"Listed companies in high-quality development" practice "two pillars" development Adisseo: mergers and acquisitions, restructuring and listing Adisseo ushered in a new stage of development

Editor's note: In order to celebrate the 30th anniversary of China's capital market, The Voice of the Economy and 15 local financial broadcasters launched a large-scale series of reports "Listed Companies in High-Quality Development", which showed the development and innovation of listed companies through on-the-spot interviews and reports on many listed companies in Beijing, Shanghai, Guangdong and other listed companies, and presented the process of China's capital market supporting the development of the real economy in the past 30 years.

According to the "Transaction Reality" of the Economic Voice of the Central Radio and Television Corporation, Adisseo (600299) is a leading enterprise in the industry focusing on the research and development, production and sales of animal nutrition additives, and functional products such as methionine and vitamins have always been the company's main business.

From a french veteran animal nutrition additives enterprise, to the acquisition of Bluestar Group, a subsidiary of China National Chemical Corporation, in 2006, to the successful landing on the Shanghai Stock Exchange through major asset restructuring in 2015, Adisseo not only filled the gap in China's methionine industry, but also became the first case of overseas enterprises successfully achieving domestic listing in the overseas mergers and acquisitions of China's central enterprises.

In recent years, Adisseo has been adhering to the development strategy of "dual business pillar", in addition to functional products, it has continuously accelerated the development of special products such as enzyme preparations and probiotics, and created a new growth pole for the company by virtue of technical advantages and cost advantages.

Gao Min, a reporter from the Central Radio and Television Corporation, talked with Hao Zhigang, chairman of Adisseo, "Practicing the Development of "Double Pillars" and "Andisu" On the first part, "Mergers and Acquisitions, Restructuring and Listing, Andisseo ushered in a new stage of development".

Gao Min, a reporter from the Central Radio and Television Corporation, interviewed Hao Zhigang, chairman of Adisseo

Gao Min: You are not only the chairman of Adisseo, but also the chairman of China Bluestar Group, the controlling shareholder of Adisseo. Speaking of the fate of Bluestar and Adisseo, we also have to start from the merger and acquisition in 2006. The acquirer is Bluestar Group, a subsidiary of the central enterprise China National Chemical Group, with an acquisition amount of 400 million euros, and the acquired party is Adisseo, a veteran French animal nutrition additive company. The decision to take the acquisition was quite bold.

Hao Zhigang: Indeed. At that time, we at ChemChina, especially Bluestar Group, also made a great determination. At the time of acquisition, the main consideration was that Adissus's main product, methionine, did not have any production and layout in China, and China's independent methionine production has not been breakthrough for many years. In this case, in order to achieve entry into the methionine industry, but also to make up for the gap in China's methionine industry, we launched this merger and acquisition.

It should be said that this merger and acquisition is of great significance to China's methionine market, China's chemical industry, and Bluestar. Through this merger and acquisition, we have realized the strategy of methionine products from scratch, from small to large, and realized the strategy of China's development and China's industrialization.

Reform and opening up has undoubtedly brought great opportunities for the development of our Chinese enterprises, and Bluestar Adisseo, as the first successful case of the securitization of the domestic capital market by the overseas mergers and acquisitions of central enterprises, is one of the most vivid empirical evidence of China's reform and opening up "going out" and "bringing in" strategy.

Gao Min: What kind of demonstration effect has Adisseo's mergers and acquisitions integration, asset restructuring and listing brought to the listing of overseas acquisition enterprises of central enterprises?

Hao Zhigang: This approach helps us to transfer technology to a high-growth domestic market through acquisitions, and through this transfer, we can grasp and seize the development opportunities brought about by the rapid growth of the Chinese market, so as to achieve good returns for the development of enterprises and give shareholders a good return.

On the other hand, through overseas mergers and acquisitions, Bluestar has also accelerated the pace of transformation and upgrading, and established a good brand in the international market. This successful case provides a good reference for the rapid development of French enterprises joining China and for Chinese enterprises to extend our industrial chain to France.

Gao Min: One of Adisseo's main businesses is the functional products of methionine and vitamins, and from the performance of the past five years, Adisseo's proportion in this regard remains above 70%. But in recent years, we have also seen several new people entering the market, and the production capacity of major manufacturers has continued to expand, and the market is oversupplied. Some market research institutes and investors believe that Adisseo may face some profit growth pressure in the methionine market. What do you think of the current competition and challenges? What are the advantages of a company breakout?

Hao Zhigang: First, the production of methionine is a very complex production process. Professionally, the barriers are very high.

Second, we have a very good cost advantage. Due to the high stability of our production and our management of low raw material prices, Adisseo liquid methionine production costs are a global leader. At the same time, we have also done many scientific and technological innovation research and management, Adisseo has a number of technical reserves in the methionine production process, these technical reserves have been or will be applied in our production process, will further improve our efficiency, our cost advantages will be further highlighted in the future.

Third, Adisseo has a strong all-round service capability. Adisseo not only sells our methionine products, but also provides our customers with high value-added services, provides more solutions, and grows and develops together with our customers by selling this product.

Therefore, in the face of competition and challenges, Adisseo will use this driving force as a breakthrough to create new sustainable products. Through industrial investment, mergers and acquisitions and external cooperation, we continue to consolidate our core business and continuously expand our portfolio of high-growth specialty products and animal nutrition and health.

Gao Min: According to the third quarter report of 2020, the company's revenue increased by 7% year-on-year, and net profit increased by 35% year-on-year. Are you satisfied with this performance?

Hao Zhigang: Adisseo is a globally operating company, and in 2020, in the face of the severe challenges brought by the epidemic, an emergency crisis response leading group was established at the first time. It should be said that in 2020, the entire Adisseo actively responded to the impact of the epidemic, and throughout the year, no production, sales and marketing services were affected by the epidemic. In the third quarter of 2020, revenue increased by 7% year-on-year, net profit increased by 35% year-on-year, I think as chairman, as a major shareholder, we are still relatively satisfied with such a performance of Adisseo.

We believe that the growth of this performance mainly comes from four reasons: one is the continuous growth of liquid methionine sales; the second is that the vitamin business has made a significant contribution to the performance; the third is that the sales of specialty products have maintained strong growth, especially the performance of ruminants products; and the fourth is that the raw material prices are at a low level, which further improves our gross profit.

Gao Min: Now special products are the company's second pillar business, the company continues to expand its product line and epitaxial mergers and acquisitions, and is currently a leading enterprise in the world of animal nutrition special products. In the first three quarters of 2020, the gross profit margin of special products was significantly higher than that of functional products such as methionine and vitamins. What kind of planning does the company have in the layout of special product research and development, production and sales?

Hao Zhigang: Adisseo has been practicing a "two-pillar" strategy, one pillar is to maintain the industry leadership position in methionine, and the other pillar is the specialty strategy. The business of specialty products is actually closer to customers and more able to bring value growth to customers, so the gross profit of specialty products is significantly higher than that of functional products such as methionine and vitamins.

As a specialty product, Adisseo has always paid great attention to and continued investment. Adisseo has ten R&D centers around the world and has established important partnerships (relationships) with top universities and research institutes in the industry, especially at the end of December 2019, we established an R&D center dedicated to aquaculture in Singapore, which will have a good layout in the future in aquaculture animal feed additives.

In addition, in November 2020, the R&D center of Adisseo China Enterprise was established, which is also the first R&D center established by Adisseo in China, and also to seek breakthroughs in China's high-growth market, strengthen independent research and development, and provide more innovative solutions for the domestic market.

Adisseo is also preparing to lay out the industrial development of fishmeal protein, which should be a very large potential market. We are now making products animal feed for fishmeal protein, a product that we plan to achieve project production in 2022, with the first phase of 20,000 tonnes expected to be operational in 2022. The planned production capacity at this stage is far from meeting the market demand, and then according to the market situation, such investment will be increased, and the launch of this product will also provide a strong support for Adisseo's specialty product strategy.

Gao Min: Adisseo has invested a lot in research and development, and the company already has 10 R&D centers around the world. Now to create this "two-pillar" model, but also to do capacity expansion, how to achieve a balance in the dual-pillar industry?

Hao Zhigang: We will continue to maintain our leading position in the methionine industry while accelerating the innovation and business strengthening capabilities of specialty products, with the goal of becoming a leader in methionine and specialty products in China.

In addition to independent innovation products, we are also increasing mergers and acquisitions with some target companies with obvious synergies in the market. Adisseo plans to acquire a specialty products company in the Netherlands called FRAmelco, and we also hope to land and promote it as soon as possible.

In terms of the first pillar of Adisseo, the second phase of our nanjing plant is well underway, which will also be operational in mid-2022 to further provide high-quality products to the Chinese and global markets.