China Agri-Business Continues Its Growth in the First Half Year of 2011

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Aug 24, 2011, 08:20 ET

XI'AN, China, Aug. 24, 2011 /PRNewswire-Asia-FirstCall/ -- China Agri-Business, Inc. ("China Agri" or the "Company," OTC: CHBU), a manufacturer and distributor of organic agricultural application products in China, reported its operation results for the three and six months ended June 30, 2011.

Highlights For The Three Months Ended June 30, 2011

Total sales increased 11% to $3,838,000 in the second quarter of 2011 compared to $3,452,574 in the second quarter of 2010.
Net income increased 200% to $2,256,307 in the second quarter of 2011 compared to $753,221 in the second quarter of 2010
Earnings per common share increased to $0.17 in the second quarter of 2011 compared to $0.06 in the second quarter of 2010

Highlights For The Six Months Ended June 30, 2011

Total sales increased 12% to $5,592,414 in the first half year of 2011 compared to $4,993,515 in the comparable period of 2010.
Net income increased 188% to $3,122,273 in the first half year of 2011 compared to $1,085,029 in the comparable period of 2010
Earnings per common share increased to $0.24 in the first half year of 2011 compared to $0.08 in the comparable period of 2010

Approximately 630 branded stores sell the Company's products under the name "Xinsheng Shiji" as of June 30, 2011. The majority of branded stores are located in Shaanxi Province, the Company's local province; the others are located in Hunan and Sichuan provinces. The sales from the Company's traditional sales network increased 126% to $1,800,757 in the six months ended June 30, 2011 compared to $1,003,370 in the comparable period of 2010. For the six months ended June 30, 2011 and 2010, approximately 68% and 84%, respectively, of revenue was generated from the Company's branded sales stores, and approximately 32% and 16%, respectively, of revenue was generated from traditional sales channels.

In December 2010, the Company decided to outsource the operation and ownership of its direct sales stores to subcontractors who bear the risk of operations of the stores, and stopped selling third party products in such branded stores. "This change enables us to focus more on product development, our marketing strategy and business expansion issues," commented Mr. Deng, Chief Executive Officer, President, and Director of the Company. "As a direct result of above change, our gross margin rate increased to 69% in the first half of year of 2011, an increase of 31 percentage points from 38% for the comparable period of 2010."

Financial Highlights

China Agri-Business, Inc.
Condensed Consolidated Balance Sheets

	June 30,	December 31,
	2011	2010
	(Unaudited)
Assets
Current Assets
Cash and cash equivalents	$ 16,398,823	$ 13,153,741
Accounts receivable, net of allowance for doubtful accounts of $9,519 and $8,248, respectively	180,864	93,634
Inventory	67,843	91,596
Prepaid expenses	206,722	16,143
Total Current Assets	16,854,252	13,355,114
Property, plant and equipment, net of accumulated depreciation of $324,916 and $279,696, respectively	573,473	599,468
Investment in Tienwe Technology	928,320	909,120
Prepaid land lease costs	522,180	538,654
Intangible assets, net of accumulated amortization of $31,990 and $24,397, respectively	109,570	114,235
Total Assets	$ 18,987,795	$ 15,516,591

Liabilities and Stockholders' Equity
Current Liabilities
Current portion of long-term debt	$ 10,223	$ 9,405
Accounts payable and accrued liabilities	140,564	337,576
Due to chief executive officer - non-interest bearing, due on demand	501,215	501,215
Total Current Liabilities	652,002	848,196


Long Term Liabilities
Long-term debt	96,687	99,728
Total Long Term Liabilities	96,687	99,728

Total Liabilities	748,689	947,924

Stockholders' Equity
Undesignated preferred stock, par value $.001 per share; authorized 4,900,000 shares; none issued	-	-
Common stock, par value $.001 per share; authorized 100,000,000 shares,
issued and outstanding 13,118,574 and 13,118,574 shares as of June 30, 2011 and December 31, 2010, respectively	13,119	13,119
Additional paid-in capital	4,806,429	4,610,052
Retained earnings	11,411,536	8,289,263
Accumulated other comprehensive income (foreign currency translation adjustments)	2,008,022	1,656,233
Total stockholders' equity	18,239,106	14,568,667
Total Liabilities and Stockholders' Equity	$ 18,987,795	$ 15,516,591

China Agri -Business, Inc.
Condensed Consolidated Statements of Income
(Unaudited)

	For The Three Months Ended June 30,		For The Six Months Ended June 30,
	2011	2010	2011	2010


Sales of products	$ 3,838,000	$ 3,452,574	$ 5,592,414	$ 4,993,515
Cost of goods sold	1,185,054	2,244,930	1,747,525	3,110,048
Gross profit	2,652,946	1,207,644	3,844,889	1,883,467

Selling, general and administrative expenses	406,606	405,833	740,456	701,092
Income from operations	2,246,340	801,811	3,104,433	1,182,375
Interest and other income	11,748	5,715	21,402	12,194
Interest expense	(1,781)	(54,305)	(3,562)	(109,540)
Income before income taxes	2,256,307	753,221	3,122,273	1,085,029
Income taxes	-	-	-	-
Net income	$ 2,256,307	$ 753,221	$ 3,122,273	$ 1,085,029

Earnings per common share:
Basic	$ 0.17	$ 0.06	$ 0.24	$ 0.08
Diluted	$ 0.17	$ 0.05	$ 0.24	$ 0.08


Weighted average number of common shares used to compute earnings per common share:
Basic	13,118,574	12,958,574	13,118,574	12,958,574
Diluted	13,140,029	13,958,574	13,148,095	13,958,574

About China Agri-Business, Inc.

China Agri-Business, Inc., through its operating company in China, Shaanxi Xinsheng Centennial Agriculture and Technology Co., Ltd., manufactures and sells non-toxic fertilizer, bactericide, and fungicide products used for farming in China. Crops grown with Xinsheng's products are eligible to qualify for the "AA Green Food" rating administered by the China Green Food Development Center, an agency under the jurisdiction of the Ministry of Agriculture of the People's Republic of China (however, our products themselves do not bear the "AA green food" designation). The Company's two primary product groups are organic fertilizers (Xinsheng Luyuan brand) and bactericides (Xinsheng Lufeng brand). The Company has a total of five brands and produces more than 50 different applications, including products designed to stimulate plant growth, condition soil, and prevent and cure plant diseases and parasites. The Company has products for a variety of crops, including potatoes, vegetables, cotton, fruit plants, and orchard trees. The products can be used alone or as supplements with other products. The Company's Xinsheng manufacturing facilities are located in Xi'an, Shaanxi province, China. For more information about China Agri, please visit http://www.chinaagri-business.com.

Forward-Looking Statements

This news release contains forward-looking statements. These statements can be identified by the use of forward-looking terminology such as "anticipates," "believes," "continue," "could," "estimates," "expects," "future," "goal," "hopes," "intends," "may," "objective," "plans," "potential," "scheduled," "seek," "should," or "will" or the negative thereof or other variations thereon or comparable terminology, or by discussions of strategy that involve risks and uncertainties. We caution you that no statements contained in this news release should be construed as a guarantee or assurance of future performance or results or the implementation of our current plans. You should not place undue reliance upon any forward-looking statements. Forward-looking statements involve risks and uncertainties, including those discussed under "Item 1A. Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2010 and in other reports we file with the Securities and Exchange Commission ("SEC"). The actual results that we achieve may differ materially from any forward-looking statements due to the effect of such risks and uncertainties. These forward-looking statements are based on current expectations, and, except as required by law, we assume no obligation to update this information whether as a result of new information, future events, or otherwise. You are urged to carefully review and consider the various disclosures made by us in our Annual Report on Form 10-K for the year ended December 31, 2010 and in our other reports we file with the SEC that attempt to advise interested parties of the risks that may affect our business, financial condition, and results of operations.

SOURCE China Agri-Business, Inc.