Origin Agritech Limited (SEED) research, news, and more from GeoInvesting

Company description

Tue, 16 Jun 2020 13:52:11 GMT

Origin Agritech Limited, founded in 1997 and headquartered in Zhong-Guan-Cun (ZGC) Life Science Park in Beijing, is China's leading agricultural technology and a rural social e-commerce company, expanding in mid-2018 from crop seed breeding and genetic improvement business to be a leading technology developer in new rural e-commerce platform and Blockchain technologies. In crop seed biotechnologies, Origin Agritech's phytase corn was the first transgenic corn to receive the Bio-Safety Certificate from China's Ministry of Agriculture. Over the years, Origin has established a robust biotechnology seed pipeline including products with glyphosate tolerance and pest resistance (Bt) traits. For further information, please visit the Company's website at: http://www.originseed.com.cn or http://www.originseed.com.cn/en/.

Research

Fri, 12 Jul 2024 04:00:00 GMT

Origin Agritech Limited (NASDAQ:SEED) (Agricultural Technology) ($3.98; $25.1 M market cap) provided a business update and held a Q&A for investors.

While things seem to be moving to commercial production stages for some of their traits, it also seems like several products are still 1 to 2 years away from production. The company provided fiscal 2025 guidance for its hybrid corn seed of close to $7 million and stated it expects significant revenues in 2025 from its NEC hybrids, but did not provide any details.

Research

Wed, 15 May 2024 18:08:30 GMT

Origin Agritech Limited (NASDAQ:SEED) (Agricultural Technology) ($5.70; $35.9 M market cap) announced first half 2024 results:

Origin Agritech reported net revenues of RMB 92 million (US$13 million) for the first half of FY2024, marking a substantial increase of 39.1% compared to RMB 66.1 million in the first half of FY2023. This growth reflects the strong demand for the Company's innovative crop solutions.
The Company achieved a net profit of RMB 1.4 million (US$0.2 million), compared to a net loss of RMB 1.1 million during the same period last year. Earnings per share were RMB 0.21 (US$0.03), compared to a loss per share of RMB 0.17 a year ago.

“Our strong financial performance in the first half of FY2024, marked by a 39.1% growth in revenue and our transition from a loss to a profit, underscores the successful execution of our strategic initiatives and the increasing market demand for our innovative agricultural solutions. As we look ahead to the remainder of the fiscal year, we remain focused on advancing our pipeline of groundbreaking hybrids and GMO crops, securing regulatory approvals, and preparing for the commercial launch of our new products, positioning Origin Agritech to achieve continued growth and shareholder value."

Investors should note that the company’s cash balance has decreased from RMB 23.7 million to RMB 10.4 million since September.

Yesterday, we issued a pod clip discussing the very positive recent development of the company being awarded a GMO certificate.

PodClips

Tue, 14 May 2024 13:51:32 GMT

Late Yesterday, I recorded a PodClip on $SEED to potentially publish on GEO. After sleeping on it and considering all the real risks associated with the stock, I decided to publish the clip and add SEED back to our Model Portfolio on a VERY speculative basis. As much as we are disappointed in management and the way events transpired over the past few years, we can’t deny one fact: The awarding of a GMO certificate is a big deal and the news we have been waiting for. So, while there is downside risk, we feel that it's worth having some exposure to SEED to see how this news plays out over the next few weeks. We also have to be cognizant that the company is in search of a new auditor, coming off having to release the past auditor.

Research

Thu, 09 May 2024 15:52:16 GMT

Origin Agritech Limited (NASDAQ:SEED) (Agricultural Technology) ($4.34; $27.4 M market cap) had two pieces of news over the past week.

The company announced it has received a GMO safety certificate for its triple stack Maize.

“Receiving this GMO safety certificate is a transformative moment for Origin Agritech and agricultural biotechnology in China. BBL2-2 exemplifies our capabilities in genetic innovation and sets a new standard in sustainable agriculture. We are eager to lead the commercialization of this technology, which promises significant improvements in crop resilience and yield."

However, this good news comes on the heels of the company having to fire its auditor due to the SEC terminating their privileges of practicing as an SEC accountant.

Research

Tue, 20 Feb 2024 16:40:47 GMT

Origin Agritech Limited (NASDAQ:SEED) (Agricultural Technology) ($2.57; $16.2 M market cap) announced it has regained compliance with the NASDAQ listing standards.

"We are pleased to regain compliance with Nasdaq's listing standards and to move forward as a Nasdaq-listed company. Looking ahead, we remain focused on leveraging our strengths in agricultural technology to capitalize on new opportunities and deliver value to our shareholders. We are committed to delivering on our promises, driving significant sales growth, and enhancing our product offerings to meet the evolving needs of the agricultural sector."

On January 11, 2024 the company received a letter from the NASDAQ notifying shares would be delisted unless the company’s appeal was approved.

Research

Tue, 21 Nov 2023 16:08:41 GMT

Origin Agritech Limited (NASDAQ:SEED) (Agricultural Technology) ($2.55; $16.0 M market cap)

SEED held its business update call this morning. The company provided guidance for fiscal 2023:

The Company expects fiscal year 2023 revenue to be between $12 to $13 million, representing an increase of 60% to 70% from fiscal year 2022 revenue of $7.4 million.
The Company expects fiscal year 2023 net income to be between $16 to $17 million, which includes a one-time gain from the sale of a former office building of $19 million.
The Company expects fiscal year 2023 operating profit of approximately $2 million.
Large-scale pilot production of nutrition-enhanced corn harvested in September and October 2023 has set the stage for revenue recognition of approximately RMB 50 to 100 million in fiscal year 2024, or $7 to $14 million U.S. dollars.

Guidance implies that the company will report a net loss of around $2 to $3 million on an adjusted basis for fiscal 2023. However, operating income will be positive, so will need to see more details on expenses below the operating income line that will lead the company to report a net loss for the year. It is also unclear if the $7 to $14 million 2024 revenue guidance for its NEC business will be in addition to other revenues as well. Again, the company has left us guessing on certain aspects of the business.

SEED also made comments that it feels that the market is not assigning the right value to the company. However, the Chairman, nor any board member has stepped up to the plate to buy stock on the open market. In the least, we have not seen any filings that would indicate they have.

–

Research

Mon, 13 Nov 2023 05:00:00 GMT

Call to Action: Removing SEED from Model Portfolio; Remains On Watch List

This was not an easy decision. We think the stock could eventually be worth a lot more based on assets and GMO potential. But we don’t know where the bottom is, given that the company is not making money and that the Chairman has not bought stock on the open market.

There are too many other great opportunities we are missing by not moving on.

SEED is a speculative stock, the type that the market is just gravitating away from in the new market environment, where earnings and cash flow matter. In general, we are focusing on more quality stocks right now.

During its tenure as a model portfolio holding, SEED had a wild run, with a peak return of 322%

Will will still follow the story and revisit it if there are major developments that can revive the stock, especially at lower prices and/or the company proves it can generate profitable revenue, cancels its shelf, and if the chairman buys stock.

Research

Wed, 06 Sep 2023 04:00:00 GMT

Origin Agritech Limited (NASDAQ:SEED) (Agricultural Technology) ($3.77; $23.7 M market cap) announced it has converted debt to equity with JV partner Beijing Changping Technology. We highlighted this information on August 21, 2023, it is nice to see the company decided to issue a press release.

Per the release:

Key Details of the Agreement:

Transaction Objective: The primary focus of this agreement is the sale of Origin's former office space in Beijing to the joint venture.
Asset Transfer: No biotechnology IP or research is included in this transaction. All intellectual property and research assets, including seed business, biotech traits, nutrition enhanced corn (NEC), and supply chain business-related technology and revenues, remain with Origin.
Financial Impact: The RMB 137.7 million ($19 million) debt will be eliminated from Origin's financial statements.

Research

Mon, 21 Aug 2023 15:52:12 GMT

Origin Agritech (SEED) Talking Points

This SEED information surrounds a Joint Venture (JV) entered into with Beijing Changping Technology Innodevelop Group (BC–TID), a PRC government entity, in 2019. BC-TID and SEED have been in the process of forming/finalizing certain aspects of the JV since 2019.

As part of that process, BC-TID loaned the JV RMB 204 million in capital. However, SEED was permitted to use RMB 137 million ($19M) to pay off some of its debt. Even though the RMB 137 million is still carried on SEED's balance sheet as debt, the JV agreement allows BC-TID to convert the debt into equity of the JV. It’s very important to understand that this is the only debt that SEED carries on its balance sheet.

And it has been communicated that this would be the case, but this conversion was supposed to take place a while ago. The 2022 20F (foreign company annual reports) filed in February 2023, had described the current state of the JV:

“As of September 30, 2022, and 2021 we had approximately RMB 17.7 million (US$2.5million) and RMB15.4 million, respectively, in cash and cash equivalents for continuing operations. Total borrowings as of September 30, 2022 and 2021 were RMB 137.7 million (US$19.4 million) and RMB 137.7 million, respectively. The borrowings as of September 30, 2022 is a loan from the BC-TID and will be converted to the equity of the joint venture being formed between the Company and BC-TID. The transactions documentation for which has been completed and submitted to government officials for approval. Excluding the borrowings from BC-TID, the Company doesn’t have any other financial debt.”

This JV is expected to be a key entity that is expected to be a main GMO product revenue generator for SEED. Furthermore, we expect that BC-TID will continue to inject capital into the JV. This should alleviate SEED's need to raise capital, at least that’s what we’re hoping for.

You can reference a relevant research note on Geoinvesting to get a little more background on the JV.

Well, per the information that we found, it appears that BC-TID finally has or is in the final stages of converting the debt to equity which would eliminate the related debt from SEED’s balance sheet, and hopefully add a significant amount of legitimacy to SEED’s participation in China’s commercialization of GMO, due to having a partnership with the government entity.

We are still dissecting the information from the various sources that support our findings.

We caution that although this development should be really great news for the SEED, the company will be a minority owner in the JV at 49%. This means that, according to accounting rules, they will probably not be able to recognize any JV revenue on its income statement, however, it will be able to recognize its share of its income in the JV, which in the end is most important.

To sum up, SEED seems to be nearing finalization of a key joint venture which will eliminate all its debt from its balance sheet and could lead to major changes in its future financials and growth prospects.

We caution that we don’t want to make any knee jerk conclusions until we’re finished digging into many new aspects of the SEED story. However, on the surface, this seems like a very significant development.

Maj and Jan have a back and forth about the situation, discussing how the JV might impact the income and balance sheet statements. They also share their thoughts on what to look for..

Please listen to the exchange between Maj and Jan here.

PodClips

Sun, 20 Aug 2023 04:00:00 GMT

SEED seems to be nearing finalization of a joint venture which could lead to major changes in its financials as well as growth. Maj and Jan have a back and forth about the situation, discussing how the JV might impact the income and balance sheet statements. They also share their thoughts on what to look for.

PodClips

Thu, 20 Jul 2023 14:13:38 GMT

Addressing a question received on SEED's recently canceled loan equity agreement with Oasis. What are the implications for future Shelfs? Also, a few comments on the NASDAQ delisting notice sent to the company.

Research

Wed, 12 Jul 2023 20:10:13 GMT

Origin Agritech Limited (NASDAQ:SEED) (Agricultural Technology) ($3.99; $25.1 M market cap) announced the groundbreaking ceremony and commencement of construction of a 100,000-ton corn drying facility in Shihezi, Xinjiang.

Some highlights from the release:

Was financed by investment from joint venture partner, $11.1 million USD
Expands addressable market by nearly 20-fold
Expected to complete in time for September 2023 harvest season
Expects to build more similar facilities next year

Research

Mon, 17 Apr 2023 17:36:25 GMT

Agritech Limited (NASDAQ:SEED) (Agricultural Technology) ($6.18; $38.9 M market cap) announced plans to expand NEC forn production with a new 33,000 acre facility.

Main takeaways:

SEED expects to generate $8 million in revenue for 2023 and $55 million in 2024.
SEED is not responsible for any of the capital costs of the project.
The company will not need to raise capital to fund its growth.
Covid lockdowns in 2022 delayed NEC production, but now the country is focused on expansion.

It's nice to see tangible news from the Company. Execution and continued transparency will be needed to bring investor confidence back to the stock. In order to solidify the company’s assertion that it will not need to raise capital to meet its guidance, the company should cancel its current shelf.

Research

Thu, 09 Mar 2023 15:28:03 GMT

Origin Agritech Limited’s (NASDAQ:SEED) (Agricultural Technology) announced a new Vice President of Business Development.

In today’s release the company mentioned that they are in the process of submitting a biosafety certificate for the BFL4-2 variety for drought resistance corn.

“Given the positive GMO corn approval policy by the Chinese government, Origin is well positioned in this potential multi-billion market. Origin's Bt/Gt corn hybrids which include triple stack traits, BFL4-2, are in the MOA's demo program and pilot seed production. The drought resistant trait, which is highly desirable given more erratic weather patterns in recent years, has successfully completed evaluation trial and an application has been filed for biosafety approval.”

This information was also available in the company’s 20-F which we highlighted in this tweet thread.

Our main and major takeaway from the release is that the Company owns the BFL4-2 variety which we recently discussed, receiving a biosafety certificate (applied for by Chinese Academy of Agricultural Sciences, CAAS) for producing insect-resistant and herbicide-tolerant corn.

Areas we would like to see the new business development focus on are:

Fixing/updating the Company’s website which has been outdated for several months in terms of news flow.
Providing more timely company updates
Contacting institutional funds and investors in China to make them aware of SEED’s progress in GMO, particularly because the Company has not issued any releases discussing China’s decision to go GMO positive as well as information regarding the Ministry of Agriculture and Rural Affairs (MOA) decision to grant a biosafety certificate to BFL4-2, mentioned above.
We have identified two funds that we think would be ideal to contact:
- CITIC involvement in Longping Hi-Tech who in 2014 offered to buy SEED for $26 per share. To us, this makes perfect sense. According to SEED, it is several years ahead of the competition in its GMO product development and claims to have the largest germ-plasm bank in China.
- Fosun International, due to the firm’s many successful investments in U.S listed China based companies in the past.

Research

Fri, 10 Feb 2023 19:53:36 GMT

Origin Agritech Limited’s (NASDAQ:SEED) (Agricultural Technology) ($8.97; $53.9 M market cap) competitive environment favorable

Today we have some interesting news on Beijing Dabeinong Biotechnology Co, the top Agricultural player in China. China is cracking down on illegal GMO activity. This should bode well for SEED in terms of competition, eliminating counterfeit seed operators. Counterfeit seed operations are what destroyed SEED’s legacy hybrid corn business several years ago.

As evidence of China’s stance on this issue, yesterday we found an article in China reporting that regulators forced DBN to halt illegal GMO operations at one of its GMO test facilities, due to failure to follow proper protocol:

“The Henan Provincial Department of Agriculture and Rural Affairs commissioned a technical testing agency to detect that Beijing Dabeinong Biotechnology Co. Ltd. had tried to grow genetically modified corn that had obtained a safety certificate in Xincai County, Henan Province, and failed to report to the Agricultural GMO Safety Management Office of the Ministry of Agriculture and Rural Affairs as required..The Department of Agriculture and Rural Affairs of Henan Province, in conjunction with the local agricultural and rural departments, has ordered the parties concerned to immediately stop the experiment and eradicate and inactivate the illegal crops.”

The article also highlights several other companies that were in violation of certain activities.

Based on some literature we found, DBN could “technically” face delays in selling already approved GMO seeds and face delays of 3 to 5 years of gaining approvals to produce and market new GMO seeds.

Now, we are not saying that the government is going to ban DBN’s GMO operations, but it does show how serious the government is about protecting the GMO market. We also think this is a very positive sign that China is about to go GMO positive.

We believe the government‘s actions to protect the GMO market will make SEED a clear leader in the GMO-positive initiatives in China, especially since it has the biggest corn germplasm bank in China and a relationship with its key research partner, The China Agricultural Academy of Sciences (CAAS). As we previously highlighted, our research shows that 3 gene traits they co-developed just received Biosafety certs used to create a GMO seed owned by SEED.

We are baffled as to why SEED has not disclosed this, but it’s Information Arbitrage nonetheless.

Research

Thu, 02 Feb 2023 15:22:20 GMT

Yesterday we released a PodClip on Origin Agritech Limited (NASDAQ:SEED) (Agricultural Technology) ($9.30; $55.9 M market cap), where Maj discussed a recent development we came across that shows SEED’s key partner, The China Agricultural Academy of Sciences (CAAS), has received a bio-safety certificate for 3 pest resistant corn traits and a resultant corn GMO product that we believe SEED and CAAS co-developed. We encourage you to listen to the PodClip for more details.

There are key pieces of information we need the company to expand upon. First we need confirmation of some of our conclusions, the first being that it co-developed the GMO product referenced in the biosafety certificate.

Secondly, we need confirmation of the disclosure of the revenue potential for SEED from this development, bound by licensing arrangements with CAAS, similar to arrangements it has with CAAS on other GMO products they are co-developing that have yet to be approved.

If the company can deliver on these transparency requirements, it’s very possible the stock could move sharply higher. But we’re not making that call just yet.??

PodClips

Wed, 01 Feb 2023 20:18:53 GMT

Origin Agritech (SEED) GMO Update (SEED) GeoInvesting PodClip

Research

Tue, 15 Nov 2022 19:11:05 GMT

Origin Agritech Limited (NASDAQ:SEED) (Agricultural Technology) ($9.22; $54.4 M market cap) announced plans to expand NEC corn production into Sichuan Province. The Company has commenced a joint venture with Sichuan Cloudland Agricultural Science and Technology ("Cloudland"), a subsidiary of Eos Asia Investments Limited ("Eos") to expand production of NEC corn into Sichuan Province, China.

“I am very excited to joint venture with Cloudland and Eos, a legendary investor in China", said Dr. Gengchen Han, Origin Agritech's Chairman. "This will allow us to quickly expand our production of corn into Sichuan Province next year and will have a positive impact on revenues and earnings, with little capital requirement due to the favorable government policies and local support of our Cloudland JV partner."

Research

Thu, 13 Oct 2022 15:36:40 GMT

Agritech Limited (NASDAQ:SEED) (Agricultural Technology) ($9.89; $59.5 M market cap) filed a 424 filing showing that it is offering 280,000 shares to potential investors at a price no less than $8.80. If executed, the company would raise $2.4 million to be used for working capital and general corporate purposes.

Our takeaways:

Negative:

We are perplexed why SEED raised money at these levels via equity. Since mid-2022, the Company has repeatedly mentioned they are well capitalized , have access to bank liquidity and have a range of financing options to them. Having said that, this move is on par with what we’ve come to expect from US Listed China based companies.

Positives:

The offering was not conducted with Oasis Capital, who they have a standing ATM with.
The offering is small and maybe shows that Chairman Han will not be reckless with equity raises and is cognizant of dilution.
We think the price of no less than $8.80 is strong given market conditions.
It’s possible that investors who were hesitant to buy the stock due to the potential financing/offering uncertainty may now revisit the story.

Our initial reaction was with extreme pessimism, but as cooler heads prevail, we concluded that this could be a very positive development for the Company after all. The reality was that SEED is low on cash and needed additional liquidity to execute its large and growing backlog of contracts with leading AgTech companies in China.

Research

Mon, 15 Aug 2022 14:05:04 GMT

Origin Agritech Limited (NASDAQ:SEED) (Agricultural Technology) ($11.42; $66.1M market cap) announced it has signed a new contract with Sichuan Yingdafeng Agricultural Tech for 100,000 mu of Origin’s NEC corn for the 2023 growing season.

"I am excited to sign this deal with Sichuan Yingdafeng," said Dr. Gengchen Han, Origin Agritech's Chairman. "Origin anticipates doing more deals like this to dramatically increase the supply of its NEC to catch up with the huge growth in demand."

Research

Wed, 27 Jul 2022 04:00:00 GMT

Origin Agritech Limited (NASDAQ:SEED) (Agricultural Technology) ($10.08; $58.4 M market cap) announced that it has received a $35 million order from Muyuan Foods, a publicly traded company with a $50 billion market capitalization. It’s listed on the Shenzhen Stock Exchange, it is China's largest hog farming company.

“Muyuan purchases over 50 million metric tons of corn feedstock annually. The initial order is part of a 100 million metric ton purchase agreement signed for [the] next 5 years.

The companies have agreed in principle to collaborate to contract grow Origin's Nutritionally Enhanced Corn (NEC) beginning in the 2023 growing season. At present, Muyuan is contract growing about 3 million mu, or roughly 494,000 acres of farmland to plant hybrid corn and other feed crops in China.”

This marks the third contract the company has announced since April 2022, with the total value of the 3 nearing $67 million. It is important to note that SEED had $7.1 million in revenues in 2021.

A huge take away from this development is that it appears that the contract is a long-term contract and that the company is working with SEED to increase the amount of metric tons of corn that it purchases on an annual basis.

Research

Fri, 22 Jul 2022 16:14:47 GMT

Origin Agritech Limited (NASDAQ:SEED) (Agricultural Technology) ($9.75; $56.4 M market cap) announced that 5 newly developed hybrid (not GMO) Corn varieties have completed trials and are pending production approval.

“The newly developed corn hybrids include a sweet corn hybrid containing 45% more folic acid and other hybrids with significant increases in vitamin E, phenolic compounds, and other nutritional value-added characteristics. The demand for high quality sweet and waxy corn for human consumption has grown significantly in the Chinese market in recent years. Origin's newly developed nutritional value-added hybrids will address this high value market.

In addition, Origin continues to extend its research effort with Nutritionally Enhanced Corn (NEC) for animal feedstock. Origin is testing hundreds of new NEC hybrids in dozens of locations across the major corn growing areas in China in 2022.”

Research

Mon, 11 Jul 2022 16:15:59 GMT

Origin Agritech Limited (NASDAQ:SEED) (Agricultural Technology) ($8.39; $48.6 M market cap) As food security concerns continue in China, Syngenta Group is preparing for a nearly $10 billion IPO. Syngenta is a leading developer and producer of seeds. We bring farmers more vigorous, stronger, resistant plants, including innovative hybrid varieties and biotech crops that can thrive even in challenging growing conditions.

Syngenta plans to use proceeds from the IPO to fund research as well as acquisitions in China and abroad.

Allowing Syngenta to IPO in our eyes is another positive step for China’s eventual move to become GMO positive.

We also thought it was interesting that the company plans to focus some of its acquisition strategies in the seed business, which in theory may open the door for Origin to be an eventual acquisition target.

Below are some highlights from the article:

“Syngenta says the proceeds will fund a first-class research center in China and a global seed bank. About 70% of the cash is slated for research and development as well as acquisitions in China and abroad, with a particular focus on seeds.”

“The business landscape for seeds looks sunnier with the recent strides made in genetically modified organisms. Though China currently allows only domestic GMO crops, demand is brisk, and these restrictions are expected to ease in the future.”

Research

Mon, 23 May 2022 14:28:23 GMT

Agritech Limited (NASDAQ:SEED) (Agricultural Technology) ($6.51; $37.7 M market cap) announced a supply agreement for 20,000 tons of nutritionally enhanced corn with Yunnan Feeding company. The contract value is for $9.2 million. (The company had total revenue of $7.1 million in 2021)

“Origin had previously announced a 50,000 metric ton supply agreement back in April of this year. The approximate combined value of the two orders is RMB217mm ($32 million). This backlog of orders does not include any impact from the previously announced collaboration with BaoDao Feed Ltd.

It is quite gratifying to see the feedstock industry's excitement and demand for our new corn variety, NEC," said Dr. Gengchen Han, Origin Agritech's Chairman. "We are focused on operations and ramping up production to catch up with the quickly increasing demand."

Research

Thu, 05 May 2022 04:00:00 GMT

Agritech Limited (NASDAQ:SEED) (Agricultural Technology) ($9.60; $55.6 M market cap) reported first half 2022 results with 300% top line growth and reached profitability.

Summary of Financial Results 6 Month Period Ending March 31, 2022

	1st half 2021 RMB	1st half 2022 RMB	% Change	1st half 2022 USD
Revenues	11.6mm	46.4mm	300%	$7.3mm
Operating expenses	12.1mm	14.3mm	18%	$2.3mm
Operating income/(loss)	(7.8mm)	(1.3mm)	N/A	($0.2mm)
Net income/(loss)	(4.6mm)	1.3mm	N/A	$0.2mm

While the numbers are still small, after years of nearly no revenue generating operations, it is nice to see the transition into a revenue generating company.

The company’s comments on expectations of strong growth are also encouraging:

Growth Drivers:

“Growth in the first half of 2022 came from the sale of the company's new high yield, disease tolerant corn variety that can adapt to stressful environments. During the 2021 growing season one of China's main growing areas experienced extreme weather fluctuations of drought followed by massive flooding. Despite this, the variety performed extremely well in this environment while other corn varieties planted nearby were decimated. This created goodwill for the Origin Agritech brand and big demand for the new hybrid seed. Origin did not have enough seed to meet demand and are expanding our seed production to meet anticipated 2023 demand .”

Second half and beyond:

“Despite the company's rapid growth rate in the first half of 2022, the company's biggest growth driver in the near-term, sale of its nutritionally enhance corn (NEC), contributed nothing to sales in the period but rather will hit in the second half of the year, after the harvest…

…The annual feed corn market is China is estimated at over 1.9 million metric tons and worth more than RMB500 billion ($75 billion). Origin expects to capture a significant portion of this market in the coming years as the NEC alleviates the need for expensive nutritional additives and thus doubles the profit margin for feedstock companies. Importantly, there is no other corn variety with similar properties, leaving Origin without competition for this product.”

GMO Update:

“Origin is encouraged by the Chinese government's continued progress on establishing the legal framework regulating the commercialization of GMO crops and views this as a sign that they will soon move to legalizing the planting of GMO crops. The company has integrated its GMO traits into its hybrid corn varieties and is ready to launch commercial sales once the government approves GMO.”

Guidance :

“Origin is reaffirming its 2022 full-year guidance of 300% sales growth. Additionally, the company expects continued and improving profitability.”

The company reported $7.1 million in sales in 2021, guidance implies revenues to be north of $21 million for 2022.

Research

Thu, 07 Apr 2022 04:00:00 GMT

Agritech Limited (NASDAQ:SEED) (Agricultural Technology) ($7.30; $44.3 M market cap) announced it has signed a purchase agreement to sell two feedstock companies a total of 50,000 tons of its nutritionally enhanced corn.

“The company is contract growing 50,000 metric tons of the corn in Xinjiang. The feedstock companies have agreed to buy the corn at market prices at the time of delivery, plus a mark-up to reward the company for the added value of the corn. Based on current market prices for corn, the sale price could be around 3,000 RMB per metric ton or 150 million RMB in total. The company is currently evaluating the impact of this purchase agreement on the company's financials and may soon update its guidance to reflect this new business.”

"We are excited by the positive reception by customers to our new corn variety," said Dr. Gengchen Han, Origin Agritech's Chairman. "In these unprecedented times of disruption in food supply chains and food inflation, I am particularly happy that we are having a positive impact on food security for China. "

Based on the financials provided, the 150 RMB would equate to about $23.5 million USD.

Research

Mon, 07 Mar 2022 16:34:15 GMT

Agritech Limited (NASDAQ:SEED) (Agricultural Technology) ($9.60; $55.6 M market cap) shares have been ticking up in the past few days as global commodity prices continue to soar, catalyzed by the Russia/Ukraine conflict, bring back in focus the need for China’s desire to adopt measures to secure its own food supply.

In fact, just yesterday Bloomberg published an article titled, “Xi Says China Can’t Rely on World Markets for Food Security”, highlighting the need for China to become food-independent and largely divorce itself from imports.

Last week, the stock rose 59% and is up 115% since bottoming out at $4.46 in early February 2022. Shares were marked up as much as 10% in pre market trading this morning, but have since retreated (we are using Friday’s closing price of $9.60). This is on the heels of a 35% rise on Friday.

Today, the company announced a new subsidiary to expand its nutrition-enhanced corn production capacity.

“The new wholly owned subsidiary in Hainan province will focus on nutrition enhanced corn research, seed production and feed corn production by taking advantage of the three corn growing seasons per year on Hainan island. Over 50,000 Mu contract growing of feed corn has been initiated for the 2022 growing season, and significant growth is expected for next growing season.

Origin Agritech nutritionally enhanced corn reduces the need for expensive additives such as soybean meal for feedstock companies. As global grain prices surge, it offers great cost savings to feedstock companies. Origin Agritech is currently in discussion with numerous feedstock companies for large orders as well as for partnerships, such as the previously announced collaboration with BaoDao Feed Ltd. We will update the market shortly after we finalize these deals.”

Those of you who have been GeoInvesting members for some time now know that since February 2019, our speculative bullish thesis on SEED had solely stemmed from our belief that it was likely the company would obtain GMO certificates for various Corn and Soybean traits. These certificates would permit the company to commercialize its IP in China once the country goes “GMO Positive.” The stock was trading around $6 at the time we communicated our original bullish stance.

The first run in SEED occurred in late 2020 at around $9 per share to February 2021 when shares rose to a high of just over $28. The run was based on the anticipation that China would imminently go GMO positive, hopefully translating into the company receiving its required certificates.

Unfortunately, even though the GMO narrative coming out of China and its government were generally positive (and some might have seen it as hype), the short-term story eventually dissipated as there were delays on an expectedly aggressive move to “officially” go GMO positive.

Shares began a slow bleed all the way back to the $4.00 range, a complete round trip (and then some) - a complete disaster! In fact, we are now in 2022, and China has still not gone full throttle on GMO positive initiatives, even though we still think it is going to happen.

However, recent events including the collaboration with a large Chinese food producer BaoDao Feed to produce and sell specialized crops had begun to put some life back into SEED, helping the stock bounce off it’s $4.46 low print.

We thought this news was a fairly big deal that the market was not fully pricing in because it showcased the company will be restarting its dormant hybrid seed business that had made the company a prominent Ag Tech firm years ago when it went public through reverse merger in 2005.

You can see our recap on SEED’s early years as a public company here. Keep in mind that the destruction of SEED’s legacy business was partly due to the transition of the industry to commoditization because the Chinese government didn’t have an effective system in place to protect agriculture companies from competition and counterfeit seed activities. But that has all changed.

The government has finally established the proper protocols, penalties and enforcement to protect companies like SEED from counterfeit activities, and hopefully price destruction.

Please also see our extensive on-the-ground due diligence report that helped us to gain confidence in SEED’s narrative to investors, and that it is indeed more accurate than most investors realize.

There are more reasons to conclude that the current run in SEED’s shares may have more meat on the bone, lending to more optimism, at least in the short run. Recent global events, most notably the Russian/Ukrainian war, are impacting commodity prices around the world. This is on top of the already protracted supply chain disruptions and inflation rates not seen in decades.

These supply chain disruptions and inflation pressures don’t seem to be as “transitory” as they were once thought to be. Just a couple weeks ago the Federal reserve chairman Powell commented that corn and soybean prices are experiencing extreme inflation.

Now, the war itself is putting commodity inflation into overdrive. But more importantly, it’s putting back in focus a potential desire for countries to adopt a more protectionist point of view. For example, food security is particularly important for China, a country facing a food shortage crisis and imports a good deal of GMO corn and soybean needs from foreign sources like the United States. This is quite ironic, considering that China has yet to approve the commercialization of GMO domestically!!!

Supply commodity chain disruptions caused by the war could also benefit countries that can fill those gaps, something to think about if China goes GMO positive.

Of course, significant risk still applies to SEED. The company has to show us that it can actually meet some of the guidance metrics it’s given.

Secondly, even though words coming out of China are definitely positive for China-based Ag Tech companies as a whole, we need more specific news related to SEED, or else the stock’s momentum could quickly run out of steam.

We look forward to more tangible news regarding its recent relationship with BaoDao, basically on the revenue generation beginning and progressing from the synergy.

We also need a fully positive stance by the Chinese government on GMO by issuing the production licenses to SEED, or for any Ag Tech company in China, for that matter.

So, in summary, we are hopeful that the run that is occurring in SEED’s price now might be more tangible if you take into account the current global landscape and that the company is now in a better position to actually generate revenue than it was during the prior speculative run.

Maybe this time around, fundamentals from SEED’s reborn hybrid seed business will be the driving force behind optimism around the SEED story and GMO approval will just be the pudding on top.

On a side note, SEED’s price momentum is following a similar path as Verde Agritech Plc (OTC:AMHPF), another agricultural technology company we recently highlighted in an RFT. AMHPF shares have been climbing and continue to do so. It seems like a perfect storm for Ag Tech companies as the war, resultant sanctions, escalating food costs and protectionism have countries concentrating on their own food production and safety needs as well as how they may be able to fill supply chain gaps.

Research

Mon, 07 Feb 2022 15:04:03 GMT

Agritech Limited (NASDAQ:SEED) (Agricultural Technology) ($4.74; $27.0 M market cap) - In yesterday's Weekly-Wrapup we discussed some silver linings in the Company’s 20-F regarding revenue opportunities and continued progress on the GMO front.

Today, the company announced that it expects revenues to grow in excess of 300%, to over 150 million RMB ($ 24 million USD), and expects to turn a profit for fiscal 2022.

“The expected revenue growth is driven by both growth in its existing hybrid seed business and the addition of a new revenue stream of selling nutritionally enhanced crops to feedstock companies.

Due to increased pre-orders, Origin is already sold out of its hybrid seeds for this year's planting season. The company is increasing its production capabilities for the next planting season as it expects this trend in demand to continue as climate change continues to pose increasingly significant challenges to farmers.

Additionally, Origin expects its partnership with BaoDao Feed Ltd to provide sizable revenue growth. Its nutritionally enhanced corn varieties are able to eliminate the need for costly additives and are estimated to double the gross margins for the feedstock companies. Origin is currently in discussions for similar partnerships with other feedstock producers with the goal of creating bespoke crops for each customer, which Origin plans to achieve through its GMO and CRISPR technologies.”

Research

Sun, 06 Feb 2022 05:00:00 GMT

Origin Agritech Limited (NASDAQ:SEED) filed its 20F after the close last Friday. We are obviously not pleased with the company’s propensity to overpromise and underdeliver. However, a lot of this has to do with the government delaying the GMO positive process that appeared to be a goal that should have been met by the end of 2021, according to information published on various sources in China.

Nonetheless, we still think that Dr. Gengchen Han, the chairman and founder of the company, needs to step up to the plate and buy stock in the open market to help instill investor confidence in the company’s future. Furthermore, it’s been 1 month since the company talked about it’s deal with Chinese food producer BaoDao Feed to produce and sell specialized corn crops, adding that it would be providing guidance with regards to this relationship. Hopefully, now that the company has filed its 20F, it can issue guidance. But it’s just another example of the company putting the cart before the horse, leaving investors dangling in the air.

Hopefully, moving on to something more positive, we were curious if there was any information in the 2021 20F filing that was not present in last year‘s 20F. Here’s what we found so far:

Status of Joint venture

Recall that in October 2020, the company entered into a joint venture arrangement with a state owned enterprise in China, Beijing Changping Technology Innodevelop Group (BC – TID), that is intended to help the company commercialize its GMO initiatives when China goes GMO positive. Although the company received $23.4 million from BC – TID, this amount is being treated as a debt obligation on SEED’s balance sheet. However, the original agreement did state that, upon the official approval and closing of the JV, BC-TID would eventually convert this debt into equity.

Well, it’s been over a year since the company stated that this event would occur. And the company never explained what was causing a delay in the debt to equity exchange. However, the 2021 20F goes into detail about what happened and mentions that the JV approval process may be in the final innings, putting the debt to equity conversion back in play. This should greatly improve SEED’s balance sheet.

“However, the process has taken longer than originally expected mainly due to the complicated tax related issues with Beijing Origin’s headquarters building and the government approval process. As ofJanuary 16, 2022, BC-TID has injected into Beijing Origin a total of RMB137.7million ($20.2million) as a loan to Beijing Origin based on the agreement. Currently, the agreement is being finally approved by the government officials. The cash amount received by Beijing Origin was used to repay the bank loan collateralized by the headquarters building and provide working capital. According to the agreement, RMB137.7 million cash currently booked as a current portion of long-term debt, due in April, 2022, is an interest-free loan and will be converted to the equity for the joint venture when the JVis formed. Also according to the agreement, the Company leases the headquarters building to BC-TID.”

Revenue opportunities and liquidity

The 20F also talks about initiatives the company is pursuing to generate revenue and cash, such as entering into licensing arrangements with other companies to use SEED’s IP. Hopefully, the company will give us some clarity on where they are in regards to these goals. But this should be an interesting positive addition to the story because licensing revenue would probably flow right to the bottom line.

“There are newhybrids completed variety trials and will be in the market this season. Furthermore nutrition enhanced corn will be produced for animal feed which will greatly increase the revenue. Besides the aforementioned cash inflows, the Company is also seeking funds from other resources including but not limited to licensing its core seed traits to its customers, applying for more government grants for research and development activities, pursuing other capital investment from investors and selling certain company assets. The Company consistently reviews its working capital requirements.”

If there is a silver lining to the SEED saga, it’s that the bullish thesis seems no longer solely dependent on China going GMO positive. If some of the things in SEED’s pot, including its new gene editing endeavours (see here and here), come to fruition, GMO positive may just be the “cream on top.”

Obviously, the company still faces potential liquidity issues until it starts to generate revenue. We are crossing our fingers that any liquidity issues the company is facing will be alleviated through the arrangement it reached with BaoDao Feed on January 4, 2021. Combine that with the closing of what appears to be the imminent approval of the joint venture and the revenue opportunities currently on the table, and we can begin to get more optimistic.

Although it’s a risk, we don’t think the company will raise equity capital at anywhere near the current stock price.

Research

Tue, 04 Jan 2022 16:35:43 GMT

Agritech Limited (NASDAQ:SEED) (Agricultural Technology) ($7.21; $42.3 M market cap) announced collaboration with Chinese food producer BaoDao Feed to produce and sell specialized corn crops.

"The total market for corn feedstock in China is 50 million metric tons per year, which equates to potential net profits of 150 billion RMB. Given the disruptive competitive advantages of Origin's corn, BaoDao estimates that the companies will reach 10 million metric tons in sales within 3-5 years. Origin anticipates the collaboration will positively impact the company's sales and earnings for 2022 and anticipates issuing guidance that reflects this impact soon."

SEED sees this collaboration positively impacting sales and earnings for 2022 and expects to issue guidance reflecting the contribution of BaoDao soon.

While this seems like positive news for the company, it is not the GMO news we have been waiting for.

PodClips

Fri, 26 Nov 2021 05:00:00 GMT

Jan Svenda, Maj Soueidan’s analyst, put out a PodClip on November 26, 2021 discussing the recent price movement of Origin Agritech Limited (NASDAQ:SEED) , suggesting that we look at the company’s positioning in a positive light during a potential protracted COVID environment:

“The reason for the update today is really [because of] the share price action regarding the ticker in the past few days, and especially, today, as you know the market was spooked by the new COVID strain coming out of South Africa. SEED itself, the stock opened lower by 5%. It rebounded a bit, but we just wanted to comment on how the company is actually positioned around COVID. We believe that they’re actually very resilient, and that any sort of COVID impact might have in China would actually just motivate the government more to speed up the process of [SEED’s] certification.”

GeoTeam · Origin Agritech Inc. (SEED) and The Effects Of Covid-19 GeoInvesting Podclips

Research

Mon, 15 Nov 2021 05:00:00 GMT

Agritech Limited (NASDAQ:SEED) (Agricultural Technology) ($9.74; $55.5 M market cap) - Our weekly wrap up email also mentioned that we are currently working on another full write-up in light of some new information regarding changes to China's GMO positive policies that have encouraging undertones. We hope to have that to you shortly. We had actually started this process before the following news was released last night on how China is easing rules for GMO approvals.

Reuters article:

“Among the many proposed changes, a GM trait applied to an already approved hybrid would only need to undergo a one-year production trial before receiving approval, rather than going through the full round of trials needed for new varieties.”

SEED’s CEO Han Gengchen was quoted in the article:

“It clarifies the procedures for GMO variety approvals and simplifies the process,”

“It will accelerate GMO corn commercial production.”

We will have more color on this development in our full writeup, as well as many others that have occurred over the last several months. We still have questions surrounding the steps needed for companies to obtain production certificates in order to grow and market GMO seeds.

Research

Fri, 12 Nov 2021 17:55:59 GMT

Agritech Limited (NASDAQ:SEED) (Agricultural Technology) ($9.81; $55.9 M market cap) announced that its new GMO corn trait has finished its environmental release trials and is in preparations for production trials (the fourth stage in the five stage process to receive its bio-safety certificate).

“As China moves towards its GMO positive future, this new corn trait will allow us to be competitive in the GMO corn market for many years to come. It will help with both increasing yields to ensure the country's food security and decreasing the need for toxic insecticides."

While this is positive news, we are still frustrated that the company continues to issue meaningless press releases. Where is the certificate they promised us a year ago? What happened to the conversion of JV debt to equity? Why won't the chairman buy back stock?

PodClips

Fri, 01 Oct 2021 14:38:13 GMT

Origin Agritech (SEED) Pod Clip Update

This week saw a bit of news come out of China (as highlighted in GeoInvesting research note here and in a Tweed here ) that we feel continues to put Origin Agritech Limited (NASDAQ:SEED) ($8.18, $46.64M market cap) in a favorable position to benefit from the eventual follow-through of GMO initiatives by the Chinese Government. Admittedly, the process has been a bit more protracted than we expected, and we’ve seen a good bit of whipsaw action in SEED’s stock price over the last few years, and even a foray into the high twenty dollar range.

We’ve also held a long standing and disclosed opinion that given the market’s overall aversion to China stocks, SEED would in no way be a darling in many investors’ eyes, and more so a “wait and see” scenario.

We added the stock to our selected long disclosure model portfolio at $6.70 in February 2019. Despite the volatility in the stock and the disconnect of the information flow between the US and China on GMO prospects in China, we feel the company’s intellectual IP and extraordinary partnerships generally mitigate the less favorable aspects of investing in China-based US listed stocks.

The story has been rife with information arbitrage that we will continue to follow, regardless of stock price, because we believe that when all is said and done, multibagger potential is on the table if and when China gets its act together.

Maj elucidates on this subject in his latest PodClip, published later in the day yesterday. Give it a listen, and stay tuned for more on SEED as developments will surely hit our desks in the months to come.

Research

Thu, 30 Sep 2021 04:00:00 GMT

Agritech Limited (NASDAQ:SEED) (Agricultural Technology) ($8.05; $45.8 M market cap) and various Chinese government agencies held an onsite observation meeting of SEED’s insect-resistant and herbicide-tolerant genetically modified corn.

Our translation of the above document:

“On September 27, Origin and Biotechnology Research Institute, Chinese Academy of Agricultural Sciences held an observation meeting on insect-resistant and herbicide-tolerant genetically modified corn at Origin’s Seed Center at Tongzhou. Yufa Peng, Xingbo Lu as the senior members from National Biosafety Evaluation Committee and other expert committee members, as well as several senior government officers from Ministry of Agriculture of the PRC., all inspected the insect-resistant effect of Origen's insect-resistant and herbicide-tolerant genetically modified corn and gave them a highly evaluation and praise. At the seminar, the experts and leaders at the meeting had an in-depth discussion on how to quickly promote the commercialization of insect-resistant and herbicide-tolerant genetically modified corn, and explained the approval procedure for Gene editing products through CRISPR. The success of this meeting will expedite SEED’s GMO commercialization.”

This is an important step, as entering the commercialization stage is the major catalyst we've been waiting on. There have been some concerns about SEED receiving all the necessary permits to commercialize its GMO traits. But this news builds upon other China-based articles we have highlighted that cover the government’s support of SEED’s initiatives.

As an aside, Google translate produced this text in contrast to our output above:

“Researcher Xingbo and other expert committee members, as well as relevant leaders of the Chinese Academy of Agricultural Sciences, etc., all observed the insect-resistant effect of Origen's insect-resistant and herbicide-tolerant genetically modified corn and gave them a high evaluation. At the seminar, the experts and leaders at the meeting had an in-depth discussion on how to quickly promote the commercialization of insect-resistant and herbicide-tolerant genetically modified corn, and provided answers to the relevant safety declarations of gene editing products. The success of this meeting will help promote the safety declaration and commercialization of Origen-related genetically modified products.”

Research

Wed, 28 Jul 2021 15:40:38 GMT

Agritech Limited (NASDAQ:SEED) (Agricultural Technology) ($9.08; $51.7M market cap) - We wanted to offer another investor’s take on the developments ongoing with SEED. A new Seeking Alpha article title, “Origin Agritech Ltd. Is Poised For Explosive Growth - Could Be The Right Time To Plant A SEED” was published this morning.

Summary Bullets:

The company is poised to capitalize on an expected shift in China to allow government-approved GMO seeds, being one of only three Chinese companies in a 15 billion Yuan market.
The stock price recently cratered on the successive filings of a $25M shelf, and then an Equity Purchase Agreement with Oasis Capital, providing a good entry point.
Key near-term catalyst: Approval for sale of its GMO corn by Chinese regulators is expected in the near term – with billion yuan revenue potential to shortly follow.
This little Chinese seed company could be worth a small speculative investment.

Valuation:

“This opportunity is purely a speculative investment. If China opens up its market to GMO seeds, and if Origin is one of three players in that new market, then Origin will be poised for hockey-stick upside. Hypothetically, if Origin achieves less than its stated target of 5 billion Yuan of GMO seed revenue, representing less than 30% of the market as projected by the Company, then a simple DCF with a 10% WACC and a 5% growth rate applied to the company beyond year 5 would yield an NPV of US$3.6 billion – 72X upside from today’s market cap. Caveat – this simple model does not calculate the effect of any dilution that would be required to fund the hypergrowth.”

Research

Fri, 16 Jul 2021 18:47:23 GMT

Agritech Limited (NASDAQ:SEED) (Agricultural Technology) ($10.14; $57.8 M market cap) - Yesterday the company published a new investor presentation on its website. Below are two key slides which echo our sentiment of if/when China goes GMO positive, that SEED will stand to benefit greatly for years to come.

Selected Disclosures on Above-mentioned Stock(s):

Research

Tue, 13 Jul 2021 19:44:36 GMT

Agritech Limited (NASDAQ:SEED) (Agricultural Technology) ($12.68; $72.2 M market cap) - Shares of SEED were strong yesterday, after the company posted an update on its GMO portfolio. This made for the second trading session in a row that SEED experienced a meaningful uptick in price.

During the trading day, the company announced it entered into an exclusive rights agreement with Biology Research Institute of Chinese Academy of Agricultural Sciences for its drought resistant GMO trait.

Dr. Gengchen Han, Origin Agritech's Chairman, said:

“We are very excited to expand our GMO trait portfolio. We believe that drought resistance will be a major area of focus as the effects of climate change come to the forefront of the world's attention."

We issued the following tweet during the day yesterday

Shares finished the day up 40% on 15 million shares in volume, vs the prior 3 month daily average of 179,903.

As referenced in the tweet, please reference Maj’s recent PodClip on SEED in regards to clarification on its hybrid corn approval.

What does all this mean?

It's good to see that the company is still receiving support from the Chinese government and key research institutes amid the persistence of delays for China to go GMO positive. This boosts our belief and confidence that SEED will play a key role in the commercialization of GMO once China pulls the trigger.

With that being said, for price momentum to continue and investors to stay excited, SEED will need to secure various certificates from the Chinese government, something they have been promising for several months.

PodClips

Fri, 09 Jul 2021 18:19:37 GMT

PodClip - Clarification On Its Hybrid Corn Approval

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Research

Thu, 08 Jul 2021 15:29:02 GMT

Agritech Limited (NASDAQ:SEED) (Agricultural Technology) ($7.24; $41.2 M market cap) announced that the Ministry of Agriculture and Rural Affairs (MOA) approved four of its new hybrid corn breeds.

“The MOA recently raised national standards for approval of corn and rice varieties and promoted further innovation in germplasm development. As one of the few companies in China to participate in the Green Pass program, Origin Agritech is in a unique position to streamline the approval process and submit more hybrids for approval per year. Thereby, strengthening the company's ability to bring multiple new hybrids to market annually, including many GMO enhanced hybrids.”

Dr. Gengchen Han, Origin Agritech's Chairman, said, "We are very excited to further grow our extensive germplasm resources, which will play an instrumental role in our goal to bring GMO enhanced hybrid seed breeds to market."

PodClips

Wed, 23 Jun 2021 14:59:49 GMT

PodClip - Podclip - Addressing Weakness In Price

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Research

Mon, 26 Apr 2021 15:14:24 GMT

Origin Agritech Limited (NASDAQ:SEED) (Agricultural Technology) ($14.73; $79.0 M market cap) - The Centaline Securities Research Institute released an industry analysis report taking a deep dive into the GMO industry in China and related growth prospects.

The report analyzes the competitive position and prospects of the leading companies in the GMO industry.

Please see section 7, for an in depth analysis of Origin Agritech

Here are some notable quotes from the report that highlight SEED’s competitive strengths:

“After nearly two decades of development, the company has become one of the few domestic three-dimensional commercial platforms with independent breeding capabilities and integrated production and sales networks.”

“Is a pioneer in the research of genetically modified crops in China.”

“The company has been deeply involved in the field of biological breeding for more than ten years, and has established long-term cooperative relationships with many domestic and foreign genetically modified seed research and development institutions such as DuPont Pioneer and the Chinese Academy of Agricultural Sciences.”

“The company's production center in Xinjiang now has a seed drying processing capacity of 20 million kg/year, and can be put into production at any time to create revenue for the company.”

“After the company obtains the production certificate, the commercial production of genetically modified seeds can be realized immediately.”

“Origen Seed Industry has established the richest and only enterprise-level corn germplasm resource bank in China in 20 years.”

“From the perspective of the company's business, the company has the richest and only enterprise-level corn germplasm bank in China. The seed bank has more than 200,000 different germplasm resources, and its acquisition value is high.”

“From the perspective of the biological breeding industry, currently only Dabeinong, Longping Hi-Tech, and Origen Seed Industry have the ability to commercialize biological breeding in my country, but Dabeinong and Longping Hi-Tech’s biological breeding income accounted for a relatively low proportion of the company’s revenue. Origen Bio-breeding income accounts for a relatively high proportion. The main operating income of Origen Seed Company in the future will come from biological breeding. Therefore, biological breeding is more flexible. From the perspective of valuation flexibility and purity of the target, Origen Seed will have higher premiums and excess returns in the future. In addition, the company may also be one of the first companies to obtain a commercial license. The first-mover advantage is obvious, which is worthy of attention.”

It seems that the analyst favors SEED amongst the companies discussed, but a further dissection of the report is certainly needed:

“Generally speaking, Dabeinong has certain advantages in industrialization and technological maturity; O.R.G Seed has obvious advantages in independent intellectual property rights and is one of the first companies most likely to obtain commercial licenses . It has advanced layout in terms of production capacity reserve, sales network layout, professional authorization, etc. Longping Hi-Tech has strong R&D capabilities and certain technical advantages, but lags behind Dabeinong and Origen Seed in preparation for industrialization. Therefore, in terms of the degree of benefit, Dabeinong and O.R.G Seed are the most likely to have long-term benefits. In addition, Origen currently has a lower valuation than leading domestic seed companies. After the commercialization of my country’s biological breeding market, the company will rely on its innovative advantages in biological breeding technology and good channel relationships in major planting regions across the country. The company's performance brings greater opportunities for improvement.”

Research

Thu, 25 Mar 2021 17:09:17 GMT

Agritech Limited (NASDAQ:SEED) (Agricultural Technology) ($22.43; $127.5 M market cap) announced it has entered into a collaboration agreement with Beijing Dabeinong Technology for the development of commercial GMO corn hybrids.

“DBN is a Chinese agriculture conglomerate with over 14,000 employees and has over $2 billion in annual sales. Beijing Dabeinong Biotechnology Co., Ltd. (DBNBC), which is DBN's holding subsidiary, is the leading biotechnology research entity in China.”

We view this as a significant development as DBN is the leader in the Ag space in China.

Research

Wed, 17 Mar 2021 04:00:00 GMT

Agritech Limited (NASDAQ:SEED) (Agricultural Technology) ($24.30; $138.1 M market cap) - We think we stumbled across a bit of more information arbitrage regarding SEED’s leading role in the commercialization of GMO in China. On Monday, the Institute of Biotechnology, Chinese Academy of Agricultural Sciences published a summary of a biological breeding cooperation promotion meeting . The two key takeaways from this article are as follows:

It appears that the Institute of Biology and Beijing O.R.G. Seed Industry Co., Ltd (“O.R.G.”). has expanded its relationship with SEED. Prior to this announcement, it appears O.R.G. and SEED were only working on some individual GMO corn endeavors. However, now it appears O.R.G. will be working with SEED for all their GMO commercialization and research initiatives.

"Both parties have Based on years of cooperation, we can complement each other's strengths and continue to carry out cooperation in multiple fields. After the meeting, the two parties agreed to further build a technology-enterprise integration consortium, establish a joint R&D base, increase innovation and achievement transformation of corn biological breeding, and contribute to the turnaround of the corn seed industry in the new era."

It looks like SEED is the first company to be certified by the Ministry of Agriculture for “integrated breeding, reproduction and promotion”

“Director Li Xinhai pointed out that O.R.G. is the first batch of “integrated breeding, reproduction and promotion” seed enterprises certified by the Ministry of Agriculture. The biological breeding field has first-mover advantages and a number of important innovations have entered the industrialization incubation stage.”

While we look into what exactly the certification implies for SEED, we assume it is a very significant development that U.S investors have yet to pick up on. Furthermore, we also don’t believe U.S investors have picked up on the information that shows that the Institute of Biotechnology, Chinese Academy of Agricultural Sciences is a leading research institute in China that is playing a role in the commercialization of GMO. Finally, it’s worth noting that SEED’s Chairman, Han Gengchen, spoke at the meeting.

"Han Gengchen, Chairman of Origen Corporation, exchanged views on the current status of the corn seed industry and future industrial needs, and said that the company will continue to invest in the field of biological breeding and look forward to in-depth cooperation with domestic superior R&D institutions."

Learn more about the Institute of Biotechnology, Chinese Academy of Agricultural Sciences role in the agro-biotechnology research space in China and worldwide here and here.

"The institute owns 7000 square meters of laboratories, 1200 square meters of greenhouses, and field stations in Hainan (Sanya), Beijing (Pinggu) and Hebei (Langfang). All above facilities provide important supports for the research of a large-scale gene transformation, molecular breeding, new crop variety development, and bio-safety evaluation of genetically modified organisms, etc. The institute has 126 employees. Among them 108 are permanent research staff including one academician of Chinese Academy of Engineering, 35 professors and 41 associate professors, and the others are administrative and supporting staff."

Research

Mon, 15 Mar 2021 15:35:07 GMT

Agritech Limited (NASDAQ:SEED) (Agricultural Technology) announced that it has successfully utilized gene editing technology to create new corn traits. The company also issued a new investor presentation which highlights some of the upcoming catalysts:

GENE EDITING

COMPS

Beijing Dabeinong Technology Group Co.,Ltd. (002385.SZ)

Yuan Long Ping High-Tech Agriculture Co., Ltd. (000998.SZ)

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Research

Thu, 18 Feb 2021 21:50:11 GMT

Agritech Limited (NASDAQ:SEED) (Agricultural Technology) ($21.48; $107.6M market cap; marked up 12% pre) an agriculture technology is seeing shares moving up pre market due to an article from the Global Times titled, “China to promote R&D in agricultural genetically modified organisms”.

Few takeaways from the article:

“Imported seeds account for only 0.1 percent of crops raised in China, but some varieties of food are more than 90-percent reliant on imports. For example, the import dependence of broccoli reach

"R&D involving new genes and innovations is encouraged to improve the exploration of seeds and the efficiency of planting. Compared with the rest of the world, China's seed bank is very large, but the utilization rate is low. The main targets are soybeans and corn for feed, through molecular breeding,"

It should be noted that SEED’s main focuses are in the Corn and Soybean traits.

Research

Sun, 20 Dec 2020 05:00:00 GMT

Agritech Limited (NASDAQ:SEED) (Agricultural Technology) – Shares of SEED exploded on Friday as news of China’s Prime Minister Xi Jinping’s comments about the country heading towards GMO commercialization began spreading. SEED itself issued a tweet stating that this was the first public statement from the Prime Minister about GMO commercialization:

On Saturday, Reuters published an article summarizing this development.

Research

Tue, 03 Nov 2020 17:05:16 GMT

Agritech Limited (NASDAQ:SEED) (Agricultural Technology) ($9.08; $45.5M market cap) an agriculture technology company, announced it was awarded a RMB6.5M grant by the Ministry of Agriculture for two of its GMO traits. This development increases our confidence that SEED will receive all necessary approvals to commercialize its GMO IP.

“The two traits that received the grant funding are GH5112E-117C, a double stack of insect resistance and herbicide tolerance corn and G1105E-823, an herbicide tolerance corn. These traits' testing standards have recently been approved, clearing the way for the final step of receiving bio-safety certificates, which the company believes will happen soon.”

We want to look into how many other companies are receiving similar grants and to what size.

SEED continues to move in the right direction to obtain all the necessary approvals to be one of the select few to be able to produce, market and license GMO related products once China goes GMO positive. Per management's comments above, the bio-safety certificates for these traits could come any day now.

Research

Wed, 28 Oct 2020 18:59:03 GMT

Agritech Limited (NASDAQ:SEED) (Agricultural Technology) ($9.48; $47.6M market cap) announced it has received an additional RMB 20 million in funding from the Beijing Changping Technology Innodevelop Group (BC - TID).

The receipt of this second tranche of money brings the total funding from BC-TID to the RMB157 million or approximately $23.4 million.
The deal documents have been completed by both Origin and BC-TID and have been submitted to government officials and are pending final approval.
Origin Agritech anticipates that the joint venture will receive the necessary government approval and that the deal will close, all within two weeks.
With the receipt of the RMB157 million, Origin Agritech has the money necessary to execute on its plans to expand its seed production and marketing in anticipation of China going GMO positive in the near-term.

Per the terms of the original framework agreement, the money received from BC-TID will be converted to equity. We would like more clarity on:

If the loan has been converted to equity even though they mention in the original release where they entered into the joint venture that this would occur per the "definitive agreement". It's possible that the conversion would happen upon government approval.
If SEED will receive another tranche to reach the 204RMB capital infusion that was originally disclosed in the framework agreement per the 2019 20-F.

Research

Sun, 27 Sep 2020 04:00:00 GMT

Origin Agritech Limited (NASDAQ:SEED)

On Monday, we published a research note on SEED that continued to build our confidence that the company will play a leading role in China’s goal to go “GMO Positive” before the end of 2020. It seems that a Chinese agricultural industry website took a page out of our notebook by mimicking our steps to prove that two of SEED’s corn traits were included on a list published on the Ministry of Agriculture and Rural Affairs website. The listed showed certain gene traits that were “tested and approved”. The action is slated to go into effect by November 1, 2020, after which we believe SEED will quickly receive biosafety certificates and other necessary commercialization certs needed for the two gene traits.

The key bullish takeaways from the article in China is that it specifically mentions SEED and that companies associated with the gene traits in the list should get a biosafety certificate within a month of the November 1 effective date.

Shares of SEED have been on a wild ride over the last 18 months and in our opinion do not fully reflect the positive developments that have occurred at the company and with the GMO Positive advancements made in China during 2020.

Understandably, U.S. investors are likely tepid about buying SEED due to an overall bearish sentiment on the U.S. listed China-based stock universe since 2014 due to various proven instances of fraud and misrepresentations.

We think it’s more likely that investors from China will be a key catalyst to push shares higher which we believe will happen as the media continues to cover GMO positive developments, especially when they reference SEED as this article did.

Research

Tue, 22 Sep 2020 16:00:06 GMT

Agritech Limited (NASDAQ:SEED) (Agricultural Technology), an agriculture technology company, announced it has received National Testing Standard approval for two GMO corn traits, confirming our due diligence. Late in the day yesterday, we published a research note and subsequently issued a related premium alert regarding information we found on the China's Ministry of Agriculture and Rural Affairs website. It was evident that newly approved gene traits could be traced back to SEED:

Today’s release confirms our findings:

“the traits that received the National Testing Standard approval are G1105E-823C, a double stack of insect resistance and herbicide tolerance corn and GH5112E-117C, an herbicide tolerance corn.

As part of the approval process, Origin's traits were tested and reviewed by third-party institutes appointed by the MOA. This method will be the national standard for testing procedures for these traits in future variety development and commercialization. According to the publication, the Standard will be implemented on November 1, 2020.”

One thing we still need to keep in mind is that in order for investors to get really excited, China has to officially announce that they have gone GMO positive.

If you missed our detailed call with SEED’s CEO and IR representative that transpired on September 8, 2020, you can go here to review the full notes.

Research

Mon, 21 Sep 2020 19:31:28 GMT

Agritech Limited (NASDAQ:SEED) (Agricultural Technology) is an agriculture technology company we have been highlighting as an opportunity to benefit from China’s stated goal to become GMO “positive” by the end of 2020. We came across this link published on August 4, 2020 on a Chinese government site, The Ministry of Agriculture and Rural Affairs.

The posting lists 29 gene traits that have been tested and “approved.” The site lists:

“29 standards including the "Qualitative PCR Method for Papaya Internal Standard Genes for Component Testing of Genetically Modified Plants and Their Products" have been reviewed and approved by experts and are now approved for publication as the National Standards of the People's Republic of China, which will be implemented on November 1, 2020.”

If you click on the PDF attachment, you will see the list of the 29 different “standards.” After some research we found that standards “12” and “16” are referring to two corn traits that are owned by SEED.

If you crosscheck the gene codes from the images above, “G1105E-823C” and “GH5112E-117C,” with google patent, you will notice that both of these gene patents were applications were filed and thus owned by SEED:

[1] Gene Trait/Source: G1105E-823c

[2] Gene Trait/Source: GH5112E-117C

We are still trying to make sense of all the information, but it seems that SEED is in line to receive two bio-safety certificates for two Corn GMO traits by November 1, 2020. So far, our preliminary research indicates that companies on similar lists over the past two years have received regulatory certificates prior to or up to a month after the implementation/effective dates disclosed in related postings. Obviously, we are very excited about this development, but we still need to gain additional clarity on what this all means for SEED. One thing we still need to keep in mind is that in order for investors to get really excited, China has to officially announce that they have gone GMO positive.

Research

Wed, 09 Sep 2020 19:30:18 GMT

Agritech Limited (NASDAQ:SEED) (Agricultural Technology) ($8.29; $41.5M market cap), an agriculture technology company held a virtual conference with the GeoInvesting community last night. A few of the main takeaways from the call with SEED’s Chairman and CEO Gengchen Han include:

China is closer to going “GMO positive” than it ever has been. If China wants to have GMO ready for the next “growing season” that starts in April 2021, giving it incentive to act fast to officially announce that China has gone GMO positive, since it could take about six months for GMO-approved companies to prepare for commercialization activities
The company has several partnerships for all aspects of its business which could help control costs and accelerate revenue generating activities. Partnership or Joint Venture relationships include::
- Research partners that work with SEED to develop GMO IP and products
- Manufacturing partners
- Marketing and distribution partners
We believe it’s really good news that SEED already has the infrastructure, marketing and distribution network in place to start generating revenue once China flips the switch to go GMO positive. This is the infrastructure that was in place when SEED was generating substantial revenue from its legacy seed business.
The competitive pressures that SEED faced that basically forced the company to not focus on the legacy seed business a few years ago will not be present in the GMO business due to strict government controls in all aspects of the commercialization of GMO initiatives. For example, SEED’s legacy business was harmed by companies entering its markets by breaking the law. The absence of these pressures should help maintain revenue growth and margins (at higher levels than the legacy business had attained, as stated by Mr. Han).
SEED expects to finalize a key GMO JV partnership agreement with a State Owned Enterprise to help fund the company’s GMO operations once it receives all the necessary certificates. Basically, as disclosed in press releases, the JV partner has lent (debt) SEED capital. This loan is expected to be converted into equity once the agreement is finalized. We are hoping that investors would welcome such a development as very positive as it shows a long-term commitment by a government entity and eliminates a large debt burden.
SEED expects that the corn trait biosafety certificate it received in 2009 (that sent the stock to reach a market cap of $300M) and was reapproved in 2015 will soon get an approval stamp to keep the certification current. (SEED’s market cap is currently $42M).
Long-time and well-known China short seller Jon Carnes (aka Alfred Little), is long SEED through his fund, with his position in the stock being one of his largest portfolio holdings. We think that the investors will view his ownership as very positive once it becomes more widely known.

Research

Tue, 08 Sep 2020 18:01:25 GMT

Today, we have scheduled a meeting with Origin Agritech Limited (NASDAQ:SEED) that you are invited to attend. Zoom invite details are at the end of this note. To reiterate yesterday evening’s email:

Last week SEED emerged from a multi-year investor relations hiatus by presenting at LD Micro Virtual conference event. We have several questions for management, so we reached out to see if the CEO could present his story, exclusively to Geoinvesting members. This will be a great opportunity to tie up some loose ends from the LD presentation since there will be no time constraints. The stock has been on a wild ride since our coverage began.

To get caught up on the volatile and developing SEED story, where SEED is banking on its role in the commercialization of GMO in China, please see a summary of events here.

Research

Wed, 26 Aug 2020 19:08:34 GMT

Agritech Limited (NASDAQ:SEED) (Agricultural Technology) ($8.99; $45.0M market cap) an agriculture technology company, announced that the Company has entered a commercialization agreement with Institute of Plant Protection (IPP) of the Chinese Academy of Agricultural Sciences (CAAS) for a new generation insect-resistant GMO corn gene. A key takeaway from this release is that SEED is finally giving us some clues into what its revenue participation will look like when it enters into licensing agreements with companies it has worked with to develop GMO intellectual property:

Under the terms of the agreement, the parties will continue to work together and intend to jointly file for patents on the transgenic corn and other crops created from this gene. Origin will be responsible for obtaining a bio-safety certificate, a key step needed before commercialization in China. Origin will retain exclusive worldwide rights to commercialize all crop seed containing this gene and in return will pay a single-digit percentage of sales royalty to IPP.

Research

Wed, 05 Aug 2020 17:59:43 GMT

Agritech Limited (NASDAQ:SEED) (Agricultural Technology) ($11.78; $59.0M market cap) announced it has regained NASDAQ compliance.

“On March 6, 2020, the Company was notified by NASDAQ that it did not comply with the minimum $2.5 million stockholders' equity, $35 million market value of listed securities, or $500,000 of net income from continuing operations requirements for The Nasdaq Capital Market. Since then, NASDAQ officials determined that for the 20 consecutive business days, from July 2 through July 30, 2020, the Company's market value of listed securities has been $35,000,000 or greater and accordingly, the Company has regained compliance with NASDAQ listing requirements.”

Research

Fri, 31 Jul 2020 19:15:30 GMT

Agritech Limited (NASDAQ:SEED) (Agricultural Technology) ($11.65; $58.0M market cap) announced that the Company has entered into a collaboration agreement with National Maize Improvement Center of China (NMICC), a leading agricultural research institute, to develop and commercialize new GMO corn traits.

"We are pleased to be working with Origin Agritech, as we have followed their progress over the years and have been extremely impressed," said Director of NMICC Jingsheng Lai. "They are one of only a couple of GMO seed companies in China that is vertically integrated, making them the ideal partner, with all the capabilities necessary to take new seed traits to market."

Research

Mon, 27 Jul 2020 13:52:37 GMT

Origin Agritech Limited (NASDAQ:SEED) announced that the Company has entered into a collaboration agreement with Biotechnology Research Institute (BRI), a division of Chinese Academy of Agriculture Sciences (CAAS) to expand collaborations in GMO soybean research and commercialization. In addition to glyphosate tolerance G2-epsps gene, which BRI developed and Origin has global exclusive commercial rights in corn, soybean, and other major crops, Origin and BRI will expand our collaboration to develop dicamba tolerance, drought tolerance, and salt-alkaline tolerance GMO soybean varieties by using three BRI newly developed and patented genes.

It's going to be interesting to see if investors understand what the SEED release implies, pertaining to its role in GMO commercialization and ownership of GMO IP. Here is our initial take:

Confirms our due diligence that SEED has a strong relationship with the Chinese Academy of Agricultural Science. It appears that BRI is using SEED’s IP to co-develop GMO traits.
Significant development that the release shows SEED will have exclusive commercial rights in corn, soybean and other major crops that BRI develops or co-develops with SEED. (prior research only centered around the very large opportunity)

Appears SEED does have ownership in the GMO traits that BRI is developing, but we still need further clarification. On July 15, 2020 BRI received a bio-safety certificate for a soybean GMO trait. More importantly, the IP used to develop the soybean GMO trait was from the same corn trait BRI used to gain a corn bio-safety certificate in 2009. Recall from our past note, BRI used SEED’s corn IP to get approval in 2009 and used it to gain soybean approval.

Caveat:

Next round of due diligence will include clarification on which GMO traits were developed by BRI using SEED’s IP and which traits BRI owns, where it's giving SEED the rights to commercialize certain GMO traits because SEED has invested several billions RMB of capital over the years to create the infrastructure to manufacture GMO products/seeds
The press release mentions that SEED’s phytase corn trait received bio-safety approval in 2009. Recall that this was the development that sent SEED shares soaring in 2009. However, it is not clear if this bio-safety approval has been maintained or if the company needs another approval in 2020. We will urge the company to clarify this issue.
Overall, SEED has to be more clear on what it actually owns in its relationship with BRI. However, our interpretation is that SEED owns the IP that BRI is using to develop GMO traits.

Research

Wed, 15 Jul 2020 19:01:28 GMT

Information Arbitrage Alert - SEED

This morning we noticed that Chinese Academy of Agricultural Science’s GMO safety certificate for corn was renewed. What is interesting about this news is that the Chinese Academy of Agricultural Science appears to have a close relationship with Origin Agritech Limited (NASDAQ:SEED) (Agricultural Technology) and that may have used SEED’s IP to gain approval. We found this verbiage in the 2009 20-F as well as its most recent 20-F:

“We focus our seed business on biotechnology development and an e-commerce platform in the seed industry. We conduct our own research and development efforts for genetically modified seeds, referred to as GM. We also collaborate with the Chinese Academy of Agricultural Science, China Agricultural University, and Zhejiang University in the PRC under various agreements for seed genetic modifications and other seed biotechnologies that give us the right to market the seeds and technologies they develop.”

What is even more interesting is that this development appears to be similar to the chain of events (Chinese Academy of Agricultural Science receiving safety certificate) that occurred in 2009 which led to SEED shares to rise over $130 per share. We view this development as extremely positive.

Here is a link to the government website which shows the Chinese Academy of Agricultural Science getting the safety certificate.

Here is the link to the application which mentions they will be using SEED’s GMO IP.

Please see an earlier recap of the SEED story here.

Research

Wed, 24 Jun 2020 19:49:40 GMT

Origin Agritech Limited (NASDAQ:SEED) ($7.98; $39.9M market cap)

As we’ve covered, China based company SEED is attempting to obtain all the necessary certificates/licenses (3 in total) to allow it to sell GMO products in China. See our late May research note for a full recap on the SEED story.

Currently, China only allows for the import of GMO products. Well, It appears that China has taken another positive step towards the domestic commercialization of GMO. Yesterday, Reuters published an article stating that China has issued/renewed 6 GMO safety certificates for companies outside of China, allowing for the import of certain GMO soybean and corn products.

What the article fails to mention is that the agricultural department of China also published information that points towards China turning its attention to domestic GMO commercialization.

We believe these developments are just another step towards China loosening restrictions on GMO, laying the groundwork for eventual domestic commercialization.

This development comes on the heels of recent activity from the Ministry of Agriculture and Rural Technology and Education, that we already brought to you, showing signs that China is heading towards GMO commercialization

We glean that the gist of these articles is that the PRC government is getting extremely aggressive in promoting the benefits of GMO and that these products are safe.

Research

Thu, 21 May 2020 13:21:09 GMT

Origin Agritech Ltd. is a China based company that trades on the NASDAQ under the ticker symbol SEED.

“Origin Agritech Limited, founded in 1997 and headquartered in Zhong-Guan-Cun (ZGC) Life Science Park in Beijing, is China's leading agricultural technology and a rural social e-commerce company, expanding in mid-2018 from crop seed breeding and genetic improvement business to be a leading technology developer in new rural e-commerce platform and Blockchain technologies. In crop seed biotechnologies, Origin Agritech's phytase corn was the first transgenic corn to receive the Bio-Safety Certificate from China's Ministry of Agriculture. Over the years, Origin has established a robust biotechnology seed pipeline including products with glyphosate tolerance and pest resistance (Bt) traits.”

I know what you're saying, please not a China based stock! Trust me, I feel the same way. Leading the research team at GeoInvesting, I saw firsthand how most of the U.S. listed China stocks I was investing in, from 2005 to 2009, ended up being frauds. I busted 12 high profile China frauds and even Int on a mission to expose 22 U.S. pump and dumps. If you are interested, here is an article that discusses Geoinvesting beginning involvement in the China stock universe.

SEED is one of the remnants left over from the failed reverse merger China days. When bad luck prevented the company from monetizing its large GMO patent portfolio it had to rely on growing other parts of business and entered business ventures that failed to gain traction. It eventually sold these businesses to survive and take one more stab at monetizing its large GMO patent portfolio.

While there are no guarantees when investing, particularly involving China based companies, our research indicates that SEED has a good chance of being of the few U.S. listed China stocks worth taking a bet in.

Geoinvesting has been monitoring SEED for some time, but began to turn bullish on the company in February 2019 when the stock was $6.50, due to our belief that the company is a great candidate to be one of the few companies in line to be awarded a license to sell GMO products in China. Currently, China only imports GMO products, but does not allow for the domestic production of GMO products. Although the stock briefly rose to $10.70 in January, shares pulled back to the $3.00 area during the COVID-19 crisis and have risen aggressively back to over $8.00 during the last few trading sessions. Quite frankly, I had thought that SEED would have been awarded all the necessary GMO licenses several months ago, but it appears that COVID-19 has delayed the process. For full disclosure I have purchased shares between $3.00 and $10.00.

What follows is a summary of our bullish view on seed.

Still, please be aware that this is a very very speculative play.

Elevator Pitch

We believe SEED’s current stock price of $3.40, or a market cap of $16 million, significantly undervalues the company’s potential to capitalize on China’s goals to commercialize GMO in China, a several billion dollar market opportunity.

Our research indicates that SEED is one of the few China based companies (less than 5) that will be permitted to receive a GMO commercialization license in China. If SEED is awarded a coveted GMO license, we believe shares would immediately be worth multiples of where it trades today.

GMO Woes

In October 2009, investors had high hopes that China would commercialize GMO. During that time, SEED received a biosafety certificate as the first, but most important step, to receive a license to license its GMO technologies to third parties and/or produce GMO products.

The stock rose from $50 to $105 the day after it made the announcement that it received a GMO biosafety certificate. However, GMO was met with significant public unrest. This resulted in the government temporarily shelving its GMO initiatives to issue certificates to allow for the production of GMO products.

The GMO initiative came back into focus when, in 2016, the Chinese government set an official plan to commercialize GMO by the end of 2020. That brings us to where we are today.

GMO Today

In December 2019, two China based companies were issued GMO biosafety certificates.

Now, investors are waiting for the Chinese government to officially issue the remaining certificates, so that they can produce GMO products. However, COVID-19 had delayed this process.

Why The Disconnect

The disconnect between SEED’s current price and where we believe the stock should be trading is based on few things:

Lack of awareness of public information in China that supports management’s comments made in press releases and SEC filings pertaining to having a biosafety certificate and optimism about the company receiving the remaining necessary GMO certifications.
Although the company has been periodically discussing it’s belief that it will receive the required GMO certificates, investors' overall distrust of U.S.listed China based companies and China’s government’s previous failure to move forward with GMO initiatives are depressing the stock. However, our review of public sources in China confirms what management has been talking about in the U.S., including the receipt of significant capital from a State Owned Enterprise JV partner to help fund the company’s GMO operations once it receives all the necessary certificates.
One very important information disconnect that we find very attractive is that investors assume SEED no longer has its biosafety certificate that was issued to them in 2009 because they were not mentioned alongside the two companies that received these certificates in December 2019. However, our research of public sources, including a media outlet that lists SEED as having the certificate, indicates that SEED has not lost the certificate because it can be renewed every five years.
In preparation for what we believe is laying the groundwork for GMO commercialization, China just announced that it’s cracking down on illegal GMO activities.
A few weeks ago, a China media report discussed SEED’s role in the commercialization of GMO.
Unlike 2009, the degree of negativity by the Chinese media and public is not as fierce as it was then. In fact, the media is essentially concluding that the commercialization of GMO is going to happen.
U.S. investor are unaware that GMO related stocks in China have risen sharply
Seed used to be the leading GMO company in China and it has been maintaining a close relationship with China Agriculture Institute in Beijing and several U.S. giant GMO companies,e.g. Monsanto and DuPont. Seed has its own GMO research results, which were recognized by the U.S. government. If Seed receives the license from Chinese government, these U.S. companies can put Seed’s GMO IP into their own products in China. Our research indicates that the two Chinese companies who received the safety certificate in 2019 do not have a high chance to work with U.S. companies because these two Chinese companies do not own GMO tech that they possess. Furthermore, one of these two companies, Dabeinong, has a terrible reputation for stealing GMO seeds in Iowa several years ago and the brother-in-law of the founder is still in jail, in Iowa.

China Has No Choice

We see very little chance that China will not commercialize GMO by the end of 2020 for the following reasons:

COVID-19 has escalated an already severe food shortage crisis in China due to disruptions in the food supply chain and a significant increase in prices of imported crops/seeds, such as corn and soybeans.
An unprecedented insect infiltration problem has been reducing food supply in China.
The company already imports GMO products from the U.S. Given trade wars between the U.S. and China, along with COVID-19, we think it's inevitable that China is going to take more control of their own food supply.

Valuation

SEED’s Market-cap after it received its biosafety certificate in 2009 rose to around $300 million. Applying the same market-cap today would equate to a price target of around $60.00, compared to its current price of around $3.50. Once it becomes evident, as we believe will be the case, that SEED receives ALL of its GMO certificates, we believe shares could meaningfully exceed $60.0.

Research

Wed, 15 Apr 2020 17:17:47 GMT

Origin Agritech Limited (NASDAQ:SEED) ($3.16; $15.1M market cap) announced it has received the RMB137.6 million from Beijing Changping Technology Innodevelop Group.

“Origin has entered a definitive framework agreement with Beijing Changping Technology Innodevelop Group (BC-TID) as announced earlier. Under this agreement, Origin and BC-TID will use Beijing Origin Seed Limited (Beijing Origin) as the target joint venture entity, The Company will contribute the Origin Life Science Center building in Beijing and two biotech corn traits to the joint venture and BC-TID will fund the joint venture with a total of RMB204 million. The Company will restructure Beijing Origin and transfer the unrelated assets to Beijing Origin State Harvest Biotechnology Limited, the wholly owned subsidy of the Company. BC-TID will then inject its cash investment into Beijing Origin to hold 51% of equity in Beijing Origin.”

The Company believes the cash infusion to bring the company back to compliance with NASDAQ:

“The cash of RMB137.66 million received is currently in the form of loan, which will be converted to equity according to the definitive framework agreement. Such equity investment will significantly increase the Company's shareholder's equity and bring the company to compliance with NASDAQ's listing rules regarding the capital deficiency we announced previously.”

We continue to hold our long position based on optimism surrounding its potential receipt of a coveted GMO license from the Chinese government.

Comments & Business Outlook

Wed, 11 Mar 2020 13:10:40 GMT

Joint Venture

Tue, 03 Mar 2020 14:50:14 GMT

BEIJING, March 3, 2020 /PRNewswire/ -- Origin Agritech Ltd. (NASDAQ: SEED) (the "Company" or "Origin"), an agriculture technology and rural e-commerce company, today announced it has entered a definitive framework agreement with Beijing Changping Technology Innodevelop Group (BC-TID).

Under this agreement, Origin and BC-TID will use Beijing Origin Seed Limited (Beijing Origin) as the target joint venture entity, The Company will contribute the Origin Life Science Center building in Beijing and two biotech corn traits to the joint venture and BC-TID will fund the joint venture with a total of RMB204 million. The Company will restructure Beijing Origin and transfer the unrelated assets to Beijing Origin State Harvest Biotechnology Limited, the wholly owned subsidy of the Company. BC-TID will then inject its cash investment into Beijing Origin to hold 51% of equity in Beijing Origin. Before the investment is finalized, BC-TID will provide a loan of RMB137.66 million to Beijing Origin.

BC-TID is wholly owned by the local government of Changping District in Beijing and was setup as an industrial investment platform. With over RMB10 billion asset, BC-TID mainly invests in the companies in the industrial parks of Changping District, where Origin Life Science Center building is located.

Research

Mon, 10 Feb 2020 16:06:22 GMT

Origin Agritech Limited (NASDAQ:SEED) (Agricultural Technology) updated the progress of iis biotech research programs and strategies for the commercialization of GMO corn seeds and traits. We believe that this update is packed with good news.

GMO Commercialization:

“As the Chinese Ministry of Agriculture and Rural Affairs (MOA) has recently issued two more biosafety certificates for biotechnology corn traits, we believe it is now more widely expected that the Chinese authorities will approve the planting and commercialization of biotech corn seed in China. As the leading corn seed biotechnology developer, Origin has been preparing for the commercialization of its technology for many years and has a rich pipeline to meet the potential demand for corn seed biotechnologies….

the issuance of the biosafety certificate for two corn seed traits last month is a strong indication that the Chinese MOA is moving towards approving the commercialization and planting of GM corn seeds in China. The Company's double-stacked corn traits of glyphosate tolerance and insect resistance is now in the final phase of biosafety certificate review by the Chinese MOA. Further cooperation with CAAS and the funding from BC-TID through the joint venture could provide the Company strong technical and financial support. Origin is prepared to take advantage of the opportunities in the field of agriculture biotechnology.”

Partnerships:

Origin has commercial cooperation programs with several multinational and local seed producers, including DuPont Pioneer and KWS. These programs are progressing very well, and the related technical work, including integration of Origin's traits into their corn hybrids, mostly has been completed.

Joint Venture/Funding:

"As announced previously, the Company is working with Beijing Changping Technology Innodevelop Group (BC-TID) to establish a joint venture to focus on the commercialization of genetically modified (GM) corn seed technologies. At this point, BC-TID has deposited RMB15 million (US$2.1 million) in an escrow account and the Company is completing the final steps of preparatory work so that BC-TID can inject the first tranche of cash investment as soon as possible."

SEED has been on a wild ride since we established a long position in early 2019 based on optimism surrounding its potential receipt of a coveted GMO license from the Chinese government. Only a few companies will eventually boast this achievement. We also added a bit to our position in October 2019 as shares pulled back, most likely reacting to ‘trade war noise’ between President Trump and China’s President Xi.

Shares briefly rallied 80% on some positive news that the Chinese Government issued biosafety GMO certificates to two entities. This certificate is a precursor to being awarded a commercialization license.

Today’s update indicates that the company is ready to take advantage of China's goal to allow domestic companies to produce GMO products.

Research

Mon, 13 Jan 2020 12:59:45 GMT

Origin Agritech Limited (NASDAQ:SEED) (Agricultural Technology) - The Good News

In early 2019 we established a long position based on hype surrounding its potential acquisition of a GMO license from China. Only a few companies will eventually boast this achievement. We also added a bit to our position in October 2019 as shares pulled back, most likely reacting to ‘trade war noise’ between President Trump and China’s President Xi.

On December 30, 2019 we highlighted that China’s agriculture ministry announced it plans to issue GMO safety certificates to Shanghai Jiaotong University and Dabeinong (002385.SZ) and Hangzhou Ruifeng Biotech & Zhejiang University, for soybean and corn, respectively.

Dabeinong, a publicly traded company on China’s Shenzhen Stock Exchange, saw its shares go limit up for 7 straight days before pulling back some.

Dabeinong 3 Month Chart:

Dabeinong is a huge company with a $34 billion market cap and saw its shares nearly double days following the news of it obtaining its safety certificate, even though GMO would only be part of its overall business.

While SEED has yet to receive a safety certificate, investors are likely speculating that it is a possible candidate to receive one, given that they had one back in 2009, has a GMO joint venture with a government entity and that the company has been a leader in the GMO corn seed technologies.

While the stock has had a strong run the last several days, rising from the mid $5 level to highs to hitting new 52 week highs of $10.44, the company’s market cap is still only $33 million.

We remain long as we await more news on the GMO front in China.

Research

Mon, 30 Dec 2019 18:32:08 GMT

**Call To Action

Looking To Add To Our Long Position In SEED - China Issues Bio-safety Certificates To 4 Different Entities

In early 2019 we established a long position in Origin Agritech Limited (NASDAQ:SEED), an agricultural technology and rural e-commerce company in China based on hype surrounding its potential acquisition of a GMO license from China. Only a few companies will eventually boast this achievement.

The stock has pulled back in recent weeks due to the lack of meaningful news flow regarding the commercialization of GMO in China and to what we believe to be some year end tax loss selling. However, some interesting news that came out today, combined with the 2019 tax selling deadline date being over, has us looking to add to our long position.

We still caution that there are no guarantees that:

Commercialization of GMO will will occur in 2020, or at all
The 2020 deadline to commercialize GMO won't be extended
SEED will receive commercialization certificates, even if commercialization of GMO is approved

Today, China’s agriculture ministry announced it plans to issue GMO safety certificates to Shanghai Jiaotong University and Dabeinong (002385.SZ) and Hangzhou Ruifeng Biotech & Zhejiang University, for soybean and corn, respectively. Here are some interesting comments:

“China will issue the certificate to SHZD32-01 soybean developed by Shanghai Jiaotong University, given there is no objection during the 15-day period soliciting public opinion, the Ministry of Agriculture and Rural Affairs said in a statement on its website.

Dabeinong’s (002385.SZ) DBN9936 corn, and another corn crop variety developed by Hangzhou Ruifeng Biotech Co.Ltd, and Zhejiang University, were also expected to receive the certificate.”

Also interesting is a Reuters article that quoted SEED’s CFO:

“This signifies the policy changes from the central government as China is moving to commercialize GMO corn,” said James Chen, chief financial officer of Origin Agritech Limited”

This adds to the flow of positive developments indicating that China is getting closer to approving the domestic commercialization of GMO agricultural products. It's worth noting that China does actually import some GMO agricultural products from the United States.

Since our original note, some minor steps point to the Chinese government leaning towards the commercialization of GMO products. On September 4, 2019 we highlighted an article by the state-controlled media, Xinhuanet, that briefly introduced different countries’ adoption of GMO products for their agriculture:

"The importance of this article is not about the content, but rather not that the well-known State Media has started reporting about GMO-related topics, it is our opinion that this is an indication of the government’s openness towards GMO technology and a possible positive sign for the eventual GMO commercialization."

While today's new development is just the issuance of biosafety certificates, we're viewing it as positive because China is issuing them within one year of a 5 year mandate to approve the commercialization of GMO by 2020.

Research

Mon, 04 Nov 2019 14:42:09 GMT

Origin Agritech Limited (NASDAQ:SEED) ($5.87; $18.7M market cap), an agricultural technology and rural e-commerce company in China.

We received some questions on the recent SEED press release, , regarding its progress of Biotech Commercialization joint venture with Beijing Changping Technology Innodevelop Group (BC-TID). As part of the JV, BC-TID plans to contribute $2.1m.

While it’s nice to see that BC-TID, a state-owned enterprise in China, it still supporting the J.V., we really didn't see the news as that meaningful for the following reasons

Small amount of money is being invested into the JV, only $2.1 million
The $2.1 million is being held in an escrow account

Again, as far as we are concerned, the only thing that matters for our SEED CTA:

China approving GMO
SEED receiving a GMO license

Everything else, in our opinion, is just fluff.

Research

Tue, 29 Oct 2019 04:00:00 GMT

Origin Agritech Limited (NASDAQ:SEED) ($5.97; $18.8M market cap), an agricultural technology and rural e-commerce company, updated its progress of Biotech Commercialization joint venture with Beijing Changping Technology Innodevelop Group.

On June 5, 2019, the Company announced that the Company entered into a Cooperation Framework Agreement with BC-TID to form a new joint venture to focus on the commercialization of genetically modified (GM) corn seed technologies.

Under the agreement, Origin and BC-TID will establish a new entity with approximately equal partnership. The Company will contribute the Origin Life Science Center building in Beijing and two biotech corn traits to the new joint venture, and BC-TID will fund the joint venture with a total of RMB204 million. The two biotech traits are the glyphosate tolerance (Gt) trait and the double stacked traits of insect resistance (Bt) and Gt genes. These two traits have completed multi-year production tests, and we have submitted the application for the final stage of biosafety approval in April to China's Ministry of Agriculture.

Since the Cooperation Framework Agreement was signed, both parties are actively involved to complete the formation of joint venture. However, the process took longer than we originally expected mainly due to the complicated tax related issues with the Origin Life Science Center building in Beijing. Both parties now agreed to use Beijing Origin Seed Limited (Beijing Origin) as the joint venture entity in order to expediate the process. The original term remains the same and both parties are cooperating to complete the process as soon as possible. Due diligence has been completed and BC-TID has deposited RMB15 million (US$2.1 million) in an escrow account.

Beijing Origin has been the operating company for the Company's Chinese seed business and is controlled by the Company through a series of stock consignment agreements. The Company will transfer the seed business from Beijing Origin to Beijing Origin State Harvest Biotechnology Limited (State Harvest), which is the Company's wholly owned entity in China. After the changes and investment from BC-TID, Beijing Origin will become a joint venture of the Company and BC-TID, and will have the assets of the Origin Life Science Center building and two biotech corn traits discussed above.

Research

Wed, 23 Oct 2019 19:34:34 GMT

**Call to Action - Adding To Our Long Position in SEED

In February 2019, we disclosed that we had taken a small speculative position in Origin Agritech Limited (NASDAQ:SEED), an agriculture technology and rural e-commerce company in China.

There is a possibility that China will pass regulation allowing Genetically Modified Organisms (GMO) to be engineered domestically, and SEED could potentially be granted a GMO license from the Chinese government. This has made the company a high risk gamble we are willing to take, especially given the escalation of the trade war between the U.S. and China. The trade war could result in China slapping $75 billion in tariffs on certain U.S goods, mainly agricultural products being imported from the U.S. In general, tariff wars can lead to nations taking measures to reduce dependency on foreign countries.

SEED shares have recently pulled back, possibly in part related to news that President Trump and President Xi will delay certain tariffs during current negotiations, including those surrounding agricultural products. Specifically, China has agreed to buy $40 to $50 billion of farm goods - the rationale being that if China is able to import its agriculture needs, it may shelve the GMO initiative.

However, even in the event of a favorable trade war outcome, we don’t think China will stop taking steps to protect itself from foreign dependencies. Furthermore, China actually already imports some GMO products from the U.S. So in our opinion, it just makes sense that China will approve GMO to be domestically engineered.

Since our original note, some minor steps point to the Chinese government’s leaning towards the commercialization of GMO products. On September 4, 2019 we highlighted an article by the state-controlled media, Xinhuanet, that briefly introduced different countries’ adoption of GMO products for their agriculture. The importance of this article is not about the content, but rather not that the well-known State Media has started reporting about GMO-related topics, it is our opinion that this is an indication of the government’s openness towards GMO technology and a possible positive sign for the eventual GMO commercialization.

SEED has also made steps to further ready itself if and when it receives a GMO license. On August 27, 2019, SEED announced an agreement with Biotechnology Research Institute of Chinese Academy of Agricultural Sciences to speed up the commercialization of genetically modified insect resistance and glyphosate tolerance corn traits in China. Then, on September 17, 2019 SEED entered into a collaboration agreement with Inova Genética Ltda (INOVA), a member of the Wehrmann Group, from Cristalina-GO, Brazil.

“The agreement will involve cooperation in field testing of hybrids of both Origin and INOVA in each other's geographic regions. INOVA will also cooperate with Origin to evaluate corn seed biotechnology traits for application in South American markets. In addition, Origin and INOVA will explore commercial opportunities between the two companies, especially in corn seed breeding, production and distribution in South America.”

Lastly, we feel the story is more timely than ever as we near the tail end of the central government's Five Year Plan which was published by the Chinese government in 2016. In that plan, they set a target for the commercialization of corn seed GMO technologies during the central government's Thirteenth Five-Year Plan, which ends in 2020.

As we previously mentioned, going long China companies is risky and we don't like doing it often, so we consider our SEED CTA to be a high risk bet.

Research

Tue, 01 Oct 2019 04:00:00 GMT

Last Friday, there were reports featured in various news outlets that Trump was in talks to limit investments in Chinese companies, even threatening to consider delisting them from the U.S. markets.

China-heavy indexes immediately fell on the news, which also weighed on the markets as a whole. In tandem, we are keeping a close eye on our recent long, albeit speculative, position in Origin Agritech Limited (NASDAQ:SEED), a China based company that passed a few of our litmus tests for a potential increase in value, contingent on:

The Chinese government legalizing domestically sourced GMO products, and
SEED being one of the companies that will receive approval to license its GMO technology in China.

Although coverage on this topic continues in the media, we are skeptical that new regulation will be passed to limit China based companies' involvement in U.S. capital markets, at least for now.

However, we don't think this topic will just go away and we're all aware of how much the current administration flip flops on international issues from day to day. Having said that, we feel this topic shouldn’t be ignored in light of the fact that there has already been pushback from China.

One thing worth noting is that, in our opinion, the tension between China and the United States will probably incentivize China to depend less on foreign nations and more on their own. We think it strengthens our case that China will approve GMO tech to lessen the dependency on foreign agricultural sources including the limited amount of GMO agricultural products it currently imports from the United States.

We'll continue to follow the call by some politicians to limit China's involvement in US capital markets.

Research

Tue, 17 Sep 2019 18:23:47 GMT

Origin Agritech Limited (NASDAQ:SEED) ($6.77; $21.6M market cap), an agricultural technology and rural e-commerce company, announced that the Company entered into a collaboration agreement with Inova Genética Ltda (INOVA), a member of the Wehrmann Group, from Cristalina-GO, Brazil.

“The agreement will involve cooperation in field testing of hybrids of both Origin and INOVA in each other's geographic regions. INOVA will also cooperate with Origin to evaluate corn seed biotechnology traits for application in South American markets. In addition, Origin and INOVA will explore commercial opportunities between the two companies, especially in corn seed breeding, production and distribution in South America.”

See our recent coverage on SEED including our research on the potential GMO license catalyst in China we are betting on, which could be a significant revenue generator for the company.

Joint Venture

Tue, 17 Sep 2019 14:08:15 GMT

BEIJING, Sept. 17, 2019 /d/ -- Origin Agritech Ltd. (NASDAQ: SEED) (the "Company" or "Origin"), an agriculture technology and rural e-commerce company, today announced that the Company has entered into a collaboration agreement with Inova Genética Ltda (INOVA), a member of the Wehrmann Group, from Cristalina-GO, Brazil.

The agreement will involve cooperation in field testing of hybrids of both Origin and INOVA in each other's geographic regions. INOVA will also cooperate with Origin to evaluate corn seed biotechnology traits for application in South American markets. In addition, Origin and INOVA will explore commercial opportunities between the two companies, especially in corn seed breeding, production and distribution in South America.

INOVA is headquartered in Cristalina-GO, Brazil, and focuses on the plant breeding business. INOVA is a member of the Wehrmann Group, which is an active participant of the seed industry and a leading company in vegetable production in Brazil. The company has Dr. Anderson Dona as research head and Dr. Roberto de Rissi as a special consultant. The group website is: www.wehrmann.com.br.

"Wehrmann, which also owns Dois Marcos seed company, is an important seed industry player in Brazil and has many years of experience in both the soybean and corn seed businesses in Brazil," said Dr. Gengchen Han, Origin's Chairman and Chief Executive Officer, "our cooperation with INOVA will expand our geographic access for both our breeding technologies and our biotech traits."

"It's a great pleasure to visit Origin's facilities in Beijing, and we are impressed by Origin's biotech research and their breeding programs. We look forward to an in depth cooperation with Origin both on the biotech front and in conventional corn seed breeding programs," said Dr. Verni Wehrmann, Chairman of the Wehrmann Group.

Research

Wed, 04 Sep 2019 04:00:00 GMT

Origin Agritech Limited (NASDAQ:SEED) ($5.09; $16.2M market cap), an agricultural technology and rural e-commerce company, remains in our focus. Last weekend, the state-controlled media Xinhuanet published an article that briefly introduced different countries’ adoption of GMO products for their agriculture. The importance of this article is not about the content, rather the fact that now the well-known state media has started reporting about GMO related topics, which in our opinion, is an indication of the government’s openness towards GMO technology and a possible positive sign for the eventual GMO commercialization.

This information arbitrage (InfoArb) development comes on the heels of details surrounding a media report that we discussed last week that there was a global biotechnology research conference held in Beijing on August 26, 2019, during which the ISAAA (International Service for the Acquisition of Agri-biotech Applications) introduced the current status of global GMO agriculture products’ commercialization, and that the application of GMO technology could reduce the use of agricultural chemicals’ in the field.

We will continue to monitor developments in China for more InfoArb on SEED before newsflow reaches U.S. shores, as it relates to SEED potentially being granted a GMO license in China.

Research

Thu, 29 Aug 2019 04:00:00 GMT

Origin Agritech Limited (NASDAQ:SEED) ($5.54; $17.7M market cap) - On August 27, 2019, we highlighted that SEED, an agricultural technology and rural e-commerce primarily in China, announced an agreement with Biotechnology Research Institute of Chinese Academy of Agricultural Sciences to speed up the commercialization of genetically modified insect resistance and glyphosate tolerance corn traits in China. We believe this announcement by SEED is consistent with the notice issued by the Agriculture Department of China on July 2, 2019, calling for more research on breeding new GMO species, claiming that based on the government’s Thirteenth Five-Year Plan (2016-2020), the process of GMO corn and soybean commercialization needs to speed up.

On August 27, 2019, an article in China introduced that there was a global biotechnology research conference held in Beijing on August 26, 2019, during which the ISAAA (International Service for the Acquisition of Agri-biotech Applications) introduced the current status of global GMO agriculture products’ commercialization, and that the application of GMO technology could reduce the use of agricultural chemicals’ in the field. It is believed that this kind of conference, inviting reporters to attend, is part of the strategy by the government to conduct more promotion and communication about the GMO technology to the public.

Regarding the players in this GMO sector, a Caixin article (Caixin is known for its close relationship with the central government in China) published on Sohu.com Limited (NASDAQ:SOHU) in November 2018 listed the companies/institutions that were already in the stage of waiting for the GMO safety certificate from the government. Four names were mentioned:

China Agricultural University
Zhejiang University
Beijing Dabeinong Technology Group Co.,Ltd. (public company listed on China Mainland A share market with ticker of SHE: 002385;
Beijing Origin Seed Limited (SEED).

It stated that China Agricultural University was developing the glyphosate tolerance corn traits, and the other three entities Zhejiang University, Beijing Dabeinong Tech, and SEED were developing corn traits with both insect resistance and glyphosate tolerance. We can see that among these four companies/institutions, only two entities are business enterprises, one is listed in China Mainland A share market and the other one SEED is listed on NASDAQ. (the other two entities are universities).

It is unclear if there are more companies/institutions that have submitted their applications for the GMO safety certificate since then. However, it’s worth noting that in the last two trading days, Beijing Dabeinong Tech (002385) hit the 10% max up threshold on the 28th and followed that move with another 3.5% in last night's trading session.

Beijing Dabeinong Tech has a market cap of about US$3.4 billion. Although we cannot say that the recent move is definitely 100% due to the GMO optimism, we should not rule out this possibility. We believe that Beijing Dabeinong price action is an encouraging signal for SEED, because it could potentially bring much more awareness to the SEED, which currently has a market cap of $17.7 million, recently posted a strong quarter of revenue and earnings and successfully addressed NASDAQ listing compliance issues.

We have yet to perform all of the necessary deep dive on-the-ground due diligence on SEED in China. Still, although SEED is a highly speculative story, we continue to believe that if it were to be awarded one of the coveted GMO licenses, we believe its shares would rise substantially on the potential of the company to generate revenue and earnings at several multiples of their current run rates.

Research

Tue, 27 Aug 2019 14:48:16 GMT

Origin Agritech Limited (NASDAQ:SEED) ($5.09; $16.2M market cap) an agricultural technology and rural e-commerce, announced an agreement with Biotechnology Research Institute of Chinese Academy of Agricultural Sciences to speed up the commercialization of genetically modified insect resistance and glyphosate tolerance corn traits in China.

"The new collaboration agreement deepens our cooperation with BRI and mainly focuses on related research for commercialization of the double stacked corn trait of insect resistance and glyphosate tolerance. Origin and BRI will join together to apply for government sponsored funds and share research facilities and capabilities, as well as the potential benefits. Both Origin and BRI will also work together to promote the commercialization of the stacked corn trait, which Origin has been developing based on the fundamental research from CAAS.

According to the "Thirteenth Five Year State Science and Technology Innovative Plan" published by the Chinese government in 2016, the Chinese government has set a target for the commercialization of corn seed GMO technologies during the central government's Thirteenth Five-Year Plan, which ends in 2020."

We have been monitoring SEED for several months now based on hype surrounding its potential receival of a GMO license from the Chinese government. Today’s release suggests that the company is preparing for that approval, even though based on the performance of the stock, the market has been taking the GMO approval event with a grain of salt. See our past coverage on SEED here.

Research

Wed, 21 Aug 2019 14:32:51 GMT

Origin Agritech Limited (NASDAQ:SEED) ($5.04; $16.1M market cap) an agricultural technology and rural e-commerce, announced that it has regained full compliance with the NASDAQ.

On June 5, 2019, the Company was notified by the NASDAQ Stock Market ("NASDAQ") that it was not in compliance with the NASDAQ listing rules regarding the minimal requirements for stockholders' equity. The non-compliance was determined based on the balance sheet of September 30, 2018, in the Annual Report on Form 20-F for fiscal year 2018 filed on June 3, 2019. Since September 30, 2018, the Company increased its stockholder's equity mainly through an equity financing in January 2019. The Company also applied to change from the NASDAQ Global Select Market to the NASDAQ Capital Market, the application for which was approved and trading on NASDAQ Capital Market for the ordinary shares of the Company commenced August 19, 2019. The Company regained full compliance with the listing standards of NASDAQ.

We have been monitoring SEED for several months now based on hype surrounding its potential of receival of a GMO license from Chinese government. See our past coverage on SEED here.

Research

Tue, 16 Jul 2019 15:43:04 GMT

Origin Agritech Limited (NASDAQ:SEED) ($5.98; $19.1M market cap) an agriculture technology and rural e-commerce company announced first half 2019 results:

Sales of $12.2 million vs $0.53 million in the prior year
EPS of $0.04 vs a loss of $1.51
Strengthened balance sheet

“During the first half year of FY2019, the Company improved its overall balance sheet by completing an equity financing of US$7.74 million through the announced deals with Longhan Investment Management Co and Tiger Capital Fund SPC. The equity financing includes the issuance of 1,397,680 ordinary shares and warrants to purchase 1 million of the Company's ordinary shares. The total equity of the Company increased to RMB43.6M (US$6.5 million), compared to the negative equity of RMB23.3 million as of September 30, 2018. Regarding the earlier equity financing with L2 Capital, the Company has withdrawn the F3 registration statement filing with SEC dated November, 2018 and there are no further outstanding shares or warrants relating to the equity financing with L2 Capital.”

We have been monitoring SEED for several months now based on hype surrounding its potential of receival of a GMO license from Chinese government. The license will be given to only a few companies. However, it's nice to see that the current business is finally having some success. See our past coverage on SEED here, including our research note that discusses the GMO "drama".

Comments & Business Outlook

Wed, 12 Jun 2019 13:12:01 GMT

BEIJING, June 11, 2019 /PRNewswire/ -- Origin Agritech Ltd. (SEED) (the "Company" or "Origin"), an agriculture technology and rural e-commerce company, today announced that on June 5, 2019 (the "Notice Date"), the Company received a letter from the NASDAQ Stock Market ("NASDAQ") notifying the Company that the Company is not in compliance with the NASDAQ listing rules. The Company's Form 20-F for the fiscal year ended September 30, 2019 reported stockholders' equity of $(3,396,000) and therefore, the Company is not in compliance with NASDAQ Listing Rule 5450(b)(1)(A) which requires the Company to maintain a minimum of $10,000,000 in stockholders' equity. The Company has 45 calendar days to submit a plan to NASDAQ to regain compliance and if such plan is accepted, the Company can be granted an extension of up to 180 calendar days from the Notice Date to evidence compliance. If NASDAQ does not accept the Company's plan, the Company will have the opportunity to appeal that decision to a hearings panel. The Company's management is pursuing options to address the noncompliance and intends to submit a compliance plan on or before the deadline set by NASDAQ.

Research

Tue, 04 Jun 2019 15:32:46 GMT

Origin Agritech Limited (NASDAQ:SEED) ($6.08; $17.5M market cap) is an agriculture technology and rural e-commerce company. We have been monitoring SEED for several months now based on hype surrounding its potential of obtaining a GMO license from China which will only be given to a few companies. In our April 24, 2019 note, we stated:

“SEED is well-positioned once the commercialization of the corn GMO technology is approved by the Chinese government and the potential market value of this market is worth billions of US dollars, according to the press release in August 2018 by the company:

“Origin is the leading technology provider for corn seed GMO technologies in China. According to the "Thirteenth Five Year State Science and Technology Innovative Plan" published by the Chinese government in 2016, the Chinese government set to target the commercialization of corn seed GMO technologies during the central government's Thirteenth Five-Year Plan, which ends in 2020.”

We are viewing the eventual filing of the 20-F as the first potential near-term catalyst. We feel this could cause shares to pop as the Company will likely retain its NASDAQ listing.”

Yesterday, after the close, SEED filed its 20-F. As we stated above, we felt this would be the first positive catalyst for the Company in potentially obtaining a GMO license. It seems the Company has taken two steps in nearing that goal.

First, the Company has sent in its application for a GMO Biosafety certificate, a measure required before being able to obtain a GMO license. Quote from 20-F:

“A production license from the Ministry of Agriculture is required for the production of GMO seeds (the “GMO License”). To obtain a GMO License, the business must obtain a safety certificate of agricultural GMO and passed variety examination, plant and breed in the designated areas, adopt appropriate safety administration and precautionary measures and comply with other conditions provided for by the Agricultural Department. We are in the process of applying for GMO Biosafety certificate as application were submitted in April, 2019.”

Second, the company entered into a cooperation agreement with a government entity to form a new Company focused on SEED’s GMO assets. Quote from 20-F:

“On May 17, 2019, the Company entered into a Cooperation Framework Agreement with Beijing Changping Technology Innodevelop Group (BC-TID), an entity owned by the government of Changping District of Beijing City. Under this agreement, BC-TID and Origin will form a new entity, which 51% and 49% of equity interests would be owned by BC-TID and the Company, respectively. Based on the agreement, Beijing Origin will contribute the headquarters building in Beijing and certain of its seed technology assets related to genetically modified seeds to the new entity. BC-TID will fund the joint venture with a total of RMB204 million in cash. Also agreed under this agreement, the new entity will pay off the bank loan of RMB78 million, which is collateralized by the Company’s headquarters building in Beijing, upon receiving the RMB204 million investment from BC-TID. The transaction is subject to the satisfaction or waiver of several conditions set forth in the agreement.”

While it seems the company is giving up a 51% interest in the new entity, we feel this is a major positive for SEED shareholders. The fact that the city government’s partnership with the company in the GMO seed area makes us further believe that the company is in a good position in this field. In addition, the potential RMB204 million cash investment from the government backed group for the 51% equity interest values the new entity at RMB400 million, which gives SEED’s 49% interest a face value of RMB196 million ( US$28.4 million). Investors should note that this is only a framework agreement and an official deal has not yet closed.

In addition, according to the company's 20-F, it completed its previously announced share subscription transaction with Tiger Fund, where about 1.4 million shares were issued at an average price of $5.54 per share. The company’s shares outstanding after this transaction is estimated to be 4.9 million.

In October 2018, we identified a strategic investor, Longhan Investment Management, Co., Ltd ("Longhan") and entered into a Share Subscription Agreement with Longhan, and the agreement was later assigned to Tiger Capital Fund SPC (“Tiger Fund”), Tiger Fund purchased 1,397,680 Shares of the Company's common stock for an aggregate purchase price of US$7,743,147.20.

Research

Wed, 24 Apr 2019 15:12:31 GMT

Origin Agritech Limited (NASDAQ:SEED) ($6.49; $18.7M market cap) is an agriculture technology and rural e-commerce company. We have been monitoring SEED for several months now based on hype surrounding its potential of obtaining a GMO license from China which will only be given to a few companies.

SEED is well-positioned once the commercialization of the corn GMO technology is approved by the Chinese government and the potential market value of this market is worth billions of US dollars, according to the press release in August 2018 by the company:

“Origin is the leading technology provider for corn seed GMO technologies in China. According to the "Thirteenth Five Year State Science and Technology Innovative Plan" published by the Chinese government in 2016, the Chinese government set to target the commercialization of corn seed GMO technologies during the central government's Thirteenth Five-Year Plan, which ends in 2020.”

The company has still not filed its annual report (20-F) for its year end September 30, 2018 which was due at the end of January 2019. We will soon provide a summary on what is going on with SEED, why some investors are so excited about it and why some are betting the stock will move big on an announcement of the company receiving a GMO license. Those interested in SEED need to understand there is significant risk on two fronts: first, it's not guaranteed that the NASDAQ will give the company a longer grace period, resulting in a delisting of the company and second, if they are not granted the GMO license many investors may flee.

We are viewing the eventual filing of the 20-F as the first potential near-term catalyst. We feel this could cause shares to pop as the Company will likely retain its NASDAQ listing.

Comments & Business Outlook

Tue, 26 Feb 2019 14:30:38 GMT

BEIJING, Feb. 25, 2019 /PRNewswire/ -- Origin Agritech Ltd. (NASDAQ: SEED) (the "Company" or "Origin"), an agriculture technology and rural e-commerce company, today announced that the Company has received a letter from the NASDAQ Stock Market ("NASDAQ") notifying the Company that the Company is delinquent with respect to the filing of the Annual Report on Form 20-F for the fiscal year ended September 30, 2018 and therefore not in compliance with the requirements for continued listing set forth in NASDAQ Listing Rule 5250(c)(1). The Company has 60 calendar days to submit a plan to NASDAQ to regain compliance and if such plan is accepted, the Company can be granted an exception until August 14, 2019 to regain compliance. If NASDAQ does not accept the Company's plan, the Company will have the opportunity to appeal that decision to a hearings panel. The Company's management is pursuing options to address the deficiency. The Company plans to file Form 20-F as soon as possible or submit a compliance plan on or before the deadline set by NASAQ.

Research

Mon, 11 Feb 2019 16:23:36 GMT

Origin Agritech Limited (NASDAQ:SEED) ($6.70; $19.3M market cap) - We’re taking a closer look at SEED and beginning to prepare an RFT (Reasons For Tracking). Origin Agritech is an agriculture technology and rural e-commerce company,

We're not at all impressed by past management's execution of the company’s business goals. However, some of GeoInvesting’s members’ interests in the story, the company’s entry into new industries, and the possibility of SEED potentially being granted a GMO license from the Chinese government, have made it worth watching.

The company also has a relatively simple share structure after affecting a reverse split last year and currently trades with a $19M market cap (market cap would increase to $28M after the private place completes). The company has guided for RMB 1B in revenue for the coming year ( $148M) in its investor presentation, without even taking into account the potential benefits of any GMO licensing.

Obviously, going long China companies is risky and we don't like doing it often, so we consider this a high risk bet. For now, we have taken a small speculative long position in the name in case the company begins to show signs of a turnaround or is granted a GMO license while we look into the situation further

Joint Venture

Fri, 21 Dec 2018 15:31:40 GMT

BEIJING, Dec. 19, 2018 /PRNewswire/ -- Origin Agritech Ltd. (SEED) ("the Company" or "Origin"), an agriculture technology and rural e-commerce company, today announced the establishment of two more new joint ventures: Shandong Aoyu Zhongye Limited (Shandong Aoyu) in Shandong province and Henan Aoyu Zhongye Limited (Henan Aoyu) in Henan province. Origin holds 51% of equity in both of the JVs.

The establishment of these two joint ventures, along with the Hubei Aoyu Agricultural Technology Limited (Hubei Aoyu) in Hubei province, Anhui Aoyu Zhongye Technology Ltd. (Anhui Aoyu) in Anhui province and Xuzhou Aoyu Agricultural Technology Ltd. (Xuzhou Aoyu) in Jiangsu province announced previously, completes the first stage of the Origin e-Commune Network development. These five JVs will be the cornerstone of Origin's SEED+ rural e-commerce business. The successful development of these five joint ventures demonstrated the acceptance of the major distributors toward revolutionary e-commune network philosophy in providing integrated and customized technology solution to the farmers across China.

The Origin e-Commune Network business has the target of RMB1 billion ( US$145 million) revenue during the fiscal year 2019.

CFO Trail

Thu, 06 Dec 2018 14:14:28 GMT

BEIJING, Dec. 3, 2018 /PRNewswire/ -- Origin Agritech Ltd. (NASDAQ: SEED) (the "Company" or "Origin"), an agriculture technology and rural e-commerce company, today announced key management changes. Dr. Gengchen Han, the Executive Chairman of the Company, and the Chief Executive Officer of the Company between 1997 and 2009 and between 2011 and 2016, has returned to become Chief Executive Officer of the Company, and Dr. James Chen, the former Chief Executive Officer of the Company, is now the Chief Financial Officer of the Company. The Company also announced that Mr. Shuangcheng Zhou will become the President of the Company upon the closing of the Share Subscription Agreement signed on October 16, 2018 between the Company and Longhan Investment Co., Ltd. ("Longhan").

Mr. Zhou is currently the Chairman and Chief Executive Officer of Longhan, the company he started in 2010. Mr. Zhou has served as the Chairman of China National Travel Industry Corporation previously. He has also been the Vice President of the National Research Institute of Policy Science and Vice-Chairman and Secretary-General of the Silk Road Special Fund Committee, among other positions in various government entities.

"I'm excited to return as the CEO of the Company and to welcome Mr. Zhou to our management team as we're moving into new strategic directions of an Origin e-Commune Network and the ISALR cooperation programs with Longhan," said Dr. Gengchen Han. He continued, "Our board and I thank Dr. Chen for his excellent service as CEO during this challenging period of time and we trust that his continuing service as CFO will serve well for the Company."

"I'm thrilled to join Origin's management team and very happy to work with Dr. Han, Origin's board and its management team," said Mr. Zhou, "I believe our cooperation program in ISALR technologies could create a major new business that will take Origin to a much higher level. Our teams have already been working together and are identifying business opportunities to implement in 2019 and beyond."

"I have been a strong believer for Origin and Dr. Han's leadership. I'm grateful that I have the opportunity to help the Company moving into the new strategic directions. The return of Dr. Han back as the CEO, the ISALR cooperation program with Longhan, and Mr. Zhou's agreement to join Origin's management team will set a strong basis for the business growth going forward," said Dr. Chen.

The ISALR (Integrated Saline-Alkaline Land Reclamation) cooperation programs with Longhan is the technology cooperation between Origin and Longhan. Origin and Longhan agreed to commercialize the ISALR technologies and target to plant on 1 million mu ( 165,000 acres) of saline-alkaline land in 2019.

CFO Trail

Tue, 04 Dec 2018 14:06:26 GMT

BEIJING, Dec. 3, 2018 /PRNewswire/ -- Origin Agritech Ltd. (SEED) (the "Company" or "Origin"), an agriculture technology and rural e-commerce company, today announced key management changes. Dr. Gengchen Han, the Executive Chairman of the Company, and the Chief Executive Officer of the Company between 1997 and 2009 and between 2011 and 2016, has returned to become Chief Executive Officer of the Company, and Dr. James Chen, the former Chief Executive Officer of the Company, is now the Chief Financial Officer of the Company. The Company also announced that Mr. Shuangcheng Zhou will become the President of the Company upon the closing of the Share Subscription Agreement signed on October 16, 2018 between the Company and Longhan Investment Co., Ltd. ("Longhan").

Joint Venture

Wed, 21 Nov 2018 03:58:44 GMT

BEIJING, Nov. 19, 2018 /PRNewswire/ -- Origin Agritech Ltd. (SEED) (the "Company" or "Origin"), an agriculture technology and rural e-commerce company, today announced that the Company and Balin Youqi Enze Agricultural and Forest Development Co, Ltd (Enze) have entered into a long-term strategic agreement to develop and cultivate 1 million mu ( 165,000 acres) of saline-alkaline land in Balin Youqi, Inner Mongolia.

Enze, based in Balin Youqi, Inner Mongolia, has been promoting the prevention and control of desertification and saline-alkali soil. Enze is devoted to the construction of demonstration bases of ecological industry, which are based on scientific and technological research on desertification and saline-alkali soil. Enze has been working with the local government to achieve the objectives of reclaiming and cultivating 1 million mu of desertified and saline-alkaline land in three years. Origin and Enze plan to apply the Integrated Saline-Alkaline Land Reclamation ("ISALR") technology that Origin and Longhan are currently working on and was announced previously.

Longhan and Enze have been working toward the cooperation project for several months and Enze has finally chosen the ISALR technology. With this strategic cooperation, the ISALR team from Origin and Longhan has already started to work with the team from Enze to develop the detailed plans for the first stage of land reclamation project and identified over 100,000 mu ( 16,500acres) of the desertified and saline-alkaline land to cultivate in the 2019 season.

Research

Mon, 22 Oct 2018 15:37:12 GMT

Origin Agritech Limited (NASDAQ:SEED) ($6.95; $20M market cap) an agriculture technology and rural e-commerce company, announced that the Company entered into a Share Subscription Agreement with Longhan Investment Management, Co., Ltd. Under this agreement, Longhan will purchase 1,397,680 Shares of the Company's common stock for an aggregate purchase price of US$7,743,147.20.

This morning, SEED held an investment call pertaining to its recently announcement of business developments. Below is a snapshot of the summary page from the company’s latest investor presentation, illustrating what we feel to be a key takeaway - its guidance of over RMB 1 billion in sales from its e-Commune Network for fiscal 2019.

Comments & Business Outlook

Mon, 22 Oct 2018 11:59:25 GMT

BEIJING, Oct. 22, 2018 /PRNewswire/ -- Origin Agritech Ltd. (SEED) (the "Company" or "Origin"), an agriculture technology and rural e-commerce company, today announced that the Company entered into a Share Subscription Agreement with Longhan Investment Management, Co., Ltd ("Longhan"). Under this agreement, Longhan will purchase 1,397,680 Shares of the Company's common stock for an aggregate purchase price of US$7,743,147.20.

As previously announced, Origin has entered a strategic cooperation agreement with Longhan, under which Origin and Longhan will work together to start the commercialization of Integrated Saline-Alkaline Land Reclamation ("ISALR") technology in 2019, both in China and globally. Origin and Longhan will integrate seed treatment, soil treatment technologies and seed breeding & biotechnology, as well as Origin's agricultural business platform. With Longhan's investment into the Company's stock, both Origin and Longhan plan to speed up the strategic cooperation and the commercialization process for the ISALR technology.

Joint Venture

Wed, 17 Oct 2018 14:47:31 GMT

BEIJING, Oct. 17, 2018 /PRNewswire/ -- Origin Agritech Ltd. (NASDAQ: SEED) (the "Company" or "Origin"), an agriculture technology and rural e-commerce company, today announced that the Company has entered into a strategic cooperation agreement with Longhan Investment Management Co., Ltd. ("Longhan") pursuant to which both companies will work together to start the commercialization of Integrated Saline-Alkaline Land Reclamation ("ISALR") technology in 2019, both in China and globally, and will integrate Longhan's technologies with Origin's seed technologies and agricultural business platform.

Longhan is an investment management company and operating platform that focuses on government-supported major projects in agricultural development and food security. With the Belt and Road initiative of the Chinese government, Longhan has developed and demonstrated its molecular biology technologies for seed treatment and soil treatment. Longhan has successfully tested its technologies on cotton in The Republic of Uzbekistan and on various crops, including corn, soybean, cotton, rice and vegetables, across several Chinese provinces with different degrees of saline-alkaline soil. The yield improvement for different crops ranges from 10-15% in medium level saline-alkaline land and over 15% for heavy saline-alkaline soil.

China has about 1.5 billion mu (100 million hectare) of saline-alkaline lands, while globally there is about 15 billion mu (1 billion hectare). Reclamation of these lands has become more and more critical to address the growing food demand in China and around the world. The escalation of the current U.S.-China trade dispute has intensified the Chinese government's attention towards food security. The technologies for expanding plantable acreage through the reclamation of saline-alkaline lands are now well supported by the Chinese government. China currently imports overs 80% of the nation's soybean demands. The ISALR technology will significantly increase the plantable acreage for corn and soybean and could thus dramatically alleviate China's dependence on imported soybeans.

"We are impressed by Longhan's technologies for seed and soil treatment and their initiative to work with the Chinese government to develop large reclamation projects for saline and alkaline soil. The strategic direction set out by Longhan complements well with Origin's seed biotechnology and seed breading technology," said Dr. Gengchen Han, Executive Chairman of Origin Agritech. Furthermore, large land reclamation projects will generate significant agricultural input demands, including seeds, fertilizer and agricultural chemicals, which could be better served with Origin's supply chain established by the Origin e-Commune Network announced previously.

"We're very pleased to work with Origin Agritech, one of the premier brands for the agricultural industry in China. Origin's strong seed technologies and its commercial experience could jump start our commercialization initiative for our state-of-art molecular biology technologies. We look forward to our joint program and believe that we could see financial returns even at the onset of this cooperation in 2019, especially with the support of the Chinese government," said Mr. Shuangcheng Zhou, Chairman and Chief Executive Officer of Longhan.

Research

Wed, 03 Oct 2018 15:12:36 GMT

Origin Agritech Ltd. (NASDAQ : SEED ) ($5.83; $16.8M market cap) an agriculture technology and rural e-commerce company, has caught our attention. Yesterday, we took note of the following tweets from an investor we are familiar with:

We are particularly interested in the company’s recent cancellation of the sale of its GMO corn business, especially due to the evolving regulatory nature of the GMO market in China. Based on the comments made in this press release over the summer...

"At this point, it's important for us to focus on the new strategic directions we have announced previously and pursue cancellation of the Second Closing so that the Company is able to move ahead with its plans," commented Dr. James Chen, Chief Executive Officer of Origin. Dr. Chen stated further, "the increasingly positive attitude from the Chinese government toward corn seed GMO technologies could allow us to realize a better value if we keep portions of our Chinese commercial corn seed business."

...we believe that SEED could potentially be in the hunt to eventually receive a GMO license from the government. If that happens, on a small $15M market cap company with a limited float, investors may see the potential for upside in the stock. However, we are only beginning to look into the company and have considerable amounts of due diligence to undertake.

Joint Venture

Wed, 03 Oct 2018 13:29:14 GMT

BEIJING, Oct. 2, 2018 /PRNewswire/ -- Origin Agritech Ltd. (SEED), ("the Company" or "Origin") an agriculture technology and rural e-commerce company, today announced that the Company has started Origin e-Commune Network and entered a new joint venture in Hubei Province with five major agricultural product distributors in the province. Origin holds 51% of equity in this new joint venture. This joint venture, Hubei Aoyu Agricultural Technology Limited (Hubei Aoyu), will provide broad agricultural products and services in addition to the corn seed products from Origin Agritech in Hubei province. This JV will be the first of several similar joint ventures Origin is in the process to form in the central China agricultural provinces.

The establishment of Hubei Aoyu marks a major milestone for the Origin's rural e-commerce strategy. With Hubei Aoyu and other similar JVs, Origin is now creating an Origin e-Commune Network based on e-commerce technologies and Origin's strong brand equity across rural China. Origin e-Commune Network is founded in the backdrop of the changing rural business environment as the result of new directions for Chinese rural development, fast growing technologies in e-commerce, expansion of 4G communication network, and modernization of rural logistics system recently.

This e-commune network philosophy is expected to revolutionize the Chinese agricultural industry as the new e-commune network could provide integrated and customized technology solution to the farmers to increase the total economic value per acre of land. Such e-commune network will not only offer farmers with the agricultural input products, but also provide much broader pre- and post-harvest services. Furthermore, the Origin e-Commune Network creates a system where distributors and farmers will participate as partnership rather than middle level distributorship and end-users in the current distribution system.

The celebration of the joint venture formation was held in Xiangyang, Hubei, a historical and major agricultural city. Dr. Gengchen Han, Executive Chairman of Origin Agritech, attended the celebration and has outlined Origin e-Commune Network philosophy to create a strong agricultural cooperative entity. "The agricultural market in China is experiencing a new growth directions and we believe that Origin e-Commune Network will enable a new form of cooperation between products and service providers and farmers. With its strong brand name and over 20 years of serving the farmers, Origin is in a great position to initiate such innovative business model as we're entering a new technology era for the Ag industry in China," said Dr. Han. More than 40 major distributors in Hubei province have attended this event.

Comments & Business Outlook

Fri, 24 Aug 2018 13:01:43 GMT

BEIJING, Aug. 23, 2018 /PRNewswire/ -- Origin Agritech Ltd. (NASDAQ : SEED ), ("the Company" or "Origin") an agriculture technology and rural e-commerce company, today announced thatthe Company has started new cooperation programs with other seed suppliers in China to integrate the company's GMO traits with the seed varieties from other suppliers.

"This is a significant step forward for the commercialization of our GMO technologies. As more and more corn seed suppliers are realizing the value of GMO technology, they start to work with us in order to get ready to license our GMO technologies," said Dr. James Chen, Origin's Chief Executive Officer.

Origin is the leading technology provider for corn seed GMO technologies in China. According to the "Thirteenth Five Year State Science and Technology Innovative Plan" published by the Chinese government in 2016, the Chinese government set to target the commercialization of corn seed GMO technologies during the central government's Thirteenth Five-Year Plan, which ends in 2020. Additionally, the recent crackdowns of illegal GMO seeds of several high profiled corn seed providers by the Chinese government help the government to pave the way for full commercialization of the corn seed GMO technology.

Origin has prepared to be ready for the commercialization of its GMO technologies and is working with other seed suppliers to integrate its GMO traits into the seed varieties of these suppliers in order to license its technologies upon the commercialization approval from the Chinese government. China has the corn planting acreage similar to the United States and the market value for the corn seed GMO technology could reach over multi billion dollars in China.

Comments & Business Outlook

Fri, 03 Aug 2018 12:57:28 GMT

BEIJING, Aug. 1, 2018 /PRNewswire/ -- Origin Agritech Ltd. (SEED), ("the Company" or "Origin") an agriculture technology and rural e-commerce company, today announced that the Company's new rural e-commerce subsidiary Beijing State Harvest Zhongying Network Technology Limited, Co. (ZhongyingNetwork) has been established and the new on-line application HUIYING has been launched to provide a rural e-commerce platform for merchandise across agricultural inputs to consumptions products.

The new e-commerce subsidiary Zhongying Network and its mobile app follow the strategy SEED+ Rural E-commerce with Blockchain Technologies, previously disclosed in March of this year (SEC 6-K filing dated as March 15, 2018). As described in March, the seed business is the core of all rural e-commerce business within an overall rural consumer market of over RMB 5 trillion. With twenty years of business experience and broad geographic exposure across China, along with a customer base of over 30,000 distributors/retailers and over 10 million farmers, Origin believes it is uniquely positioned in the rural e-commerce business to serve hundreds of millions of potential customers.

Through its new rural e-commerce business, Origin will significantly expand its business scope from its original corn seed to a wide range of products. The products to be offered on Origin's rural e-commerce platform will include, but will not be limited to, agricultural seed products (e.g., corn seeds, rice seeds, and vegetable seeds), other agricultural inputs (e.g., fertilizers and agricultural chemicals), foods, household products, and other consumer products.

"With the launch of our rural e-commerce business, we're ready to utilize the brand equity Origin has built in the rural regions of China and the strong trend of growing rural consumption," said Dr. James Chen, Origin's Chief Executive Officer. "We're excited with our new rural e-commerce business model, which we believe has many superior aspects and offers an innovative new e-commerce alternative to the consumers in thefast growing rural regions in China."

"The new rural e-commerce business presents a great growth opportunity for Origin, and more importantly it combines our current seed business in the rural regions with the technologies we have been developing, including the Blockchain technology in cooperation with the Elastos Foundation," said Dr. Gengchen Han, Chairman of the Board of Directors. "We believe the launch of our rural e-commerce business will provide significant value to Origin and our shareholders."

Comments & Business Outlook

Thu, 02 Aug 2018 13:17:46 GMT

Research

Thu, 26 Jul 2018 15:35:09 GMT

Origin Agritech Limited (NASDAQ:SEED) ($10.41; $24.8M market cap), an agricultural biotechnology company, announced two pieces of news yesterday:

The company received asset sale proceeds of RMB 24.14 million (about 3.5 million USD) from the sale of Beijing Shihui Agricultural Development Co., Ltd.
The company is working to cancel the second phase of the sale of its commercial seed business, as they see that the seed business could “generate significant cash flow and potentially result in meaningful earnings for the Company” in the future.

We are keeping a very close eye on the company’s seed business, as the Chinese government has already stated a plan to commercialize these types of technologies by the year 2020. The government will ostensibly be handing out licenses for these producers, and we believe that if SEED can secure one of these GMO licenses, there may be significant upside for the stock. The company’s PR made the following statements that caught our attention:

“The Company believes that the assets to be retained are more valuable to the Company at this time partly because they can generate significant cash flow and potentially can result in meaningful earnings for the Company. More importantly, the Company believes that the potential for the GMO technologies to be commercialized in China has increased recently. If the GMO technologies can be commercialized by 2020, as suggested by an announced plan from the Chinese government, the combined assets of the Company's GMO technologies and distribution business could prove of significant value to the shareholders. ”
"At this point, it's important for us to focus on the new strategic directions we have announced previously and pursue cancellation of the Second Closing so that the Company is able to move ahead with its plans," commented Dr. James Chen, Chief Executive Officer of Origin. Dr. Chen stated further, "the increasingly positive attitude from the Chinese government toward corn seed GMO technologies could allow us to realize a better value if we keep portions of our Chinese commercial corn seed business."
“The value of GMO technologies is beginning to be recognized by the Chinese government and public, especially after the recent heightened visibility in the media of trade negotiations between the United States and China. The cracking down of the illegal GMO corn seed production in China also demonstrates action by the Chinese government to better control the commercialization process of GMO technologies. A recent publication from the Chinese Ministry of Agriculture and Rural Affairs has placed GMO technologies as a key agricultural green technology. Even though past slow government and public acceptance of GMO corn seed technologies in China has delayed the realization of the Company's technology investments, management believes the Company's leading position and readiness in corn seed GMO technologies could eventually result in a significant value to its shareholders.”

Comments & Business Outlook

Thu, 26 Jul 2018 13:19:28 GMT

BEIJING, July 25, 2018 /PRNewswire/ -- Origin Agritech Ltd. (SEED) ("the Company" or "Origin") an agricultural biotechnology trait and corn seed provider, today announced that the Company received the asset sale proceeds of RMB 24.14 million from the first closing of the asset sale transaction (First Closing) from Beijing Shihui Agricultural Development Co., Limited (Beijing Shihui or the Buyer), with this payment, the first phase of sale is completed. The Company will work with Beijing Shihui to cancel the second phase for the sale of its commercial seed business.

Origin and its subsidiaries entered a Master Transaction Agreement with Beijing Shihui on September 26, 2016, to sell portions of its commercial seed business. Under the agreement, the sale was to be in two separate phases. The first part of the transaction (First Closing) called for the sale of the assets under the subsidiaries Denong Zhengcheng Seed Limited (Denong), Changchun Origin Seed Technology Development Limited (Changchun Origin), and Linze Origin Seed Limited (Linze Origin) for an aggregate purchase price of RMB200 million (including debt assumption), which was later modified to RMB221 million. The second phase of the transaction (Second Closing) was to include the assets under the newly created entity Zhengzhou Origin including a seed processing plant in Zhengzhou, China, the seed distribution business of Beijing Origin Seed Limited (Beijing Origin), and the Company headquarters building in Beijing. The Second Closing called for the Buyer to deliver to the Company an aggregate of RMB190 million (including debt assumption). The Buyer prepaid RMB10 million of the consideration to the Company at the signing of the Master Agreement.
With the current payment of RMB24.14 million from the Buyer, the First Closing now is completed. The Company has reviewed the Second Closing and believes that it is in the best interest of the Company, at this time, to cancel the Second Closing. With the cancellation of the Second Closing, the Company will continue to own the seed processing plant in Zhengzhou, the distribution business of Beijing Origin and the Beijing headquarters building. The distribution business of Beijing Origin represented over 70% of total corn seed revenue during 2017 planting season.

The Company believes that the assets to be retained are more valuable to the Company at this time partly because they can generate significant cash flow and potentially can result in meaningful earnings for the Company. More importantly, the Company believes that the potential for the GMO technologies to be commercialized in China has increased recently. If the GMO technologies can be commercialized by 2020, as suggested by an announced plan from the Chinese government, the combined assets of the Company's GMO technologies and distribution business could prove of significant value to the shareholders.

"At this point, it's important for us to focus on the new strategic directions we have announced previously and pursue cancellation of the Second Closing so that the Company is able to move ahead with its plans," commented Dr. James Chen, Chief Executive Officer of Origin. Dr. Chen stated further, "the increasingly positive attitude from the Chinese government toward corn seed GMO technologies could allow us to realize a better value if we keep portions of our Chinese commercial corn seed business."

The value of GMO technologies is beginning to be recognized by the Chinese government and public, especially after the recent heightened visibility in the media of trade negotiations between the United States and China. The cracking down of the illegal GMO corn seed production in China also demonstrates action by the Chinese government to better control the commercialization process of GMO technologies. A recent publication from the Chinese Ministry of Agriculture and Rural Affairs has placed GMO technologies as a key agricultural green technology. Even though past slow government and public acceptance of GMO corn seed technologies in China has delayed the realization of the Company's technology investments, management believes the Company's leading position and readiness in corn seed GMO technologies could eventually result in a significant value to its shareholders.

Research

Wed, 27 Jun 2018 15:01:41 GMT

Origin Agritech Limited (NASDAQ:SEED) ($0.78; $17.8M market cap), an agricultural biotechnology company, announced a 1 for 10 reverse stock split. The reverse stock split will reduce the number of outstanding shares to 2,787,273. The effective date will be July 10, 2018. We will keep a close eye on SEED as it could attract speculative momentum investors. We have seen many examples of stocks pumping after reverse splits.

Comments & Business Outlook

Tue, 27 Mar 2018 13:17:04 GMT

BEIJING, March 26, 2018 /PRNewswire/ -- Origin Agritech Limited (SEED) ("the Company" or "Origin") today announced that Ms. Yaya Young will join Origin's senior management team to start and manage the Company's rural e-commerce business that was announced earlier this month.

"We're very pleased that Yaya would join our team to launch and lead our e-commerce business. She has impressive experience in the e-commerce business and various businesses related to rural China, which fits very well into our strategy of developing a Blockchain technology based rural e-commerce platform," commented Dr. James Chen, Origin's Chief Executive Officer. Mr. Chen continued saying that her joining Origin's management team represents an important milestone in the Company's new strategic direction and the Company would move fast to establish our rural e-commerce platform.

Ms. Young has been a successful entrepreneur in China with experience in e-commerce, rural internet-based P2P financing platform, and agricultural commodities exchange businesses. During her tenure as the vice president at Beijing Nongxintong Technology Group from January 2013 to January 2016, Ms. Young led a project under the Ministry of Agriculture to introduce rural leisure business to the urban population and cooperated with China UnionPay to develop 1.5 million rural leisure business clients. As the president of Hunan Tianxia Phoenix Cultural Tourism Investment Co, Ms. Young managed the tourism projects for Phoenix city in Hunan province between January 2012 and February 2013. Ms. Young was the vice president at Imperial State Agricultural Commodities Exchange from March 2009 to July 2012 and was one of the key persons who founded and operated the first pork trading platform in China. The total pork trading volume reached RMB40 billion during the first three years of its operation.

"I'm very excited to join Origin Agritech and become part of the great management team for business in rural China. Origin has established an excellent reputation after serving the farmers in China for 20 years," said Ms. Young, "I believe the consumption growth in rural China is a key growth engine for the Chinese economy in the next decade and a new e-commerce business model could help the rural China to benefit from the new lifestyles that have already been adopted by people in major Chinese cities."

"The joining of Yaya to our management team is a significant step as our management team launches the e-commerce platform," said Dr. Gengchen Han, Chairman of the Board for Origin. "I'm confident that with the credentials of both James and Yaya in building social network e-commerce businesses, and the market network Origin has accumulated over the last twenty years, we would jump start Origin's new strategy in rural e-commerce."

Ms. Young received her bachelor degree in International Trading from Hunan University and completed her Master's program for Regional Economics at Renmin University of China. She was a news reporter in Los Angeles for International Daily News during 2002 to 2004 and for Phoenix TV American from 2006 to 2009. During the period between 2004 and 2006, she worked at the investment banking division of Citigroup.

Comments & Business Outlook

Fri, 16 Mar 2018 13:18:53 GMT

BEIJING, March 16, 2018 /PRNewswire/ -- Dr. James Chen, the Chief Executive Officer of Origin Agritech Limited (SEED) ("the Company" or "Origin"), an agricultural biotechnology trait and corn seed technology provider, presented the Company's strategy for SEED+ Rural E-Commerce with Blockchain Technologies at the "Elastos x BITMAIN Meetup: Blockchain for Scaling Large, Enterprise DApps" on March 15, 2018.

During the Meetup, Dr. Chen discussed Origin's history of embracing information technologies and the growing opportunities for rural e-commerce business in China. "Origin has 20 years of operation in rural China and has established strong brand name across vast farmland in China", said Dr. Chen during the meetup, "we're extending our competitive advantages for rural customer bases, management experience and business understanding in rural regions, and supply source tracking for agricultural products, and we plan to startup social network e-commerce platform with products including but not limited to agricultural inputs."

Comments & Business Outlook

Fri, 09 Mar 2018 14:14:51 GMT

BEIJING, March 8, 2018 /PRNewswire/ -- Origin Agritech Ltd. (SEED) ("the Company" or "Origin") an agricultural biotechnology trait and corn seed provider, today announced the newly appointed Chief Executive Officer Dr. Z. James Chen has set and discussed new strategic directions for the Company.

"With over 20 years of serving the agricultural industry in China, Origin has always been exploring the technology and market frontiers and has accumulated various leading technologies for the agricultural farmland in China. Although the delay in GMO technology commercialization as well as the weak corn seed market have delayed the financial realization of our key agribiotech and germplasm technologies, we are confident that our efforts over the last 20 years have already built the foundation for future growth despite the weak market conditions," discussed Dr. James Chen, "while we will continue to develop the agribiotech technologies as we wait for the final commercialization approval from the Chinese government, we will focus our effort on the e-commerce for the vast farmland in China applying blockchain technologies and foundation seed technologies, we believe our strategic advantages and past technology development will give us opportunities to be successful in these business areas."

Below are three key strategic directions Dr. James Chen and new management team has set and discussed:

1. E-commerce development for the vast farmland in China

As a leading agriculture seed supplier over the last 20 years, Origin Agritech has built a strong brand name in the vast farmland across China and has involved in the e-commerce to provide seed products and services to the farmers. In addition to the typical advantages e-commerce can provide compared to the traditional distribution system, one of the key advantage e-commerce has for the seed business is the better ability to track the source of seed supply. With the new blockchain technologies, there is a potential that the detail original source of seed products can be tracked and documented. This could resolve the intellectual property pirating problems the Chinese farmers and seed providers face over the years. Under the new strategic cooperation with Elastos Foundation announced earlier, we will start our e-commerce business development facing the vast Chinese farmland with the products including but not limited to the agricultural inputs.

2. Foundation corn seed technology business development

Since the beginning, Origin has been working on the development of germplasm and hybrid corn seed varieties. The company has built a large collection of diverse corn seed germplasm, which we believe is the largest among the Chinese corn seed companies. Also, we have established a database system with the characterization of these germplasms in our collection. We believe our unique elite lines will enable us to create competitive hybrid corn seed products for the Chinese seed market and possibly for the global corn seed market.

Since most local seed companies have no or limited R&D capability, they will rely on the seed technology developed by a company with foundation seed technologies. Origin is in the unique position to become a foundation corn seed company, similar to the success of foundation seed companies in the U.S., since Origin is one of very few companies in China with not only large diverse germplasm collection but also the most advanced breeding technologies, including the largest Doubled Haploid program in China. As the new strategic direction, we will increase our business development effort for our foundation corn seed technologies and become the first and only foundation seed company in China.

3. Further development of our biotech and genome editing seed technologies

Origin has been the leading biotech seed technology company in China and has successfully developed three leading GM traits. While we are waiting for the final commercialization approval from the Chinese government, we cooperate with the government agencies in implementing the previously announced commercialization plan for GM corn seed technologies outlined in the 13th Five-Year Plan, which ends in 2020. In addition, recent advancement in genome editing technology opens up tremendous new opportunities in the seed industry. We are uniquely positioned to capture this opportunity to expand our scope of technology offerings. Our leading technology platform established for biotech development, including DNA and protein engineering, efficient commercial scale plant transformation and versatile trait-efficacy testing capabilities, can be seamlessly utilized for genome editing, and has already enabled us to jump start the project.

"We believe the new strategic directions set by the new management team represents the key technology and market advantages built over the last two decades and we trust we can build new businesses while waiting for the final commercialization approval of agribiotech technology in China," said Dr. Gengchen Han, Chairman of Origin Agritech, "the new management team's new strategic directions have full support from our board and we look forward to new Origin post commercial seed business divestiture"

Comments & Business Outlook

Fri, 16 Feb 2018 14:10:19 GMT

BEIJING, Feb. 15, 2018 /PRNewswire/ -- Origin Agritech Ltd. (SEED) ("the Company" or "Origin") an agricultural biotechnology trait and corn seed provider, and Elastos Foundation today announced their plan to develop a global strategic partnership for mutually beneficial joint activities fostering smart economic solutions to establish platforms to serve global agribusiness transactions, data services, and rural e-commerce activities.

The Elastos Project was initially conceived by Mr. Rong Chen in 2000, as he sought to develop the world's first internet operating system. Elastos Foundation was founded in 2016 by Rong Chen and Sunny Feng Han, aiming to create a new Internet system powered by blockchain technologies. Elastos turns an open-source software platform into decentralized applications (Dapps) that runs on a peer-to-peer network without centralized control. Users can access these Dapps via their mobile phones, without changing their operating system. The current Internet provides a web of information as users would receive data and information by clicking a URL. The new Elastos Dapps is creating a web of apps where a user gets codes when clicking a URL. Elastos utilizes blockchain technologies to issue IDs for digital content, making it possible to know who owns which digital assets. The Elastos Web will be a special economic zone where Elastos tokens (ELA) function as the base currency.

Origin, focusing on biotechnology traits and corn seed business, has been developing a system for seed tracking and e-commerce technologies in order to provide the best seed technologies to Chinese farmers. With several years' trial experience and assistant from Elastos Foundation during the development of Origin's e-commerce platform, both Origin and Elastos believe formal cooperation in developing a comprehensive platform based on Elastos' Smart Web technologies would provide a great service to global agribusiness transactions, data services, and rural e-commerce activities.

The development of such platform based on Elastos' Smart Web powered by blockchain technologies is expected to solve seed piracy problems and protect agricultural seed intellectual properties. Elastos' blockchain can utilize digital ID system so that seed suppliers and farmers can easily track a seed's original source. In addition, the operating system of Elastos has a great advantage to process large transaction volumes to meet the need of surging e-commerce activities.

"I always have had a great respect for Rong and his team since we both started our separated but unique technology businesses in Zhongguancun, and I'm very excited that our cooperation over the last several years have led to a new level of cooperation with much clearer and higher objectives," said Dr. Gengchen Han. He continued saying that "we believe that the new platform would allow us to provide much more advanced services to the global agribusiness and rural e-commerce services in China."

"I'm delighted to see that our service to Origin has been well recognized; we believe together we can develop a unique, a much more comprehensive technology platform with our decentralized applications (Dapps) powered by blockchain technologies. We warmly welcome Origin to become a key member in our Elastos community," said Mr. Chen.

Both Origin and Elastos agreed to initiate the cooperation immediately. In addition, both companies agreed that Mr. Rong Chen, founder of Elastos will join Origin's board and Dr. Gengchen Han, chairman of Origin, will serve Elastos as an advisor. Both companies also agreed to mutually invest into each other.

Comments & Business Outlook

Thu, 04 Jan 2018 14:52:19 GMT

BEIJING, Jan. 4, 2018 /PRNewswire/ -- Origin Agritech Ltd. (SEED) ("the Company" or "Origin") an agricultural biotechnology trait and corn seed provider, today announced that it received an installment of the purchase price for the seed and production and distribution business sold to Beijing Shihui Agricultural Development Co. Ltd. ("Shihui").The amount received was RMB18.64 million (approximately US$2.79 million). The Company and Shihui continue to work together to set the payment schedule for the assets sold at the September 2017 closing and the second closing of the additional assets that Shihui has agreed to purchase.

Comments & Business Outlook

Tue, 19 Dec 2017 14:11:00 GMT

BEIJING, Dec.18, 2017 /PRNewswire/ -- Origin Agritech Ltd. (SEED)("the Company" or "Origin"), an agricultural biotechnology trait and corn seed provider, today released a progress update on growth platforms which are focused on the development and commercialization of superior corn seed products and high value biotechnology traits.

"We are happy to share the exciting news on key milestone achievements for our seed product pipeline and biotechnology trait development programs," said Dr. Gengchen Han, Origin Executive Chairman.

- After 2 years of production trials as required by the government regulations in China, comprehensive data packages of the leading biotechnology traits, insect resistance and herbicide tolerance, have been submitted to China's regulatory agency for Biosafety Certificate (Phase 5) issuance. These traits have also been incorporated into Origin's leading inbred parental lines and commercial partner's elite lines in preparation for variety approval and commercial product launch.

- Origin's corn seed product portfolio has had another year of outstanding performance. Analysis of field trial data from more than 100 test locations indicated that 7 of the 7 hybrid varieties in the Green Pass production trials meet or exceed the criteria of new product registration. Data packages of these varieties will be submitted to the Ministry Of Agriculture (MOA) in December for national registration approval.

- In late 2017 Origin successfully fulfilled the Excellence Through Stewardship (ETS) Program audit requirements and became a formal member of this global organization of the AG biotechnology industry. This achievement demonstrates Origin's commitment to best practices and quality management systems and highlights its pledge to continuous improvement.

"I am pleased to report to stakeholders that our corn breeding pipeline and seed product portfolio are getting stronger year after year in both quantity and quality. Our biotech trait development program remains one of the industry leaders in China and we are ready to commercialize the technology once the government approvals are issued" said Dr. Jihong Liang, Origin Chief Technology Officer.

Corn seed product breeding, development and commercialization:
Progress Update

In early 2017 Origin received 5 national approvals for corn seed product registration that are suited to the major corn production areas in China. Summer field trials of the Green Pass program generated better than expected results. Seven new seed product registrations are being submitted to MOA for approval in early 2018. A total of 24 new products will enter the Green Pass trials in the summer of 2018.
Origin opened a Green Pass program in the South West of China that tests corn products suited to the diverse ecological conditions in that region. This effort will enable Origin to expand its corn product portfolio to meet the needs of the farmers in that market segment of about 13 million acres
Origin entered into collaboration agreements with 5 leading corn seed companies to evaluate Origin's new seed products in their trailing systems. The test results are being summarized and will provide support in discussions of commercial license agreements
Biotech trait development and biosafety certification
Progress Update

In 2017, Origin completed the second year of regulatory production trials of its first generation PEST/WEED trait as required by the government regulations. In addition to the trials conducted in 2016 that thoroughly evaluated molecular characteristics, field efficacy, environmental safety and food safety, all of which met critical biosafety regulation standards, the 2017 tests further examined effect of the traits on expanded spectrum of non-target organisms. The results confirm that the biotech traits have no negative impact on the tested non-target organisms.
Dossiers summarizing the combined 2016 and 2017 laboratory and field-test studies internal to Origin and in collaboration with third party research labs were submitted in November to request Phase 5 Biosafety Certificate approval.
In 2017, Origin's first generation WEED and PEST/WEED traits are incorporated into the elite corn inbred lines of Origin and into the products of Origin's seed commercial partners preparing for future regulatory approval and commercialization. The use of winter nursery in Hainan Island combined with cutting-edge molecular marker technology enabled Origin to expedite the trait conversion timeline.
In collaboration with Arcadia in early 2017, Origin produced corn seeds carrying insect resistance and herbicide tolerance technologies developed in China in a USDA designated greenhouse in California state and passed quarantine tests. Collaborative field experiments were successfully conducted in Iowa State in the summer of 2017 that confirmed efficacy of the traits and produced larger quantity of seeds for use in the required regulatory trials.
"We are extremely pleased with the latest progress in our seed product development and biotech trait programs. These advancements have provided strong supports to our goal to become the preferred technology partner in China," said Dr. Han. "Investments in technology and innovation is the key to success in this rapidly changing and consolidating industry. We are confident that we are in the right track to win."

Comments & Business Outlook

Mon, 18 Dec 2017 14:23:55 GMT

BEIJING, Dec. 15, 2017 /PRNewswire/ -- Origin Agritech Ltd. (NASDAQ: SEED) ("the Company" or "Origin") an agricultural biotechnology trait and corn seed provider, today announced that it had been informed by Beijing Shihui Agricultural Development Co. Ltd. ("Shihui"), to which Origin Agritech Limited ("Company") has sold its seed production and distribution business, that it has obtained approval from a bank lender for a revolving credit agreement. Because of bank processing practices and year end practicalities, Shihui has requested, and the Company has granted, an extension for payment of the unpaid portion of the purchase price for the assets acquired in September 2017 until end of December 2017. Additionally, the second closing on assets that Shihui has agreed to purchase, which includes the headquarters building of the Company in Beijing, will be delayed until the end of January 2018.

Comments & Business Outlook

Mon, 04 Dec 2017 13:47:21 GMT

DES MOINES, Iowa, Dec. 1, 2017 /PRNewswire/ -- Origin Agritech Ltd. (SEED) ("the Company" or "Origin") an agricultural biotechnology trait and corn seed provider, today announced that Mr. William S. Niebur, who served the Company since April of 2016, resigned from his positions of Chief Executive Officer and director as of the end of business on November 30, 2017, to pursue new opportunities. Dr. Niebur will continue to assist the Company as a strategic consultant during a transition period. The Company thanks Dr. Niebur for his significant contributions during his tenure with the Company and will soon announce the appointment of a new Chief Executive Officer.

The Company, while continuing to seek seed trait and germplasm commercial opportunities in the United States, will be suspending its Iowa representative office and will operate its United States activities from its headquarters in Beijing, Peoples Republic of China.

Comments & Business Outlook

Wed, 29 Nov 2017 13:53:17 GMT

DES MOINES, Iowa and EINBECK, Germany, Nov. 29, 2017 /PRNewswire/ -- Origin Agritech Ltd. (SEED) ("Origin" or the "Company"), an agricultural biotechnology trait and seed provider, announced today that the company has entered into a commercial biotechnology trait and corn germplasm license agreement with KWS SAAT SE (KWS), one of the world's leading plant breeding and seed companies. This agreement facilitates KWS' entry into China's corn biotechnology trait and expanded seed market.

Under the agreement, Origin will combine insect resistance and herbicide tolerance traits co-developed by the Chinese Academy of Agriculture Sciences and Origin Agritech into KWS corn inbred lines. Biotech-enhanced corn is planned to be deployed upon Chinese commercial and regulatory approval. Future biotech enhanced versions of these products will also be made available to KWS to serve Chinese farmers.

"KWS has been a strong strategic partner in the development of Origin's new insect resistant and herbicide tolerant traits, and this agreement is a key milestone for our company," said Bill Niebur, CEO, Origin Agritech. "This collaboration enables Origin to deliver the value of the new traits when integrated into the strong genetics of KWS. We believe that the deployment envisaged by this and previous agreements could provide Origin's technology greater access to the future biotech corn market, which we estimate could become a $1 billion market opportunity."

KWS has 160 years of plant breeding history, a 70-country footprint and a strong reputation in China.

"We are happy about the opportunity to combine Origin's traits with KWS genetics to develop highly performing insect resistant and herbicide tolerant seed varieties which would be of high value for the Chinese farmer," said Gyula Szelle, head of East-SE Asia Corn and Oilcrops at KWS. "It will continue to be our ambition to offer our high-quality corn seed to the Chinese market through our affiliates and licensees there and with regard to future policies."

Aligned with the goals of the China Ministry of Agriculture, Origin will continue to support the advancement of agricultural biotechnology. The recent 13th Five Year Plan released by the Chinese government pushes for accelerated development of biotech crops, emphasizing insect control for maize and herbicide tolerance for soybeans.

"We are committed to modernizing China's agriculture system and improving the country's food security," Niebur said. "Our partnership and commercial agreement with KWS will advance Origin's mission of providing agricultural solutions for today's growing world through being the preferred partner for and from China in biotechnology."

Comments & Business Outlook

Thu, 24 Aug 2017 13:03:45 GMT

DES MOINES, Iowa, Aug. 24, 2017 /PRNewswire/ -- Origin Agritech Ltd. (SEED) ("the Company" or "Origin"), an agricultural biotechnology trait and corn seed provider, today announced that it has received the first payment from the Company's RMB 421 million sale of its proprietary China-based commercial corn seed production and distribution business, originally announced on September 27, 2016.

The consideration for the first part of the asset sale will be paid by Beijing Shihui Agricultural Development Co, Ltd ("Beijing Shihui") in several tranches aggregating RMB 221 million, including RMB 152 million paid today from the buyer in a combination of cash and assumption of debt. Beijing Shihui will make two additional payments totaling RMB 69 million to be paid prior to November 15, 2017. A second and final payment of up to RMB 200 million, including the initial RMB 10 million down payment, subject to certain set offs is expected no later than December 15, 2017.

"This marks a critical milestone achievement in our journey to becoming a leading international corn seed technology company," said Dr. Bill Niebur, Origin CEO. "The proceeds significantly accelerate and expand our capabilities to develop and deliver corn biotechnology traits and corn product licensing business within China and around the globe. All current indicators point to a near-term commercial launch for the projected USD 5-6 billion GM-traited corn seed market in China. Origin's leading corn germplasm collection and biotech trait platform are well positioned to monetize the novel business opportunity and strong customer demand for superior products."

"China remains the primary focus for Origin near term. Our portfolio of collaborations with leading agricultural multinationals, Chinese domestic seed companies and leading academic institutions uniquely positions us to realize the near and long term commercial potential of our 20-years' investment in serving farmers through biotechnology and genetics."

"We see very exciting opportunities in the coming months and years with this new business model and we look forward to sharing more news on our growth story with investors," concluded Niebur.

Under the terms of the Beijing Shihui agreement, Origin will retain its corn breeding and biotech research programs; all intellectual properties, which include an industry-leading corn germplasm collection, GM trait portfolio and modern laboratories; extensive field testing networks; and off-season winter nursery in Hainan, with which Origin plans to expand and pursue germplasm and trait licensing opportunities. Origin will also maintain its "Green Pass" status, allowing the competitive advantage of introducing new hybrid varieties to the Chinese market through an expedited and more predictable government approval process.

Notable Share Transactions

Tue, 08 Aug 2017 14:04:53 GMT

DES MOINES, Iowa, August 8, 2017 /PRNewswire/ -- Origin Agritech Ltd. (SEED) ("the Company" or "Origin"), an agricultural biotechnology trait and corn seed provider, today announced that Origin CEO Dr. Bill Niebur has reported the purchase of 73,530 treasury shares from the Company for a total value of $100,000.

The purchase transaction by Dr. Niebur was made on a private placement basis, and consummated on August 7, 2017, at a price of $1.36 per share. The purchase price reflected the market price as of the close of the market on August 4, 2017. The shares are "restricted" securities and do not have registration rights.

Comments & Business Outlook

Thu, 02 Mar 2017 14:09:23 GMT

DES MOINES, Iowa, March 2, 2017 /PRNewswire/ -- Origin (Origin Agritech Ltd., NASDAQ: SEED), an agricultural biotechnology trait and seed provider, announced that it will hold a special meeting of stockholders in connection with the sale of both the production and distribution segments of Origin's commercial corn seed assets on April 13, 2017 at 11:00 a.m., United States Central Time, at the Company's office located at The Financial Center, 666 Walnut Street, Suite #1554, Des Moines, IA 50309.

The Company stockholders of record at the close of business on February 28, 2017 will be entitled to receive notice of the special meeting and to vote their shares, either in person or by proxy, at the shareholder meeting. The proxy materials will be distributed to stockholders commencing March 2, 2017.

The transaction is intended to orient the Company as a multi-national seed development company capitalizing on its biotechnology assets and employee skills in research and development. This will allow the Company to focus on strategic partnerships and licensing opportunities both within China and around the globe to drive future revenue and profit growth.

As previously announced on September 26, 2016, Origin announced the sale of its proprietary China-based commercial seed business for RMB 400 million (approximately USD$60 million) to Beijing Shihui Agricultural Development Co, Ltd. ("Beijing Shihui"). The sale includes both the production and distribution segments of Origin's commercial corn seed assets. The Company intends to shift to a licensing model for its biotech traits and germplasm which will serve as a new revenue growth opportunity for Origin. Future company revenue is expected to be generated by charging royalties and license fees for its superior corn seed inbreds and hybrids as well as for the commercial use of its biotech seed traits. As part of the transaction, the Company will retain its corn breeding and biotech research and development capabilities, which include modern laboratories, extensive field testing networks and off-season winter nursery in Hainan Province, to expand and pursue germplasm and trait licensing opportunities. Through Xinjiang Originbo Seed Limited, Origin also will maintain its "Green Pass" status, allowing it the competitive advantage of introducing new hybrid varieties to the Chinese market through an expedited government approval process. Origin will also retain its start-up operations in the United States.

Comments & Business Outlook

Wed, 22 Feb 2017 14:12:13 GMT

DES MOINES, Iowa, Feb. 22, 2017 /PRNewswire/ -- Origin (Origin Agritech, LLC, a subsidiary of Origin Agritech Ltd.) (NASDAQ: SEED), an agricultural biotechnology trait and seed provider, and Arcadia (Arcadia Biosciences, Inc., NASDAQ: RKDA), a California-based company that develops and commercializes agricultural productivity traits and nutritional products, today announced their collaboration to achieve the first-ever export of a key corn biotechnology product developed in China to the United States for completion of global regulatory trials.

The successful movement of this corn seed, containing an insect resistance/herbicide tolerance trait discovered and developed in China, to the Arcadia greenhouse represents a key milestone in Origin's strategic business plan to achieve global regulatory approvals for cultivation and international grain movement.

"This first-of-its-kind export validates Origin's leading position in China biotech and its close alignment with Chinese ministries leading the transformation of the domestic seed industry. Combining Origin's robust pipeline of value-added Chinese traits and elite corn germplasm with Arcadia's research and development infrastructure demonstrates our plan to capture a sizeable piece of China's estimated billion-dollar corn seed trait market," said Bill Niebur, Origin chief executive officer. "As a leader in agtech focused on modernizing the traditional corn seed market, our international team remains focused on accelerating research and development to improve the lives of Chinese farmers."

Arcadia and Origin signed an agreement under which Arcadia will assist Origin in developing information for submission to regulatory authorities in the U.S., China and other countries for the approval of their traits in corn. This project involves production of inbred and hybrid seed lines under quarantine conditions in Arcadia greenhouses.

"Arcadia has the proven expertise to bring traits through the regulatory process successfully and efficiently," said Raj Ketkar, Arcadia's president and CEO. "We have conducted hundreds of studies in the laboratory, greenhouse and field to gain regulatory approvals for various traits in major crops, and we have a strong regulatory team that has developed complete regulatory dossiers in multiple countries. This collaboration with Origin is an example of how our partners can leverage these capabilities to accelerate the commercialization of novel ag biotech traits."

"Ultimately, this milestone achievement will create more choices and opportunities for farmers," said Jihong Liang, Origin chief technology officer. "This is an important achievement, showcasing Origin's competitive advantage in science and global reach through collaborations inside China and beyond its borders. Origin is leading the way in gaining regulatory approvals for this critical advanced technology globally to drive future business growth."

Origin's investment and focus aligns tightly with China's 13th Five Year Plan, which calls for the modernization of agriculture as the foundation for building a prosperous society. The Chinese government, including the Ministry of Agriculture (MOA) and Chinese Academy of Agricultural Sciences (CAAS), has advanced a policy vision to facilitate seed industry innovation, improve the competitiveness of the Chinese ag tech industry and cultivate new seed varieties for farmers around the world. Through these actions, China has shown strong commitment to advancing its ag industry through new advances in biotechnology. Origin anticipates China commercialization of corn biotechnology at the end of this decade.

Comments & Business Outlook

Tue, 03 Jan 2017 14:03:14 GMT

DES MOINES, Iowa, Jan. 3, 2017 /PRNewswire/ --

Significant Progress in FY16 as Origin Continues Transition to a Global Agricultural Technology Provider

FY16 Business Realignment Positions Origin for Exciting Opportunities Ahead

Total revenues for the fiscal year ended September 30, 2016 were RMB335.3 million (US$50.2 million), a decrease of 11.0% from RMB376.6 million during the fiscal year ended September 30, 2015.
Net loss per share was RMB2.87 (US$0.43) for the fiscal year 2016, compared with net loss per share of RMB0.61 in fiscal year 2015.

"We have delivered a 2016 fiscal year of significant change and milestone achievements that reflect our new strategic operating direction," said Dr. Bill Niebur, Origin's Chief Executive Officer. "We have diversified our business model, refreshed our product portfolio and are working to improve our financial position to enable Origin to capitalize on a consolidating global agricultural market environment. Based on China's 13th Five-Year Plan, we continue to believe that the Chinese government is committed to the commercialization of agricultural biotechnology as part of the larger effort to modernize agriculture. We have crafted a strategic plan specifically to position Origin as a leader in the global agricultural transformation."

Notable Share Transactions

Tue, 03 Jan 2017 14:01:16 GMT

DES MOINES, Iowa, Jan. 3, 2017 /PRNewswire/ --

Origin Gains Access to non-GM Corn Seed Products for the U.S. from DuPont Pioneer

Origin Agritech Ltd. (SEED) ('the Company" or "Origin"), an agricultural biotechnology trait and seed provider, recently signed a definitive agreement with DuPont Pioneer, the advanced seed and genetics business of DuPont (DD). Under the terms of the agreement, Origin will gain access to non-GM corn seed products from DuPont Pioneer. Origin anticipates having commercial seed products available for sale in the U.S. market for spring 2017 planting. Additional terms and financial details of the agreement were not disclosed.

"This agreement with DuPont Pioneer is a critical first step toward launching Origin's North America strategic Pillar III, focused on serving the non-GM/Organic markets," said Bill Niebur, Origin CEO. "We look forward to offering these products to U.S. farmers through a novel, digitally-enabled route to market while building a platform from which Origin can continue to grow."

This is Origin's second business agreement with DuPont. The companies announced in April a commercial agreement to jointly develop new seed technologies in China for Chinese farmers.

"We are pleased with the opportunity to continue to do business with Origin," said Bart Baudler, Commercial Unit Lead, PROaccess. "Through this agreement, Origin is strengthening its ability to diversify its genetic and product choices for farmers."

Origin recently released advances in its Pillar I and II growth platforms. Today's announcement supports progress in the launch of its Pillar III: North America non-GM/Organic growth platform.

"Today's announcement helps advance our business model of creating value by connecting growers and end users—while providing services along the value chain," said Christine Bobst, Origin North America Business Director. "We are looking forward to serving the non-GM/Organic markets in new and different ways as we pursue a full slate of agricultural products, technology and service offerings."

Comments & Business Outlook

Wed, 14 Dec 2016 13:47:31 GMT

DES MOINES, Iowa, Dec. 14, 2016 /PRNewswire/ -- Origin Agritech Ltd. (SEED)("the Company" or "Origin"), an agricultural biotechnology trait and corn seed provider, today released a progress update on long-term growth platforms (Strategic Pillars I and II) which are focused on the development and future launch of high value biotechnology traits and products in corn.

"We have very exciting news on key milestone achievements for our biotechnology research program," said Dr. Bill Niebur, Origin Chief Executive Officer.

- Comprehensive data packages have been submitted for our leading biotechnology traits, insect resistance and herbicide tolerance, as required for China regulatory Safety Certificate (Phase 5) issuance.

- Origin's first generation biotechnology trait for insect resistance and herbicide tolerance (PEST/WEED) has been successfully exported from China to the U.S. with permits from the Chinese and U.S. governments. This initiates the global regulatory approval process and represents the first export of such technology by a Chinese company to a strategic partner based in the U.S.

"These approval steps underscore the Ministry of Agriculture (MOA), Chinese Academy of Agricultural Science (CAAS) and Origin's commitment to contributing to strong technology relationships, seed industry innovation, global compliance, improved competitiveness of the Chinese ag tech industry and the critical effort on food security," Dr. Niebur said.

"I am pleased to announce to stakeholders our recent achievements in the strategic pillars of our business," said Dr. Jihong Liang, Origin Chief Technology Officer.

Pillar I: China-based biotech traits & seed products

Progress Update

In 2016, Origin completed the laboratory and field production trials for its first generation PEST/WEED trait. In these trials, molecular characteristics, field efficacy, environmental safety and food safety were thoroughly evaluated and the results met critical biosafety regulation standards.
Dossiers summarizing the laboratory and field-test studies internal to Origin and in collaboration with third party research labs were submitted in November to request Phase 5 Safety Certificate approval.
In 2017, Origin's first generation WEED and PEST/WEED traits will be incorporated into the elite corn inbred lines of Origin and into the products of leading Chinese seed industry partners preparing for future regulatory approval and commercialization.
Pillar II: Global biotech trait development

Progress Update

Parallel to the milestones achieved in Pillar I, Origin has made strong progress in seeking global approval for our lead biotechnology trait event (PEST/WEED).
Origin has successfully requested and received the first transgenic corn seed export permit from China's Government agencies, following required protocols. Our U.S. collaborator has secured an importation permit for these seeds from the United States Department of Agriculture ("USDA"). In late 2016 corn seeds containing our lead trait event and a back-up were successfully shipped from China to the US and planted in a USDA designated greenhouse.
Corn seeds carrying Origin's insect resistance and herbicide tolerance technologies developed in China will enter collaborative field experiments next summer to conduct testing required by the USDA, Environmental Protection Agency (EPA) and the Food and Drug Administration (FDA).
"We are extremely pleased with the latest advances in our Pillar I and II growth platforms. Our goal to become the preferred technology partner for and from China has been enhanced through the science and collaboration described today," said Dr. Niebur. "In addition to today's announcement, we look forward to providing future updates on Origin's Pillar III North American non-GM/Organic business launch, as well as review of our full year 2016 financial results."

Notable Share Transactions

Wed, 23 Nov 2016 14:10:47 GMT

DES MOINES, Iowa, Nov. 22, 2016 /PRNewswire/ -- Origin (Origin Agritech Ltd., NASDAQ: SEED), a biotechnology-focused and superior corn seed products provider, today announced that company management will be conducting a non-deal road show meeting with investors in New York on Nov. 28 and 29, Boston on Nov. 30 and Chicago on Dec. 8. For those investors interested in meeting with management, please inquire with the contact listed below.

Research

Wed, 28 Sep 2016 15:27:35 GMT

SEED ($2.33; was marked up 35% pre-market) announced the sale of its commercial seed production and distribution business for $60 million. Quotes from management:

“This is the next phase in management's plan to establish Origin as a global seed germplasm and biotech trait leader. Origin will retain its corn breeding and biotech research and development capabilities, which include modern laboratories, extensive field testing networks and off-season winter nursery in Hainan, to expand and pursue germplasm and trait licensing opportunities. Through Xinjiang Originbo, Origin also will maintain its "Green Pass" status, allowing it the competitive advantage of introducing new hybrid varieties to the Chinese market through an expedited government approval process...

...Under the terms of this deal, the acquirer of the China-based commercial seed business will enter into separate license agreements to pay Origin a royalty stream for the present and future product portfolio and a technology access fee for the research and development effort that Origin provides going forward in the areas of product discovery and development, hybrid registration, trait integration and intellectual property protection…

...Through this transaction and the development of our North American non-GM business, we believe that we are setting the stage for compelling growth opportunities," Niebur said. "We have a very exciting future ahead of us and look forward to providing our investors with additional updates on our business in the upcoming weeks and months."

We plan to speak with management to learn more about the North American growth opportunities as well as gain more color on the royalty stream agreement. We believe the key to the stock trading above its current cash value of $2.90 in the near term will be determined by the amount of income the company can generate from its royalty agreement with the acquirer.

Comments & Business Outlook

Thu, 11 Aug 2016 12:49:18 GMT

Third Quarter 2016 Financial Results

Total net revenue for the third fiscal quarter of 2016 increased by 12.1% to RMB82.6 million (US$12.5 million) from RMB73.7 million in the prior year period.
Net loss attributable to the Company was RMB18.2 million (US$2.7 million), or net loss per diluted share of RMB0.8 (US$0.12) in the third quarter of fiscal year 2016, compared to a net loss of RMB11.9 million, or net loss per diluted share of RMB0.52 in the same quarter of fiscal year 2015. Excluding the impact of the aforementioned one-time items, the net loss attributable to the Company decreased to RMB13.3 million, or net loss per diluted share of RMB0.58, from RMB16.9 million, or net loss per diluted share of RMB0.74 in the same quarter of fiscal year 2015, respectively.

Mr. Shashank Aurora, Chief Financial Officer of Origin, commented, "The sum of recognized revenue and deferred revenue as of June 30, 2016 was RMB473.9 million, or US$71.5 million, an increase of 6.0% compared to RMB447.1 million for the same period one year ago, driven by ongoing development and strong interest in our corn seed products and biotechnologies. The majority of deferred revenue will be recognized in the fourth fiscal quarter of 2016. Excluding one-time items, we narrowed both our loss from operations and net loss compared to last quarter as well as to the prior year. In our Seed Production & Distribution segment, we managed our inventory downward in the quarter as we improved our forecasting capabilities and better aligned seed production with demand. This helped generate healthy cash flow from operations, freed up working capital and reduced our debt. We continue to optimize our cost structure based on the exciting market opportunities that lie ahead."

Dr. William S. Niebur, Chief Executive Officer of Origin, commented, "We are making steady progress with our efforts to become a more globally focused seed and biotechnology company that bases its development in China and provides solutions to farmers around the world. We have recently added several important executive team members, including a new Chief Financial Officer and a new Chief Technology Officer who will drive the evolution of our current business model to enable expansion globally. Additionally, as a part of our strategic partnership approach, we announced a collaboration and commercial licensing agreement with a major multinational seed company in the third fiscal quarter to develop new GM crops for farmers in China. This agreement has great potential to modernize China's agricultural system and enhance food security, both major priorities for the government. We have a healthy pipeline of new seed products and traits for future release and are committed to pursuing new domestic and international partnership opportunities to maximize revenue and profit growth in the years ahead."

Comments & Business Outlook

Tue, 26 Apr 2016 13:59:57 GMT

BEIJING, April 25, 2016 /PRNewswire/ -- The Board of Directors of Origin Agritech Ltd., a technology-focused crop seed provider, today announced Dr. William S. Niebur as the company's new president and CEO. Dr. Niebur assumes the title from current CEO Dr. Gengchen Han, who will retain his position as Chairman of the Board.

Dr. Niebur takes the reins of the company at a time when Origin is strategically positioning itself as a global participant in the biotechnology and seed market. Origin will continue to enhance and expand its core seed business, while pursuing new opportunities and markets.

"This announcement is the next step in our strategic plan to grow our worldwide presence in the biotechnology and seed industries," Dr. Han said. "Dr. Niebur's extensive experience, strategic vision, industry relationships and reputation – in Asia, North and South America and Europe – will help to further accelerate Origin's emergence on the global stage."

"I am honored to be selected as the next president and CEO of Origin," Dr. Niebur said. "This is a bold and innovative company that is redefining its future. Origin is well-positioned with its established core seed business and proprietary germplasm development program, as well as its emerging seed-traits business. Origin will continue to focus on growth while driving stronger execution in the Asia seed business. The recruitment of stronger talent, development and out-licensing of novel value-added traits, and deepening of current and new strategic partnerships to grow our business globally will become a significant part of Origin's future."

Dr. Niebur most recently served with DuPont Pioneer as Vice President and General Manager with strategic oversight responsibility for China, East Asia and Oceania. Dr. Niebur has been in the seed business for more than three decades, beginning his career as a corn geneticist in Princeton, Ill. He went on to gain extensive global experience, first overseeing research and development while living in Europe, then returning to North America as the company's global Vice President for R&D, and finally moving into business operations managing seed businesses in East and North Asia. In 2015, Dr. Niebur was named as one of 50 people "Shaping the Future of the U.S.-China Relationship" in the Pacific Power Index, publicized by Foreign Policy Group. Dr. Niebur was instrumental in integrating technologies into plant genetics programs and was granted several patents which led to the commercialization of more than 30 branded products during his scientific career. Dr. Niebur holds both his Bachelor of Science and Master of Science degrees from Iowa State University. He earned his doctorate in plant breeding and cytogenetics from the University of Minnesota.

"I am proud of the work that has been accomplished by the research and business teams over the past 33 years, and humbled by the learning opportunities that were afforded to me in my career," Dr. Niebur said. "After my retirement earlier this year, now seemed the right time for a new direction and challenge. I couldn't be more excited about the opportunity to become the leader of a proven and established seed and technology company, which is strategically positioned for growth under the Chairmanship and future vision of Dr. Han, the Board of Directors and a new senior management team."

Today's announcement comes a little more than two weeks after Origin announced a major commercial collaboration agreement to develop new seed technologies for Chinese farmers in partnership with a leading multinational company. These combined efforts will contribute to the modernization and stabilization of China's dynamic agriculture system, leading to improved food and environmental security, closely aligned with published government priorities and initiatives.

Origin has also applied for patents and regulatory approval in other countries, including the United States, to advance its global strategy to meet the needs of farmers around the world.

CFO Trail

Fri, 29 Jan 2016 13:37:15 GMT

MANAGEMENT CHANGE

Effective as of today, the Company appointed Mr. Song Xu as its Chief Financial Officer, replacing Mr. James Chen, who has resigned to pursue other opportunities.

Comments & Business Outlook

Fri, 15 Jan 2016 13:07:02 GMT

BEIJING, January 15, 2016 /PRNewswire/ -- Origin Agritech Limited (NASDAQ: SEED) ("Origin" or the "Company"), a technology-focused supplier of crop seeds in China, today announced unaudited financial results for the fiscal year ended September 30, 2015. These unaudited year end results reflect the Company's consolidated financial statements during the period from October 1, 2014 to September 30, 2015. Origin prepares its consolidated financial statements in accordance with generally accepted accounting principles (GAAP) of the United States.

FY2015 Highlights

Financial Highlights

Operating income for the fiscal year 2015 was RMB1.3 million (US$0.2 million), a significant turnaround from the operating loss of RMB24.5 million in fiscal year 2014.
Net cash provided by operating activities was RMB52.2 million (US$8.2 million) in FY2015, representing a significant turnaround from the negative cash flow from operating activities of RMB85.6 million and RMB146.1 million in FY2014 and FY2013, respectively.

Seed Biotech Advances

After several years of testing, our biotech corn seeds with stacked transgenic traits of Bt and glyphosate tolerance genes have shown promising results in both our northern testing site (for summer testing) and southern testing site (for winter testing and with heavy natural insect pressure). We believe that we are now ready to proceed to the production test in 2016.
Backcrossing of glyphosate tolerance traits into corn seed lines from major multinational seed companies has been completed successfully. We are now ready to proceed to the backcrossing activities of our stacked traits of Bt and glyphosate genes. We believe that we also are ready to enter commercial licenses with these multinational companies for our seed biotechnologies.

Corporate Strategies

As the Company has successfully developed several biotech traits that could be valuable in the global seed market, we have announced our strategies to operate the company under two business lines: Biotech & Product Development under State Harvest and Seed Production & Distribution under Beijing Origin. Under the new strategies, we plan to enter the U.S. market in 2016 and introduce our seed biotechnologies to the global seed market.

Operating Activities and Results

Corporate Strategies Origin started as a hybrid corn seed company in 1997 as the first private seed company in China. With the success in and strong cash flow from the hybrid corn seed business, Origin started its seed biotechnology research in early 2000's and established Origin Life Science Center in 2005. The Company has since focused on the seed biotech product development and funded the biotech R&D with its free cash flow from the traditional hybrid seed business.

After more than 10 years of seed biotech development, the Company is now essentially becoming a biotech company focused on its GMO (Genetically Modified Organism) technologies and has developed biotech corn seed products that are waiting to be commercialized. At the same time, the Company has already built up state-of-the-art seed production bases and solid distribution channels in China and continues to generate cash flow from the hybrid seed business.

With the success in biotech product development, especially the successful field trials of the stacked traits of insect resistance Bt genes and glyphosate tolerance genes, the Company announced in June, 2015 its strategies going forward. Under the announced strategy, the Company plans to reorganize into two business units: Biotech & Product Development under State Harvest and Seed Production & Distribution under Beijing Origin.

Under the new corporate structure, the Company plans to enter the seeds and traits market in North America with its GMO product pipelines under State Harvest represented by its first generation phytase transgenic corn, second generation glyphosate tolerance corn seed, and its new technology of stacked traits of Bt and glyphosate tolerance genes. While waiting for the approval for commercial planting in China, State Harvest plans to introduce these agri-biotech products into the United States seed market. In addition, State Harvest has also built a solid capacity for breeding technologies, including marker-assisted breeding and doubled haploids technologies, which along with its germplasm resources, will allow State Harvest to become a global seed technology company.

Comments & Business Outlook

Wed, 05 Aug 2015 12:58:08 GMT

Third Quarter 2015 Financial Results

For the third quarter of fiscal 2015, the Company reported revenues of RMB73.7 million (US$12.0 million) compared with RMB92.9 million for the three months ended June 30, 2014.

Net loss attributable to Origin Agritech for the third quarter of fiscal 2015 was RMB11.9 million (US$1.9 million), or net loss per basic and diluted share of RMB0.52 (US$0.09), compared to a net loss attributable to Origin Agritech of RMB14.7 million or net loss per basic and diluted share of RMB0.65 in the same period one year ago.

Comments & Business Outlook

Wed, 17 Jun 2015 04:00:00 GMT

BEIJING, June 16, 2015 /PRNewswire/ -- Origin Agritech Limited (NASDAQ GS: SEED) ("Origin", or the "Company"), a technology-focused supplier of crop seeds in China, today announced that Dr. Gengchen Han, Chairman and CEO of Origin, met with investors at a meeting organized by Wells Fargo Securities and discussed the strategic directions of new Origin Agritech on June 16^th, 2015. During his presentation, Dr. Han announced that Origin has successfully transitioned from a traditional seed company to a biotechnology seed company after more than 10 years of agri-biotech developments. This is marked by the successful development of our biotech seed product pipelines, especially the new technology of stacked traits of glyphosate tolerance (GT) and insect resistance (Bt)

With the transformation to new Origin Agritech, the Company is now organized into a simple structure of two fundamental business lines: agri-biotech and product develop under State Harvest and seed production and distribution under Beijing Origin. State Harvest is now in the position to introduce to the seed market its first generation phytase transgenic corn, second generation glyphosate tolerance corn seed, and its new technology of stacked traits of GT and Bt genes. While waiting for the approval for commercial planting in China, State Harvest is ready to introduce these agri-biotech products into the global seed market. In addition, State Harvest has also built a solid capacity for breeding technologies, including marker-assisted breeding and doubled haploids technologies, which along with its rich germplasm resources, will allow State Harvest to become an important global seed technology company.

Beijing Origin will focus on our seed production and distribution business in China. After recent restructurings, Beijing Origin's corn seed business now represents over 85% of the revenues in Beijing Origin, and we believe it has a strong potential to generate EBITDA of over RMB100 million. Beijing Origin's broad product lines across all major planting regions in China and innovative distribution network are the cornerstones for its leadership position in China. Its state-of-the-art corn seed production and conditioning facilities in Gansu and Xinjiang provinces provide superior quality products to the farmers in China and they are the growth engine for Beijing Origin.

During the meeting today, Dr. Han also discussed the Company's current business performance and financial conditions. Dr. Han pointed out that we should see a significant year-over-year improvement in the income from operations during the fiscal year 2015, despite continuous challenges due to industry oversupply. On the balance sheet, Dr. Han discussed the inventory adjustment during both 2014 and 2015 planting seasons, which could improve our operating cash flow significantly this and next year. In addition, the company is expected to have minimal needs in CAPEX during the next couple of years as our new state-of-the-art facility in Xinjiang province allows us to double our corn seed revenues.

"As Origin Agritech is celebrating its eighteenth anniversary, we are excited to launch our new strategies and move to the new stage for Origin Agritech", said Dr. Han in the meeting, "we believe the earnings potential of Beijing Origin could demonstrate the value of Origin's fundamental seed production and distribution businesses while our new global strategy for State Harvest's agri-biotech and product development businesses could move Origin to the global market and allows Origin to become a global player in the biotech seed business."

The presentation materials used in today's meeting have been filed with SEC on June 15, 2015.

Comments & Business Outlook

Tue, 05 May 2015 04:00:00 GMT

Second Quarter 2015 Financial Results

The Company reported a net loss per share of RMB1.14, representing a significant improvement from the net loss per share of RMB1.95 in the same period last year.
Net loss attributable to the Company for the second quarter of fiscal 2015 was RMB25.9 million (US$4.2 million), or net loss per basic and diluted share of RMB1.14 (US$0.19), compared to a net loss of RMB44.3 million, or net loss per basic and diluted share of RMB1.95 in the same period one year ago.

Comments & Business Outlook

Thu, 05 Feb 2015 05:00:00 GMT

First Quarter 2015 Financial Results

Revenues of RMB15.6 million (US$2.5 million), compared with revenues of RMB20.4 million in the three months ended December 31, 2013.
Net loss attributable to Origin Agritech Limited for the first quarter of fiscal 2014 was RMB29.5 million (US$4.8 million), or net loss per basic and diluted share of RMB1.30 (US$0.21), compared with net loss of RMB31.0 million, or net loss per basic and diluted share of RMB1.36 in the same period one year ago.

Comments & Business Outlook

Mon, 12 Jan 2015 05:00:00 GMT

ORIGIN AGRITECH LIMITED

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

(In thousands, except number of share and per share data)

	Year ended September 30,
	2012			2013			2014			2014
	RMB			RMB			RMB			US$
Revenues		552,111			481,694			414,891			67,521
Cost of revenues		(387,783	)		(315,082	)		(301,148	)		(49,010	)
Gross profit		164,328			166,612			113,743			18,511
Operating expenses
Selling and marketing		(56,437	)		(55,375	)		(58,972	)		(9,597	)
General and administrative		(77,585	)		(66,153	)		(46,428	)		(7,556	)
Research and development		(37,629	)		(42,162	)		(40,377	)		(6,571	)
Other income, net		3,852			15,241			7,555			1,229
Total operating expenses, net		(167,799	)		(148,449	)		(138,222	)		(22,495	)

Income(loss) from operations		(3,471	)		18,163			(24,479	)		(3,984	)

Interest expense		(4,029	)		(11,326	)		(19,743	)		(3,213	)
Share of net income (loss) of equity investments		4,030			5,161			(776	)		(126	)
Loss on disposal of an equity method investment		-			-			(1,498	)		(244	)
Loss on disposal of a subsidiary		-			-			(2,623	)		(427	)
Interest income		2,547			1,776			596			97
Income (loss) before income taxes		(923	)		13,774			(48,523	)		(7,897	)

Income tax (expense)benefits(note 18)
Current		(589	)		(2,707	)		(677	)		(110	)
Deferred		(1273	)		(1,755	)		-			-
Reversal of contingent tax liability		-			-			39,060			6,357
Income tax (expense) benefits		(1,862	)		(4,462	)		38,383			6,247

Net income (loss)		(2,785	)		9,312			(10,140	)		(1,650	)
Less: Net income (loss) attributable to non-controlling interests		(1,351	)		1,818			(613	)		(100	)

Net income (loss) attributable to Origin Agritech Limited		(1,434	)		7,494			(9,527	)		(1,550	)
Other comprehensive income (loss)
Net income (loss)		(2,785	)		9,312			(10,140	)		(1,650	)
Foreign currency translation difference		117			1,890			(56	)		(9	)
Comprehensive income (loss)		(2,668	)		11,202			(10,196	)		(1,659	)
Less: Comprehensive income (loss) attributable to non-controlling interests		(1,351	)		1,818			(613	)		(100	)
Comprehensive income (loss) attributable to Origin Agritech Limited		(1,317	)		9,384			(9,583	)		(1,559	)

Net income (loss) attributable to Origin Agritech Limited per share - basic (note 19)		(0.06	)		0.32			(0.42	)		(0.07	)

Net income (loss) attributable to Origin Agritech Limited per share - diluted (note 19)		(0.06	)		0.32			(0.42	)		(0.07	)

Shares used in calculating basic net income (loss) per share		23,382,812			23,259,127			22,743,853			22,743,853

Shares used in calculating diluted net income (loss) per share		23,382,812			23,278,443			22,743,853			22,743,853

Management Discussion and Analysis

Revenues and Gross Margin

Total revenues for the fiscal year ended September 30, 2014 were RMB414.89 million (US$67.52 million), a decrease of 14% from RMB481.69 million during the fiscal year ended September 30, 2013. Overall, the year-over-year decrease in revenues was mainly due to the lower sales in the Company’s rice seed business and a decline in the corn seed contract production business. Contract production business is when we produce seeds for other seed companies. Although contract production a common practice in China, this is not our main business. In fiscal year 2013, we had some large one-time contract production businesses as we started our Xinjiang production facility. The total revenues from our corn seed contract production businesses were RMB27.98 million.

Exclusive of scrap sales, revenues from our hybrid corn seeds decreased by 6.9% to RMB355.44million (US$57.85million) in fiscal year 2014 from RMB381.82million in fiscal year 2013, this year-over-year decrease was mainly due to the decline of corn seed contract production business in this year. Excluding scrap sales and contract production businesses, revenues from our key strategic corn seed business in fiscal year 2014 was RMB351.65 million (US$57.14 million), almost flat with that RMB353.84 million in fiscal year 2013.Gross margin of our corn products decreased by 5.4% in fiscal year 2014 compared with fiscal year 2013, which was mainly due to higher average unit purchase cost of seed as a result of lower seed production yield for one of our key production centers this year.

Non-scrap revenues from our hybrid rice seeds decreased by 50.3% to RMB36.15million (US$5.88 million) in fiscal year 2014 from RMB72.71million in fiscal year 2013, which was mainly due to increasing competition in the rice seed market. Gross margin of our rice products decreased by 27.7% in fiscal year 2014 compared with fiscal year 2013 due to fierce competition in the seed market. Non-scrap revenues from our canola seeds decreased by 5.3% to RMB20.62 million (US$3.35 million) in fiscal year 2014 compared with RMB21.77 million in fiscal year 2013.

Net income

Net loss for the fiscal year ended September 30, 2014 were RMB9.53 million (US$1.55million), compared with the net income of RMB7.49 million during the fiscal year ended September 30, 2013. The year-over-year decline was mainly due to the revenue decline and increase in average unit cost of sales.

Comments & Business Outlook

Thu, 08 Jan 2015 05:00:00 GMT

BEIJING, January 8, 2015 /PRNewswire/ -- Origin Agritech Limited (NASDAQ: SEED) ("Origin" or the "Company"), a technology-focused supplier of crop seeds in China, today announced unaudited financial results for the fiscal year ended September 30, 2014. These unaudited year end results reflect the Company's consolidated financial statements during the period from October 1, 2013 to September 30, 2014. Origin prepares its consolidated financial statements in accordance with generally accepted accounting principles (GAAP) of the United States.

Operating Activities and Results

Fiscal 2014 was a transition year for both the agricultural biotechnology and conventional seed industries in China. For the genetically modified technologies, there are indications that the Chinese government is starting to promote GM technologies and is trying to educate the public about the safety of these technologies. In reaction, however, the public debate about GM technologies in China heated up significantly in the media, mostly on the Chinese Internet, as some celebrities joined the debate. For the conventional seed industry, fiscal year 2014 represented a very challenging year as the industry wide inventory levels reached historic highs at the beginning of the selling season. However, a resulting inventory destocking, which we believe is occurring, is expected to improve the supply/demand ratio for the 2015 planting season.

More importantly, Origin has made significant progress on the biotechnology front and has made operational improvements as we faced the challenges in the seed industry during fiscal year 2014. Our GM corn product pipelines now include not only the phytase transgenic corn seed, but we now have glyphosate tolerance corn seed, next generation corn seed products of stacked glyphosate tolerance and insect resistance traits and other GM products in different stages of government safety approval. For our conventional seed business, we have weathered through the challenging market, and we were able to increase our core corn seed sales volume by 10% year over year in fiscal year 2014 (excluding scrap sales and our contract production business). Looking forward, we believe that we have prepared Origin for the expected market recovery in 2015 with improved operating efficiency and promising new seed product pipelines.

Biotechnology Progress. In fiscal year 2014, Origin further advanced its GM corn seed pipeline with several generations of GM technologies. In addition to our progress with the regulatory approvals, we have made significant progress in the backcrossing of our GM traits into our hybrid corn varieties. Since we started licensing programs of our GM technologies to large multinational companies several years ago, we have achieved desirable results in the backcrossing programs to incorporate our GM traits into the corn varieties of the multinational companies. Backcrossing is a necessary step to commercialize GM corn seed products and it often takes several years to achieve the optimal results. We believe that our backcrossing programs are progressing well, and we are now much closer to the commercialization of GM technologies of our first generation GM product phytase corn and our second generation product glyphosate tolerance transgenic corn seed. Our new technologies, including insect resistance (Bacillus Thuringiensis, or Bt) and stacked traits of glyphosate tolerance and insect resistance, are in various stages of regulatory approval. The attached chart is a simplified summary of the current stages of our key GM pipelines.

Furthermore, we have made significant achievement in our biotechnologies intellectual property protections. We were awarded three domestic patents in fiscal year 2014: 1) Method for Developing Glyphosate-Resistant Maize (ZL201210107400.1); 2) A Glyphosate-Resistant Protein G2-aorA Monoclonal Antibody and the Use Thereof (ZL201210107179.1), and 3) Method for Detecting Glyphosate-Resistant Protein G2-aorA and Dedicated ELISA Kit (ZL201210107406.0). We now have a total of 6 domestic patents and one PCT patent, as listed in the table below. During the fiscal year 2014, we applied for three additional patents in China: 1) Method and the Primer Pairs for Detecting Glyphosate-Resistant Maize G1105E-823C Expressing G2-aroA Gene (201410267596.1); 2) The Primer Pairs to Detect Glyphosate-Resistant Maize G1105E-823C Expressing G2-aroA Gene (201410268436.9); and 3) The Primer Pairs Used for Detecting Glyphosate-Resistant Maize G1105E-823C Expressing G2-aroA Gene (201410268258.X). We believe these patents will strengthen further our leading position in the GM seed technologies in ChinaFollowing the corporate restructuring in fiscal year 2012 and operational improvements in fiscal year 2013, we achieved further significant improvement in operating efficiency and cost reduction in fiscal year 2014. We were able to further reduce the number of employees and operating costs, especially the general & administrative expenses in fiscal year 2014. As of September 30, 2014, Origin has 531 employees, compared with 856, 713, and 678 employees as of September 30, 2011, 2012, and 2013, respectively. The G&A costs in fiscal year 2014 was RMB46.43 million, compared to RMB86.75 million, 77.59 million, and 66.15 million in FY2011, FY2012, and FY2013, respectively. The G&A expenses as the percentage of sales declined from 15.3% in FY2011 to 11.2% in FY2014. We believe our cost reduction efforts were important to the improvements in our financial performance during the challenging Year.

On the marketing and inventory fronts, we have faced many more challenges than we originally anticipated when entering the fiscal year 2014 selling season and, by the end of fiscal second quarter of 2014, our inventory had reached a historical high as the competition escalated with many seed suppliers dumping seeds on the market. The imposition of more strict seed business license requirements also amplified inventory dumping as some small companies exited the market. In response to the market competition, we took swift action in our selling and marketing efforts and improved our sales dramatically during the last three months of the season. By the end of the fiscal year 2014 selling season, our sales organization recorded a 10% year over year volume increase for the corn seeds sales (excluding scrap sales and our contract production business). We think this is remarkable considering the tough market conditions and on-going reorganization efforts and it helped to improve our inventory position.

Overall Analysis

Corn seeds remained our strongest product line, accounting for 86% of our overall sales. Total revenues from corn seeds were RMB357.44 million (US$58.11 million) in fiscal year 2014, compared with RMB387.22 million in fiscal year 2013. Excluding scrap sales and our contract production business, revenues from our key strategic corn seed business in fiscal year 2014 was RMB351.65 million (US$57.14 million), which was almost flat when compared with that revenue of RMB353.84 million in fiscal year 2013. The sales volume of the corn seeds, excluding the scrap and our contract production business, was up 10% year over year. Revenues from the rice product line for the year ended September 30, 2014 decreased by approximately 49% to RMB36.84 million (US$6.0 million) from RMB72.71 million in fiscal year 2013, due mainly to the increasing competition. Sales of canola seeds decreased by 5% to RMB20.62 million (US$3.35 million) in fiscal year 2014 compared to RMB21.77 million in fiscal year 2013.

Operating expenses for the fiscal year ended September 30, 2014 were RMB138.22 million (US$ 22.50 million), representing a decrease of 7% from RMB148.45 million in the fiscal year 2013, which was mainly because of our expense control efforts, notwithstanding an increase in marketing expenses. General and Administrative expenses for the fiscal year ended September 30, 2014 were RMB 46.43 million, a significant decrease of 30% year-over-year.

Operating loss for the fiscal year ended September 30, 2014 was RMB24.48 million (US$4.0 million), compared to the operating profit of RMB18.16 million for the fiscal year ended September 30, 2013. The decrease in operating results was mainly due to the decline in revenue and a relative increase in production cost.

Net loss for the fiscal year ended September 30, 2014 was RMB9.53 million (US$1.55 million) compared to the net income of RMB7.49 million for the fiscal year ended September 30, 2013. The year-over-year decline was mainly due to the decline in revenue and increase in production costs.

Net loss per share was RMB (0.42) or US$ (0.07) for the fiscal year 2014, compared with net income of RMB 0.32 in fiscal year 2013.

As of September 30, 2013 and 2014, we had approximately RMB131.98 million and RMB46.27 million (US$7.52 million), respectively, in cash and cash equivalents. Total borrowings as of September 30, 2013 and 2014 were RMB 286.32 million and RMB 289.83 million (US$47.11 million), respectively. During fiscal year 2014, Net cash used in operating activities was RMB85.64 million (US$13.92 million), down from a cash outflow of RMB146.11 million for the fiscal year ended September 30, 2013. Net cash used in investing activities was RMB0.56 million (US$0.09 million) for the fiscal year ended September 30, 2014, compared with RMB68.28 million for the fiscal year ended September 30, 2013. Net cash provided by financing activities was RMB0.39 million (US$0.06 million) for the fiscal year ended September 30,2014 compared with RMB191.69 million for the fiscal year ended September 30, 2013. The borrowing was mainly related to the operations of Beijing Origin and Linze Origin, which had RMB225.00 million (US$36.57 million) bank loan for settlement of seed purchases, and RMB52.52 (US$8.54 million) for the new corn seed processing plant construction in Xinjiang.

Research and Development Activities

Origin was built on its strong R&D platform and we strongly believe a commitment to R&D is essential to the growth of the company. During fiscal year 2014, we continue to make significant progress both in our conventional hybrid crop seed development programs and biotechnology R&D activities.

Key developments for Origin's GM corn seeds:

Phytase: Four commercial hybrids with phytase traits have completed the variety production test. These varieties with phytase traits have been submitted to the Chinese government (the Ministry of Agriculture) for variety safety certificate and final approval.

Glyphosate Tolerance: One GM glyphosate tolerance event (the unique DNA recombination event that took place in one plant cell) passed Phase 4 - Production Test and is waiting for the Phase 5 - Safety Certificate. Two more glyphosate tolerance events are being submitted for Phase 3 - Environment Release Test. In addition, more than one thousand events are undergoing Phase 1 - Laboratory Research;

Glyphosate + Bacillus Thuringiensis (Bt): Three events of the Company's glyphosate tolerance and insect resistance traits have advanced into Phase 3 - Environment Release Test. More than 4,500 events of the stacked traits (inserting more than one gene in a seed via biotechnology) are being screened in Phase 1 - Laboratory Research.

Backcrossing Programs: Multiyear programs of backcrossing of phytase and glyphosate tolerance traits into corn varieties from our own product lines as well as several product lines of multinational companies are progressing well. Successful backcrossing products of phytase and glyphosate tolerance traits into our own varieties are and will be submitted for government approvals.

Hybrid Corn Seed Development Program:

In addition to GM crop seeds, Origin has a large R&D program developing conventional hybrid crop seeds. In China, new hybrid seed varieties need to go through an official approval process prior to sales. This approval process typically involves three to four years of registration trials and normally proceeds according to the following sequential steps:

Pre-Registration > Registration Trial 1 > Registration Trial 2 > Field Demo > Approval

Each step leading up to approval takes approximately one year unless it needs to be repeated. In some localities the Registration Trial 2 and Field Demo steps are treated as one and the same step.

During fiscal year 2014, we had more than 35 tests going through different stages of the approval process. As the results of multiyear testing, we received registration approval for 8 of our new varieties. For both fiscal years 2013 and 2014, we received a total of 15 approvals for our corn seed hybrid products. This is a significant improvement over the previous three years, during which we only received a total of 5 approvals.

Outlook

Looking forward, we expect the market condition to recover in fiscal year 2015 as the industry corn seed inventory is expected to decline. With our new product introductions, increasing sales efforts, and operational improvements, we expect both revenues and operating income to improve meaningfully in fiscal year 2015. More importantly, we believe that our cash flow from operating activities will have a significant recovery as we manage our inventory and sales efforts product by product.

Comments & Business Outlook

Tue, 06 Jan 2015 05:00:00 GMT

BEIJING, January 6, 2015 /PRNewswire/ -- Origin Agritech Limited (NASDAQ GS: SEED) ("Origin", or the "Company"), a technology-focused supplier of crop seeds in China, today announced that the Company has received the renewed Bio-safety Certificate from the Ministry of Agriculture for its genetically modified phytase corn.

The Bio-safety Certificate was originally received in 2009 for our genetically modified phytase corn for a period of five years and it expired in August, 2014. Genetically modified (GM) seed products in China must undergo five separate stages of approval beginning with a phase one laboratory approval to the final receipt of the Bio-safety Certificate in phase five. Bio-safety Certificate has an effective period of five years and the Ministry of Agriculture may review additional data for safety evaluations during the renewal application process.

In addition to the original phytase corn seed, we now have four commercial hybrids with phytase traits in the Phase 5 - Bio-safety Certificate stage. More importantly, our next generation GM product glyphosate tolerance corn seed has passed Phase 4 - Production Test and is waiting for the Phase 5 - Bio-safety Certificate and our GM corn products with stacked traits of glyphosate tolerance and insect resistance (Bt) have progressed to the Phase 3-Environment Release Test.

Going Private News

Mon, 03 Nov 2014 05:00:00 GMT

BEIJING, November 3, 2014 /PRNewswire/ -- Origin Agritech Limited (NASDAQ GS: SEED) ("Origin", or the "Company"), a technology-focused supplier of crop seeds in China, today announced that its Board of Directors (the "Board") has determined that Hunan Xindaxin Company Limited's ("Xindaxin") unsolicited non-binding proposal (the "Proposal") to acquire the Company for US$2.50 in cash per ordinary share of the Company, as set forth in Xindaxin's preliminary non-binding proposal letter dated May 12, 2014 and as previously announced on May 13, 2014, is not in the best interests of the Company and its shareholders. Accordingly, the Board has determined not to pursue further discussions with Xindaxin regarding the Proposal at this time.

The Board will continue to review periodically the Company's long-term strategic plan with the goal of maximizing shareholder value, and as part of this ongoing process, the Board and senior management of the Company will continue to review periodically strategic alternatives that may be available to the Company. The Company does not undertake any obligation to provide any updates with respect to such review, except as required under applicable law.

Comments & Business Outlook

Mon, 04 Aug 2014 04:00:00 GMT

Third Quarter 2014 Financial Results

Revenues of RMB92.9 million (US$15.1 million) compared with RMB128.3 million
Net loss for the third quarter of fiscal 2014 was RMB14.7 million (US$2.4 million), or net loss per basic and diluted share of RMB0.65 (US$0.11), compared to a net profit of RMB6.1 million, or net profit per basic and diluted share of RMB0.26 in the same period one year ago.

Comments & Business Outlook

Fri, 09 May 2014 04:00:00 GMT

Second Quarter 2014 Financial Results

Revenues of RMB4.7 million (US$0.8 million) compared with RMB27.5 million for the three months ended March 31, 2013.
Net loss for the second quarter of fiscal 2014 was RMB44.3 million (US$7.2 million), or net loss per basic and diluted share of RMB1.95 (US$0.32), compared to a net loss of RMB27.8 million, or net loss per basic and diluted share of RMB1.19 in the same period one year ago.

Comments & Business Outlook

Mon, 24 Feb 2014 05:00:00 GMT

Fourth Quarter 2014 Financial Results

Revenues of RMB 20.4 million (US$3.3 million) compared withRMB 22.7 million in the three months ended December 31, 2012.
Net loss for the first quarter of fiscal 2014 was RMB31 million (US$5.1 million), or net loss per share of RMB1.36 (US$0.22), compared with net loss of RMB23 million, or net loss per share of RMB0.98 in the same period one year ago.

Comments & Business Outlook

Thu, 23 Jan 2014 05:00:00 GMT

20-F

Our consolidated financial statements are prepared and presented in accordance with accounting principles generally accepted in the United States, or U.S. GAAP.

	For the year ended
	September 30,
	(in thousands, except share data)
	2009	2010	2011	2012	2013
	RMB	RMB	RMB	RMB	RMB	USD(1)
Consolidated statement of income and comprehensive income data:
Net revenues	592,492	584,860	567,434	552,111	481,694	77,297
Cost of revenues	(392,842)	(353,587)	(371,591)	(387,783)	(315,082)	(50,561)
Gross profit	199,650	231,273	195,843	164,328	166,612	26,736
Selling and marketing	(55,648)	(52,227)	(56,831)	(56,437)	(55,375)	(8,886)
General and administrative	(64,833)	(78,708)	(86,748)	(77,585)	(66,153)	(10,615)
Research and development	(33,473)	(38,356)	(44,771)	(37,629)	(42,162)	(6,766)
Other income, net	1,991	2,340	5,120	3,852	15,241	2,446
Total operating expenses	(151,963)	(166,951)	(183,230)	(167,799)	(148,449)	(23,821)
Income (loss) from operations	47,687	64,322	12,613	(3,471)	18,163	2,915
Interest income	2,036	1,634	1,771	2,547	1,776	285
Interest expenses	(16,784)	(8,539)	(1,469)	(4,029)	(11,326)	(1,818)
Loss on repurchase of convertible notes	(51,101)	-	-	-	-	-

Equity in earnings / Gain on disposal of associated company	4,669	18,253	1,616	4,030	5,161	828

Loss on liquidation of subsidiary	-	-	(13,582)	-	-	-
Changes in the fair value of embedded derivatives	3,300	-	-	-	-	-
Income (loss) before income taxes	(10,193)	75,670	949	(923)	13,774	2,210
Income tax expense	(11,732)	(9,319)	(13,730)	(1,862)	(4,462)	(716)
Net income (loss) before non-controlling interests	(21,925)	66,351	(12,781)	(2,785)	9,312	1,494
Non-controlling interests	18,892	17,298	10,298	(1,351)	1,818	292
Net income (loss) attributable to Origin Agritech Limited	(40,817)	49,053	(23,079)	(1,434)	7,494	1,202

Net income (loss) per share:
Basic	(1.77)	2.12	(1.00)	(0.06)	0.32	0.05
Diluted	(1.77)	2.10	(1.00)	(0.06)	0.32	0.05
Shares used in computation:
Basic	23,013,692	23,189,464	23,351,615	23,382,812	23,259,127	23,259,127
Diluted	23,013,692	23,337,265	23,351,615	23,382,812	23,278,443	23,278,443

	5

	Sept 30		Sept 30		Sept 30		Sept 30	Sept 30
	2009		2010		2011		2012	2013
					(in thousands)
	RMB		RMB		RMB		RMB	RMB	USD(1)
Consolidated balance sheet data:
Cash and cash equivalents		121,255		299,672		129,942	152,789	131,978	21,467
Current working capital (2)		(33,533)		67,650		(21,753)	(46,153)	(67,436)	(10,969)
Total assets		824,544		935,011		818,382	975,437	1,158,072	188,366
Deferred revenues		18,280		23,111		19,812	23,243	22,069	3,590
Total current liabilities		546,822		596,611		532,571	605,195	751,978	122,314
Total liabilities		546,822		606,037		532,571	662,005	837,827	136,277
Non-controlling interests		51,389		57,089		26,774	52,385	54,203	8,816
Total Origin Agritech Limited shareholders’ equity		226,333		271,885		259,037	261,047	266,042	43,273

Comments & Business Outlook

Wed, 08 Jan 2014 05:00:00 GMT

Fiscal year 2013

Revenues was RMB481,694 vs. last years RMB552,111
Net income (loss) attributable to Origin Agritech Limited per share � basic and diluted was RMB 0.32 vs last years RMB (0.06)

Outlook

With the industry inventory for seeds, especially corn seed, at historically high levels, we expect the market to continue with increasing competition in fiscal year 2014. However, we will continue our disciplined management approach and deepen our restructuring effort in different levels to improve our operational efficiency. We expect our earnings performance to improve again and revenue growth to turnaround in the FY2014.

Comments & Business Outlook

Wed, 07 Aug 2013 04:00:00 GMT

Third Quarter Financial Results

Revenues of RMB128.3 million (US$20.8 million) compared with RMB269.3 million for the three months ended June 30, 2012
Gross profit for the third quarter of fiscal 2013 was RMB36.9 million (US$6.0 million) compared to RMB54.2 million in the third quarter of fiscal 2012. Gross margin for the third quarter of fiscal 2013 increased to 28.7% from 20.1% for the same period of fiscal 2012. The increase in the gross margin was mainly due to improved cost control adopted since last year.
Net income attributable to Origin for the third quarter of fiscal 2013 was RMB6.1 million (US$1.0 million), orRMB0.26 (US$0.04) per basic and diluted share, compared with a net income of RMB25.4 million, or RMB1.1 per basic and diluted share during the same quarter one year ago.

Comments & Business Outlook

Wed, 08 May 2013 04:00:00 GMT

Second Quarter 2012 Financial Results

Revenues of RMB27.5 million (US$4.4 million) compared with RMB14.7 million for the three months ended March 31, 2012.

Gross profit for the second quarter of fiscal 2013 was RMB6.7 million (US$1.1 million) compared with a gross loss of RMB2.9 million in the second quarter of fiscal 2012.

Net loss for the second quarter of fiscal 2013 was RMB27.8 million (US$4.4 million), or net loss per diluted share of RMB1.19 (US$0.19), compared to a net loss of RMB37.1 million, or net loss per diluted share ofRMB1.58 in the same period one year ago.

Research

Tue, 07 Aug 2012 04:00:00 GMT

Third Quarter 2012 Results

During the third quarter of fiscal 2012, revenues increased by 10.1% year-over-year to RMB269.3 million (US$42.7 million) from RMB244.7 million one year ago.
Net income attributable to Origin for the third quarter of fiscal 2012 was RMB25.4 million (US$4.0 million), or RMB1.09 (US$0.17) per share - both basic and diluted, compared with a net income of RMB13.9 million, or RMB0.60 per share - both basic and diluted during the same period one year ago.

Comments & Business Outlook

Tue, 07 Aug 2012 04:00:00 GMT

Third Quarter Results

During the third quarter of fiscal 2012, revenues increased by 10.1% year-over-year to RMB269.3 million (US$42.7 million) from RMB244.7 million one year ago. Higher revenues this quarter were mainly due to earlier sales settlement with the distributors for the 2012 selling season.

Gross profit for the third quarter of fiscal 2012 was RMB54.2 million (US$8.6 million) compared to RMB85.8 million in the third quarter of fiscal 2011.

Comments & Business Outlook

Tue, 10 Jul 2012 04:00:00 GMT

BEIJING--(BUSINESS WIRE)--Origin Agritech Limited (NASDAQ: SEED) (“Origin” or the “Company”), a technology-focused supplier of hybrid and genetically modified crop seeds in China, today provided update on its Genetically Modified (“GM”) corn seed pipeline and hybrid corn seed development program.

GM Corn Seed Pipeline

Genetically modified seed products in China must initially undergo a five-stage approval process consisting of Phase 1 - Laboratory Research, Phase 2 - Intermediate Test, Phase 3 - Environment Release Test, Phase 4 - Production Test, leading to the receipt of the Bio-Safety Certificate from Ministry of Agriculture (“MOA”) in Phase 5. Currently, only domestic seed producers such as Origin Agritech are allowed to proceed through all five phases, while international companies are restricted to Phase 1 only and forbidden to proceed to Phases 2 through Phase 5.

Origin’s genetically modified phytase corn was the first GM corn seed which passed all five phases of the GM approval process and received notification of Bio-Safety Certificate. Origin has further incorporated phytase traits into two of its best-selling commercial corn hybrids. Commercialization of these two corn hybrids is pending approval from the Chinese government. Two additional corn hybrids with GM phytase traits are undergoing variety production test.

Phytase is an essential element for the growth and development of all animals by increasing phosphorous absorption. Phytase transgenic corn inputs the phytase trait directly into corn, thus reducing costs for animal feed producers by eliminating the need to mix phytase and corn ingredients together. Origin’s GM phytase-producing corn is expected to reduce the need for inorganic phosphate supplements as animals will directly absorb more phosphate from their feed, reducing animal feed’s high cost. Full release.

Comments & Business Outlook

Tue, 08 May 2012 04:00:00 GMT

Second Quarter 2012 Results

During the second quarter of fiscal 2012, the Company generated revenues of RMB14.74 million (US$2.34 million), compared with RMB1.09 million for the three months ended March 31, 2011. Revenues generated in the second quarter were mainly a result of scrap sales. As a reminder, the majority of Origin’s revenues are recorded in the fiscal third quarter as a result of our revenue recognition policy.

Net loss for the second quarter of 2012 was RMB37.07 million (US$5.89 million), or RMB-1.58 (US$-0.25) per diluted share, as compared to a net loss of RMB35.13 million, or RMB-1.36 (US$-0.21) per diluted share in the same period one year ago.

Research

Thu, 19 Jan 2012 05:00:00 GMT

Fiscal 2011 Results

Revenues of RMB567.43 million (US$89.29 million), a slight decrease of 2.98% from September 30, 2010 with RMB584.86 million (US$87.28 million).
Income from operations for the year ended September 30, 2011 were RMB12.61 million (US$1.99 million), compared with the income from operations from September 30, 2010 of RMB64.32 million (US$9.60 million).
Net loss attributable to Origin for the fiscal year of 2011 was RMB 23.08 million (US$3.63 million) compared with a net profit attributable to Origin of RMB49.05 million (US$7.32 million) in the year ended September 30, 2010. Of note, this amount included the net loss from the liquidation of our investment of Jilin Changrong of RMB13.58 million (US$2.14 million).
EPS per ADS for 2011 was a loss of (0.16) vs earings of $0.32 last year

Dr. Gengchen Han, Chairman, President and Chief Executive Officer of Origin Agritech, commented, “The Chinese seed industry is entering the next growth phase, in which we believe the prospective demand for high quality products will continue to rise. Fundamentals such as the rising food consumption and stabilizing planting area continue to bode very positive for the seed industry in general while individual crop segments also demonstrate promising growth prospects. Diversifying use for corns such as manufacturing animal feed continues to provide robust support in driving up corn price. Rising exports is expected to further boost the growth of rice seed industry.”

“In addition, recently implemented key industry policies will raise the barrier of entry and considerably favor industry leaders with established, high-yielding seed product portfolio and vertically integrated research and development capabilities. In response, we have proactively started strategic initiatives such as expanding our hybrid seed conditioning and production capabilities, establishing new marketing channels in the Northwest, proceeding with our GMO applications, and most recently have completed our strategic leadership transition. We are confident that our recent initiatives would pay off in capturing new growth opportunities in the short run and further strengthening our competitive position.”

Comments & Business Outlook

Wed, 14 Sep 2011 04:00:00 GMT

Third Quarter Results

During the third quarter of fiscal 2011, the Company generated revenues of RMB244.7 million (US$37.4 million), compared with RMB462.2 million (US$68.1 million) generated in the three months ended June 30, 2010.
Income from operations for the third quarter of 2011 amounted to RMB34.0 million (US$5.2 million) compared with an operating income of RMB153.4 million (US$22.6 million) for the same period in 2010.
Net income attributable to Origin for the third quarter of 2011 was RMB13.9 million (US$2.1 million), or RMB 0.60 (US$0.09) per share - both basic and diluted, as compared to a net income of RMB105.2 million (US$15.5 million), or RMB 4.57 (US$0.67) per share - both basic and diluted in the same period one year ago.

FISCAL 2011 GUIDANCE

Based on its current outlook, and existing and anticipated business conditions, Origin lowers the revenue guidance for FY 2011 in the range of RMB 530 million to RMB 550 million.

Analyst Reports

Fri, 20 May 2011 04:00:00 GMT

Rodman and Renshaw on SEED 5/20/2011

F2Q11 Earnings Update

F2Q11 Results

Origin Agritech Limited (“Origin,” Ticker: SEED, Market Outperform) announced its fiscal 2Q11 financial results that were below our expectations as well as Street consensus. For this seasonally light quarter, the company reported revenue of $0.2 million, slightly below our Street-low expectation of $0.3 million as well as Street consensus of $0.9 million. Gross loss came in at $1.1 million, more than our estimate of a loss of $0.8 million. The company incurred $4.9 million operating expenses in the quarter, slightly less than our estimate of $5.1 million. As a result, actual operating loss was $6.0 million, more or less in-line with our estimate. Net loss in the quarter was $4.8 million, or $0.21 per diluted share, slightly larger than our respective estimates of $4.0 million and a $0.17 per diluted share.

As of March 31, the company had cash and cash equivalents equating to $35.2 million, shareholders’ equity of $33.8 million, as well as short-term borrowings of $3.1 million.

All Eyes on FQ3

As the seed industry is heavily seasonal with the June quarter being the single most important quarter of the year, the March quarter is typically viewed with a passing glance, unless there is something extraordinarily wrong or unusually good. Sales in the quarter are mostly scrap seeds. We believe F2Q11 was no exception, despite the somewhat below-expectation results. We do have some preliminary indications for FQ3 performance, however, as the company’s $67.7 million deferred revenue and $45.9 million advances from customers in the F2Q11 balance sheet were either in-line or higher than their respective figures a year ago. These data points lead us to continue to believe that Origin’s F3Q11 revenue will be moderately higher than last year.

Adjusting Estimates while Maintaining Rating and Price Target

We have slightly tweaked our financial model to reflect the recent results. We now expect the company will report $76.9 million of revenue, $17.2 million of net income, or $0.74 per diluted share for F3Q11. For fiscal 2011, our respective updated estimates are $94.5 million, $8.8 million, and $0.38. We are maintaining our Market Outperform rating and $14 price target on the shares of Origin. We derive our $14 price target by discounting FCF through FY2020 by 9.7% of WACC and applying a 2% of terminal growth rate.

Major Risks

Major risks to the company and our rating include: 1) strong seasonality of the business, 2) dependence on corn seed market and licensed hybrid seed portfolio, 3) significant government influence, 4) technological changes in creating seed hybrids, 5) uncertainty of time over the government’s acceptance of genetically modified seeds into the market, 6) difficulty of building forward-looking estimates due to relatively poor reporting standards, and 7) country risks related to operating and investing in China.

Notice Regarding Privacy and Confidentiality:

This material has been prepared for informational purposes only. While it is based on information generally available to the public from sources we believe to be reliable, no representation is made that the subject information is accurate or complete. Past performance is not a guarantee nor does it necessarily serve as an indicator of future results. Price and availability are subject to change without notice. Additional information is available upon request.

Since Rodman & Renshaw, LLC is not a tax advisor, transactions requiring tax consideration should be reviewed carefully with your tax advisor. Similarly, Rodman & Renshaw, LLC is not a law firm and provides no legal opinions or legal advice.

Rodman & Renshaw, LLC may make a market in the securities being discussed.

Rodman & Renshaw, LLC and/or its officers or employees may have positions in any of the securities of this (these) issuer(s).

Member FINRA.
Member SIPC.

Comments & Business Outlook

Thu, 19 May 2011 04:00:00 GMT

Second Quarter Results:

During the second quarter of fiscal 2011, the Company generated revenues of RMB1.09 million (US$0.17 million), a decrease of 32.31% from RMB 1.60 million (US$0.24 million) generated in the three months ended March 31, 2010
Net loss for the second quarter of 2011 was RMB35.13 million (US$5.36 million), or RMB -1.36 (US$-0.21) per diluted share, as compared to a net loss of RMB30.98 million (US$4.54 million), or RMB -1.23 (US$-0.18) per diluted share in the same period one year ago.

Based on its current outlook, and existing and anticipated business conditions, Origin reiterates the revenue guidance for FY 2011 in the range of RMB 600 million to RMB 650 million.

Analyst Reports

Thu, 05 May 2011 04:00:00 GMT

Rodman and Renshaw on SEED 5/05/2011

New Licensing Agreement a Step in Right Direction

Origin Agritech (“Origin”, Ticker: SEED, Market Outperform) today announced that it has reached a licensing agreement with a multinational corporation to develop high-yielding corn varieties incorporating Origin’s glyphosate-resistant and Bt- traits. These traits are novel to the Chinese market and are protected by separate patents both in China and the U.S. Origin will license the traits to this unnamed multinational partner while taking the lead in the development and testing activities. Please note that Origin possesses comprehensive worldwide rights to the Chinese Academy of Agricultural Sciences (CAAS) developed glyphosate- resistant and Bt- genes.

We certainly view this as a positive step for Origin’s effort to commercialize its GM technology and capability. While no details of this licensing agreement are available at this time, we believe the unnamed partner is a Europe-based multinational company with markets covering almost 100 different countries. And based on our communication with management, we expect the agreement will involve an upfront payment to Origin as well as a percentage of profit after the commercialization. Origin will have a leading role during the development process. In our opinion, while the eventual commercial launch of these traits might not happen until several years down the road, the development is certainly a step in the right direction. Perhaps most significantly, we believe this announced collaboration with a world class multinational corporation further validates Origin’s technology and capability, and suggests its GM products do possess significant commercial merit.

We are maintaining our Market Outperform rating on the shares of Origin and $14 price target. Our $14 price target is based on a DCF model discounting FCF through FY2020 by 9.8% of WACC and applying a 2% terminal growth rate. We expect the company will announce its F2Q11 results in mid-May, and we estimate Origin will report $0.3 million of revenue, $4.0 million of net loss, and a loss of $0.17 per diluted share for this seasonally light quarter.

Major risks to the company and our rating include: 1) strong seasonality of the business, 2) dependence on corn seed market and licensed hybrid seed portfolio, 3) significant government influence, 4) technological changes in creating seed hybrids, 5) uncertainty of time over the government’s acceptance of genetically modified seeds into the market, 6) difficulty of building forward-looking estimates due to relatively poor reporting standards, and 7) country risks related to operating in China.

Notice Regarding Privacy and Confidentiality:

This material has been prepared for informational purposes only. While it is based on information generally available to the public from sources we believe to be reliable, no representation is made that the subject information is accurate or complete. Past performance is not a guarantee nor does it necessarily serve as an indicator of future results. Price and availability are subject to change without notice. Additional information is available upon request.

Since Rodman & Renshaw, LLC is not a tax advisor, transactions requiring tax consideration should be reviewed carefully with your tax advisor. Similarly, Rodman & Renshaw, LLC is not a law firm and provides no legal opinions or legal advice.

Rodman & Renshaw, LLC may make a market in the securities being discussed.

Rodman & Renshaw, LLC and/or its officers or employees may have positions in any of the securities of this (these) issuer(s).

Member FINRA.
Member SIPC.

Liquidity Requirements

Mon, 28 Feb 2011 05:00:00 GMT

Due to the cyclical nature of the cash flow inherent in our business, the majority of cash flow from operations is received during the second half of the calendar year, which corresponds to the fourth quarter and the subsequent first quarter of our fiscal year. We use bridge loan financings and bank credit facilities to cover operating expenses during low-revenue portions of the year, which generally include July through December. We believe we can generate sufficient cash flows from operating activities and can access sufficient borrowing capacity from local banks to satisfy our seasonal liquidity needs.

The nature of our business involves cycles in expenses and revenues that are not always in phase. Most often in the third calendar quarter of each year, we may face costs that are in excess of our cash flow sources during that period. Whether that occurs, and to what extent it occurs, depends on the amount of deposits received from customers compared with the advanced payments made by us to our seed producing farmers and the final payment for seed procurement. The exact timing of these payments is determined by the Chinese lunar calendar, which varies from one calendar year to the next. As a result, in some years our working capital needs are greater than in others. This aspect of the business is the reason we have customarily relied upon short term bridge loans to cover our expenses pending receipt of cash payment from farmers at the time of seed purchases. We, on a consolidated basis, have had access to sufficient financing in the past to manage these cash flow cycles.

Analyst Reports

Wed, 23 Feb 2011 05:00:00 GMT

Rodman and Renshaw on SEED 2/23/2011

F1Q11: Below Expectation Results from a Seasonally Light Quarter

A month after announcing its F2010 results, Origin Agritech Limited (“Origin,” Ticker: SEED, Market Outperform) reported its fiscal 1Q11 results that largely missed our and Street’s expectations. Revenue slid 54.1% YoY to $2.6 million, noticeably below our estimate of $5.9 million and Street consensus of $6.4 million. Gross margin came in at 50.1%, below the 53.3% in the same period of last year and our estimate of 51.0%. Net income was a loss of $3.3 million, or $0.14 per diluted share, below our respective estimates of a loss of $2.0 million and a loss of $0.08 per diluted share, as well as Street consensus of a loss of $2.8 million and a loss of $0.12 per diluted share.

F1Q11 Highlights and Discussions

Revenue decrease due to changing planting schedules of farmers: Sales of canola seeds contributed 97.9% of total sales in the quarter. However the volume sold was much lower than last year due to changing planting schedules of farmers. On the pricing side, prices of canola seeds were higher than last year, which contributed to more than 540bps of gross margin expansion for the canola seed products.

Higher operating expenses owing to increased R&D expenditure: Total operating expenses rose 15.6% YoY to $6.6 million. The hike was primarily attributed to increased R&D expenses which reached $1.9 million in the quarter vs. $1.2 million in F1Q10, translating to 56.6% YoY increase. SG&A, on the other hand, were $4.7 million, representing only a small increase from $4.5 million last year. The higher R&D expenses reflected the company’s stepped up R&D investments, which we believe are essential for sustaining the company’s competitive position and maximizing long term shareholder value.

Balance sheet condition continued to improve: Origin had cash and cash equivalents of $28.8 million as of the end of F1Q11. Short-term loan decreased to $3.0 million from $12.8 million in F4Q10 and $30.6 million in F1Q10. Deferred revenue was $31.9 million, roughly flat with $32.3 million in the same period of last year, while advanced payment from customers increased considerably to $58.2 million from $43.3 million last year, suggesting stronger demand for Origin’s products for the upcoming selling season.

F2011 guidance reiterated: The company reaffirmed its revenue guidance for FY2011 to be between RMB600 million and RMB650 million.

Notice Regarding Privacy and Confidentiality:

This material has been prepared for informational purposes only. While it is based on information generally available to the public from sources we believe to be reliable, no representation is made that the subject information is accurate or complete. Past performance is not a guarantee nor does it necessarily serve as an indicator of future results. Price and availability are subject to change without notice. Additional information is available upon request.

Since Rodman & Renshaw, LLC is not a tax advisor, transactions requiring tax consideration should be reviewed carefully with your tax advisor. Similarly, Rodman & Renshaw, LLC is not a law firm and provides no legal opinions or legal advice.

Rodman & Renshaw, LLC may make a market in the securities being discussed.

Rodman & Renshaw, LLC and/or its officers or employees may have positions in any of the securities of this (these) issuer(s).

Member FINRA.
Member SIPC.

Comments & Business Outlook

Tue, 22 Feb 2011 05:00:00 GMT

During the first quarter of fiscal 2011, the Company reported:

Revenues of RMB 17.19 million (US$2.60 million), a decrease of 55.47% from RMB 38.60 million (US$5.65 million) generated in the three months ended December 31, 2009.

RMB 16.83 million of the revenues this quarter were a result of the sales of canola seed products, 241,309 kg, for the three months ended December 31, 2010. The small remainder was a result of scrap sales. Across the industry, canola seeds, amongst other seed groups, sold lower volumes as a result of the changing planting schedules of farmers. The majority of Origin’s revenues are recorded in the fiscal third quarter as a result of our revenue recognition policy. The goods already sold and shipped to customers can be seen as Deferred Revenue line on the balance sheet and the Advances from Customers records the advance cash receipts from customers this selling season.

Gross profit for the three-months ended December 31, 2010 was RMB 8.61 million (US$1.3 million) compared to RMB 20.58 million (US$3.01 million) in the same period of the prior year. Gross margins for canola seeds for this quarter (exclusive of scrap sales) were 58.67% versus 53.3% for the canola seed sales for the same quarter in last year. This is a result of the higher pricing structure of our canola seed products this year.

Total operating expenses for the three-months ended December 31, 2010 were RMB 39.02 million (US$5.89 million) compared with RMB 38.96 million (US$5.71 million) reported for the same period in 2009.

Operating loss for the first quarter of fiscal 2011 year amounted to RMB 30.41 million (US$4.59 million) compared with an operating loss of RMB 18.38 million (US$2.69 million) for the same period in fiscal 2010 year.

Net loss for the first quarter of fiscal 2011 year was RMB 25.15 million (US$3.80 million), or RMB 0.94 (US$0.14) per basic and diluted share, as compared to a net loss of RMB 16.39 million (US$2.40 million), or RMB 0.59 (US$0.09) per basic and diluted share in the same period one year ago.

2011 GUIDANCE

Based on its current outlook, and existing and anticipated business conditions, Origin reiterates the revenue guidance for FY 2011 in the range of RMB 600 million to RMB 650 million.

Analyst Reports

Wed, 19 Jan 2011 05:00:00 GMT

Rodman and Renshaw on SEED 01/19/2011

FY2010 Review

Origin Agritech Limited (‘Origin”, Ticker: SEED) reported mixed FY10 results today. Total revenue grew 0.6% YoY to $87.3 million, beating our estimate of $86.3 million but slightly lower than the Street consensus of $87.6 million. Gross profit increased 18.1% YoY to $34.5 million, with a gross margin of 39.5%, less than our estimate of $36.4 million and 42.2% gross margin. Net income significantly improved to $7.3 million or $0.31 per diluted share, compared to a loss of $6.0 million or a loss of $0.26 per diluted share a year ago. The EPS result was in-line with the Street consensus but below our expectation of $0.35.

FY10 Overview and Discussions

Revenue growth dragged by rice and canola seeds: The tepid revenue growth was mainly due to diminished sales of hybrid rice seeds which plummeted 34.2% YoY, affected by weather related issues. The 10.9% YoY decline in the sales of hybrid canola seeds also contributed to the lackluster top line performance. Sales of hybrid corn seeds, the company’s biggest revenue driver, grew 2.4% YoY and partially offset the slides in revenue from rice and canola seeds. The company expects FY11 revenue will be between RMB600 million and 650 million, suggesting YoY growth between 2.6% and 11.1% (excluding changes in FX).

Gross margin expanded 580bps YoY: Gross margin improved in almost every product segment except hybrid cotton seeds. The gross margin of corn seeds expanded to 49.7% from 40.6% last year. Rice seeds gross margin improved by more than 2000bps YoY to 37.0%. Canola seeds gross margin also increased by more than 2100bps YoY to 63.1%. The remarkable gross margin improvement was primarily attributable to the company’s elimination of the bottom 15% non-performing products as well as pricing increase of corn seeds. Looking forward to 2011, the company expects the gross margin of pesticides will improve from the current 13% to more than 20%, and the overall gross margin will continue to expand from the current level.

Operating expenses on the rise: Operating expenses in FY2010 reached $25.3 million, or 28.9% of revenue, compared to $22.5 million or 26.0% of revenue in FY09. The increase was mainly due to more hiring and new stock options associated with the equity incentive plan as well as increases in R&D investment. The increase in operating expenses was tempered somewhat by the decrease in selling and marketing expenses, which recorded $7.8 million in FY10 and represented a 6.15% decline from last year. Looking ahead, we expect the increased R&D investment, which is essential for Origin’s further development of its GM product pipeline, and overall operating expenses as percentages of revenue will maintain at similar levels.

Notice Regarding Privacy and Confidentiality:

This material has been prepared for informational purposes only. While it is based on information generally available to the public from sources we believe to be reliable, no representation is made that the subject information is accurate or complete. Past performance is not a guarantee nor does it necessarily serve as an indicator of future results. Price and availability are subject to change without notice. Additional information is available upon request.

Since Rodman & Renshaw, LLC is not a tax advisor, transactions requiring tax consideration should be reviewed carefully with your tax advisor. Similarly, Rodman & Renshaw, LLC is not a law firm and provides no legal opinions or legal advice.

Rodman & Renshaw, LLC may make a market in the securities being discussed.

Rodman & Renshaw, LLC and/or its officers or employees may have positions in any of the securities of this (these) issuer(s).

Member FINRA.
Member SIPC.

Comments & Business Outlook

Tue, 31 Aug 2010 04:00:00 GMT

During the third quarter of fiscal 2010 the Company generated:

Revenues of RMB 462.23 million (US$68.07 million), a decrease of 3.13% from RMB 477.17 million (US$69.84 million) generated in the three months ended June 30, 2009.
Operating profit for the third quarter of 2010 amounted to RMB153.36million (US$22.58 million) compared with an operating profit of RMB118.95 million (US$17.41 million) for the same period in 2009.
Net income attributable to Origin Agritech Limited for the third quarter of 2010 was RMB105.16 million (US$15.49million), or RMB 4.52 (US$0.67) per diluted share, as compared to a net income attributable to Origin Agritech Limited of RMB74.97 million (US$10.98million), or RMB3.26 (US$0.48)per diluted share in the same period one year ago.

Based on its current outlook, and existing and anticipated business conditions, Origin believes the revenue guidance for FY 2010 to be in the range of RMB 580 million to RMB 600 million.