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Shineco, Inc. Reports Third Quarter of 2017 Financial Results

2017-05-16 05:30
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BEIJING, May 16, 2017 /PRNewswire/ -- Shineco, Inc. ("Shineco" or the "Company"; NASDAQ: TYHT), a producer and distributor of Chinese herbal medicines, organic agricultural produce, specialized textiles, and other health and well-being focused plant-based products in China, today announced its financial results for the third quarter ended March 31, 2017.

Mr. Yuying Zhang, Chairman and Chief Executive Officer of Shineco, Inc., commented, "We are very pleased to report solid financial results for the third quarter of 2017 with meaningful improvement of a 3.6% increase in revenues and 10.3% increase in net income. We saw continued growth in the medicine market as the sales of our Luobuma or "Bluish Dogbane" products increased by 2.7% and other agricultural products increased by 10.7%, respectively. Our margins, including both gross margin and operating margin were also enhanced in the third quarter, highlighting our strong execution despite a relatively challenging macro and industry environment. Looking ahead, we expect to continue expanding our geographic presence within the China market. We believe we are well positioned for a strong growth in the years to come."

Third Quarter of 2017 Financial Highlights


For the Three Months Ended March 31

($ millions, except per share data)


2017


2016


% Change

Revenue


7.94


7.66


3.6%

  Luobuma products


1.12


1.09


2.7%

  Chinese medicinal herbal products


3.05


3.17


-3.7%

  Other agricultural products


3.77


3.41


10.7%

Gross profit


2.60


2.17


19.9%

Gross margin


32.8%


28.3%


4.4%

Operating income


1.67


1.35


23.8%

Operating margin


21.0%


17.6%


3.4%

Net income attributable to Shineco

1.92


1.74


10.3%

EPS


0.091


0.090


1.3%

  • Revenues increased by 3.6% to $7.94 million for the three months ended March 31, 2017 from $7.66 million for the same period of last year, mainly due to increased sales of products.
  • Gross profit increased by 19.9% to $2.60 million for the three months ended March 31, 2017 from $2.17 million for the same period of last year. Gross margin increased by 4.4 percentage points to 32.8% from 28.3% for the same period of last year.
  • Net income attributable to Shineco increased by 10.3% to $1.92 million, or $0.091 per basic and diluted share, for the three months ended March 31, 2017 from $1.74 million, or $0.090 per basic and diluted share, for the same period of last year. The increases in net income and earnings per share were primarily due to an increase in gross profit, partially offset by an increase in operating expenses and a decrease in other income.

Third Quarter of 2017 Financial Results

Revenues

Revenues for the three months ended March 31, 2017 increased by $0.28 million, or 3.6%, to $7.94 million from $7.66 million for the same period of last year, mainly due to increased sales of products.



For the Three Months Ended March 31



2017


2016

($ millions)


Revenues


COGS


Gross
Margin


Revenues


COGS


Gross
Margin

Luobuma products


1.12


0.57


49.6%


1.09


0.49


55.0%

Chinese medicinal herbal products


3.05


2.28


25.2%


3.17


2.53


20.0%

Other agricultural products


3.77


2.47


34.4%


3.41


2.45


28.1%

Business and sales related taxes


-


0.02


-


-


0.02


-

Total


7.94


5.34


32.8%


7.66


5.49


28.3%

Revenues from Luobuma products increased by $0.03 million, or 2.7%, to $1.12 million for the three months ended March 31, 2017 from $1.09 million for the same period of last year, mainly due to the increase in sales price of our products.

Revenues from Chinese medicinal herbal products decreased by $0.12 million, or 3.7%, to $3.05 million for the three months ended March 31, 2017 from $3.17 million for the same period of last year. The decrease was primarily due to the depreciation of RMB against USD. The average currency exchange rates for the three months ended March 31, 2017 and 2016 were 1 RMB to $0.1451 USD and 1 RMB to $0.1529 USD, respectively, which represented a decrease of 5.1%.

Revenues from other agricultural products increased by $0.37 million, or 10.7%, to $3.77 million for the three months ended March 31, 2017 from $3.41 million for the same period of last year. The increase was mainly attributable to the increase in the unit price of our yew trees.

Gross profit and Gross Margin

Total cost of goods sold decreased by $0.15 million, or 2.8%, to $5.34 million for the three months ended March 31, 2017 from $5.49 million for the same period of last year. Gross profit increased by $0.43 million, or 19.9%, to $2.60 million for the three months ended March 31, 2017 from $2.17 million for the same period of last year. Overall gross margin increased by 4.4 percentage points to 32.8% for the three months ended March 31, 2017, compared to 28.3% for the same period of last year.

Gross margins for Luobuma products, Chinese medicinal herbal products, and other agricultural products were 49.6%, 25.2%, and 34.4%, respectively, for the three months ended March 31, 2017. This compared to gross margins for Luobuma products, Chinese medicinal herbal products, and other agricultural products of 55.0%, 20.0%, and 28.1%, respectively, for the same period of last year.

Operating income

Selling expenses decreased by $0.06 million, or 15.9%, to $0.30 million for the three months ended March 31, 2017 from $0.36 million for the same period of last year, primarily due to decreased service fees of e-commerce websites during the three months ended March 31, 2017, compared to the same period of last year. General and administrative expenses increased by $0.17 million, or 36.5%, to $0.63 million for the three months ended March 31, 2017 from $0.46 million for the same period of last year. The increase in general and administrative expenses was primarily attributable to the increased labor expenses as well as expensed related to our initial public offerings such as attorney fees and auditing fees. As a result, total operating expenses increased by $0.11 million, or 13.5%, to $0.94 million for the three months ended March 31, 2017 from $0.82 million for the same period of last year.

Operating income increased by $0.32 million, or 23.8%, to $1.67 million for the three months ended March 31, 2017 from $1.35 million for the same period of last year. Operating margin was 21.0% for the three months ended March 31, 2017, compared to 17.6% for the same period of last year.

Net income

Net income increased by $0.18 million, or 10.4%, to $1.96 million for the three months ended March 31, 2017 from $1.77 million for the same period of last year. After the deduction of non-controlling interests, net income attributable to common shareholders for the three months ended March 31, 2017 was $1.92 million, or $0.091 per basic and diluted share. This compared to net income attributable to common shareholders of $1.74 million, $0.090 per basic and diluted share, for the same period of last year.

Nine Months Ended March 31, 2017 Financial Results


For the Nine Months Ended March 31

($ millions, except per share data)


2017


2016


% Change

Revenue


25.53


27.07


-5.7%

  Luobuma products


2.77


3.54


-21.7%

  Chinese medicinal herbal products


9.73


10.43


-6.8%

  Other agricultural products


13.04


13.10


-0.5%

Gross profit


8.47


8.90


-4.9%

Gross margin


33.2%


32.9%


0.3%

Operating income


5.25


6.00


-12.4%

Operating margin


20.6%


22.2%


-1.6%

Net income attributable to Shineco

6.12


6.74


-9.2%

EPS


0.30


0.35


-14.3%

Revenues

Revenues for the nine months ended March 31, 2017 decreased by $1.5 million, or 5.7%, to $25.53 million from $27.07 million for the same period of last year, mainly due to both decreased sales price and decreased sales volume of our products as well as the depreciation of RMB against USD. 



For the Nine Months Ended March 31



2017


2016

($ millions)


Revenues


COGS


Gross
Margin


Revenues


COGS


Gross
Margin

Luobuma products


2.77


1.37


50.4%


3.54


1.64


53.7%

Chinese medicinal herbal products


9.73


7.20


26.0%


10.43


8.01


23.2%

Other agricultural products


13.04


8.44


35.3%


13.10


8.46


35.5%

Business and sales related taxes


-


0.05


-


-


0.06


-

Total


25.53


17.06


33.2%


27.07


18.17


32.9%

Revenues from Luobuma products decreased by $0.77 million, or 21.7%, to $2.77 million for the nine months ended March 31, 2017 from $3.54 million for the same period of last year, mainly due to both the decreased sales price and decreased sales volume of our products.

Revenues from Chinese medicinal herbal products decreased by $0.71 million, or 6.8%, to $9.73 million for the nine months ended March 31, 2017 from $10.43 million for the same period of last year. The decrease was primarily due to the depreciation of RMB against USD. The average currency exchange rates for the nine months ended March 31, 2017 and 2016 were 1 RMB to $0.1472 USD and 1 RMB to $0.1563 USD, respectively, which represented a decrease of 5.8%. During the nine months ended March 31, 2017, in order to meet the qualifications of a new standard promulgated by the local government, the Company reduced production of certain types of traditional Chinese medicinal herbal products.

Revenues from other agricultural products decreased by $0.07 million, or 0.5%, to $13.04 million for the nine months ended March 31, 2017 from $13.10 million for the same period of last year. The decrease was mainly attributable to the depreciation of RMB against USD as mentioned above.

Gross profit and Gross Margin

Total cost of goods sold decreased by $1.11 million, or 6.1%, to $17.06 million for the nine months ended March 31, 2017 from $18.17 million for the same period of last year. Gross profit decreased by $0.43 million, or 4.9%, to $8.47 million for the nine months ended March 31, 2017 from $8.90 million for the same period of last year. Overall gross margin increased by 0.3 percentage points to 33.2% for the nine months ended March 31, 2017, compared to 32.9% for the same period of last year.

Gross margins for Luobuma products, Chinese medicinal herbal products, and other agricultural products were 50.4%, 26.0%, and 35.3%, respectively, for the nine months ended March 31, 2017. This compared to gross margins for Luobuma products, Chinese medicinal herbal products, and other agricultural products of 53.7%, 23.2%, and 35.5%, respectively, for the same period of last year.

Operating income

Selling expenses decreased by $0.18 million, or 13.0%, to $1.19 million for the nine months ended March 31, 2017 from $1.36 million for the same period of last year, primarily due to decreased advertising expenses, promotion expenses, and service fees of e-commerce websites, partially offset by increased rent expense of warehouses during the nine months ended March 31, 2017 compared to the same period of 2016. General and administrative expenses increased by $0.49 million, or 31.7%, to $2.03 million for the nine months ended March 31, 2017 from $1.54 million for the same period of last year. The increase in general and administrative expenses was primarily attributable to the increased labor expenses as well as expenses related to our initial public offerings, such as attorney feels, consulting fees and auditing fees. As a result, total operating expenses increased by $0.31 million, or 10.7%, to $3.22 million for the nine months ended March 31, 2017 from $2.90 million for the same period of last year.

Operating income decreased by $0.74 million, or 12.4%, to $5.25 million for the nine months ended March 31, 2017 from $6.00 million for the same period of last year. Operating margin was 20.4% for the nine months ended March 31, 2017, compared to 22.2% for the same period of last year.

Net income

Net income decreased by $0.63 million, or 9.1%, to $6.23 million for the nine months ended March 31, 2017 from $6.86 million for the same period of last year. After the deduction of non-controlling interests, net income attributable to common shareholders for the nine months ended March 31, 2017 was $6.12 million, or $0.30 per basic and diluted share. This compared to net income attributable to common shareholders of $6.74 million, $0.35 per basic and diluted share, for the same period of last year.

Financial Condition

As of March 31, 2017, the Company had cash and cash equivalents of $23.67 million, compared to $22.01 million as of June 30, 2016. Net cash used in operating activities was $1.38 million for the nine months ended March 31, 2017, compared to net cash provided by operating activities of $10.09 million for the same period of last year. Net cash used in investing activities was negative $1.69 million for the nine months ended March 31, 2017, compared to net cash provided by investing activities of $2.73 million for the same period of last year. Net cash provided by financing activities was $5.60 million for the nine months ended March 31, 2017, compared to net cash used in financing activities of $0.52 million for the same period of last year.

About Shineco, Inc.

Incorporated in August 1997 and headquartered in Beijing, China, Shineco, Inc. ("Shineco" or the "Company") is a Delaware holding company that uses its subsidiaries' and variable interest entities' vertically- and horizontally-integrated production, distribution and sales channels to provide health and well-being focused plant-based products in China. Utilizing modern engineering technologies and biotechnologies, Shineco produces, among other products, Chinese herbal medicines, organic agricultural produce and specialized textiles. For more information about the Company, please visit www.shinecobiotech.com.

Forward-Looking Statements

This press release contains information about Shineco's view of its future expectations, plans and prospects that constitute forward-looking statements. Actual results may differ materially from historical results or those indicated by these forward-looking statements as a result of a variety of factors including, but not limited to, risks and uncertainties associated with its ability to raise additional funding, its ability to maintain and grow its business, variability of operating results, its ability to maintain and enhance its brand, its development and introduction of new products and services, the successful integration of acquired companies, technologies and assets into its portfolio of products and services, marketing and other business development initiatives, competition in the industry, general government regulation, economic conditions, dependence on key personnel, the ability to attract, hire and retain personnel who possess the technical skills and experience necessary to meet the requirements of its clients, and its ability to protect its intellectual property. Shineco encourages you to review other factors that may affect its future results in Shineco's registration statement and in its other filings with the Securities and Exchange Commission.

For more information, please contact:

Tina Xiao
Ascent Investor Relations LLC
Phone: +1-917-609-0333
Email: tina.xiao@ascent-ir.com

 

SHINECO, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)







ASSETS







March 31,


June 30,


2017


2016

CURRENT ASSETS:






    Cash

$

23,674,622


$

22,009,374

    Accounts receivable, net - third parties


10,739,886



4,464,098

                                                 - unconsolidated entity


1,448,238



1,088,144

    Due from related parties


1,180,521



1,671,435

    Inventories


1,821,987



4,608,179

    Advances to suppliers, net


967,967



53,024

    Loans to third parties, net


1,113,487



560,234

    Other receivables, net


1,068,565



463,361

    Short-term deposit


162,594



100,270

    Prepaid leases - current, net


458,597



478,565

    Prepaid expenses


155,988



33,117

TOTAL CURRENT ASSETS


42,792,452



35,529,801







    Property and equipment at cost, net of accumulated depreciation and amortization


10,271,245



11,035,199

    Land use right, net of accumulated amortization


1,332,642



1,408,765

    Investments


5,376,850



4,766,847

    Deposit for business acquisition


2,031,596



-

    Long-term deposit and other noncurrent assets


112,121



120,357

    Prepaid leases-non current, net


3,378,365



3,860,327

    Deferred tax assets


306,112



327,492

TOTAL  ASSETS

$

65,601,383


$

57,048,788







LIABILITIES AND EQUITY






CURRENT LIABILITIES:






    Short-term bank loans

$

2,917,517


$

2,745,945

    Accounts payable


433,582



259,803

    Advances from customers


35,132



9,597

    Due to related parties


168,129



244,915

    Other payables and accrued expenses


426,689



1,999,622

    Taxes payable


1,465,657



1,278,142

TOTAL LIABILITIES


5,446,706



6,538,024







Commitments and contingencies












EQUITY:






    Common stock; par value $0.001, 100,000,000 shares authorized;






    21,034,072 and 19,320,882 shares issued and outstanding






    at March 31, 2017 and June 30, 2016


21,034



19,321

    Additional paid-in capital


22,737,302



17,344,466

    Statutory reserve


3,410,064



3,242,139

    Retained earnings


36,788,324



30,837,399

    Accumulated other comprehensive loss


(3,837,576)



(1,887,929)

    Total Stockholders' equity of Shineco, Inc.


59,119,148



49,555,396

    Non-controlling interest


1,035,529



955,368

TOTAL EQUITY


60,154,677



50,510,764







TOTAL LIABILITIES AND EQUITY

$

65,601,383


$

57,048,788







 

 

SHINECO, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

(UNAUDITED)














For the Nine Months Ended March 31,


For the Three Months Ended March 31,


2017


2016


2017


2016









REVENUE

$

25,531,313


$

27,073,426


$

7,941,583


$

7,662,509













COST OF REVENUE












    Cost of product and services


17,007,048



18,110,671



5,319,742



5,470,557

    Business and sales related tax


53,228



59,469



19,264



20,903













GROSS PROFIT


8,471,037



8,903,286



2,602,577



2,171,049













OPERATING EXPENSES












    General and administrative expenses


2,029,981



1,540,906



631,640



462,659

    Selling expenses


1,186,536



1,363,761



304,182



361,814

              Total operating expenses


3,216,517



2,904,667



935,822



824,473













INCOME FROM OPERATIONS


5,254,520



5,998,619



1,666,755



1,346,576













OTHER INCOME












    Income from equity method investments


1,545,677



1,503,730



551,281



567,370

    Other income 


253,196



142,354



93,888



89,118

    Interest income (expense), net


15,124



100,336



(25,414)



28,423

              Total other income


1,813,997



1,746,420



619,755



684,911













INCOME BEFORE INCOME TAX PROVISION


7,068,517



7,745,039



2,286,510



2,031,487













PROVISIONS FOR INCOME TAXES


833,661



883,840



328,274



256,953













NET INCOME


6,234,856



6,861,199



1,958,236



1,774,534













    Less: net income attributable to non-controlling interest


116,006



122,161



35,829



31,212













NET INCOME ATTRIBUTABLE TO SHINECO, INC.

$

6,118,850


$

6,739,038


$

1,922,407


$

1,743,322













COMPREHENSIVE INCOME












    Net income

$

6,234,856


$

6,861,199


$

1,958,236


$

1,774,534

    Other comprehensive income (loss): foreign currency translation gain (loss)


(1,985,492)



(2,480,288)



528,683



355,159

    Total comprehensive income 


4,249,364



4,380,911



2,486,919



2,129,693

    Less: comprehensive income attributable to non-controlling interest


80,161



102,090



43,720



37,863













COMPREHENSIVE INCOME ATTRIBUTABLE TO SHINECO, INC.

$

4,169,203


$

4,278,821


$

2,443,199


$

2,091,830













    Weighted average number of shares basic and diluted


20,477,598



19,320,882



21,034,072



19,320,882













    Basic and diluted earnings per common share

$

0.30


$

0.35


$

0.09


$

0.09

























 

SHINECO, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)








For the Nine Months Ended March 31,


2017


2016







CASH FLOWS FROM OPERATING ACTIVITIES:






Net income

$

6,234,856


$

6,861,199

Adjustments to reconcile net income to net cash provided by (used in) operating activities:






    Depreciation and amortization


445,037



597,939

    Provision for doubtful accounts


147,770



179,891

    Increase in inventory reserve


45,419



199,409

    Deferred tax provision (benefit)


9,790



(95,667)

    Income from equity method investments


(1,545,677)



(1,503,730)

    Interest income from loans to related parties


(86,585)



-







Changes in operating assets and liabilities:






    Accounts receivable


(6,898,335)



(48,765)

    Advances to suppliers


(929,907)



1,301,677

    Inventories


2,613,094



852,488

    Other receivables


(864,944)



(276,472)

    Prepaid expense and other assets


(192,464)



122,734

    Due from related parties


361,287



543,958

    Prepaid leases


351,480



421,707

    Accounts payable


185,693



29,486

    Advances from customers


26,247



(21,654)

    Other payables


(1,519,339)



710,269

    Taxes payable


232,390



218,890

NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES


(1,384,188)



10,093,359







CASH FLOWS FROM INVESTING ACTIVITIES:






    Acquisitions of property and equipment


(41,016)



(24,218)

    Collections from  (Payments of) loans to third parties


(506,452)



74,787

    Collections on loans to related parties


567,246



235,207

    Income received from investments in unconsolidated entities


551,933



2,441,406

    Deposit for business acquisition


(2,060,548)



-

    Payments on investment in unconsolidated entities


(200,000)



-

NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES


(1,688,837)



2,727,182







CASH FLOWS FROM FINANCING ACTIVITIES:






    Proceeds from short-term bank loans


2,680,184



2,851,694

    Proceeds from other short-term loans


-



47,828

    Repayment of short-term bank loans


(2,406,426)



(3,544,588)

    Proceeds from initial public offering, net of offering costs of $2,314,806


5,394,549



-

    Proceeds from  (Repayments of) advances from related parties


(68,984)



128,894

NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES


5,599,323



(516,172)







EFFECT OF EXCHANGE RATE CHANGE ON CASH


(861,050)



(412,628)







NET INCREASE IN CASH


1,665,248



11,891,741







CASH - Beginning of the Period


22,009,374



6,056,105







CASH - End of the Period

$

23,674,622


$

17,947,846







SUPPLEMENTAL CASH FLOW DISCLOSURES:






   Cash paid for income tax

$

579,566


$

755,858

   Cash paid for interest

$

109,208


$

253,875







 

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/shineco-inc-reports-third-quarter-of-2017-financial-results-300457890.html

Source: Shineco, Inc

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