Agricultural Science Stocks' Product Portfolio Optimization Strategy Proves Effective: DaBomb Q2 Gross Margin Hits Record High for Listed Companies

DaBomb (6578) is seeing its transformation benefits gradually materialize. Second-quarter revenue reached NT$98.01 million, a slight increase of only 0.58% year-on-year. However, the proportion of high-margin products continued to rise, with the second-quarter gross margin reaching a record high of 23.01% since its listing. The core business turned profitable, leading to a positive net profit attributable to the parent company of NT$5.226 million, or NT$0.08 per share (EPS). First-half revenue reached NT$199 million, a year-on-year increase of 1.23%, with net profit attributable to the parent company of NT$12.074 million, a five-year high for the same period, and EPS of NT$0.19.

Product portfolio optimization significantly improved the company's profitability. Affected by the temporary slowdown in demand in the Vietnamese market, DaBomb Protein Biotech Corp. revenue in the second quarter decreased by 3.13% compared to the first quarter. However, the gross profit margin in the second quarter was 23.01%, which was 4.93 percentage points higher than the first quarter. Compared to a small loss of 590,000 yuan in the first quarter, the operating profit in the second quarter turned positive to 3.412 million yuan, highlighting the success of the company's strategy of actively transforming to produce high value-added products in recent years.

DaBomb Protein Biotech Corp. stated that due to the resurgence of African swine fever in parts of its main export market, Vietnam, at the end of the second quarter, demand for feed ingredients and functional additives temporarily slowed, leading to a decline in revenue in June. Order scheduling will continue to impact shipments in the third quarter. Currently, the African swine fever outbreak in Vietnam is gradually subsiding, and with rising local pork prices, the livestock industry is expected to resume operations as soon as possible. Furthermore, with the commissioning of its 20KL liquid fermentation tank production line, the CDMO business will officially launch in the fourth quarter, DaBomb Protein Biotech Corp. operations are expected to recover from the trough in the fourth quarter.

DaBomb Protein Biotech Corp. has completed the installation of two 20KL liquid fermentation tank production lines at its Tainan Science Park plant as scheduled. After trial operation in the third quarter, production will commence, significantly increasing the capacity for high-margin functional additives and boosting revenue from these products. By integrating microbial fermentation technology upstream and formulation technology and export business downstream, DaBomb provides OEM clients with a one-stop integrated service, demonstrating its internationally competitive professional technical service capabilities. In addition to meeting the needs of CDMO clients, the company's product portfolio can be further optimized, and gross profit margin is expected to continue to rise.

The above content is excerpted from Times Information, August 2, 2024, 17:04, reporter Guo Honghui, Taipei.
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