China New Borun Announces Fourth Quarter and Full-Year 2013 Unaudited Financial Results

Quarterly Revenue Increased 30.7% Year-Over-Year

Quarterly Gross Profit Improved 44.3% Year-Over-Year

Quarterly Net Income Increased 41.1% Year-Over-Year

Mar 05, 2014, 16:30 ET from China New Borun Corporation

BEIJING, March 5, 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 fourth quarter and full year ended December 31, 2013.   

Mr. Jinmiao Wang, Chairman and Chief Executive Officer of Borun, commented on the results, "We completed a solid fourth quarter, with total revenues exceeding the high-end of guidance and profitability expanding to a 12-month high.  We also successfully completed initial sales of our new chlorinated polyethylene ("CPE") and foam insulation products, marking a new milestone in our expanded business scope.  Despite the challenging market environment over the past two years, we were able to earn positive net income in every single quarter, and as our momentum builds, we believe are well positioned to grow annual revenue, profitability and cash flow in 2014."

Fourth Quarter 2013 Quick View

  • Total revenue increased 30.7% to RMB657.8 million ($107.9 million[1]) from RMB503.4 million in the fourth quarter of 2012.
  • Gross profit increased 44.3% to RMB78.6 million ($12.9 million) from RMB54.4 million in the fourth quarter of 2012.
  • Net income increased 41.1% to RMB30.5 million ($5.0 million) from RMB21.6 million in the fourth quarter of 2012.
  • Basic and diluted earnings per American Depositary Share ("ADS") were RMB1.18 ($0.19) for the quarter ended December 31, 2013. Each ADS represents one of the Company's ordinary shares.

[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 December 31, 2013 were made at a rate of RMB6.0969 to USD1.00, the rate published by the People's Bank of China on December 31, 2013. 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.

Mr. Wang continued, "Heading into 2014, we remain cautiously optimistic on our edible alcohol business, as the baijiu market further rationalizes supply and demand.  We will continue to optimize our strong sourcing capability and strive to achieve greater operating leverage in our core business.  At the same time, we are excited about ramping up sales and production of our newly-introduced CPE and foam insulation product lines.  We're happy the construction of our new plants were completed on budget and practically without any glitches.  We anticipate material contributions from the new business beginning in the second half of 2014."

Fourth Quarter 2013 Financial Performance

For the fourth quarter of 2013, revenue increased by 30.7% year-over-year to RMB657.8 million ($107.9 million) from RMB503.4 million in the same period of 2012. The increase in revenue was mainly attributable to higher production volume and higher sales volumes for all of our products.

Revenue breakdown by product line is as follows:  

  • Revenue from edible alcohol increased by 26.0% to RMB435.4 million ($71.4 million) in the fourth quarter of 2013, compared to RMB345.7 million in the fourth quarter of 2012. The sales volume of edible alcohol in the fourth quarter of 2013 increased by 29.6% year-over-year to 82,769 tons, primarily due to higher production volume as the market demand for edible alcohol temporarily recovered during this quarter. The production volume increased by 30.5% year-over-year to 81,810 tons in the fourth quarter of 2013. The average selling price decreased by 2.8% year-over-year to RMB5,260 per ton.
  • Revenue from DDGS feed increased by 44.0% to RMB152.1 million ($25.0 million) in the fourth quarter of 2013, compared to RMB105.7 million in the fourth quarter of 2012. The sales volume of DDGS feed in the fourth quarter of 2013 increased by 25.9% year-over-year to 67,905 tons, while the average selling price increased by 14.4% year-over-year to RMB2,240 per ton.
  • Revenue from liquid carbon dioxide increased by 9.0% to RMB11.9 million ($1.9 million) in the fourth quarter of 2013, compared to RMB10.9 million in the fourth quarter of 2012. The sales volume of liquid carbon dioxide in the fourth quarter of 2013 increased by 21.5% year-over-year to 28,486 tons, and the average selling price decreased by 10.3% year-over-year to RMB416 per ton.
  • Revenue from crude corn oil increased by 27.3% to RMB52.4 million ($8.6 million) in the fourth quarter of 2013, compared to RMB41.2 million in the fourth quarter of 2012. The sales volume of crude corn oil in the fourth quarter of 2013 increased by 29.8% year-over-year to 6,930 tons, and the average selling price decreased by 1.9% year-over-year to RMB7,563 per ton.
  • We began generating revenue from our newly-completed CPE and foam insulation plants during this quarter. Revenue from CPE was RMB5.0 million ($0.8 million) in the fourth quarter of 2013, and the sales volume was 553 tons at price per ton of RMB9,058. Revenue from foam insulation was RMB0.4 million ($0.1 million) in the fourth quarter of 2013, and the sales volume was 375 cubic meters at price per cubic meter of RMB1,101.

During the fourth quarter of 2013, gross profit increased by 44.3% to RMB78.6 million ($12.9 million) from RMB54.4 million in the same period of 2012. Gross margin for the fourth quarter of 2013 increased to 11.9%, from 10.8% in the same period of 2012, which was primarily attributable to the temporarily recovered market demand.

Income from operations increased by 52.8% to RMB65.6 million ($10.8 million) in the fourth quarter of 2013, from RMB42.9 million in the same period of 2012, primarily driven by higher gross profit earned.

Selling expenses slightly increased by RMB0.1 million, or 7.9% to RMB1.4 million ($0.2 million) in the fourth quarter of 2013, from RMB1.3 million in the same period of 2012.

General and administrative expenses increased by RMB1.4 million, or 13.5% to RMB11.6 million ($1.9 million) in the fourth quarter of 2013, from RMB10.2 million in the same period of 2012.

Interest expense increased by RMB10.9 million or 75.5% to RMB25.2 million ($4.1 million) in the fourth quarter of 2013, from RMB14.4 million in the same period of 2012, mainly due to the interest expense arisen from the Bond issued at the beginning of 2013.

Income tax expenses in the fourth quarter of 2013 were RMB10.2 million ($1.7 million), representing an effective tax rate of 25%.

Net income increased by 41.1% to RMB30.5 million ($5.0 million) in the fourth quarter of 2013, compared to RMB21.6 million in the same quarter of 2012. In the fourth quarter of 2013, basic and diluted earnings per ordinary share and per ADS were RMB1.18 ($0.19), and the Company had 25.7 million weighted average basic and diluted shares outstanding. 

As of December 31, 2013, cash and bank deposits of RMB521.3 million ($85.5 million) decreased by RMB89.4 million, compared with RMB610.7 million as of December 31, 2012. Cash flows used in operating activities for the fourth quarter of 2013 were RMB21.0 million ($3.4 million), which was mainly due to that the Company pre-stored a part of corn during this quarter.

Full Year 2013 Financial Performance

For the year ended December 31, 2013, total revenue decreased 12.8% year-over-year to RMB2.3 billion ($369.9 million), from RMB2.6 billion for the year ended December 31, 2012. Gross profit decreased 29.1% year-over-year to RMB245.7 million ($40.3 million), from RMB346.8 million for the year ended December 31, 2012. Income from operations decreased 32.0% year-over-year to RMB198.9 million ($32.6 million), from RMB292.4 million for the year ended December 31, 2012. Net income decreased 57.7% year-over-year to RMB79.5 million ($13.0 million), from RMB188.2 million for the year ended December 31, 2012. Basic and diluted earnings per ordinary share and per ADS decreased to RMB3.09 ($0.51), from RMB7.31 in the prior year. Weighted average number of basic and diluted shares outstanding was approximately 25.7 million in 2013.

Financial Outlook

The Company estimates that its revenue for the first quarter of 2014 will be in the range of RMB500 million ($82.0 million) to RMB530 million ($86.9 million), an increase of approximately 11% to 18% 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 Thursday, March 6, 2014 (9:00 p.m. Beijing time on Thursday, March 6, 2014) to discuss the results and highlights from the fourth quarter and full year of 2013 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:

34973259

A replay of the webcast will be accessible through March 13, 2014 on http://ir.chinanewborun.com or by dialing:

United States toll free:

1-855-452-5696

International:   

61-2-8199-0299

Passcode

34973259

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, 2012

December 31, 2013

RMB

RMB

US$

Assets

Current Assets

Cash

610,692,645

521,270,799

85,497,679

Restricted cash

75,000,000

42,040,667

6,895,417

Trade accounts receivable, net of allowance for doubtful accounts of nil and nil, as of December 31, 2012 and 2013, respectively

302,779,899

358,463,468

58,794,382

Available-for-sale securities

16,783,869

2,752,853

Inventories

138,280,880

353,206,120

57,932,084

Advance to suppliers

67,828,505

276,245,034

45,309,097

Other receivables

34,880,868

58,510,165

9,596,707

Prepaid expenses

6,039,816

3,773,980

619,000

Deferred income tax assets

248,712

40,793

Total current assets

1,235,502,613

1,630,542,814

267,438,012

Property, plant and equipment, net

1,047,934,015

1,143,722,628

187,590,846

Land use right, net

56,432,887

138,944,251

22,789,328

Intangible assets, net

13,475,014

9,648,771

1,582,570

 

Long-term deferred expenses

10,697,712

1,754,615

Other non-current assets

89,648,135

Total assets

2,442,992,664

2,933,556,176

481,155,371

Liabilities and shareholders' equity

Current Liabilities

Trade accounts payable

12,605,132

29,272,232

4,801,166

Accrued expenses and other payables

63,942,736

106,574,084

17,480,045

Income taxes payable

6,661,771

9,119,258

1,495,720

Short-term borrowings

842,200,000

620,200,000

101,723,827

Current portion of long-term borrowings

24,000,000

3,936,427

Total current liabilities

925,409,639

789,165,574

129,437,185

Long-term borrowings

48,000,000

7,872,853

Bonds Payable

 

500,000,000

82,008,890

Total liabilities

925,409,639

1,337,165,574

219,318,928

Shareholders' equity

Ordinary share – (December 31, 2012 and 2013: 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

76,782,002

Retained earnings – appropriated

118,401,996

126,356,029

20,724,635

Retained earnings – unappropriated

931,347,064

1,002,921,340

164,496,931

Accumulated other comprehensive loss

(473,818)

(1,194,550)

(192,850)

Total shareholders' equity

1,517,583,025

1,596,390,602

261,836,443

Total liabilities and shareholders' equity

2,442,992,664

2,933,556,176

481,155,371

 

CHINA NEW BORUN CORPORATION

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME

 

For the three-month period ended,

December 31, 2012

September 30, 2013

December 31, 2013

(RMB)

(RMB)

(RMB)

(US$)

Revenues

503,375,028

518,001,425

657,782,689

107,888,056

Cost of goods sold

448,934,524

469,332,820

579,206,629

95,000,185

Gross profit

54,440,504

48,668,605

78,576,060

12,887,871

Operating expenses:

Selling

1,286,558

1,213,777

1,387,878

227,637

General and administrative

10,238,935

10,298,164

11,625,578

1,906,801

Total operating expenses

11,525,493

11,511,941

13,013,456

2,134,438

Income from operations

42,915,011

37,156,664

65,562,604

10,753,433

Other (income) expenses:

Interest income

(438,967)

(1,296,587)

(937,588)

(153,781)

Interest expense

14,371,023

24,076,289

25,226,848

4,137,652

Others, net

194,026

(23,410)

659,948

108,243

Total other expense, net

14,126,082

22,756,292

24,949,208

4,092,114

Income before income taxes

28,788,929

14,400,372

40,613,396

6,661,319

Income tax expenses:

Current

7,197,232

3,600,094

10,156,353

1,665,822

Deferred

Income tax expenses

7,197,232

3,600,094

10,156,353

1,665,822

Net income

21,591,697

10,800,278

30,457,043

4,995,497

Earnings per share:

Basic and diluted

0.84

0.42

1.18

0.19

Weighted average ordinary shares outstanding:

Basic and diluted

25,725,000

25,725,000

25,725,000

25,725,000

 

 

 

CHINA NEW BORUN CORPORATION

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME

For the year ended,

December 31, 2012

December 31, 2013

(RMB)

(RMB)

(US$)

Revenues

2,587,441,751

2,254,970,152

369,855,197

Cost of goods sold

2,240,600,096

2,009,229,511

329,549,363

Gross profit

346,841,655

245,740,641

40,305,834

Operating expenses:

Selling

4,566,943

5,160,405

846,398

General and administrative

49,845,321

41,645,512

6,830,604

Total operating expenses

54,412,264

46,805,917

7,677,002

Income from operations

292,429,391

198,934,724

32,628,832

Other (income) expenses:

Interest income

(1,364,810)

(3,850,272)

(631,513)

Interest expense

42,767,789

95,601,270

15,680,308

Others, net

157,807

505,384

82,892

Total other expense, net

41,560,786

92,256,382

15,131,687

Income before income taxes

250,868,605

106,678,342

17,497,145

 

Income tax expenses:

 

Current

62,717,151

27,150,033

4,453,088

Deferred

Income tax expense

62,717,151

27,150,033

4,453,088

Net Income

188,151,454

79,528,309

13,044,057

Earnings per share:

Basic and diluted

7.31

3.09

0.51

Weighted average ordinary shares outstanding:

Basic and diluted

25,725,000

25,725,000

25,725,000

SOURCE China New Borun Corporation



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