SEED - Earnings call transcript Q2 2022

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Operator

Hello and welcome to the Origin Agritech First Half 2022 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note today's event is being recorded. And I would like to turn the conference over to Kirin Smith from PCG Advisory. Mr. ahead. go please Smith,

Kirin Smith

of Welcome forward-looking With Agritech's Gengchen me CEO, this our Chairman for Keith. certain and note earnings made XXXX. statements statements are results Han, subject half conference and during statements VP Han, Wei as call. today Securities will and Agritech's Development. Private to the forward-looking the you, Origin that Please first that and be Origin Litigation call XXXX our cause Business Thank risks, are materially Such expressed uncertainties other differ defined by Reform factors could Act this from of implied or to to call. actual those Dr. on

the please cautionary call are to our which Director information, I press available please statement on additional Relations. our release, Joe ahead. now to refer of the all filings turn SEC, Investor like to Joe, website. of our For Origin's with Ramelli would over in and our go

Joe Ramelli

thank joining And to support. Kirin. everyone your the us call we appreciate you Thanks, today really on

know it's of given of uncertain bringing point world. has investors, uncertain been food China in never Agritech and global with And to time now, bit interest or supply the innovation on rising inflation. I mission geopolitical rising affecting right wars chain geopolitical more food a events the inflation, little Origin's the very for an So rates,

wouldn't like in be benefits we'd think could your place say And maybe that to to like I all a portfolio. so, hedge but those we're from good a maybe things, that

thriving during these you times. we're difficult As can see,

resulting very such, sector as approval embracing the you that playing government, the to but priority the value per role top into Agritech of innovation, we're yield gene-edited the So improved problem, to of effect we published can agriculture only a food for excited and the security food very not nutritional heavily yields, multiplier is imagine. recent for also in And as this nutritional And investing Chinese crops. as they're procedures in with technology increased such corn, as the area. solving a dramatically be have corn security

can an to As XXXX benefiting in rapid Gross from of from results, RMBXX.X growth, to impressive grew from importantly, leverage the operations RMBX.X XX%, our RMBX.X resulting million The is we and XXX% loss our tailwinds. margin of our these muted model or line. half or million from lot USDX.X only USDXXX,XXX. Sales despite million million bottom you RMBXX.X business had RMBX.X of from dropped RMBXX.X a grew to operating million. benefits million see course decreased grew from at of and to business the expenses down lot a a which to million first

from a the the us also million with of portion for main We growing RMBX.X was which in the this China. factor our generated launch earnings background fields planted in really sub-lending test million black corporate of rapid driving region disease-tolerant Beijing, the that share. into pushed And growth in had USDX.XX or a in headquarters to fields RMBX.X main our in environments. period the stressful variety We interesting. can a is corn adapt of story test plant corn The

corn you but flooding. that our thrived under and we were right, did products was might very really really there versus can decimated conditions. some plant was on I deck. perform by And don't news, know corn seen competing And and have our then investment of terrible drought they interesting followed have some the really that horrific those pictures in see you well and in if thrives it

looks a of kind and dead. and Our very green corn there's is thriving and brown

goodwill of our brand demand seeds. a great Origin and created Agritech's deal this So for for

but corn, out have could hybrid this launched over lot increase newly actually has traditional We yield more corn. of ran addition, we sold inventory. significant In a

the demand. anticipated we're for season, seed So this up meet ramping to production coming

significant last tested feed the enhanced our corn corn develop program with our nutritionally breeding industry in of enhanced locations. our to nutritionally we several meet partners industry. to put effort the at into years, the XXXX, feedstock we multiple In Over the needs

or Our the mentioned see as supply. type product them alleviates make the need corn NEC excited, corn are for are our feed new nutritionally of this meal enhanced needed release, is margins sufficient just in soybean in for is not how partners impactful in the very traditionally such needed feedstock for other or additives demanding for industry corner immediate our as are and with they And varieties. profit this that their this press And to and every and hogs. we

And NEC growing we I contracts do coming from over to just X.X an more important want impactful the new why XXXX business as will billion million zero It recognized results would significant us project don't seed this profit rapidly this margins. about and a are of for market the first for the EPS in of in almost our huge NEC USDXX capturing and percentage that's few play market product. with hard feedstock fathom think business. feedstock to have take to in why the it's feedstock It's impact is industry so business that in And value dramatically feedstock few improve as why tons, was excited. of to it that be market high size companies see years. We And market the to grow billion these such a financial and revenues pretty sales is RMBXXX doesn't China. Origin the the financial approximately. half our approximate very traditional note or It's percentage contribution which even partners company. in NEC will us gain So this and role next model or our of incredible metric company - we had

when in of of sales the hit The of course confidence given half degree the sales be yet that we has year to period full high end harvested. to us in and We're calendar a into development, this new corn GMO By ends will prepared are second our of traits varieties completed on to way faster are commercialization the our will XXX% technological framework regard - September. for for integrated standard really the which positive, guidance fiscal some exceed With corn As know of hybrid drought-tolerant which And we think year. approval the year. have variety subsequently XXXX. has approval. are the the of before the process not last a is of step biosafety be is you we that licenses, new for we of of the GMO for the establish pace. laws given successfully crops GMO all the China and country year, might legal faster Late passed moves the production trials last to GMO and soon being that into coming GMO corn filed will the actual in

So now of with trait, that the big addition have of like that's Bayer trait every outside we the sold China. companies by

as had plans fascinating had player get there CRISPR the And deal they And told development to the prior those - a plant a for they're that also with breeding. licensing But deal was time past. difficult scientists for company, biggest I walls cell company. We at me we because traits for all side. a got outside dollar worked has a a to there's of sold. have really Origin developments [Indiscernible] multibillion in opportunity that those corn We've We on portfolio market editing the I complete be and big projected space. licensing Monsanto. CRISPR biotech major be gene ever to GMO, with worked is said the a damn a so

the closer for the that about, processes So early And plant that in you the Chinese Origin We the with only were walls China, been CRISPR, interesting the think the it not it's has yield. XXXX, market. some of course leaf days our we're come recently the new new denser, CRISPR corn interesting. is and that since we and - know, corn, see that of and GMO a of world getting be working angle talked with plants you can believe really which and changed order innovations one market in leader them made on we've in to very leader Agritech and And CRISPR. can the corn of China that We we're planted over that the or using we on breeding. increase would corn up past which proximity in announced so in we for corn we've And it traits. other dozen

is we're That germplasm. we So, this healthy really of And pace or huge not whole call I at a accelerate. you work corn that's also in portfolio tandem, think things And to it's like it they has, in - Origin technology. a I assets traits, with going think a gene-edited doing only - on look a lot GMO And of that the itself, when that and innovation as course, it's that of the corn of of the hybrid the GMO we thriving need takes differentiating factor. traits. amazing

into competitors our if have armyworm say without, thriving but trait, put corn you put for don't have they GMO resistance, hybrids And into. that GMO have if you traits, it corn a which to really but put it successful it subpar you'll have resistance, that a will thriving it still will be you isn't a but corn in, be it variety a armyworm don't endpoint. of the to for - Some a corn have corn, instance subpar,

gene with as technology editing have excited this traits and new we tuned So do. the side anyway, about it's truly summary, many can what confident to us on and rate going In before development we're very shareholders. And of that Han amazing stay we're an that return some Q&A. we're generate to really Chairman, Gengchen for opportunity attractive is the answer and going

call Keith, up the would please you operator Q&A? open So for

Operator

do We Celadon Bill question Instructions] with Financial. have [Operator Stein from a

Bill Stein

you is, and some on of China, different the the years. all gene do editing. finally success for starting Hi to filing States patents could My be been to Han, you. are about question And for the patents question Dr. these has if Thank that for maybe would looking you're achieve possibly with on for you've congratulations the so, worldwide United that? your elaborate you

Gengchen Han

than Yes kind our things more other what gene the us - for have already you Since a patents, the the the you China normal putting basically of new technology efficient this China. trait know now of - you think, editing, much not like - doing some you we But genes, for editing [indiscernible] products internally U.S. this genes he created - basically outside more it we're as if know, in technology just is as this like, and you you way know same [indiscernible] procedure corn. people is through gene break best corn. the at seems are gene moment, not said the for confident. have of only is for proof I know in already the regards well in especially and know, worldwide We're editing we we

that from know, much big us So the really gene very customers it's a much - trait advantage you very but breeding or and editing, know from do will sometimes no efficient, faster more And for technology. gene - or difference, much be editing even much but this faster, is maybe this about gave much much, even process U.S. and pooling much, well example, exciting even basically operating,

Bill Stein

is One Okay, to GMO the today your, can you? contracts Origin and is comment, land Do just time for And can maybe in I corn I'm I expect any expect. of have versus Thank since just sorry, you Origin other licensee still NEC do with put DuPont you approved also - a you. a guess also new questions it versus we few comment more to is, how on isn't yet. strong history? the

Gengchen Han

think Okay, focused since also you multinational that's we first possible of, look we all collaboration you of kinds actually restrictions in the multinational. still with - has operation limit more kind China. some I But know, - know

the more our in So more have know on we sell with the local seed and we dependence company. you China collaborating

in as one the ago. difference no, you years mentioned Origin area another As from XX last what's

that's which corn better for it's profit we should years we is when year at growing. but years technology really XX out touch breeding a you which Like GMO bitter last lot China this the showing have last XX number had on I put know But noise. all moment, pool As But as had building good are was as and the one. know, good. it's in build bad effort years XX a think weather hybrid largely have as in business seed like advanced two the on mentioned you more of focus that result Joe a a showing hybrid just GMO recent - you we we on Number technology process get But product or good excellent the - good of really hybrids is, have. growing the much is actually the very other we know things. corn, Origin most we is didn't

terms new technology. terms we development in Origin at So are of of than stronger in for much product product product of us GMO this in competition before moment

there. know, very supply year of I is, just you enhanced the we - still would people. help since the few has think years you farmer we - It tight option are through emphatic two see with we that one not feel was this corn have will basis you This last save saw very we know amount moving strong too like see have you one we was was mentioned - a Number that's also we seem see said the issue one. launched this technology we you the can as nutrition that's are corn. last [indiscernible] we partners

that You cost. of cost can XX% that the see that corn in base

So enhanced be money with the, corn. lot saved can they from you all our save actually nutrition a [indiscernible] corn, money million can that of RMBXXX before have

So partner us the growing with demands. formed they their seed they - farmers contract to have supply their the with actually for growing excited are so tried

the right growing the you the So RMBXXX the RMBXXX very annual this area you person hedge cover seed. know side billion exciting is no one in you corn maybe double us talk GMO market think to here a you new support [indiscernible] of that's now world for mentioned million for just was corn that's only like really China very seed million know, if as We're billion. our total at - and seed crop we RMBXXX very But like around People one like RMBX the corn I is much products. there competition. as and for

growing the to are seed. decide We the only with one

- contracts, have them think you know, next demand that us see meet I products. we think of So for be coming can we I of much lots few collaboration we'll request see not to only with area for for request mean, years, these the just some this is next we know, you kind of the exciting very I can't - in kind

As I be it exciting for investors. will think definitely Origin very for

Bill Stein

to than investors me? going be the past the to Thank more very be you Are I you much. in to groups more available would for - for in speak guess question

Gengchen Han

Yes, for the three freely pandemic the would notice, basically time you can so the likely I've - we'll to much sometimes a with is make way so you know, the But in in due I you I this call think in first issues know, know, disruption really daily years, last many you conference is work. travel years. you can't this so

was time course years. Of least couldn't I five last remember at

likely to any was communicate investors - news as try I So soon to our as exciting to the get some development with pass more United States and throughout possible. new

Joe Ramelli

Joe. this is think, I Bill

the for good you support thanks again. and from I think to hear

the we call five that got have works Han. Development York years, to said story a of maybe Chairman Han is of we really that and VP new Business think - area tell. New out this first the as And exciting actually a Wei we've I

great so, And on would going as there's news from a I developments an lot on road the of to be more. things think just the of anticipate we're here. accelerated and company And pace I going

Bill Stein

Thank you very much. Thanks very much.

Joe Ramelli

Thank you, Bill.

Operator

have we question a Securities. with and right All Instructions] [Operator Yeager Howard from Newbridge

Howard Yeager

guys, Hey Dr. hey, Han. Joe, hey

Gengchen Han

Hello.

Howard Yeager

of year. closing developments last just you questions, this can new the or So you throughout out it comment before. Joe, any question on on sort any alluded you I when a couple contracts rest new wanted to ask the of to of were But

where You rest and for company show if or or think comment I can insider maybe year? we know to things nature really some again, we of future this into But buying the contracts conviction that new the from developments can any see you are if on company. the you any - that itself to could of the wanted

Joe Ramelli

comment an to right would does don't for you margins Chairman think to decision economic a double if make pretty it make stupid, the really turn someone can quick profit industry, that. on then want And real obviously pass to I'll say be to and have I over I the but Yes, Han. that not

a can and thing huge, low you - imagine, huge do. as to low And that's So business impactful a to. hugely it's margin

file, officer friends my to So we mentioned a us, don't have buying in so family stock - I coming then you but do lot back but stock. to and when I I'm was not more company able people actually an also I've know you and had and several buy months buying. insider and the

of I'm in, very And not but - about you this so kind - here. all in on excited future if all know the

Chairman over turn I'll So Han. it to

Gengchen Han

Hello that something like yes you - as is questions one counter corn its the right. two raised

this Now as corn. like we corn - our have field NEC for actually nutrition enhanced you know

not is we to them corn the produce mills. the strategy produce strategy seeds for are let to selling to What the corn. trying not farmers our we're Our seeds sell the seed

set we seed - why have new with JV company. that's plant So the up the

yet. we year also this made of make let contract right got from more So supply lot but had already, has can't the - see we we it orders, XX,XXX have

year but increase how a main the us next is seed to growing is So year's meet the big challenge need to this that's thing. for

lot have I think a grow seed no we of lot not. next to the to of year, we'll grow are corn

the we So seeds. the for seeds corn hybrid selling are

nutrition know, seed. and because seed rather if want is for Our corn, product the mu. seed per I a RMBXXX the we to products at but will who GMO the the one farmers the details million NEC or season, be sell than least for seeds targeted this probably for this RMBX,XXX sell sell the better reason value is GMO enhanced are means, reach more The different you produce corn the one NEC we stake will on note for probably more corn this

I year, brought So XXX. mean if we just we know can put you next

we seeds. mu you I'm easier not can calculate produce revenue what or can for we question. sure XXX,XXX can sell we numbers and I much can know imagine, bigger have that your As much, as you - answered can

Howard Yeager

years I did. and my I'm Joe, I've No, the of Number this frustration questions. two for and Han more that quick Joe has with had some and going. been in way to one, from you thing six to know, the I eight investors been Dr. everything's And just happy very close guess

frustrations everyone that through the the every to corn now - seeing see to higher you Thank some price like banks are question some one banks roof where other of I that. last or And more Do my you you think of with other or the you based or one is. what if corn of that the on And guys is after So really performing and has think are price up could day? you. major from is, would you guess these would be of the stock ask we some going the two quick Those with been that starting then we revenue, coverage ramp expect hopefully are things questions? see contracts do that. stock

Joe Ramelli

those Howard. handle can I

We are getting banks talking about coverage. to some

on and are imminent, it's think so And but don't know, a working you it's I process that. we

as our developing then of on where mean, company. it at you an in So there. look I the a a scratcher head obviously now. to if look It's share I price bit - side, the insider other forward is know, you it's And little something

at - undervalued don't but it's want just about to to look say dramatically we valuation of like. You you we think not the comment if only the stock, suffice

earlier hugely math can that mu, Chairman at the an feedstock to I a take XXX,XXX mu if margin. you smaller them all right companies, that market able market to of about, to And Chinese being year. going our sowing if on said doubling now to the than and the look that actually the be XXX,XXX they're make that think first reiterating accommodating just next are very kind company said grow the growing. but not farmers letting the with of margins what wanted do instance, China which to product do able acre, corn market acre actual is we're one market. And you such it's capital JV the feedstock corn. profit the And up Han talked of investors to what contract supplying saw this the the we equivalent that in ramping BaoDao, we a a for grow these as by impactful to basically, just get Chairman multiple Han we've for seeds to with policies final profit We all in of piece huge opportunity

we So the help up and owner in to we're able have capital to and the not out corn be expertise put risk, really, a what to process. JV seed, XX% them at is the the supply technical in

to can it's and So you owners look in XXX,XXX math, look potential is. the kind if investors what at that know, half And at revenue we're they where mu be and going pretty do staggering. of product that

we think And If said, you - can a out Chairman competition now. that there's where have start that Han year could where a year be from else nobody that. zero we will do modeling as we for be we that

Howard want anything? know that did all your you questions answer did did So or I to

Howard Yeager

you much. excited Han - very you. No, no you, did. Thank Yes you about Dr. did, Thank no, you thank future. the

Joe Ramelli

to been five a to Howard, support five previous we lot company know, things. great It's be to years and and the appreciate Great really the better your years somebody hear with for are appreciate. we really understate going the than you we that's next five know

Operator

there to Thank else moment, at you. comments. to return for as to Chairman Han like floor nothing [Operator Instructions] is would All any I the closing present right

Gengchen Han

the very exciting investors. I we'll time, conference in a years, we we'll supporting last our good very know sure think you I the day. at thanks call. really I'm a you're - everyone. deliver to for support period and this company Thanks much. Have and few the your very Hello, appreciate Yes, definitely attending for much results are the

Operator

Thank you concluded. presentation, your conference for lines. you now may has now attending Thank disconnect you. today's The

Origin Agritech Limited (SEED) 8 May 222022 Q2 Earnings call transcript