China New Borun Announces Second Quarter 2012 Financial Results

2Q12 Revenue Increased 11.0% Year-Over-Year

Aug 06, 2012, 16:05 ET from China New Borun Corporation

BEIJING, Aug. 6, 2012 /PRNewswire-Asia/ -- China New Borun Corporation (NYSE: BORN; "Borun" or the "Company"), a leading producer and distributor of corn-based edible alcohol in China, today announced unaudited financial results for the second quarter of 2012.

Second Quarter 2012 Quick View

  • Total revenue increased 11.0% to RMB803.7 million ($127.1 million[1]) from RMB724.4 million in the second quarter of 2011.
  • Gross profit decreased 23.6% to RMB115.5 million ($18.3 million) from RMB151.1 million in the second quarter of 2011.
  • Net income decreased 28.9% to RMB68.1 million ($10.8 million) from RMB95.8 million in the second quarter of 2011.
  • Diluted earnings per American Depositary Share ("ADS") were RMB2.65 ($0.42) for the quarter ended June 30, 2012. 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 quarter ended June 30, 2012 were made at a rate of RMB6.3249 to USD1.00, the rate published by the People's Bank of China on June 30, 2012. 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.

Commenting on the results for the quarter, Mr. Jinmiao Wang, Chairman and Chief Executive Officer of Borun, stated, "We are proud of our record quarterly revenue achieved in the second quarter, with continued growth from all of our key product lines.  Our strong top line provides clear evidence of the continued solid demand for our edible alcohol and by-products in China, and driven by our pre-sale success, we continue to immediately sell-out our entire production, gaining greater operating efficiency."

Mr. Wang added, "Our key raw material, corn, continued its price increase trend during this non-harvest season in the second quarter, and the entire edible alcohol industry faced margins pressure.  However, even though corn prices may continue to rise in future quarters, we are cautiously optimistic that prices for our main product, edible alcohol, will also pick up for the remainder of 2012, which should mitigate further margin contraction. Additionally, our strategic corn sourcing arrangement provides us with assured supplies at a favorable price throughout the non-harvest season. We believe that these initiatives will position Borun well in the second half of 2012."

Second Quarter 2012 Financial Performance

For the second quarter of 2012, revenue increased by 11.0% year-over-year to RMB803.7 million ($127.1 million) from RMB724.4 million in the same period of 2011.  Key factors affecting the Company's results of operations are as follows:

  • Revenue from edible alcohol, driven by higher sales volume, increased by 7.3% to RMB562.3 million ($88.9 million) in the second quarter of 2012, compared to RMB523.9 million in the second quarter of 2011.  Due to the solid demand for edible alcohol, the sales volume increased by 6.1% year-over-year to 100,111 tons. In the second quarter of 2012, selling price of edible alcohol increased by 1.2% year-over-year to RMB5,617 per ton. 
  • Revenue from DDGS Feed increased by 38.5% to RMB165.1 million ($26.1 million) in the second quarter of 2012, compared to RMB119.2 million in the second quarter of 2011, as sales volume increased by 14.1% year-over-year to 85,740 tons. The implementation of crude corn oil production in Shouguang Facility further increased DDGS Feed yield per ton of corn processed. In the second quarter of 2012, selling price of DDGS Feed increased by 21.4% year-over-year to RMB1,926 per ton.
  • Revenue from liquid carbon dioxide increased by 4.9% to RMB16.6 million ($2.6 million) in the second quarter of 2012 compared to RMB15.8 million in the second quarter of 2011, driven by higher sales volume during the period, partially offset by a decrease in selling price per ton. In the second quarter of 2012, sales volume increased by 21.2% to 36,307 tons, and selling price decreased by 13.4% year-over-year to RMB457 per ton.
  • Revenue from crude corn oil increased by 75.7% to RMB59.7 million ($9.5 million) in the second quarter of 2012, compared to RMB34.0 million in the second quarter of 2011, as sales volume increased by 76.1% year-over-year to 7,754 tons and selling price decreased by 0.3% year-over-year to RMB7,694 per ton.

During the second quarter of 2012, gross profit decreased by 23.6% to RMB115.5 million ($18.3 million) from RMB151.1 million in the same period of 2011.  Gross margin for the second quarter of 2012 decreased to 14.4% from 20.9% in the same period of 2011, primarily due to corn cost increasing at a faster rate than selling price during the second quarter of 2012.

Operating income, despite stable operating expenses, decreased by 25.6% to RMB101.0 million ($16.0 million) in the second quarter of 2012, from RMB135.8 million in the same period of 2011, due to higher cost of goods sold.

Selling expenses were RMB1.2 million ($0.2 million) in the second quarter of 2012, which were stable compared to the same period of 2011.    

General and administrative expenses were RMB13.3 million ($2.1 million) in the second quarter of 2012, which were stable compared to RMB14.1 million in the same period of 2011.

Income tax expenses in the second quarter of 2012 were RMB22.7 million ($3.6 million), representing an effective tax rate of 25.0%.

Net income decreased by 28.9% to RMB68.1 million ($10.8 million) in the second quarter of 2012, compared to RMB95.8 million in the same quarter of 2011.  In the second quarter of 2012, basic and diluted earnings per share and per ADS were RMB2.65 ($0.42), and the Company had 25.7 million weighted average basic and diluted shares outstanding.

As of June 30, 2012, the Company had cash and bank deposits of RMB180.8 million ($28.6 million), representing a decrease from RMB223.9 million as of December 31, 2011. Cash flows used in operating activities for the quarter ended June 30, 2012 were approximately RMB4.2 million ($0.7 million) due to increased cash payments for corn held in inventory.

Financial Outlook

Reflecting a planned annual maintenance of its production facilities, the Company estimates that its revenue for the third quarter of 2012 will be in the range of RMB670.0 million ($105.9 million) to RMB695.0 million ($109.9 million), an increase of approximately 6.9% to 10.8% over the same quarter of 2011.

This forecast reflects the Company's current and preliminary view, which is 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, August 7, 2012 (8:00 p.m. Beijing time on Tuesday, August 7, 2012) to discuss the results and highlights from the second quarter of 2012 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:                

1-718-354-1231

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:                            

12463518

A replay of the webcast will be accessible through August 14, 2012 on http://ir.chinanewborun.com or by dialing:

United States toll free:                          

1-866-214-5335

International:

1-718-354-1232

Passcode                                              

12463518

About China New Borun Corporation

China New Borun Corporation (NYSE: BORN) is a leading producer and distributor of corn-based edible alcohol in China.  Borun's edible alcohol products are primarily sold as an ingredient to producers of baijiu, a popular grain-based alcoholic beverage that is sold throughout China in retail stores, restaurants and bars. The Company also produces DDGS Feed, liquid carbon dioxide and crude corn oil as by-products of edible alcohol production.  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 ("SEC"), 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 +86-10-8556-9033 wendy.sun@asiabridgegroup.com

 

CHINA NEW BORUN CORPORATION

UNAUDITED CONSOLIDATED BALANCE SHEET

 

December 31, 2011

 

June 30, 2012

RMB

RMB

US$

Assets

Cash

223,875,750

180,849,070

28,593,190

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

300,023,348

304,304,946

48,112,215

Inventories

86,205,820

208,179,208

32,914,229

Advance to suppliers

143,742,755

168,397,441

26,624,522

Other receivables

12,682,305

10,171,348

1,608,144

Prepaid expenses

3,957,293

2,945,514

465,701

Total current assets

770,487,271

874,847,527

138,318,001

Property, plant and equipment, net

1,127,381,307

1,088,892,293

172,159,606

Land use right, net

57,583,427

57,008,157

9,013,290

Intangible assets, net

17,301,257

15,388,135

2,432,945

Total assets

1,972,753,262

2,036,136,112

321,923,842

Liabilities and shareholders' equity

Trade accounts payable

13,200,118

17,312,029

2,737,123

Accrued expenses and other payables

86,945,695

101,468,743

16,042,743

Income taxes payable

34,475,778

27,924,652

4,415,035

Short-term borrowings

508,700,000

428,200,000

67,700,675

Total current liabilities and total liabilities

643,321,591

574,905,424

90,895,576

Shareholders' equity

Ordinary share (December 31, 2011 and June 30, 2012: 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

74,014,164

Retained earnings – appropriated

99,586,852

99,586,852

15,745,206

Retained earnings – unappropriated

762,010,754

893,814,414

141,316,766

Accumulated other comprehensive loss

(473,718)

(478,361)

(73,595)

Total shareholders' equity

1,329,431,671

1,461,230,688

231,028,266

Total liabilities and shareholders' equity

1,972,753,262

2,036,136,112

321,923,842

 

CHINA NEW BORUN CORPORATION

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME

 

For the three-month period ended,

June 30,

 2011

March 31,

2012

June 30, 2012

 

(RMB)

(RMB)

(RMB)

(US$)

Revenues

724,369,706

721,175,850

803,731,107

127,074,121

Cost of goods sold

573,290,692

611,298,467

688,256,998

108,817,056

Gross profit

151,079,014

109,877,383

115,474,109

18,257,065

Operating expenses:

Selling

1,230,520

1,162,789

1,153,473

182,370

General and administrative

14,088,395

14,580,533

13,333,724

2,108,132

Total operating expenses

15,318,915

15,743,322

14,487,197

2,290,502

Operating income

135,760,099

94,134,061

100,986,912

15,966,563

Other (income) expenses:

Interest income

(199,696)

(319,400)

(373,465)

(59,047)

Interest expense

7,852,602

9,555,927

10,538,792

1,666,239

Others, net

1,849

(15,898)

(3,197)

(505)

Total other expense, net

7,654,755

9,220,629

10,162,130

1,606,687

Income before income taxes

128,105,344

84,913,432

90,824,782

14,359,876

Income tax expense

32,340,478

21,228,358

22,706,196

3,589,969

Net income

95,764,866

63,685,074

68,118,586

10,769,907

Earnings per share:

       Basic and diluted

3.72

2.48

2.65

0.42

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 six-month period ended,

June 30, 2011

June 30, 2012

(RMB)

(RMB)

(US$)

Revenues

1,296,181,008

1,524,906,957

241,095,821

Cost of goods sold

1,017,955,509

1,299,555,465

205,466,563

Gross profit

278,225,499

225,351,492

35,629,258

Operating expenses:

Selling

2,389,920

2,316,262

366,213

General and administrative

28,397,460

27,914,257

4,413,391

Total operating expenses

30,787,380

30,230,519

4,779,604

Operating income

247,438,119

195,120,973

30,849,654

Other (income) expenses:

Interest income

(508,893)

(692,865)

(109,546)

Interest expense

15,900,270

20,094,719

3,177,081

Others, net

8,181

(19,095)

(3,019)

Total other expense, net

15,399,558

19,382,759

3,064,516

Income before income taxes

232,038,561

175,738,214

27,785,138

Income tax expense

58,659,552

43,934,554

6,946,284

Net income

173,379,009

131,803,660

20,838,854

Earnings per share:

Basic and diluted

6.74

5.12

0.81

Weighted average ordinary shares outstanding:

Basic and diluted

25,725,000

25,725,000

25,725,000

SOURCE China New Borun Corporation



RELATED LINKS

http://www.chinanewborun.com