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
Over the past year, the bull market returned, with technology leading the way.
As I said back in October 2024, the rally that began on September 24 was not merely a rebound, but a reversal. Since then, China's capital markets have undergone a broad revaluation, moving from undervaluation toward fair value.
The Shanghai Composite Index reached its highest level in a decade. The "Yi-Zhong-Tian" trio—Eoptolink, Zhongji Innolight and TFC Communication, three prominent Chinese optical communications stocks—saw their share prices multiply severalfold in a single year. Cambricon's market capitalization briefly exceeded RMB 600 billion. Elsewhere in the technology sector, triple-digit price-to-earnings ratios and valuations exceeding RMB 10 billion became commonplace.
Some investors were greedy; others, fearful. Still others asked me: Are technology stocks in a valuation bubble?
My answer is that what we are witnessing is the hunger and anxiety of an era, reflected in the capital markets. Once you understand this, the current fervor for technology investing is no longer difficult to explain.
Investment has nothing to do with macroeconomics, but everything to do with geopolitics.
China-US relations will shape the investment landscape for decades to come. Geopolitics has played a major role in shaping the hunger and anxiety of our times, fundamentally reshaping the way we invest.
What, then, lies at the heart of China's hunger and anxiety?
The Fourth Industrial Revolution is already underway, yet China has not fully overcome the technological shortcomings left by the Third. There is no time to lose.
This is why some people wonder: Why do Chinese computing chip companies command such high valuations when their technologies still lag so far behind NVIDIA's? Why does NVIDIA trade at just 50 times earnings, while a company hailed as "China's answer to NVIDIA" commands a multiple of 300?
To me, this gets the logic exactly backward.
It is precisely because these companies cannot catch up with NVIDIA in the near term that they command a higher strategic premium. The wider the technological gap, the greater the strategic value.
The further something lies beyond our reach, the stronger our hunger. The harder it is to catch up, the deeper our anxiety. If China were to achieve a complete breakthrough in computing chips one day, valuations might actually come down.
Where can one find China's most spectacular natural landscapes?
Much of the answer, I believe, lies in and around the Hengduan Mountains: the Meili Snow Mountains, Jade Dragon Snow Mountain, Mount Gongga, Mount Siguniang, Jiuzhaigou, and many others. Vast differences in elevation and deep fault lines have given rise to landscapes of extraordinary grandeur.
Hard-tech investing follows a similar logic.
Technological gaps, discontinuities in capabilities, and missing links in industrial systems: a leap in difficulty brings a leap in valuation, and a successful breakthrough can, in turn, bring a leap in returns.
This logic extends well beyond computing chips. It is equally evident in memory semiconductors, commercial spaceflight, and other sectors where China still faces substantial technological gaps with other countries.
It was precisely this conviction that led CoStone Capital, starting in 2016, to decisively focus its investments on three areas: hard tech, emerging industries, and life sciences and healthcare. In this context, "hard tech" refers specifically to important industries in which China faces a technological gap with the United States.
Thanks to this forward-looking strategy, CoStone Capital established an early presence across the full value chains of key sectors, including semiconductors, artificial intelligence, and robotics.
Looking ahead, the frontiers of technological progress and industrial upgrading are boundless. Nor can the gaps in hard technology be closed overnight. The twin windows of opportunity presented by technological innovation and the development of homegrown alternatives to foreign technologies have only just begun to open.
The road ahead is long, but the future holds immense promise.
As an investment firm, CoStone Capital will continue to invest where the hunger and anxiety of each era run deepest, move forward with the tensions that shape our times, and extend our reach toward the most challenging—and most important—frontiers.
Spring 2026