SEED stock exploded more than 35% higher after the company announced FY 2022 revenue growth of 300%.
Origin Agritech Issues 2022 Guidance of 300% Revenue Growth
On Febgruary 7, 2022, Origin Agritech Ltd. (NASDAQ: SEED), an agriculture technology company, announced that it expects revenues to grow in excess of 300%, to over 150 million RMB, 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.
Origin Agritech Announces Collaboration with BaoDao Feed Ltd. To Commercialize Nutrition Enhanced Corn
On January 4, 2022, Origin Agritech Ltd. (NASDAQ: SEED) announced that it has signed a collaborative agreement with BaoDao Feed Ltd. (“BaoDao”), a Chinese feed producer with 500 million RMB in annual sales.
Under the terms of the agreement, the two companies will collaborate to produce and sell specialized corn crops to feed producers. The corn variety that Origin brings to the collaboration is very desirable for feedstock as it contains 160% higher crude fat content than conventional corn as well as higher amino acid content, eliminating the need for costly additives. The companies estimate a resulting cost savings of 200-300 RMB per metric ton which would effectively double the gross margins compared to BaoDao’s sale of conventional corn as feedstock.
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.
“We are very excited to be opening up this new line of business,” said Dr. Gengchen Han, Origin Agritech’s Chairman. “We have gotten to know our customers and listened to their needs and let that drive our development of innovative new corn varieties. This partnership validates our customer-centric approach.”
Origin Agritech Developing Nutrition Enhanced Corn Using CRISPR Gene Editing
On December 22, 2021, Origin Agritech Ltd. (NASDAQ: SEED) announced that it is developing nutritionally enhanced corn using CRISPR technology.
Origin is currently in trials to develop new corn varieties that have been genetically engineered to have balanced amino acid content. If these trials are successfully completed, it will validate Origin’s next generation methodology in applying CRISPR technology to develop new corn varieties. CRISPR gene editing does not introduce foreign DNA into the corn and as such more closely mimics gene mutations that frequently occur in nature. Additionally, the time and cost of developing genetically engineered corn using CRISPR is a fraction versus what it would be using traditional GMO technology.
Dr. Gengchen Han, Origin Agritech’s Chairman, said, “We are very excited to be working on this industry leading application of CRISPR in agriculture. Our nutrition balanced corn trait would not only significantly reduce the need for costly additives in animal feed, it will also pave the way for many more applications of CRISPR technology.”
📺 China maps out GMO crops industry development plan
📉 SEED Stock Technical Analysis
Both the long and short term trends are negative. SEED is part of the Food Products industry. There are 105 other stocks in this industry, of which 79% are performing better than SEED. SEED is currently trading near the lower end of its 52 week range, which is not a good sign. The S&P500 Index is trading in the upper part of its 52 week range, so SEED is lagging the market.
There is support at 6.30 from a trend line in the weekly time frame. There is also a support zone ranging from 4.75 to 4.82. This zone is formed by a combination of multiple trend lines and important moving averages in multiple time frames. Finally, there is support at 4.57 from a horizontal line in the weekly time frame.
There is resistance at 8.05 from a trend line in the daily time frame. There is resistance at 8.43 from a trend line in the weekly time frame. Finally, there is resistance at 10.43 from a horizontal line in the weekly time frame.
The technical rating of SEED is bad and it also does not present a quality setup at the moment. SEED stock has a Setup Rating of 1 out of 10. Prices have been extended to the upside lately. For a nice entry it is better to wait for a consolidation. Click here to sign up for email alerts on when SEED stock has a Setup Rating of 8 or higher.