Tianli Agritech Reports Fourth Quarter and Full Year 2011 Results

Net Income Reached $8.1 million with $0.80 EPS

WUHAN CITY, China, March 15, 2012 /PRNewswire-Asia/ -- Tianli Agritech, Inc. (NASDAQ:OINK), a leading producer of breeder and market hogs, and retailer of hog meat headquartered in Wuhan City, China, today announced its financial results for the fourth quarter and twelve month period ended December 31, 2011.

Fourth quarter Highlights:

• Revenue increased 49% year-over-year to $8.7 million due to higher selling prices, increased unit sales of Tianli market hogs plus retail sales of "Tianli An Puluo" hog meat.
• The retail division contributed $1.7 million of revenues in its second quarter of operations for the year.

Tianli's Chairwoman and CEO, Ms. Hanying Li, began, "We completed another successful year, which included the acquisition of our 11^th hog farm and the launch of our Tianli-branded retail pork products through our partnership with An Puluo Foods. While our fourth quarter results were negatively impacted by complications resulting from contaminated feed at a few of our farms, we responded quickly to contain the impact. Having implemented a series of additional safeguards, we expect the negative drag on our financials to subside in the first half of 2012."

*EPS calculations are based on the results of the weighted average calculation method of the 10,135,000 shares outstanding during Q4 2011 and 9,733,696 shares outstanding during Q4 2010, reflecting the effect of the Company's July 2010 IPO.

Revenue for the fourth quarter of 2011 increased 49% to $8.7 million from same period a year ago. The Company sold 25,472 hogs, down 1.13% from the prior year reflecting the stronger demand for market hogs offset by the weaker demand for breeder hogs. Sales of market hogs increased 68.25% to $5.3 million as high retail pork prices drove strong demand for market hogs. Breeder hog sales fell 38.21% to $1.6 million, representing 18.80% of total sales in the fourth quarter of 2011.

Through its cooperation with An Puluo Food, Tianli's retail division generated $1.7 million in sales in the fourth quarter after launching in the third quarter of 2011. Tianli provides and co-brands hog meat cuts, packaged and sold in refrigerated food cases under the Tianli AnPuluo brand in over 50 major retail outlets in great Wuhan, including Wal-Mart, Zon 100, and RT Mart.

Gross profit in the fourth quarter of 2011 was $1.8 million, a 26% decrease from the same period last year. Gross margin was approximately 21% and 43% for the fourth quarter of 2011 and 2010, respectively. The year-over-year margin decline was attributable to $1.3 million in costs related to the disposal of a shipment of contaminated hog feed and the treatment and disposal of hogs which became ill as a result of eating the contaminated feed.

Selling, general and administrative expenses were $0.9 million in the fourth quarter of 2011, an increase of approximately $0.5 million. Approximately $0.1 million of the increase was related to higher public company expenses and $0.4 million related to the Company's retail business and marketing costs not present in the year ago period.

Net income was approximately $0.8 million, down 61% from $2.2 million in the three months ended December 31, 2010. Earnings per fully diluted share were $0.08 compared to $0.22 the previous year.

Twelve Months 2011 Results

*EPS calculations are based on the results of the weighted average calculation method of the 10,135,000 shares outstanding during Q4 2011 and 9,023,630 shares outstanding during FY 2010, reflecting the effect of the Company's July 2010 IPO.

Net sales increased 48% to $31.4 million during the year ended December 31, 2011. Tianli sold 101,600 hogs at an average sales price of $282 per hog, an increase of 3% and 31%, respectively. Market hog sales were $19.3 million in 2011 compared to $12.4 million in 2010, a 55% increase. Breeder hog sales were $9.4 million, up 6% from $8.8 million for the year ended December 31, 2010 as higher prices offset a decline in the number of breeder hogs sold. Total sales of processed pork products sold through retail channels were $2.8 million in 2011.

Sales by Products

(Dollar Figures Rounded)

Gross profit increased 24% to $11.4 million, resulting in a gross profit margin of approximately 36.2%. Gross margins for breeder hogs, market hogs, and processed pork products were 47%, 32% and 28%, respectively.

Selling, general and administrative expenses were $3.2 million compared to $1.2 million in the prior year. The Company incurred $0.3 million of non-cash stock compensation expenses, $0.8 million public company expenses and $0.6 million of operating expenses related to its retail segment in the first twelve months of 2011. Operating income was essentially flat year-over-year at $8.2 million.

Net income and earnings per share were $8.1 million and $0.80 respectively in the twelve months ended December 31, 2011, compared to $8.2 million and $0.90 in the previous twelve month periods.

Financial Position

As of December 31, 2011, the Company had $6.5 million in cash and cash equivalents compared to $8.0 million as of December 31, 2010. The Company generated approximately $6.7 million of cash from operations in the twelve months of 2011. Working capital as of December 31, 2011 was $11.9 million, including $9.9 million of inventories and a $1.1 million loan to An Puluo Food which should be collected within 12 months. Inventories increased to support the launch of the Company's retail business in the third quarter of 2011 and reflect our operations at farm #9 and #10.

Tianli invested approximately $14.4 million in capital expenditures and breeding stock during the twelve months of 2011, primarily for plant and equipment, enhancing breeder stock with imported purebreds from Europe and for investments related to its retail products expansion.

"Our company is executing on the vision I had when we launched Tianli eight years ago," Ms. Li concluded. "The strong demand for pork in China is providing us with a tailwind to grow organically as our more recent farm acquisitions reach capacity. The retail expansion provides us with further opportunities to increase revenues and cash flows while establishing the Tianli brand through AnPuluo Foods. Our single most exciting strategy for 2012, Enshi Black Hog breeding and sales, is expected to be a major contributor in revenues and earnings for years to come"

Business Update on Black Hogs Project

In May of 2011, Tianli announced the development of its Black Hog program through which Tianli will breed and sell high-value Black Hog meat. Black Hog meat is known for its increased nutritional value and better taste and thus commands a 35% premium to white hog meat sold at retail. The Company will work with all of its farmers and farming co-ops in the Enshi Prefecture in Hubei Province to ensure that the quality of the breed is maintained and to develop standardized programs for the feed and care of the hogs. As part of this effort, Tianli will develop an appropriate feed mix, which the farmers will purchase from the Company. To be eligible to participate in the program farmers will need to be able to maintain no less than 6 sows or produce at least 100 black hogs per year. By the end of 2011, the Company had funded and completed the construction of 125 farms for local farmers and it envisions that it will fund and construct up to an additional 183 farms by the end of the year 2012. The goal is to achieve a production capacity of 100,000 black hogs during 2012 with a long run target of an annual capacity of 1 million black hogs.

The Company expects to benefit from the program in a number of ways, principally by reselling the black hogs purchased from the participating farmers and by providing the farmers with necessary supplies. To date and at the time of this report, the Company has not started to sell Black Hogs yet. However, we will start to sell black hogs in either the first or second quarter of 2012. The hogs will be bought from the first 78 hog farmers who are the first participants of our Black Hog Program.

Earnings Conference Call

To attend the call, please use the information below for either dial-in access or webcast access. When prompted on dial-in, ask for "Tianli Agritech Fourth quarter 2011 Conference Call".

Please dial in at least 10 minutes before the call to ensure timely participation. A playback will be available through March 23, 2012. To listen, please call +1-877-344-7529 within the United States or +1-412-317-0088 if calling internationally.

This call is being webcast by MZ Technologies and can be accessed by clicking on the following link: http://webcast.mz-ir.com/publico.aspx?codplataforma=3650.

About Tianli Agritech, Inc.

Tianli Agritech, Inc. is in the business of breeding, raising and selling breeder and market hogs in China and is developing a retail channel for its pork products including high-value, black hog meat. The Company is focused on growing high quality hogs for sale for breeding and meat purposes. The Company conducts genetic, breeding and nutrition research to steadily improve its production capabilities.

Forward-Looking Statements

This news release contains forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements that are other than statements of historical facts. These statements are subject to uncertainties and risks including, but not limited to, product and service demand and acceptance, changes in technology, economic conditions, the impact of competition and pricing, government regulation, and other risks contained in reports filed by the company with the Securities and Exchange Commission. All such forward-looking statements, whether written or oral, and whether made by or on behalf of the company, are expressly qualified by the cautionary statements and any other cautionary statements which may accompany the forward-looking statements. In addition, the company disclaims any obligation to update any forward-looking statements to reflect events or circumstances after the date hereof.

For more information, please contact:

Company - US
Tianli Agritech, Inc.
Mr. Simon Guo
Vice President and US Representative
Phone: +1-347-343-0580
Email: simon@tianli-china.com
Web: http://www.tianli-china.com

Investor Relations

Mr. John Mattio
MZ North America, SVP
Phone: (212) 730-7130
Email: john.mattio@mzgroup.us
Web: http://www.mz-ir.com