Summary: Both Meihua Group and Zhejiang Hugeleaf reported year-on-year decreases in financial metrics for H1 2023. The performance of their amino acid segments was varied.

Meihua Group

On 19 Aug., Meihua Holdings Group Co., Ltd. (Meihua Group) released the report of H1 2023 results. Adversely affected by its amino acid products, Meihua Group's revenue and net profit for H1 dipped on a year-on-year basis.

Financial metrics of Meihua Group for H1 2023 (unaudited):

• Operating revenue: USD1.91 billion (RMB13.59 billion), down 4.44% YoY;
• Net profit attributable to equity holders of the Company: USD192.31 million (RMB1.37 billion), down 46.77% YoY;
• Net profit attributable to equity holders of the Company after deduction of non-recurring loss/profit: USD197.31 million (RMB1.41 billion), down 44.40% YoY.

Meihua Group mainly attributed the declines in revenue and net profit to main products' price drop. Performance of business segments:

• In H1 2023, sales volumes of main products lysine and threonine increased by 9.71% and 4.04% YoY respectively, but the selling prices of these two products dipped by 22.99% and 24.83% YoY respectively, which partially contributed to the declines in revenues from and profits of main businesses.
• As for amino acids for pharmaceutical use, sales volumes of proline and guanosine improved over the previous year, as a result of the company's efforts to extend these products' application to downstream fields. Notably, proline saw YoY growth in both the sales volume (+25.58%) and selling price (+4.03%), thanks to the increase of proline's application in the foods for special medical purposes.
• 
  
• As for the flavour enhancer segment, the price of monosodium glutamate (MSG) in China has dropped from a high level since Q2 2023 because the supply-demand relations became imbalanced. Consequently, Meihua Group lowered the price of its MSG in pace with the market trend, which affected its operating revenue in a negative way.
• Since the xanthan gum output was ramped up as new production line was put into operation, the sales volume and average selling price of xanthan gum presented an upswing; the revenue from the product went up by 52.89% YoY, and the product's gross profit margin also went up YoY.

Zhejiang Hugeleaf

On 11 Aug., Zhejiang Hugeleaf Co., Ltd. (Zhejiang Hugeleaf) released the report of H1 2023 results. Despite the declines in revenue and net profit, the tryptophan products delivered a strong financial performance.

Financial metrics of Zhejiang Hugeleaf for H1 2023 (unaudited):

• Operating revenue: USD39.46 million (RMB281.26 million), down 9.94% YoY;
• Main reason for decline: Sales volume and price of steam products in the reporting period dropped YoY.
• Net profit attributable to equity holders of the Company: USD15.39 million (RMB109.71 million), down 72.38% YoY;
• Main reason for decline: Income from the long-term investment on stocks in the reporting period went down YoY.
• Net profit attributable to equity holders of the Company after deduction of non-recurring loss/profit: USD13.91 million (RMB99.13 million), up 11.90% YoY.
• Main reason for uplift: Sales volume and price of veterinary drugs in the reporting period went up YoY.

Veterinary drugs and feed additives, including L-Tryptophan premix, refined L-Tryptophan, etc., gave a solid financial performance in H1 2023. The demand for amino acids kept growing in the reporting period, owing to the stable increase in downstream demand from feed industry and continuous expansion of low crude-protein diets' application in feed. The price of tryptophan in China stayed at a high level, and the company's tryptophan products saw uplifts in sales volume and prices in the reporting period.

Key statistics of Zhejiang Hugeleaf's L-Tryptophan in H1 2023 are detailed as follows:

• Output: 1,403 tonnes (based on 100% active ingredient);
• Sales volume: 1,292 tonnes, up by 2.75% YoY;
• Sales: +23.00% YoY;
• Average selling price: USD7,905/t (RMB56,346/t), up 18.76% YoY;
• Operating revenue (from L-Tryptophan): USD10.21 million (RMB72.80 million).