China New Borun Announces Third Quarter 2015 Unaudited Financial Results

Nov 11, 2015, 16:30 ET from China New Borun Corporation

BEIJING, Nov. 11, 2015 /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 third quarter ended September 30, 2015. 

Mr. Jinmiao Wang, Chairman and Chief Executive Officer of Borun, commented on the results, "We are very pleased with Borun's strong third quarter 2015 financial results.  Driven by recovering trends in China's baijiu industry, our third quarter's revenue grew 25%, and net income nearly tripled year-over-year.  The strong profits combined with a sharp reduction in inventory fueled record operating cash flows of RMB624 million, which nearly doubled our cash balance to almost one billion RMB."   

"Given that the fourth quarter is seasonally peak for baijiu consumption, we are confident to sustain our improved profitability and expect net profits for full year 2015 will significantly grow from that of a year ago.  Importantly, we are thrilled that in this fourth quarter's new harvest season, the spot prices for corn continue to decrease, while the average selling price for edible alcohol remains stable.  The combination of better industry fundamentals and our solid market position provides us with excellent optimism for 2016."

Third Quarter 2015 Quick View

  • Total revenue increased 25.0% to RMB661.4 million ($104.0 million[1]) from RMB529.2 million in the third quarter of 2014.
  • Gross profit increased 45.7% to RMB66.3 million ($10.4 million) from RMB45.5 million in the third quarter of 2014.
  • Net income increased 272.9% to RMB21.8 million ($3.4 million) from RMB5.8 million in the third quarter of 2014.
  • Basic and diluted earnings per American Depositary Share ("ADS") were RMB0.85 ($0.13) for the quarter ended September 30, 2015. Each ADS represents one of the Company's ordinary shares.

Third Quarter 2015 Financial Performance

For the third quarter of 2015, revenue increased by 25.0% year-over-year to RMB661.4 million ($104.0 million) from RMB529.2 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 25.0% to RMB429.3 million ($67.5 million) in the third quarter of 2015, compared to RMB343.4 million in the third quarter of 2014. The sales volume of edible alcohol in the third quarter of 2015 increased by 24.1% year-over-year to 83,115 tons, and the average selling price of edible alcohol slightly increased by 0.7% year-over-year to RMB5,165 per ton.
  • Revenue from DDGS Feed increased by 20.2% to RMB140.4 million ($22.1 million) in the third quarter of 2015, compared to RMB116.8 million in the third quarter of 2014. The sales volume of DDGS Feed in the third quarter of 2015 increased by 35.0% year-over-year to 72,322 tons, while the average selling price decreased by 11.0% year-over-year to RMB1,941 per ton.
  • Revenue from liquid carbon dioxide decreased by 8.9% to RMB7.3 million ($1.1 million) in the third quarter of 2015, compared to RMB8.0 million in the third quarter of 2014. The sales volume of liquid carbon dioxide in the third quarter of 2015 increased by 31.4% year-over-year to 31,732 tons, while the average selling price decreased by 30.7% year-over-year to RMB229 per ton.
  • Revenue from crude corn oil increased by 17.2% to RMB40.1 million ($6.3 million) in the third quarter of 2015, compared to RMB34.2 million in the third quarter of 2014. The sales volume of crude corn oil in the third quarter of 2015 increased by 25.4% year-over-year to 6,291 tons, while the average selling price decreased by 6.6% year-over-year to RMB6,370 per ton.
  • Revenue from chlorinated polyethylene (CPE) increased by 83.3% to RMB44.4 million ($7.0 million) in the third quarter of 2015, compared to RMB24.2 million in the third quarter of 2014. The sales volume of CPE in the third quarter of 2015 increased by 87.0% year over year to 5,200 tons, while the average selling price decreased by 2.0% to RMB8,547 per ton.

During the third quarter of 2015, gross profit increased by 45.7% to RMB66.3 million ($10.4 million) from RMB45.5 million in the same period of 2014. Gross margin for the third quarter of 2015 increased to 10.0%, from 8.6% in the same period of 2014, which was primarily attributable to the decrease in average corn cost and increase in average selling price of edible alcohol, partly offset by the decrease in average selling price of by-products.

Operating income increased by 50.5% to RMB50.7 million ($8.0 million) in the third quarter of 2015, from RMB33.7 million in the same period of 2014, primarily attributable to higher gross profit earned.

Selling expenses increased by RMB0.8 million, or 77.7% to RMB1.9 million ($0.3 million) in the third quarter of 2015, from RMB1.1 million in the same period of 2014, which increased in line with the sales volume.

General and administrative expenses increased by RMB2.9 million, or 27.2% to RMB13.6 million ($2.1 million) in the third quarter of 2015, from RMB10.7 million in the same period of 2014.

Income tax expenses in the third quarter of 2015 were RMB7.3 million ($1.1 million), representing an effective tax rate of 25.0%.

Net income increased by 272.9% to RMB21.8 million ($3.4 million) in the third quarter of 2015, compared to RMB5.8 million in the same quarter of 2014. In the third quarter of 2015, basic and diluted earnings per share and per ADS were RMB0.85 ($0.13), and the Company had 25.7 million weighted average basic and diluted shares outstanding. 

As of September 30, 2015, cash and bank deposits of RMB994.7 million ($156.4 million) increased by RMB101.9 million, compared with RMB892.8 million as of December 31, 2014. Cash flows provided by operating activities for the third quarter of 2015 were RMB624.0 million ($98.0 million), which was mainly attributable to higher net profits and lower inventories.

Financial Outlook

The Company estimates that its revenue for the fourth quarter of 2015 will be in the range of RMB650 million ($102.2 million) to RMB700 million ($110.0 million), an increase of approximately 6.6% to 14.8% over the same quarter of 2014.

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, November 12, 2015 (9:00 p.m. Beijing time on Thursday, November 12, 2015) to discuss the results and highlights from the third quarter 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:

66099135

A replay of the webcast will be accessible through November 20, 2015 on http://ir.chinanewborun.com or by dialing:

United States toll free:

1-855-452-5696

International:

61-2-8199-0299

Passcode

66099135

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 chlorinated polyethylene (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 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 quarter ended September 30, 2015 were made at a rate of RMB6.3613 to USD1.00, the rate published by the People's Bank of China on September 30, 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

 

September 30, 2015

RMB

RMB

US$

Assets

Cash

830,430,168

994,664,390

156,361,811

Restricted cash

62,370,000

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

531,480,981

482,893,172

75,911,083

Held-to-maturity debt securities

98,720,762

15,518,960

Inventories

496,754,625

314,858,032

49,495,863

Advance to suppliers

52,577,513

223,416

35,121

Other receivables

73,593,217

51,330,734

8,069,221

Prepaid expenses

4,562,333

4,500,000

707,403

Total current assets

2,051,768,837

1,947,190,506

306,099,462

Property, plant and equipment, net

1,096,055,659

1,025,666,720

161,235,395

Land use right, net

136,125,360

134,000,927

21,065,022

Intangible assets, net

5,822,528

2,952,846

464,189

Other non-current assets

5,562,810

1,711,635

269,070

Total assets

3,295,335,194

3,111,522,634

489,133,138

Liabilities and shareholders' equity

Trade accounts payable

17,055,679

44,696,744

7,026,354

Accrued expenses and other payables

86,729,443

87,920,628

13,821,172

Income taxes payable

6,205,515

13,699,971

2,153,643

Short-term borrowings

901,000,000

803,200,000

126,263,500

Current portion of long-term borrowings

24,000,000

24,000,000

3,772,814

Bonds Payable

500,000,000

320,000,000

50,304,183

Total current liabilities

1,534,990,637

1,293,517,343

203,341,666

Long-term borrowings

84,000,000

66,000,000

10,375,238

Total liabilities

1,618,990,637

1,359,517,343

213,716,904

Shareholders' equity

Ordinary share – (December 31, 2014 and September 30, 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

73,590,648

Retained earnings – appropriated

134,277,095

134,277,095

21,108,436

Retained earnings – unappropriated

1,074,210,923

1,149,905,084

180,765,737

Accumulated other comprehensive loss

(451,244)

(484,671)

(74,312)

Total shareholders' equity

1,676,344,557

1,752,005,291

275,416,234

Total liabilities and shareholders' equity

3,295,335,194

3,111,522,634

489,133,138

 

CHINA NEW BORUN CORPORATION

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME

For the three-month period ended,

September 30,

 2014

June 30,

2015

September 30, 2015

RMB

RMB

    RMB

US$

Revenues

529,187,562

720,638,443

661,425,029

103,976,393

Cost of goods sold

483,683,441

632,954,711

595,147,823

93,557,578

Gross profit

45,504,121

87,683,732

66,277,206

10,418,815

Operating expenses:

Selling

1,085,428

1,866,280

1,928,963

303,234

General and administrative

10,705,813

13,506,488

13,615,056

2,140,295

Total operating expenses

11,791,241

15,372,768

15,544,019

2,443,529

Operating income

33,712,880

72,310,964

50,733,187

7,975,286

Other (income) expenses:

Interest income

(469,678)

(4,017,821)

(3,120,573)

(490,556)

Interest expense

25,407,558

24,018,082

23,234,892

3,652,538

Others, net

983,190

1,490,237

1,561,751

245,509

Total other expense, net

25,921,070

21,490,498

21,676,070

3,407,491

Income before income taxes

7,791,810

50,820,466

29,057,117

4,567,795

Income tax expense

1,947,952

12,705,116

7,264,280

1,141,949

Net income

5,843,858

38,115,350

21,792,837

3,425,846

Earnings per share:

Basic and diluted

0.23

1.48

0.85

0.13

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 nine-month period ended,

September 30, 2014

September 30, 2015

RMB

RMB

US$

Revenues

1,823,806,418

1,952,988,691

307,010,940

Cost of goods sold

1,620,279,819

1,739,791,689

273,496,249

Gross profit

203,526,599

213,197,002

33,514,691

Operating expenses:

Selling

3,834,906

4,997,915

785,675

General and administrative

31,900,401

38,935,253

6,120,644

Total operating expenses

35,735,307

43,933,168

6,906,319

Operating income

167,791,292

169,263,834

26,608,372

Other (income) expenses:

Interest income

(1,632,625)

(9,401,783)

(1,477,966)

Interest expense

78,127,550

73,662,328

11,579,760

Others, net

3,112,608

4,077,740

641,023

Total other expense, net

79,607,533

68,338,285

10,742,817

Income before income taxes

88,183,759

100,925,549

15,865,555

Income tax expense

22,045,940

25,231,388

3,966,389

Net income

66,137,819

75,694,161

11,899,166

Earnings per share:

Basic and diluted

2.57

2.94

0.46

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