China New Borun Announces Second Quarter 2010 Financial Results
2Q10 Revenue and Net Income Increased 155% Year-Over-Year
2Q10 Cash from Operations Increased to RMB138 million
Phase III Daqing Expansion on Track and on Schedule
BEIJING, Aug. 4 /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 second quarter of 2010.
Second Quarter 2010 Financial Highlights
-- Total revenue increased 154.5% to RMB432.5 million ($63.7 million(1))
from RMB169.9 million in the second quarter of 2009.
-- Gross profit increased 149.9% to RMB102.1 million ($15.0 million) from
RMB40.9 million in the second quarter of 2009.
-- Net income increased 154.8% to RMB67.1 million ($9.9 million) from
RMB26.3 million in the second quarter of 2009.
-- Diluted earnings per American Depositary Share ("ADS") were RMB3.16
($0.46) for the quarter ended June 30, 2010. 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, 2010, were made at a rate of
RMB6.7909 to USD1.00 as published by the People's Bank of China on
June 30, 2010. 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.
Mr. Jinmiao Wang, Chairman and Chief Executive Officer of Borun, commented, "We are very pleased with our second quarter financial results, which marks our first quarter reporting as a publicly-traded company. Our rapid growth in revenue for both edible alcohol and by-products, as well as our strong operating cash flows, demonstrate the advantages of our business model and our unique competitive position.
"We are also glad to announce significant progress in several of our growth initiatives. We started construction on Phase III of our Daqing facility this quarter, and we expect to complete Phase III on schedule by the end of this year. We have also completed the construction of our liquid carbon dioxide project at the Shouguang facility, which has already generated revenue since July. With the completion of Phase III of our Daqing facility, we estimate we will be the second largest edible alcohol producer in China."
Second Quarter 2010 Financial Performance
Second quarter 2010 revenue increased by 154.5% year-over-year to RMB432.5 million ($63.7 million) from RMB169.9 million in the same period of 2009. The increase was primarily due to the following:
-- Revenue from edible alcohol increased by 156.0% to RMB301.0 million
($44.3 million) in the second quarter of 2010 compared to RMB117.6
million in the second quarter of 2009 primarily as a result of the
increase in sales volume during this period, in turn due to the
increase in production capacity resulting from the completion of both
Phase II at Shouguang facility and Phase II at Daqing facility during
the third quarter of 2009, and an increase in sales price per ton.
Sales volume increased by 117.6% to 65,410 tons and sales price
increased by 17.7% to RMB4,601 per ton in the second quarter of 2010.
-- Revenue from DDGS Feed increased by 108.2% to RMB80.1 million ($11.8
million) in the second quarter of 2010, compared to RMB38.5 million in
the prior year period, due to the Company's expanded production
capacity driving an increase in sales volume, partly offset by a
decrease in sales price per ton. Sales volume increased by 115.8% to
45,334 tons and sales price decreased by 3.5% to RMB1,767 per ton in
the second quarter of 2010.
-- Revenue from Corn Germ increased by 286.2% to RMB51.4 million ($7.6
million) in the second quarter of 2010 compared to RMB13.3 million in
the second quarter of 2009, mainly driven by the Company's expansion of
production capacity and improvement of production yield, both resulting
in increased sales volume, as well as a higher sales price per ton.
Sales volume increased by 212.6% to 15,670 tons and sales price
increased by 23.6% to RMB3,279 per ton in the second quarter of 2010.
During the second quarter of 2010, gross profit increased by 149.9% to RMB102.1 million ($15.0 million) from RMB40.9 million in the prior year period. Gross margin for the second quarter of 2010 was 23.6%, compared to 24.1% in the second quarter of 2009. Gross margin in the second quarter of 2009 was slightly higher than the second quarter of 2010, as corn prices were lower in the second quarter of 2009, and the lower corn price was not fully reflected in lower sales prices for edible alcohol in 2009.
Operating income increased by 141.8% to RMB90.7 million ($13.4 million) in the second quarter of 2010, from RMB37.6 million in the same period of 2009, as a result of the Company's strong revenue growth.
Selling expenses, increased by 45.9% to RMB0.6 million ($0.1 million) in the second quarter of 2010 compared to RMB0.4 million in the same period in 2009, reflecting an increase in expenses for the sales force, as the Company continued to expand its sales and marketing efforts.
General and administrative expenses increased by 270.7% to RMB10.8 million ($1.6 million) in the second quarter of 2010 compared to RMB2.9 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 second quarter of 2010 were RMB21.7 million ($3.2 million), representing an effective tax rate of 24.5%, increasing from RMB9.1 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 154.8% to RMB67.1 million ($9.9 million) in the second quarter of 2010, compared to RMB26.3 million in the same quarter of 2009. Diluted earnings per share and per ADS were RMB3.16 ($0.46) in the second quarter of 2010. The Company had approximately 17.2 million weighted average diluted shares outstanding during the quarter ended June 30, 2010.
As of June 30, 2010, the Company had cash and bank deposits of RMB391.2 million ($57.6 million), compared to RMB105.8 million as of December 31, 2009. Cash flows provided by operating activities for the six months ended June 30, 2010 were approximately RMB165.2 million ($24.3 million) due to strong operation results.
Initial Public Offering
On June 11, 2010, Borun completed an initial public offering of 5.725 million ADSs representing 5.725 million ordinary shares at a price of $7.00 per ADS. This represented 22.3% of the 25.725 million total outstanding shares following the initial public offering. The net proceeds from the initial public offering, after deducting a total of $4.2 million of underwriting discounts, commissions and offering expenses, totaled $35.9 million.
Ms. Ann Yu, Chief Financial Officer of Borun, stated, "We are excited to move forward into the second half of 2010 with a highly flexible financial position. Our cash balance following the initial public offering was approximately RMB 391.2 million ($57.6 million), and we are confident that the combination of our solid cash on hand, growing operating cash flows, and existing credit facility with local banks will provide us enough capital to execute on our immediate expansion plans. Given the strong demand for our products, we anticipate strong sales with respect to our expanded capacity, which could lead to higher revenue and profits in 2011 and beyond."
Financial Outlook
The Company estimates that its revenue for the full year of 2010 will be in the range of RMB1,650 million ($243.0 million) to RMB1,670 million ($245.9 million), an increase of approximately 55.7% to 57.5% over the previous year.
This forecast reflects the Company's current and preliminary view, which is subject to change.
Conference Call
The Company will hold a conference call at 8:00 am ET on August 5, 2010 to discuss second quarter results. Listeners may access the call by dialing:
United States toll free: 1-888-396-2369
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
International: 1-617-847-8710
Conference ID: 69908506
A telephone replay will become available beginning two hours after the conclusion of the call and will be available through August 12, 2010. Listeners may access the replay by dialing:
United States toll free: 1-888-286-8010
International: 1-617-801-6888
Conference ID: 47658065
Additionally, a live and archived webcast of the conference call will be available at http://ir.chinanewborun.com .
About China New Borun Corporation
China New Borun Corporation 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 and Corn Germ as by-products of edible alcohol production and began producing liquid carbon dioxide from waste carbon dioxide produced during the alcohol production process in July 2010. 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.
For more information, please contact:
ICR, LLC:
In the U.S.:
William Zima
Tel: +1-203-682-8200
In China:
Michael Tieu
Tel: +86-10-6599-7960
CHINA NEW BORUN CORPORATION
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET
December 31, June 30, 2010
2009
RMB RMB US$
Assets
Cash 105,785,067 391,213,394 57,608,475
Trade accounts receivable,
net of allowance for doubtful
accounts of RMB0, respectively 71,397,615 147,806,564 21,765,387
Inventories 49,085,059 71,447,949 10,521,131
Advance to suppliers 9,352,257 -- --
Other receivables 15,190,678 598,190 88,087
Prepaid expenses 996,831 267,983 39,462
Total current assets 251,807,507 611,334,080 90,022,542
Property, plant and equipment,
net 461,978,632 542,910,192 79,946,722
Land use right, net 27,120,739 26,869,270 3,956,658
Intangible assets, net 24,953,743 23,040,621 3,392,867
Total assets 765,860,621 1,204,154,163 177,318,789
Liabilities and shareholders'
equity
Trade accounts payable 41,750,889 142,079,334 20,922,018
Accrued expenses and other
payables 34,683,542 44,191,541 6,507,465
Income taxes payable 30,016,801 24,445,884 3,599,800
Short-term borrowings 143,200,000 113,200,000 16,669,366
Total current liabilities 249,651,232 323,916,759 47,698,649
Total liabilities 249,651,232 323,916,759 47,698,649
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;
June 30, 2010: Nil) 25 -- --
Class B convertible preference
share - (December 31, 2009:
par value of RMB0.0068259,
1,065.330 shares authorized,
issued and outstanding; June
30, 2010: Nil) 7 -- --
Class C convertible preference
share - (December 31, 2009:
par value of RMB0.0068259,
374.907 shares authorized,
issued and outstanding; June
30, 2010: Nil) 3 -- --
Ordinary share - (December 31,
2009: par value of
RMB0.0068259, 14,847,811
shares authorized, issued
and outstanding; June 30,
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 227,157,411 465,555,163 68,555,738
Retained earnings -
appropriated 41,314,903 41,314,903 6,083,863
Retained earnings -
unappropriated 247,863,898 373,411,407 54,987,028
Accumulated other comprehensive
income (loss) (228,208) (219,665) (32,214)
Total shareholders' equity 516,209,389 880,237,404 129,620,140
Total liabilities and
shareholders' equity 765,860,621 1,204,154,163 177,318,789
CHINA NEW BORUN CORPORATION
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME
For the three months period ended,
June 30, March 31, June 30, 2010
2009 2010
(RMB) (RMB) (RMB) (US$)
Revenues 169,906,968 388,768,417 432,469,590 63,683,693
Cost of goods sold 129,038,886 301,674,443 330,324,880 48,642,283
Gross profit 40,868,082 87,093,974 102,144,710 15,041,410
Operating expenses:
Selling 435,902 613,196 635,830 93,630
General and
administrative 2,902,411 6,024,293 10,759,284 1,584,368
Total operating expenses 3,338,313 6,637,489 11,395,114 1,677,998
Operating income 37,529,769 80,456,485 90,749,596 13,363,412
Other (income) expenses:
Interest income (65,768) (36,824) (156,239) (23,007)
Interest expense 2,376,050 2,056,267 1,849,998 272,423
Others, net (203,333) (353,268) 218,007 32,103
Total other expense, net 2,106,949 1,666,175 1,911,766 281,519
Income before income
taxes 35,422,820 78,790,310 88,837,830 13,081,893
Income tax expense 9,084,620 20,339,461 21,741,170 3,201,515
Net income 26,338,200 58,450,849 67,096,660 9,880,378
Participation in
undistributed
earnings by preference
shareholders (6,390,684) (15,056,939) (12,687,683) (1,868,336)
Net income attributable
to ordinary
shareholders 19,947,516 43,393,910 54,408,977 8,012,042
Earnings per share:
Basic and diluted 1.34 2.92 3.16 0.46
Weighted average
ordinary shares
outstanding:
Basic and diluted 14,847,811 14,847,811 17,238,402 17,238,402
CHINA NEW BORUN CORPORATION
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME
For the six months period ended,
June 30,
2009 June 30, 2010
(RMB) (RMB) (US$)
Revenues 346,692,802 821,238,007 120,932,131
Cost of goods sold 267,842,686 631,999,323 93,065,621
Gross profit 78,850,116 189,238,684 27,866,510
Operating expenses:
Selling 1,058,734 1,249,026 183,926
General and administrative 6,844,765 16,783,577 2,471,481
Total operating expenses 7,903,499 18,032,603 2,655,407
Operating income 70,946,617 171,206,081 25,211,103
Other (income) expenses:
Interest income (172,878) (193,063) (28,430)
Interest expense 5,020,941 3,906,265 575,221
Others, net (429,474) (135,261) (19,918)
Total other expense, net 4,418,589 3,577,941 526,873
Income before income taxes 66,528,028 167,628,140 24,684,230
Income tax expense 15,840,370 42,080,631 6,196,621
Net income 50,687,658 125,547,509 18,487,609
Participation in undistributed
earnings by preference
shareholders (11,260,575) (27,744,622) (4,085,559)
Net income attributable to
ordinary shareholders 39,427,083 97,802,887 14,402,050
Earnings per share:
Basic and diluted 2.66 6.09 0.90
Weighted average ordinary shares
outstanding:
Basic and diluted 14,847,811 16,049,711 16,049,711
SOURCE China New Borun Corporation
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