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IPO Approved: World's Largest Alanine Producer Going Public

2020.11.07 CoStone Capital Views:


On November 17, 2020, the IPO application of Anhui Huaheng Biotechnology Co.,Ltd(831088), a CoStone Capital portfolio, has been approved, and the company is to be listed on the STAR market. Following EFORT(688165), Sino Medical(688108), Brightgene Bio-medical(688166), JINHONG Gas(688106), Donglai Coating Technology(688129), and GalaxyCore, Huaheng Biotechnology has become another CoStone Capital portfolio that goes public on STAR market. Huaheng Biotechnology’s core business is synthetic biotechnology, it focuses on the research and development, production, and sales of alanine and alanine derivatives. Its main products include alanine products (L-Alanine, DL-Alanine, andβ-Alanine), D-calcium pantothenate and α-arbutin, which have a broad application in daily use chemicals, medicines and health-care products, food-additives and fodder.  


Application of Huaheng products 

According to China Bio-Fermentation Industry Association, the alanine market has been growing rapidly these recent years. Global demand for alanine products in 2019 was about 50,000 tons, while Huaheng’s production and sales the same year was 25,700 tons and 23,700 tons respectively, marking its industry leading position.

As of the prospectus was signed, Huaheng possesses 26 invention patents and 18 utility model patents. The company has undertaken the “863” project of the Ministry of Science and Technology, the high-tech microbial manufacturing industrialization project of the NDRC, and other national scientific and technological R&D projects. The company boasts many national and provincial awards such as the 1st prize of technology invention of China Light Industry Council, Manufacturing champion product of MIIT, National Outstanding Innovation and other awards for enzymatic technology and products. With its cutting-edge manufacturing technique, high quality products and the green ecological label, Huaheng Biotechnology is favored by many customers from home and abroad. By now, Huaheng has accumulated quality customer resource and established business cooperation with leading companies worldwide, including BASF SE, Nouryon, Ajinomoto, ITOCHU, Symrise, Tianxin Pharmaceutical, Huazhong Pharmaceutical and Huahai Pharmaceutical. The company’s operating revenue has increased from ¥383 million of 2017 to ¥491 million of 2019, net profit raised from ¥65 million to ¥126 million, achieving a compound annual growth rate of 40% and showing a promising growth momentum. .



Operating revenue and net profit of Huaheng Biotechnology

CoStone Capital believes that Huaheng Biotechnology is driven by technological innovation and is backed by advanced production capacity. Through synthetic biotechnology, the company has commercialized the patent on “production of L-alanine by microbial fermentation of bio-based raw materials”. The company has substituted nonrenewable resources with renewable ones, upgraded traditional petrochemical process to cleaner and more environmental friendly standards, and with these commitments, Huaheng has reshape the landscape of this industry. By virtue of its outstanding microbial manufacturing technique, Huaheng will usher its alanine business into a new stage.  

Rewritten by Xue Guanda, Edited by Du Zhixin, Li Yunzhen

The year 2019 marks the fortieth anniversary of China’s Reform &Opening-Up, once again, we meet at the turning point of history. What’s the next step for the game, is there any clear guidance? The answer is affirmative.

Our country is enjoying a good momentum of development, which does not come from the Washington Consensus nor the Beijing Consensus. China’s experience has proved that both the visible hand and the invisible hand are crucial: the visible hand, stands for the government-led reform, and would yield benefits for reform and opening up; the invisible hand, stands for the Marginal Power represented by the private sector, and would improve economic efficiency and tax collection, create jobs and employment opportunities.

Provided that we want to protect and expand the benefits form reform, three simple but mandatory agreements are to be made and followed: No.1 Private ownership must be recognized, protected and treated equally with public ownership constitutionally, both ownerships are scared and inviolable;No.2 Make further clarification of the principal position of market economy, “deepen economic system reform by centering on the decisive role of the market in allocating resources”, as President Xi addressed in the third Plenary Session of the 18th CPC Central Committee;No.3 Implement the guiding principles of “comprehensively promoting law-based governance” of the fourth plenum. The rule of law is essential for economic growth, irreplaceable to protect private ownership, and necessary to encourage innovation and entrepreneurship.

Above are three rules for us to avoid falling into the Middle-income Trap. Assuming that we are breaking systematic barriers to private enterprises’ participation in market economy, and boosting innovation and entrepreneurship of our society, then we are heading towards a promoting direction. We are marching in the path of light, regardless of the ups and downs of Sino-US relationship, the drop in GDP growth rate, or the monetary policy.

These principals also apply on knowing how better to run a business: don’t be hedged by rules and regulations at the beginning, pay more attention to your survival, and you’ll learn more when you start your second business.

For many years, Huawei has been the only Chinese company on the list of the Top 50 R&D Spenders. Regardless of the economy and its income, what Huawei has been doing is investing in its future, dedicated to R&D, continuously and resolutely. This provisional work underscores Huawei’s accomplishments, makingHuawei anindustry leader.

So, there are standard answers on how to run a company,which could be summarized as concentration and professional dedication, continuous investment on innovation and trying harder in R&D. Entrepreneurship is also important, every single company needs entrepreneurs to push aside all obstacles and difficulties, to implement strategies and ideas. We, as investors, are destined to look for such outstanding entrepreneurs and their companies, invest in them and partner with them.

At this key point of history, a country, a company, or asingle individual, will all need to find the right path. Four decades after the Reform and Opening-up, it’s time to learn from our experience and stop “wadding across


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