(Yicai Global) Jan. 2 -- By-Health, a Chinese nutritional supplements maker, said it will likely report its first full-year loss since going public in 2010 after writing down the value of assets due to disappointing sales at an Australian subsidiary. It blamed China's new e-commerce law for the unit's lackluster performance.

By-Health will take an impairment loss of CNY1.5 billion to CNY1.6 billion (up to USD234.4 million), the Zhuhai-based company warned its investors in a pre-earnings release on Dec. 31. This will result in a net loss of CNY365 million to CNY370 million (up to USD53.1 million) in 2019, it added.

Sales of Life-Space Group, an Australian probiotics maker that By-Health acquired in 2018, have failed to reach the expectations, the parent said. The remedy: doubling down on online sales channels, according to an executive of the Chinese parent. 

By-Health will expand its e-commerce presence in Australia while maintaining LSG's brand influence, the executive told Yicai Global in an interview. In China, the firm will try to make LSG into the second-biggest probiotics brand by increasing sales channels also offline, the person added. 

Part of the reason behind LSG's poor performance was China's new e-commerce law, implemented since last January, which resulted in some small and medium-sized stores to drop overseas items off their shelves, according to the manager. The impact was bigger than what By-Health could have imagined, the person added. 

Still, it was not a mistake to acquire LSG, according to the executive. The purchase helps the parent to export its products, and tap into the probiotics market, although the impairment loss will bring huge pressures to the company's short-term performance.

From last January to September, probiotics sales rose 20 percent from a year ago, whereas the overall sales of healthcare products declined, the executive said, using pharmacy data from 14 major Chinese cities. Online probiotics sales made up half of the total. 

In September 2018, By-Health paid AUD690 million (USD473 million) to buy LSG, which had sold its products online in China since 2014. 

Founded in 1995, By-Health sources its ingredients from 23 countries with plants in places including Brazil and Australia.

By-Health's shares [SHE: 300146] fell 0.5 percent to CNY16.21 (USD2.33) this afternoon. 

Editor: Tang Shihua, Emmi Laine