China Starch (03838) issues profit warning, expecting a decrease of approximately 64% in pre-tax profit for the fiscal year 2025 compared to the previous year.

China Starch (03838) announces that the group is expected to achieve total revenue of approximately RMB 10.58 billion for the year ending December 31, 2025 (this year), compared to RMB 11.415 billion in 2024. The group expects a significant decrease of approximately 64% in pre-tax profit compared to RMB 8.38 billion for the year ending December 31, 2024. The decrease in expected revenue and pre-tax profit for this year is primarily due to the following factors: (i) The exceptional performance in 2024 was mainly driven by a decrease in the cost of corn kernels. In contrast, the price of corn kernels has been rising for three consecutive quarters this year. This cost increase has negatively impacted the profit margin of the group. (ii) The continuous oversupply in the Chinese corn starch and lysine industry has put sustained downward pressure on market prices. Especially, the price of lysine dropped significantly in the second half of this year, adversely affecting the group's profitability. (iii) During 2025, several countries initiated anti-dumping investigations on Chinese lysine products. With overseas buyers reducing orders, some products intended for export have shifted to the domestic market, further exacerbating the oversupply situation and causing additional downward pressure on domestic lysine prices. (iv) The expansion project of the starch production base in Linqing this year has affected production capacity, as one starch production line has been dismantled to accommodate the expansion construction project. Details of the starch production project are contained in the company's announcement dated February 20, 2025. (v) The expected peak season for starch sugar in this year (including national holidays and summer months) did not materialize as anticipated.