(Yicai Global) March 14 -- Dong-E-E-Jiao's products cost more as the price of donkey hide, the raw material of its donkey-hide gelatin, has gone up.

The company gained CNY7.3 billion (USD1.1 billion) in revenue last year, down 0.5 percent annually. Its net profit attributable to shareholders was CNY2.1 billion (USD331 million), up 2 percent, the company said yesterday in its annual report for last year.

Ejiao products, China's famous donkey-hide gelatin brand, brought CNY6.3 billion to the firm last year, contributing 86 percent of its revenue. Its three main products are Ejiao, Compound Ejiao Pulp and Ejiao Cake.

Ass-hide glue, as it is also called, is used in traditional Chinese medicine to treat bleeding, dizziness, insomnia and dry cough, public information shows.

The company, which is based in China's eastern Shandong province, raised the ex-factory price of its major product Dong'e Ejiao by 6 percent in the sixth such rise since 2014, it said in December. It has now gone up more than threefold over five years.

Surging donkey hide's prices are the reason. The raw material's domestic price has grown 23 percent per year on average, and this has intensified competition for the resource, which grows ever scarcer as ever fewer farmers breed asses in China, the Shandong Academy of Agriculture Sciences said in a statistical release.

The company will expand channels around its three major products this year, and will continue to market Ejiao to high-end users, improve the associated tourism experience and the gelatin stewing procedures it uses to derive the compound.

The company will also reposition its Compound Ejiao Pulp as a blood tonic, breaking the stereotyped view of the medicinal extract. It will seek high-income consumers for Ejiao Cake, setting up a high-end brand store for it to offer a membership experience.

It also plans to develop new products and ingestion forms.

It will use Ejiao as the core around which to extend its 'Ejiao plus' and 'plus Ejiao' product lines and make cosmetic products, it said.

Dong-E-E-Jiao [SHE:000423] was included in the MSCI index rating system in May, which is a weighted index of 1,649 stocks from around the world. US-based brokerage Oppenheimer Holdings took 4 percent of its shares to become its fourth-largest shareholder after the firm's semi-annual report issued last year. Its largest shareholder is China Resources Dong-E-E-Jiao, with 23 percent.

Editor: Ben Armour