Capsicum price plummets, Chenguang biology's huge inventory faces impairment

Business club, Dec 12 news recently, a news came that the yield of hot peppers in Xinjiang is not good, and the price has plummeted by 50% This may make Chenguang Biology (300138), which uses hot peppers as raw materials, face a huge inventory impairment In Shifang incident, Chenguang biological products were considered as raw materials for making smoke bombs and were sealed at the trading limit "The price of pepper is generally cheaper than that of last year, which makes the company increase its purchasing efforts The inventory includes pepper, marigold and cottonseed," people related to Chenguang biology told securities market weekly "The price of pepper is still falling these days According to some internal discussions, some inventory reductions may be accrued in the later stage according to the actual situation Value preparation " Chenguang biology is mainly engaged in the R & D, production and sales of natural plant extracts such as paprika red pigment, lutein (Marigold Extract), paprika oleoresin, cottonseed protein and cottonseed oil The proportion of direct materials required for production accounts for more than 90% of the product cost Therefore, the supply and price changes of raw materials such as paprika and marigold will have an important impact on the company's performance, while Xinjiang and other regions Is one of the company's raw material supply bases On November 16, a news report on China news.com said that as the largest pepper production base in China, the price of hot peppers in Xinjiang has been fluctuating In 2010, the price was the highest, reaching nearly 14 yuan per kilogram Now, the price is about 7 yuan, and the price has been reduced by nearly 50% in two years According to the company's prospectus, pepper inventory and marigold inventory are the main components of the company's inventory Since 2012, the inventory of morninglight biology has increased dramatically In 2011, the annual report period, the inventory was 303 million yuan In 2012, the half year report period, the inventory rose to 423 million yuan At the end of the third quarter, the inventory reached 554 million yuan, the highest level in nearly five years According to Chenguang biology, the increase in inventory is mainly due to the company's projects in India, the company's increased raw material procurement and the increase in pepper product inventory It is worth noting that for the inventory of 303 million yuan in 2011, morninglight bio has accrued 3.12 million yuan of inventory falling price reserves However, under the sharp drop in Pepper prices, for the inventory of 423 million yuan reported in the middle of 2012 and 554 million yuan reported at the end of the third quarter, Chenguang biology did not make any provision for inventory depreciation At the same time, the comparable company Rhine bio (002166) disclosed in the morning light bio Prospectus has provision for falling price of inventory During the 2011 Annual report period, Rhine bio made provision for falling price of RMB 1.94 million for the book balance inventory of RMB 449 million, and for the half year report period of 2012, it also made provision for falling price of RMB 1.94 million for the book balance inventory of RMB 441 million "Since this year's purchase, the purchase price of ordinary grade dried pepper is about 10 yuan / kg, which is at the low point since 2010, significantly lower than last year's price of about 16 yuan / kg," a researcher at a securities firm told reporters that Chenguang biology may have the risk of too long time of lutein de stocking and large fluctuations in the price of raw materials However, it is not clear whether the company needs to make depreciation reserves for the above-mentioned inventories and the estimated amount of inventory impairment in the later period, while the Secretary of the board of directors and the representative of securities affairs are away on business.