Agricultural Technology Stocks: Taiwan Plant Turns Profitable, Zhangzhou Plant Cuts Losses; DaBomb Strives for Profitability in Q4

DaBomb (6578)'s biotechnology plant in Zhangzhou ceased operations in the third quarter of this year. After recognizing the one-time expenses related to the closure of the Zhangzhou plant in the third quarter, the plant will no longer incur losses. Currently, Taiwan's technology plants have already turned profitable in the first three quarters. After the Zhangzhou plant stopped incurring losses, analysts expect that profits may turn positive in the fourth quarter.

With a higher proportion of sales from high-priced, high-margin products, although sales volume was lower than the same period last year, the core business performance has improved significantly. DaBomb Protein Biotech Corp. reported revenue of NT$87.05 million in the third quarter of this year, roughly the same as the same period last year; gross profit of NT$9.79 million, a 92.55% increase year-on-year; and operating loss of NT$12.17 million, an 11.93% decrease year-on-year. For the first three quarters, revenue was NT$283 million, a 10.92% decrease year-on-year; gross profit was NT$25.43 million, a 161.39% increase year-on-year; and operating loss was NT$34.93 million, a 35.23% decrease in loss.

DaBomb Protein Biotech Corp. primarily targets export markets. Following the pandemic, it has adopted a global short-chain strategy, with Taiwan becoming a key production base. Currently, DaBomb Protein Biotech Corp. production focus is on its Tainan plant, which accounts for over 90% of sales and revenue. The transformation is gradually yielding results, with the plant's revenue in the first three quarters exceeding that of the same period last year, and gross profit surging by 197%. Notably, the plant returned to profitability in the third quarter, offsetting losses from the first half of the year, and has achieved profitability for the first three quarters.

Another production base, the Zhangzhou plant in Fujian, has been significantly impacted by the African swine fever outbreak in mainland China in recent years, becoming a major reason for DaBomb Protein Biotech Corp. operating losses. As part of the company's transformation strategy, the Zhangzhou plant completed its phased tasks and ceased operations in the third quarter of this year, resulting in an asset impairment charge recognized in the third quarter. Consequently, DaBomb Protein Biotech Corp. after-tax loss for the third quarter expanded to NT$29.56 million. DaBomb Protein Biotech Corp. stated that after recognizing the one-time expense of the Zhangzhou plant's closure in the third quarter, there will be no further losses in the future. With the return to profitability of the company's main operating entity, the Tainan Science Park plant, DaBomb Protein Biotech Corp. profit is expected to turn positive in the fourth quarter.

DaBomb Protein Biotech Corp. continues to adjust its direction, utilizing postbiotic immune-enhancing technology to develop high-value-added new products and expanding its CDMO business to assist clients in developing differentiated products. The new product, the DBT-100 series, is an antibiotic alternative combining an immune-enhancing postbiotic and an antibacterial probiotic. It has already completed import registration in the Philippines and is in the process of import registration in Vietnam, Malaysia, the Philippines, and South Korea. Customers in these countries are conducting tests, and negotiations with distributors are underway. With the acquisition of more feed additive import permits from various countries, shipments are expected to increase month by month starting in the fourth quarter.

The above content is excerpted from a news release by Guo Honghui of the Times Information on November 3, 2023.
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