nearly halving from its peak [2][3]. Product Pricing and Market Dynamics - The decline in profitability is attributed to a comprehensive drop in market prices across nearly all product lines. For instance, the average price of amino acid products has fallen from 18,900 yuan per ton in 2022 to 15,000 yuan per ton in the first half of 2025, a decrease of over 20%. Specifically, the price of L-alanine dropped from 35,000 yuan per ton at the beginning of 2025 to 20,000 yuan per ton by mid-year, a decline of approximately 42.86% [3][4]. Supply and Demand Changes - The market's supply-demand dynamics have shifted significantly, with many sub-markets transitioning from high growth to stagnation. For example, the compound annual growth rate for valine is expected to drop from 60.2% (2020-2024) to 8.6% (2024-2030) and further to 3.4% (2030-2035). The inositol market is projected to experience nearly stagnant growth during the same period [4][5]. - The oversupply situation is exacerbated by rapid capacity expansion driven by high previous profits, alongside a slowdown in downstream demand due to macroeconomic factors. This has led to increased price competition [4][5]. Industry Competition and Strategic Shifts - Other companies in the industry are also expanding capacity, with significant new production planned for L-valine by competitors such as Yipin Biological and Jinhai Biological, which will further intensify competition [5][6]. - In response to the fierce competition in its core business, Huaheng Biological is attempting to pivot towards high-value beauty and personal care ingredients. However, this transition faces challenges due to the importance of patent barriers, brand effects, and channel control, areas where the company currently lacks strength [6][7].