China New Borun Announces First Quarter 2014 Unaudited Financial Results Revenue Increased 38.8% Year-Over-Year

Gross Margin Improved by 401 Basis Points Year-Over-Year

Net Income Increased 208.3% Year-Over-Year

BEIJING, May 22, 2014 /PRNewswire/ -- China New Borun Corporation (NYSE: BORN; "Borun" or the "Company"), a leading producer and distributor of corn-based edible alcohol in China, today announced its unaudited financial results for the first quarter ended March 31, 2014.   

Mr. Jinmiao Wang, Chairman and Chief Executive Officer of Borun, commented on the results, "I am delighted that we executed on our plans and delivered very strong first quarter financial results.  Driven by greater sales volume and a firm average selling price of our products, revenue grew 39% year-over-year, and gross margin expanded more than 400 basis points to a 24-month high of 14.5%."

First Quarter 2014 Quick View

  • Total revenue increased 38.8% to RMB625.7 million ($101.7 million[1]) from RMB450.7 million in the first quarter of 2013.
  • Gross profit increased 92.1% to RMB90.5 million ($14.7 million) from RMB47.1 million in the first quarter of 2013.
  • Net income increased 208.3% to RMB39.3 million ($6.4 million) from RMB12.8 million in the first quarter of 2013.
  • Basic and diluted earnings per American Depositary Share ("ADS") were RMB1.53 ($0.25) for the quarter ended March 31, 2014. Each ADS represents one of the Company's ordinary shares.

Mr. Wang continued, "More encouragingly, demand for edible alcohol from baijiu producers remains solid, and we anticipate to further benefit from the industry's recovering trend for the remainder of 2014.  At the same time, our strong sourcing capability enables us to keep corn cost relatively stable, and as such, we are very confident to grow full-year 2014 profits."

First Quarter 2014 Financial Performance

For the first quarter of 2014, total revenue increased by 38.8% year-over-year to RMB625.7 million ($101.7 million) from RMB450.7 million in the same period of 2013. The increase in total revenue was mainly attributable to higher sales volumes for all of our products.

Revenue breakdown by product line is as follows:  

  • Revenue from edible alcohol increased by 27.4% to RMB399.4 million ($64.9 million) in the first quarter of 2014, compared to RMB313.5 million in the first quarter of 2013. The sales volume of edible alcohol in the first quarter of 2014 increased by 27.5% year-over-year to 75,838 tons, primarily due to higher demand from baijiu industry during the quarter. The average selling price was RMB5,267 per ton, unchanged from the same period of last year.
  • Revenue from DDGS feed increased by 58.4% to RMB153.4 million ($24.9 million) in the first quarter of 2014, compared to RMB96.8 million in the first quarter of 2013. The sales volume of DDGS feed in the first quarter of 2014 increased by 42.3% year-over-year to 69,079 tons, and the average selling price increased by 11.3% year-over-year to RMB2,221 per ton.
  • Revenue from liquid carbon dioxide increased by 42.9% to RMB11.6 million ($1.9 million) in the first quarter of 2014, compared to RMB8.2 million in the first quarter of 2013. The sales volume of liquid carbon dioxide in the first quarter of 2014 increased by 69.4% year-over-year to 31,333 tons, while the average selling price decreased by 15.7% year-over-year to RMB372 per ton.
  • Revenue from crude corn oil increased by 40.6% to RMB45.4 million ($7.4 million) in the first quarter of 2014, compared to RMB32.2 million in the first quarter of 2013. The sales volume of crude corn oil in the first quarter of 2014 increased by 43.2% year-over-year to 6,034 tons, while the average selling price decreased by 1.8% year-over-year to RMB7,517 per ton.
  • We began generating revenue from our newly-completed chlorinated polyethylene ("CPE") and foam insulation plants since the fourth quarter in 2013. Revenue from CPE was RMB14.9 million ($2.4 million) in the first quarter of 2014, and the sales volume was 1,698 tons at average selling price of RMB8,749 per ton. Revenue from foam insulation was RMB1.0 million ($0.2 million) in the first quarter of 2014, and the sales volume was 938 cubic meters at average selling price of RMB1,099 per cubic meter.

During the first quarter of 2014, gross profit increased by 92.1% to RMB90.5 million ($14.7 million) from RMB47.1 million in the same period of 2013. Gross margin for the first quarter of 2014 increased to 14.5%, from 10.4% in the same period of 2013, which was primarily attributable to the recovered market demand, as well as the Company's continued efforts in optimizing its sourcing capability to stabilize the corn cost.

Income from operations increased by 117.4% to RMB78.8 million ($12.8 million) in the first quarter of 2014, from RMB36.2 million in the same period of 2013, primarily driven by higher gross profit earned.

Selling expenses increased by RMB0.1 million, or 15.8% to RMB1.2 million ($0.2 million) in the first quarter of 2014, from RMB1.1 million in the same period of 2013. Selling expenses for the first quarter 2014 accounted for 0.19% of total revenue, compared to 0.23% for the first quarter 2013.

General and administrative expenses increased by RMB0.7 million, or 7.0% to RMB10.5 million ($1.7 million) in the first quarter of 2014, from RMB9.8 million in the same period of 2013. General and administrative expenses for the first quarter 2014 accounted for 1.7% of total revenue, compared to 2.2% for the first quarter 2013.

Interest expense increased by RMB6.1 million or 30.9% to RMB26.0 million ($4.2 million) in the first quarter of 2014, from RMB19.9 million in the same period of 2013, mainly due to the interest expense arisen from the second tranche of Borun Bond issued at the April of 2013.

Income tax expenses in the first quarter of 2014 were RMB13.1 million ($2.1 million), representing an effective tax rate of 25%.

Net income increased by 208.3% to RMB39.3 million ($6.4 million) in the first quarter of 2014, compared to RMB12.8 million in the same quarter of 2013. In the first quarter of 2014, basic and diluted earnings per ordinary share and per ADS were RMB1.53 ($0.25), and the Company had 25.7 million weighted average basic and diluted shares outstanding. 

As of March 31, 2014, cash and bank deposits of RMB424.4 million ($69.0 million) decreased by RMB96.9 million, compared with RMB521.3 million as of December 31, 2013. Cash flows used in operating activities for the first quarter of 2014 were RMB332.0 million ($54.0 million), which was mainly due to that the Company completed the pre-stored of corn during this quarter. These corns could satisfy the Company's production needs during the non-harvest season in 2014. As of March 31, 2014, inventory balance of RMB937.4 million ($152.4 million) increased by RMB584.2 million, compared with RMB353.2 million as of December 31, 2013.

Financial Outlook

The Company estimates that its revenue for the second quarter of 2014 will be in the range of RMB640 million ($104.0 million) to RMB670 million ($108.9 million), an increase of approximately 1.8% to 6.6% over the same quarter of 2013.

This guidance is based on the current market conditions and reflects the Company's current and preliminary estimates of market and operating conditions and customer demand, which are all subject to change.

Conference Call

Borun's management will hold a corresponding earnings conference call and live webcast at 8:00 a.m. E.T. on Friday, May 23, 2014 (8:00 p.m. Beijing time on Friday, May 23, 2014) to discuss the results and highlights from the first quarter of 2014 and answer questions from investors. A webcast of the call will be available at http://ir.chinanewborun.com. Listeners may access the call by dialing:

United States Toll Free:

1-866-519-4004

US Toll/International:

1-845-675-0437

Hong Kong Toll Free:

800-930-346

Hong Kong Toll:

852-2475-0994

China Toll Free:

800-819-0121

China Toll Free (Mobile):

400-620-8038

Conference ID:

36719769

A replay of the webcast will be accessible through May 30, 2014 on http://ir.chinanewborun.com or by dialing:

United States toll free:

1-855-452-5696

International:

61-2-8199-0299

Passcode

36719769

About China New Borun Corporation

China New Borun Corporation (NYSE: BORN) is a leading producer and distributor of corn-based edible alcohol sold as an ingredient to producers of baijiu, a popular grain-based alcoholic beverage in China.  The Company also produces DDGS Feed, liquid carbon dioxide and crude corn oil as by-products of edible alcohol production, and CPE and foam insulation that are widely used in chemical industries. China New Borun is based in Shouguang, Shandong Province. Additional information about the company can be found at http://www.chinanewborun.com and in documents filed with the U.S. Securities and Exchange Commission, which are available on the SEC's website at www.sec.gov.

Forward-looking Statements

All statements included in this press release, other than statements or characterizations of historical fact, are forward-looking statements. These forward-looking statements are based on our current expectations, estimates and projections about our industry, management's beliefs, and certain assumptions made by us, all of which are subject to change. Forward-looking statements can often be identified by words such as "anticipates," "expects," "intends," "plans," "predicts," "believes," "seeks," "estimates," "may," "will," "should," "would," "could," "potential," "continue," "ongoing," similar expressions, and variations or negatives of these words. These forward-looking statements are not guarantees of future results and are subject to risks, uncertainties and assumptions that could cause our actual results to differ materially and adversely from those expressed in any forward-looking statement.

Contact Information

Asia Bridge Capital Limited
Wendy Sun
Phone: +86-10-8556-9033 (China)
           +1-888-870-0798  (U.S.)
Email:  wendy.sun@asiabridgegroup.com


 

CHINA NEW BORUN CORPORATION
UNAUDITED CONSOLIDATED BALANCE SHEETS

 


December 31, 2013


March 31, 2014


RMB


RMB


US$

Assets






Current Assets






Cash

521,270,799


424,397,568


68,984,179

Restricted cash

42,040,667


52,040,667


8,459,009

Trade accounts receivable, net of allowance for doubtful

accounts of nil and nil, as of December 31, 2013 and

March 31, 2014, respectively

 

358,463,468


350,859,654


57,030,876

Available-for-sale securities

16,783,869



Inventories

353,206,120


937,441,197


152,377,432

Advance to suppliers

276,245,034


353,655


57,485

Other receivables

58,510,165


131,301,327


21,342,521

Prepaid expenses

3,773,980


2,529,490


411,159

Deferred income tax assets

248,712



Total current assets

1,630,542,814


1,898,923,558


308,662,661

Property, plant and equipment, net

1,143,722,628


1,136,661,644


184,759,943

Land use right, net

138,944,251


138,236,203


22,469,759

Intangible assets, net

9,648,771


8,692,210


1,412,885

Long-term deferred expenses

10,697,712


9,413,987


1,530,207

Total assets

2,933,556,176


3,191,927,602


518,835,455







Liabilities and shareholders' equity






Current Liabilities






Trade accounts payable

29,272,232


15,679,235


2,548,599

Accrued expenses and other payables

106,574,084


89,403,445


14,532,183

Income taxes payable

9,119,258


12,398,818


2,015,380

Short-term borrowings

620,200,000


872,000,000


141,740,219

Current portion of long-term borrowings

24,000,000


24,000,000


3,901,107

Total current liabilities

789,165,574


1,013,481,498


164,737,488

Long-term borrowings

48,000,000


42,000,000


6,826,937

Bonds Payable

 

500,000,000


500,000,000


81,273,061

Total liabilities

1,337,165,574


1,555,481,498


252,837,486







Shareholders' equity






Ordinary share – (December 31, 2013 and March 31, 2014:

par value of RMB0.0068259, 25,725,000 shares issued and

outstanding)

175,596


175,596


25,725

Additional paid-in capital

468,132,187


468,132,187


76,093,072

Retained earnings – appropriated

126,356,029


126,356,029


20,538,683

Retained earnings – unappropriated

1,002,921,340


1,042,237,937


169,411,735

Accumulated other comprehensive loss

(1,194,550)


(455,645)


(71,246)

Total shareholders' equity

1,596,390,602


1,636,446,104


265,997,969

Total liabilities and shareholders' equity

2,933,556,176


3,191,927,602


518,835,455

 

 

CHINA NEW BORUN CORPORATION
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME

 


For the three-month period ended,


March 31,

2013


December 31,

2013


March 31, 2014


(RMB)


(RMB)


(RMB)


(US$)









Revenues

450,692,059


657,782,689


625,731,081


101,710,161

Cost of goods sold

403,601,450


579,206,629


535,247,941


87,002,477

Gross profit

47,090,609


78,576,060


90,483,140


14,707,684

Operating expenses:








Selling

1,049,336


1,387,878


1,214,951


197,486

General and administrative

9,808,797


11,625,578


10,490,866


1,705,250

Total operating expenses

10,858,133


13,013,456


11,705,817


1,902,736

Income from operations

36,232,476


65,562,604


78,777,323


12,804,948

Other (income) expenses:








Interest income

(626,090)


(937,588)


(525,335)


(85,392)

Interest expense

19,879,666


25,226,848


26,024,958


4,230,256

Others, net

(25,944)


659,948


855,570


139,070

Total other expense, net

19,227,632


24,949,208


26,355,193


4,283,934

Income before income taxes

17,004,844


40,613,396


52,422,130


8,521,014

Income tax expenses

4,251,211


10,156,353


13,105,533


2,130,254

Net income

12,753,633


30,457,043


39,316,597


6,390,760









Earnings per share:








Basic and diluted

0.50


1.18


1.53


0.25

Weighted average ordinary shares

outstanding:








Basic and diluted

25,725,000


25,725,000


25,725,000


25,725,000









 

[1]

This press release contains translations of certain Renminbi amounts into US dollars at specified rates solely for the convenience of readers. Unless otherwise noted, all translations from Renminbi to US dollars for the period ended March 31, 2014 were made at a rate of RMB6.1521 to USD1.00, the rate published by the People's Bank of China on March 31, 2014. China New Borun Corporation makes no representation that the Renminbi or US dollar amounts referred to in this press release could have been or could be converted into US dollars or Renminbi, at any particular rate or at all.

 

SOURCE China New Borun Corporation



RELATED LINKS
http://www.chinanewborun.com
http://ir.chinanewborun.com

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