China New Borun Announces Fourth Quarter and Full Year 2010 Financial Results

4Q10 Revenue Increased 24.1% Year-Over-Year

4Q10 Net Income Increased 13.7 % Year-Over-Year

Phase III Daqing facilities Began Commercial Operation

Mar 03, 2011, 00:01 ET from China New Borun Corporation

com.clickability.cms.translator.UtilContext$userObject@1b54416b.

BEIJING, March 3, 2011 /PRNewswire-Asia-FirstCall/ -- 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 fourth quarter and full year of 2010.

Mr. Jinmiao Wang, Chairman and Chief Executive Officer of Borun, commented, "We are very pleased to report a strong set of fourth quarter and full year 2010 financial results.  Driven by higher prices for edible alcohol and our strong capacity utilization, we achieved record fourth quarter revenue and profits that exceeded our previously stated guidance. Our consistent growth in revenue for both edible alcohol and by-products, as well as our stable gross margin, again demonstrate the advantages of our business model. With the expanded capacity from our Daqing Phase III, Borun has become the second largest edible alcohol producer in China."

Mr. Wang continues, "We are also proactively focused on enhancing our ability to pre-purchase corn at lower prices.  During the recent peak harvest season, we continued to engage granaries to secure sufficient lower-priced corn and store for later use in non-harvest season.  This strategy not only reduces our input costs but also improves our capacity utilization and operating efficiency.  Fuelled by the strong demand of Chinese Baijiu market, we continue to be excited with our growth prospects, and we believe that our technical strengths and leading market position will enable us to seize more growth opportunities.  I am very proud of our achievements and successes during this quarter, and I look forward to our continued success in 2011."

Fourth Quarter 2010 Financial Highlights

  • Total revenue increased 24.1% to RMB475.0 million ($71.7 million1) from RMB382.7 million in the fourth quarter of 2009.
  • Gross profit increased 24.3% to RMB115.4 million ($17.4 million) from RMB92.8 million in the fourth quarter of 2009.
  • Net income increased 13.7% to RMB69.6 million ($10.5 million) from RMB61.2 million in the fourth quarter of 2009.
  • Diluted earnings per American Depositary Share ("ADS") were RMB2.71 ($0.41) for the quarter ended December 31, 2010. Each ADS represents one of the Company's ordinary shares.

Fourth Quarter 2010 Financial Performance

Fourth quarter 2010 revenue increased by 24.1% year-over-year to RMB475.0 million ($71.7 million) from RMB382.7 million in the same period of 2009.  The increase was primarily due to the following:

  • Revenue from edible alcohol increased by 29.4% to RMB334.5 million ($50.5 million) in the fourth quarter of 2010 compared to RMB258.6 million in the fourth quarter of 2009 primarily as a result of the increase in price of edible alcohol and also an increase in volume during this period, driven by the strong demand of the edible alcohol market. Sales price increased by 22.4% to RMB5,082 per ton  and sales volume increased by 5.7% to 65,818 tons in the fourth quarter of 2010.
  • Revenue from DDGS Feed decreased by 10.0% to RMB71.2 million ($10.7 million) in the fourth quarter of 2010, compared to RMB79.0 million in the prior year period, due to the decrease in sales price per ton. Sales price decreased by 9.9% to RMB1,641 per ton in the fourth quarter of 2010.
  • Revenue from Corn Germ increased by 26.7% to RMB55.5 million ($8.4 million) in the fourth quarter of 2010 compared to RMB43.8 million in the fourth quarter of 2009, primarily driven by the increase in sales price per ton and the increase in sales volume during this period. Sales price increased by 17.6% to RMB3,549 per ton and sales volume increased by 7.7% to 15,644 tons in the fourth quarter of 2010.  
  • Liquid carbon dioxide, a new by-product, began contributing revenue in July 2010. Revenue from liquid carbon dioxide was RMB13.8 million ($2.1 million) in the fourth quarter and the sales volume was 28,051 tons at a price per ton of RMB493.

During the fourth quarter of 2010, gross profit increased by 24.3% to RMB115.4 million ($17.4 million) from RMB92.8 million in the prior year period.  Gross margin for the fourth quarter of 2010 remained stable at 24.3 % compared to the fourth quarter of 2009.

Operating income increased by 21.8% to RMB100.1 million ($15.1 million) in the fourth quarter of 2010, from RMB82.2 million in the same period of 2009, reflecting of the Company's strong revenue growth.

Selling expenses, increased by 199.3% to RMB1.1 million ($0.2 million) in the fourth quarter of 2010 compared to RMB0.4 million in the same period in 2009. The higher expenses in the fourth quarter of 2010 were primarily due to promotional activities targeting new customers.    

General and administrative expenses increased by 38.6% to RMB14.2 million ($2.1 million) in the fourth quarter of 2010 compared to RMB10.2 million in the same period of 2009, reflecting an increase in administrative staff costs, professional fees and other expenses in connection with maintaining the Company's status as a publicly-traded company.  

Income tax expenses in the fourth quarter of 2010 were RMB24.0 million ($3.6 million), representing an effective tax rate of 25.6%, increasing from RMB22.8 million in the same period of 2009. As the effective tax rate remained relatively stable, the increase was consistent with the increase of income before income tax expenses.

Net income increased 13.7% to RMB69.6 million ($10.5 million) in the fourth quarter of 2010, compared to RMB61.2 million in the same quarter of 2009.  Diluted earnings per share and per ADS were RMB2.71 ($0.41) in the fourth quarter of 2010.  The Company had approximately 25.7 million weighted average diluted shares outstanding during the quarter ended December 31, 2010.

As of December 31, 2010, the Company had cash and bank deposits of RMB341.0 million ($51.5 million), compared to RMB105.8 million as of December 31, 2009.  Cash flows provided by operating activities for the year ended December 31, 2010 were approximately RMB194.3 million ($29.3 million) due to strong operating results.

Full Year 2010 Financial Performance

For the year ended December 31, 2010, total revenue increased 61.6% to RMB1,713.9 million ($258.8 million) from RMB1,060.5 million for the year ended December 31, 2009. Gross profit increased by 63.1% to RMB405.6 million ($61.2 million) from RMB248.6 million for the year ended December 31, 2009. Operating income increased 59.2% to RMB359.9 million ($54.3 million) from RMB226.1 million for the year ended December 31, 2009. Net income increased 55.9% to RMB259.4 million ($39.2 million), or RMB11.07 ($1.67) per diluted share or ADS, from RMB166.4 million, or RMB8.32 per diluted share or ADS, in the prior year. Weighted average number of diluted shares outstanding was approximately 20.9 million in 2010, up from 14.8 million in 2009.

Financial Outlook

The Company estimates that its revenue for the first quarter of 2011 will be in the range of RMB543 million ($82.0 million) to RMB563 million ($85.0 million), an increase of approximately 39.7 % to 44.8% over the same quarter of 2010.

This forecast reflects the Company's current and preliminary view, which is subject to change.

Conference Call

The Company will hold an earnings conference call at 8:00 am ET on March 3, 2011 to discuss the results and highlights from the fourth quarter and full year 2010 and answer questions from investors.  The dial-in number and passcode for the conference call are as follows:

United States toll free:

1-800-561-2813

US Toll/International:

1-617-614-3529

Hong Kong toll free:  

800-96-3844

South China toll free (China Telecom):                                          

10-800-130-0399

North China toll free (China Telecom):    

10-800-152-1490

South China toll free (China Netcom):    

10-800-852-1490

Passcode:

83837107

A telephone replay will become available beginning two hours after the conclusion of the call and will be available through March 10, 2011. The dial-in number and conference ID to access the replay are as follows:

United States toll free:                                                      

1-888-286-8010

International:    

1-617-801-6888

Conference ID:

12916079

Additionally, a live and archived webcast of the conference call will be available in the Investor Relations section of Borun's website at http://ir.chinanewborun.com.

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, Corn Germ, 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, 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

ICR, LLC

Michael Tieu

Phone: +86-10-6583-7509

Or +1-646-328-2526

E-mail: michael.tieu@icrinc.com

CHINA NEW BORUN CORPORATION

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET

December 312009

December 31, 2010

RMB

RMB

US$

Assets

Cash

105,785,067

340,984,614

51,487,251

Trade accounts receivable, net of allowance for doubtful accounts of RMB0, respectively

71,397,615

128,480,503

19,400,019

Inventories

49,085,059

96,942,787

14,637,955

Advance to suppliers

9,352,257

46,113,552

6,962,953

Other receivables

15,190,678

33,904,486

5,119,436

Prepaid expenses

996,831

1,313,568

198,343

Total current assets

251,807,507

647,739,510

97,805,957

Property, plant and equipment, net

461,978,632

1,035,304,235

156,326,609

Land use right, net

27,120,739

58,733,967

8,868,583

Intangible assets, net

24,953,743

21,127,500

3,190,164

Total assets

765,860,621

1,762,905,212

266,191,313

Liabilities and shareholders' equity

Trade accounts payable

41,750,889

29,222,634

4,412,496

Accrued expenses and other payables

34,683,542

199,446,777

30,115,629

Income taxes payable

30,016,801

19,707,874

2,975,807

Short-term borrowings

143,200,000

498,000,000

75,195,917

Total current liabilities

249,651,232

746,377,285

112,699,849

Total liabilities

249,651,232

746,377,285

112,699,849

Commitment and contingencies

-

-

-

Shareholders' equity

Class A convertible preference share – (December 31, 2009: par value of RMB0.0068259, 3,711.952 shares authorized, issued and outstanding; December 31, 2010: Nil)

25

-

-

Class B convertible preference share – (December 31, 2009: par value of RMB0.0068259, 1,065.330 shares authorized, issued and outstanding; December 31, 2010: Nil)

7

-

-

Class C convertible preference share – (December 31, 2009: par value of RMB0.0068259, 374.907 shares authorized, issued and outstanding; December 31, 2010: Nil)

3

-

-

Ordinary share – (December 31, 2009: par value of RMB0.0068259, 14,847,811 shares authorized, issued and outstanding; December 31, 2010: par value of RMB0.0068259, 100,000,000 shares authorized, 25,725,000 shares issued and outstanding)

101,350

175,596

25,725

Additional paid-in capital

227,157,411

468,132,187

70,686,002

Retained earnings – appropriated

41,314,903

67,794,324

10,236,659

Retained earnings – unappropriated

247,863,898

480,808,808

72,600,119

Accumulated other comprehensive income (loss)

(228,208)

(382,988)

(57,041)

Total shareholders' equity

516,209,389

1,016,527,927

153,491,464

Total liabilities and shareholders' equity

765,860,621

1,762,905,212

266,191,313

CHINA NEW BORUN CORPORATION

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME

For the three months period ended,

December 31, 2009

September 30, 2010

December 31, 2010

(RMB)

(RMB)

(RMB)

(US$)

Revenues

382,662,630

417,682,807

475,004,064

71,723,627

Cost of goods sold

289,825,432

316,742,605

359,561,238

54,292,243

Gross profit

92,837,198

100,940,202

115,442,826

17,431,384

Operating expenses:

Selling

371,749

619,533

1,112,490

167,981

General and administrative

10,233,584

11,765,149

14,186,268

2,142,067

Total operating expenses

10,605,333

12,384,682

15,298,758

2,310,048

Operating income

82,231,865

88,555,520

100,144,068

15,121,336

Other (income) expenses:

Interest income

(115,714)

(250,734)

(202,434)

(30,567)

Interest expense

3,027,985

2,368,256

6,333,944

956,399

Others, net

(4,773,713)

11,573

378,054

57,085

Total other expense, net

(1,861,442)

2,129,095

6,509,564

982,917

Income before income taxes

84,093,307

86,426,425

93,634,504

14,138,419

Income tax expense

22,846,969

22,186,475

23,997,632

3,623,542

Net income

61,246,338

64,239,950

69,636,872

10,514,877

Participation in undistributed earnings by

preference shareholders

(17,574,680)

-

-

-

Net income attributable to ordinary shareholders

43,671,658

64,239,950

69,636,872

10,514,877

Earnings per share:

Basic and diluted

2.94

2.50

2.71

0.41

Weighted average ordinary shares outstanding:

Basic and diluted

14,847,811

25,725,000

25,725,000

25,725,000

CHINA NEW BORUN CORPORATION

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME

For the year ended,

December 312009

December 31, 2010

(RMB)

(RMB)

(US$)

Revenues

1,060,493,812

1,713,924,878

258,795,488

Cost of goods sold

811,865,247

1,308,303,166

197,548,306

Gross profit

248,628,565

405,621,712

61,247,182

Operating expenses:

Selling

2,370,530

2,981,049

450,126

General and administrative

20,177,351

42,734,994

6,452,805

Total operating expenses

22,547,881

45,716,043

6,902,931

Operating income

226,080,684

359,905,669

54,344,251

Other (income) expenses:

Interest income

(362,507)

(646,231)

(97,578)

Interest expense

9,961,785

12,608,465

1,903,825

Others, net

(6,191,254)

254,366

38,408

Total other expense, net

3,408,024

12,216,600

1,844,655

Income before income taxes

222,672,660

347,689,069

52,499,596

Income tax expense

56,262,029

88,264,738

13,327,606

Net income

166,410,631

259,424,331

39,171,990

Participation in undistributed earnings by

preference shareholders

(42,868,951)

(27,744,622)

(4,189,322)

Net income attributable to ordinary shareholders

123,541,680

231,679,709

34,982,668

Earnings per share:

Basic and diluted

8.32

11.07

1.67

Weighted average ordinary shares outstanding:

Basic and diluted

14,847,811

20,927,117

20,927,117

SOURCE China New Borun Corporation



RELATED LINKS

http://www.chinanewborun.com