China New Borun Announces Fourth Quarter and Full-Year 2015 Unaudited Financial Results

Mar 14, 2016, 16:30 ET from China New Borun Corporation

BEIJING, March 14, 2016 /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, 2015. 

Mr. Jinmiao Wang, Chairman and Chief Executive Officer of Borun, commented on the results, "We are thrilled with our strong fourth quarter of 2015 financial results, as revenue grew by nearly 15% year-over-year, gross margin expanded by 40 basis points, and net income rose by nearly 300% year-over-year, benefiting from our leadership position and positive government support."

"Demand for edible alcohol remained strong, while corn cost continued to noticeably trend downward, which should support further gross margin expansion opportunities.  We also expect that our capacity expansion for chlorinated polyethylene ("CPE") in the second quarter of 2015 will drive additional revenue growth in 2016. We feel confident about our business and profitability outlook for 2016."

Fourth Quarter 2015 Quick View

  • Total revenue increased 14.6% to RMB699.1 million ($107.7 million[1]) from RMB610.0 million in the fourth quarter of 2014.
  • Gross profit increased 18.7% to RMB67.6 million ($10.4 million) from RMB56.9 million in the fourth quarter of 2014.
  • Net income increased 306.6% to RMB53.2million ($8.2 million) from RMB13.1 million in the fourth quarter of 2014.
  • Basic and diluted earnings per American Depositary Share ("ADS") were RMB2.07 ($0.32) for the quarter ended December 31, 2015. Each ADS represents one of the Company's ordinary shares.  

Fourth Quarter 2015 Financial Performance

For the fourth quarter of 2015, revenue increased by 14.6% year-over-year to RMB699.1 million ($107.7 million) from RMB610.0 million in the same period of 2014. The increase in revenue was mainly attributable to higher sales volume in edible alcohol and its by-products.

Revenue breakdown by product lines is as follows:  

  • Revenue from edible alcohol increased by 11.1% to RMB454.6 million ($70.0 million) in the fourth quarter of 2015, compared to RMB409.3 million in the fourth quarter of 2014. The sales volume of edible alcohol in the fourth quarter of 2015 increased by 14.4% year-over-year to 89,991 tons, while the average selling price of edible alcohol decreased by 2.9% year-over-year to RMB5,052 per ton.
  • Revenue from DDGS Feed increased by 13.9% to RMB148.9 million ($22.9 million) in the fourth quarter of 2015, compared to RMB130.7 million in the fourth quarter of 2014. The sales volume of DDGS Feed in the fourth quarter of 2015 increased by 30.6% year-over-year to 81,836 tons, while the average selling price decreased by 12.7% year-over-year to RMB1,819 per ton.
  • Revenue from liquid carbon dioxide decreased by 25.4% to RMB6.2 million ($1.0 million) in the fourth quarter of 2015, compared to RMB8.3 million in the fourth quarter of 2014. The sales volume of liquid carbon dioxide in the fourth quarter of 2015 increased by 12.0% year-over-year to 35,170 tons, while the average selling price decreased by 33.4% year-over-year to RMB177 per ton.
  • Revenue from crude corn oil increased by 11.1% to RMB48.3 million ($7.5 million) in the fourth quarter of 2015, compared to RMB43.5 million in the fourth quarter of 2014. The sales volume of crude corn oil in the fourth quarter of 2015 increased by 16.2% year-over-year to 7,623 tons, while the average selling price decreased by 4.5% year-over-year to RMB6,331 per ton.
  • Revenue from CPE increased by 144.6% to RMB40.5 million ($6.2 million) in the fourth quarter of 2015, compared to RMB16.5 million in the fourth quarter of 2014. The sales volume of CPE in the fourth quarter of 2015 increased by 149.5% year over year to 4,736 tons, while the average selling price decreased by 2.0% to RMB8,547 per ton. Revenue from foam insulation was RMB0.6 million ($0.1 million) in the fourth quarter of 2015, compared to RMB1.7 million in the fourth quarter of 2014.

During the fourth quarter of 2015, gross profit increased by 18.7% to RMB67.6 million ($10.4 million) from RMB56.9 million in the same period of 2014. Gross margin for the fourth quarter of 2015 increased to 9.7%, from 9.3% in the same period of 2014, which was primarily attributable to the decrease in average corn cost, partly offset by the decrease in average selling price of edible alcohol and its by-products.

Operating income increased by 8.3% to RMB48.0 million ($7.4 million) in the fourth quarter of 2015, from RMB44.3 million in the same period of 2014, primarily attributable to higher gross profit earned and partly offset by the impairment for foam insulation equipment.

Selling expenses increased by RMB0.2 million, or 16.0% to RMB1.2 million ($0.1 million) in the fourth quarter of 2015, from RMB1.0 million in the same period of 2014, which is in line with the sales volume.

General and administrative expenses decreased by RMB0.2 million, or 1.8% to RMB11.3 million ($1.7 million) in the fourth quarter of 2015, from RMB11.5 million in the same period of 2014.

In the fourth quarter of 2015, as the manufacturing of foam insulation products was halted in 2015, and the Company elected to make a one-time non-cash impairment of RMB7.0 million ($1.1 million) for all the equipment related to the production of foam insulation. 

Income tax expenses in the fourth quarter of 2015 were RMB17.7 million ($2.7 million), representing an effective tax rate of 25.0%.

Net income increased by 306.6% to RMB53.2 million ($8.2 million) in the fourth quarter of 2015, compared to RMB13.1 million in the same quarter of 2014. The increase in net income was primarily attributable to a government subsidy netting of income tax of approximately RMB32.0 million the Company received during the fourth quarter of 2015, as the local government grants for corn processing.  In the fourth quarter of 2015, basic and diluted earnings per share and per ADS were RMB2.07 ($0.32), and the Company had 25.7 million weighted average basic and diluted shares outstanding. 

As of December 31, 2015, cash and bank deposits of RMB495.6 million ($76.3 million) decreased by RMB397.2 million, compared with RMB892.8 million as of December 31, 2014. Cash flows used in operating activities for the fourth quarter of 2015 increased to RMB443.0 million ($68.2 million), which was primarily used in corn pre-purchase in the harvest season.

Full Year 2015 Financial Performance

For the year ended December 31, 2015, total revenue increased 9.0% year-over-year to RMB2.7 billion ($408.4 million), from RMB2.4 billion for the year ended December 31, 2014. Gross profit increased 7.4% year-over-year to RMB279.8 million ($43.1 million), from RMB260.4 million for the year ended December 31, 2014. Income from operations increased 2.4% year-over-year to RMB217.3 million ($33.5 million), from RMB212.1 million for the year ended December 31, 2014. Net income increased 62.7% year-over-year to RMB128.9 million ($19.8 million), from RMB79.2 million for the year ended December 31, 2014. Basic and diluted earnings per ordinary share and per ADS increased to RMB5.01 ($0.77), from RMB3.08 in the prior year. Weighted average number of basic and diluted shares outstanding was approximately 25.7 million in 2015.

Financial Outlook

Reflecting the sustained solid demand for edible alcohol and its by-products, the Company continues to operate at a high level capacity utilization.  However, this February the Shouguang government conducted a safety check for all the chemical manufacturing facilities in Shouguang, which mandated the Company's Shouguang facility to shut down for an additional two weeks (approximately 15% of quarterly production schedule) after the Chinese New Year. 

As such, despite sustained solid industry fundamentals, the Company estimates that its revenue for the first quarter of 2016 will be in the range of RMB510 million ($78.5 million) to RMB540 million ($83.2 million), a decrease of approximately 5.4% to 10.7% over the same quarter of 2015.

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 Tuesday, March 15, 2016 (8:00 p.m. Beijing time on Tuesday, March 15, 2016) to discuss the results and highlights from the fourth quarter and full year of 2015 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: 

800-906-601

Hong Kong Toll:

852-3018-6771

China Toll Free:

800-819-0121

China Toll Free (Mobile):

400-620-8038

Conference ID:

62178138

A replay of the webcast will be accessible through March 22, 2016 on http://ir.chinanewborun.com or by dialing:

United States toll free:

1-855-452-5696

International:   

61-2-8199-0299

Passcode

62178138

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 that is 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 http://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

[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 year ended December 31, 2015 were made at a rate of RMB6.4936 to USD1.00, the rate published by the People's Bank of China on December 31, 2015. 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.

 

 CHINA NEW BORUN CORPORATION UNAUDITED CONSOLIDATED BALANCE SHEETS

December 31, 2014

 

December 31, 2015

RMB

RMB

US$

Assets

Cash

830,430,168

495,630,607

76,326,014

Restricted cash

62,370,000

Trade accounts receivable, net of allowance for doubtful accounts of nil and nil, respectively

531,480,981

515,520,269

79,388,978

Held-to-maturity debt securities

98,720,762

15,202,778

Inventories

496,754,625

438,841,092

67,580,555

Advance to suppliers

52,577,513

344,998,183

53,128,955

Other receivables

73,593,217

68,223,787

10,506,312

Prepaid expenses

4,562,333

3,645,396

561,383

Deferred tax assets

1,755,197

270,296

Total current assets

2,051,768,837

1,967,335,293

302,965,271

Property, plant and equipment, net

1,096,055,659

988,392,988

152,210,328

Land use right, net

136,125,360

133,292,782

20,526,793

Intangible assets, net

5,822,528

1,996,285

307,423

Other non-current assets

5,562,810

Total assets

3,295,335,194

3,091,017,348

476,009,815

Liabilities and shareholders' equity

Trade accounts payable

17,055,679

22,292,132

3,432,939

Accrued expenses and other payables

86,729,443

80,201,926

12,350,919

Income taxes payable

6,205,515

26,175,329

4,030,943

Short-term borrowings

901,000,000

753,200,000

115,991,129

Current portion of long-term borrowings

24,000,000

84,000,000

12,935,814

Bonds payable

500,000,000

320,000,000

49,279,290

Total current liabilities

1,534,990,637

1,285,869,387

198,021,034

Long-term borrowings

84,000,000

Total liabilities

1,618,990,637

1,285,869,387

198,021,034

Shareholders' equity

Ordinary share – (December 31, 2014 and December 31, 2015: 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

72,091,319

Retained earnings – appropriated

134,277,095

147,162,560

22,662,708

Retained earnings – unappropriated

1,074,210,923

1,190,180,107

183,285,097

Accumulated other comprehensive loss

(451,244)

(502,489)

(76,068)

Total shareholders' equity

1,676,344,557

1,805,147,961

277,988,781

Total liabilities and shareholders' equity

3,295,335,194

3,091,017,348

476,009,815

 

CHINA NEW BORUN CORPORATION

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME

For the three-month period ended,

December 31,

 2014

September 30,

2015

December 31, 2015

RMB

RMB

    RMB

US$

Revenues

610,013,951

661,425,029

699,055,308

107,652,967

Cost of goods sold

553,101,972

553

596,147,823

631,477,965

97,246,206

Gross profit

56,911,979

65,277,206

67,577,343

10,406,761

Operating expenses:

Selling

1,045,480

928,963

1,212,615

186,740

General and administrative

11,521,209

13,615,056

11,319,024

1,743,105

Impairment loss of fixed assets

7,020,788

1,081,186

Total operating expenses

12,566,689

14,544,019

19,552,427

3,011,031

Operating income

44,345,290

50,733,187

48,024,916

7,395,730

Other (income) expenses:

    Government subsidy

(42,630,000)

(6,564,925)

Interest income

(1,074,378)

(3,120,573)

(3,292,495)

(507,037)

Interest expense

24,757,422

23,234,892

21,798,132

3,356,864

Others, net

3,231,807

1,561,751

1,268,630

195,366

Total other expense, net

26,914,851

21,676,070

(22,855,733)

(3,519,732)

Income before income taxes

17,430,439

29,057,117

70,880,649

10,915,462

Income tax expense

4,357,609

7,264,280

17,720,161

2,728,865

Net income

13,072,830

21,792,837

53,160,488

8,186,597

Earnings per share:

      Basic and diluted

0.51

0.85

2.07

0.32

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, 2014

December 31, 2015

RMB

RMB

US$

Revenues

2,433,820,369

2,652,043,999

408,408,895

Cost of goods sold

2,173,381,791

2,372,269,654

365,324,266

Gross profit

260,438,578

279,774,345

43,084,629

Operating expenses:

Selling

4,880,386

5,210,530

802,410

General and administrative

43,421,610

50,254,277

7,739,047

Impairment loss of fixed assets

7,020,788

1,081,186

Total operating expenses

48,301,996

62,485,595

9,622,643

Operating income

212,136,582

217,288,750

33,461,986

Other (income) expenses:

Government subsidy

(42,630,000)

(6,564,925)

Interest income

(2,707,003)

(12,694,278)

(1,954,891)

Interest expense

102,884,972

95,460,460

14,700,699

Others, net

6,344,415

5,346,370

823,329

Total other expense, net

106,522,384

45,482,552

7,004,212

Income before income taxes

105,614,198

171,806,198

26,457,774

Income tax expense

26,403,549

42,951,549

6,614,443

Net income

79,210,649

128,854,649

19,843,331

Earnings per share:

Basic and diluted

3.08

5.01

0.77

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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