BY-HEALTH’s annual revenue up 21% but Australian subsidiary hurt by new e-commerce laws

By Tingmin Koe contact

- Last updated on GMT

BY-HEALTH’s FY 2019 revenue was up 21%.  © Getty Images
BY-HEALTH’s FY 2019 revenue was up 21%. © Getty Images

Related tags: China, Australia, BY-HEALTH, life-space

Chinese health foods giant BY-HEALTH's FY19 revenue jumped 20.94% to hit RMB$5.2bn (US$748m), however performance from its Australian subsidiary Life-Space failed to meet expectations due to changes in China’s e-commerce law.

In its FY19 financial report released on March 12, BY-HEALTH said the nearly 21% revenue growth occurred despite market challenges such as the “100-day operation”.

However, the performance of its Australian probiotics subsidiary Life-Space in China had failed to reach expectations, largely due to China’s new e-commerce law which BY-HEALTH said had led to a decline in the number of individual daigous.

“Other daigou merchants and distributors also reduced the stocking of products and transactions to cope with the operating risks brought by the change in (the e-commerce) policy. This has led to a relatively huge negative impact to the Life-Space Group (LSG) business,” ​it said.

As such, the focus has been on building the Life-Space brand in China’s offline channels. Last March, the brand’s products became available in China’s mother-and-baby stores and pharmacies.

Within China, Life-Space managed to deliver an in-country revenue of RMB$129m.

Through adjusting the business and organisation structure, BY-HEALTH added that the sales of Life-Space’s products in Australia have grown steadily, while cross-border business into China also saw a larger growth as compared to that of the entire industry.

Outside of China, Life-Space brought in a revenue of RMB$458m. 

Growth drivers

BY-HEALTH has identified protein powder and joint health products as its key revenue engines.

Revenue from its same-name “BY-HEALTH” brand was up 8% to hit RMB$3.2bn. Products sold via the brand included protein powder.

On the other hand, its joint health brand “Keylid” saw the biggest growth margin by 47% to hit RMB$1.19bn.

The company attributed the revenue growth to its “moderately aggressive”​ market strategy, such as enhancing the brand image of its flagship protein powder and increasing presence in mother-and-baby channels.

Sales channels wise, the offline platforms brought in about 80% of the company’s in-country revenue, with a yoy increase of 20%. Revenue from online climbed 17%.

Powder growth

In terms of dosage formats, tablet products brought in the largest gross profit, however, powder products delivered the highest yoy growth.

Operating revenue and profit from tablet products grew by 6.13% and 5.16% to hit RMB$2.06bn and RMB$1.57bn respectively. 

Gross profit from this category was 76.17% - the largest out of all product formats, but there was a yoy drop of 0.7%.

In fact, except for powder products whereby gross profit grew by 5.78% to hit 61.93%, all other product formats (including gel capsules) saw a decline in gross profit.

In revenue and profit terms, powder products brought in RMB$1.1bn and RMB$683m, only behind the tablet products, which was also a yoy growth of 37.17% and 51.28% respectively.

Mergers and changes

The company was involved in six mergers last year and completed a transfer-of-equity for one of its subsidiaries – Supershot Beverage, which focuses on producing energy drinks.

The merger with Supershot Bevrage merely lasted for eight months.

The mergers involved 1) Hong Kong BaiHong 2) BY-HEALTH (Zhuhai) Nutrition Exploratorium 3) Hong Kong BioCarna Company 4) BioCarna Pty Ltd 5) Hao Jian Shi (Hainan) and 6) Guangdong Bai Yi.

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