Research Brief | CNOC Holdings Receives 44 Institutions Including Ping An Asset Management, Details Corn Procurement Advantages and Allulose Layout

Basic Research Information

Key Research Highlights

Corn Procurement: Four Major Advantages Building a Cost Barrier

In response to investor concerns about the competitiveness of raw material procurement for corn, the company states its core advantages are: first, leveraging the synergy of the COFCO Group’s supply chain, ensuring significantly better grain source security than industry average, effectively avoiding risks of grain shortages and production halts; second, production bases located in major corn-producing regions such as Heilongjiang, Jilin, and Anhui, reducing transportation costs through local procurement; third, using a combination of futures and spot markets along with hedging strategies to offset price fluctuations, maintaining long-term inventory cost advantages; fourth, possessing processing technology for substitutes like cassava, allowing flexible adjustment of raw material structure to smooth out cost fluctuations.

Fuel Ethanol Industry: Four Barriers Strengthening Competitive Edge

Regarding the difficulty of adding new supply in the corn-based fuel ethanol industry, the company notes a trend toward industry concentration among leading players. Core barriers include: policy access, with high thresholds for licensing approval; raw material security, as new entrants find it difficult to quickly establish large-scale procurement systems; channel and customer relationships, requiring strict qualification reviews by major companies like PetroChina and Sinopec, with the company being among the first producers to establish long-term stable cooperation; and technological and financial strength, leveraging COFCO Group’s platform for R&D, environmental protection, and capital resources.

Pricing Mechanism: Framework Agreements Lock in Cooperation, Market-based Bidding Determines Prices

The company’s corn ethanol products adopt a “framework agreement + market-based bidding” pricing model. Annual framework agreements with downstream oil companies lock in cooperation terms, while regional subsidiaries determine batch supply volume and prices through bidding. Price adjustments are mainly driven by regional supply and demand changes, including seasonal increases in ethanol gasoline demand and regional supply tensions. The company will flexibly quote prices based on market conditions to balance supply and profitability.

Fructose Business: Three Major Advantages Driving Profit Growth

As a core profit segment, the company’s starch sugar business benefits from: nationwide capacity layout that overcomes transportation radius limitations, with a new project in Taicang, East China, enhancing regional competitiveness; reliance on the National Engineering Research Center for Corn Deep Processing, enabling production of high-value-added “small specialty” syrup products with significantly higher gross margins than basic products; a full-chain food safety management system supporting high brand recognition, maintaining over 10 years of stable cooperation with top clients like Coca-Cola, Pepsi, and Mengniu, while actively expanding into new sectors such as ready-to-drink tea and baking.

Alurone Sugar Layout: Technological Leadership + Flexible Capacity Expansion

As a strategic emerging business, Alurone Sugar is progressing smoothly: technologically, the company is the first to produce enzyme-based sugar approved by the National Health Commission, with proprietary R&D technology covering the entire process chain; product-wise, a matrix of high-purity crystalline and liquid syrup forms covering beverage and dairy scenarios; channel-wise, collaborations with brands like Mengniu, Master Kong, and Bawang Tea Princess, with some products already on the market; capacity-wise, adopting a “three-step” strategy, with rapid deployment through cooperation models, a Yushu, Jilin, plant expected to start production within the year, and reserved capacity in Pingliang to be flexibly adjusted based on demand.

Other Key Issues Response

• Coal-based Ethanol Competition: Coal-based ethanol is a fossil energy product that does not meet national standards for fuel ethanol. Downstream mainly involves chemical companies, and since our corn-based renewable energy fuel ethanol targets oil companies, they belong to different sectors with no direct competition.
• Price References and Cost Models: Public prices for fuel ethanol can be checked on domestic chemical industry websites; final transactions are based on bidding results from PetroChina and Sinopec regions. The industry-standard cost model is “3 tons of corn produce 1 ton of fuel ethanol + about 500 RMB/ton processing fee.”
• Handling Low-Quality Corn: The company has mature technology for processing moldy corn, which can optimize overall costs by adjusting raw material ratios. Purchasing low-quality corn helps diversify raw materials and enhances cost control flexibility.

Disclaimer: The market involves risks; investments should be cautious. This article is automatically generated by an AI model based on third-party databases and does not represent Sina Finance’s views. All information herein is for reference only and does not constitute personal investment advice. Please refer to official announcements for accuracy. For questions, contact biz@staff.sina.com.cn.

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