BEIJING, November 7, 2014 /PRNewswire/ -- China New Borun Corporation (NYSE: BORN; "Borun" or the "Company"), a leading producer and distributor of corn-based edible alcohol in China, today announced its unaudited financial results for the third quarter of 2014.
Mr. Jinmiao Wang, Chairman and Chief Executive Officer of Borun, commented on the results, "We're pleased that this third quarter Borun reported revenue in line with our previously-stated guidance and more importantly earned positive net income for the seventeenth consecutive quarter since our IPO in June of 2010. Our ability to consistently earn positive net income was especially rewarding this quarter, as the industry experienced a severe inverse relationship between average selling price for edible alcohol, which declined 1.4% year-over-year, and spot corn prices, which increased 7.5% year-over-year during the period. We were able to temper our gross margin, as we continued to benefit from our advantageous sourcing strategy lower per ton of our corn cost compared to that of the spot price of corn.
We're also very pleased that this third quarter we generated healthy operating cash flows of RMB394.8 million. Furthermore, despite China's weakened macro-economics, we continued to make progress in ramping up our chlorinated polyethylene ("CPE") and foam insulation businesses, as the new businesses grew 15% sequentially and contributed RMB26.8 million, or 5% of total revenue during the quarter. It is encouraging that we will have ample opportunities to further enhance the profitability of these new businesses, as our production of foam insulation, although expanded by over 50% sequentially in the third quarter, is still running at below one third of its designed capacity. Looking ahead, we will continue to ramp up production and offerings of our new CPE and foam insulation businesses, while at the same time, focus our efforts in further lowering cost for our core edible alcohol business. We feel confident that we can sustainably earn positive net income in the foreseeable future."
Third Quarter 2014 Quick View
Third Quarter 2014 Financial Performance
For the third quarter of 2014, revenue increased by 2.2% year-over-year to RMB529.2 million ($86.0 million) from RMB518.0 million in the same period of 2013. The increase in revenue was mainly attributable to the incremental revenue contribution from the Company's CPE and foam insulation businesses that were introduced in the fourth quarter of 2013.
Revenue breakdown by product lines is as follows:
During the third quarter of 2014, gross profit decreased by 6.5% to RMB45.5 million ($7.4 million) from RMB48.7 million in the same period of 2013. Gross margin for the third quarter of 2014 decreased to 8.6%, from 9.4% in the same period of 2013, which was primarily attributable to a decrease in average selling price of edible alcohol, combined with the increase in cost of corn, as well as lower gross margin from the new CPE and foam insulation businesses during its production ramp up.
Operating income decreased by 9.3% to RMB33.7 million ($5.5 million) in the third quarter of 2014, from RMB37.2 million in the same period of 2013, primarily due to lower gross profit earned.
Selling expenses were RMB1.1 million ($0.2 million) in the third quarter of 2014, decreased by RMB0.1 million, or 10.6% from RMB1.2 million in the same period of 2013.
General and administrative expenses increased by RMB0.4 million, or 4.0% to RMB10.7 million ($1.7 million) in the third quarter of 2014, from RMB10.3 million in the same period of 2013, mainly due to the increasing management cost for the Company's new CPE and foam insulation businesses.
Income tax expenses in the third quarter of 2014 were RMB1.9 million ($0.3 million), representing an effective tax rate of 25.0%.
Net income decreased by 45.9% to RMB5.8 million ($0.9 million) in the third quarter of 2014, compared to RMB10.8 million in the same quarter of 2013. In the third quarter of 2014, basic and diluted earnings per share and per ADS were RMB0.23 ($0.04), and the Company had 25.7 million weighted average basic and diluted shares outstanding.
As of September 30, 2014, cash and bank deposits of RMB586.9 million ($95.4 million) increased by RMB65.6 million, compared with RMB521.3 million as of December 31, 2013. Cash flows provided by operating activities for the third quarter of 2014 were RMB394.8 million ($64.2 million).
Financial Outlook
The Company estimates that its revenue for the fourth quarter of 2014 will be in the range of RMB654 million ($106.3 million) to RMB659 million ($107.1 million), a decrease of approximately 0.6% to an increase of 0.2% over the same quarter of 2013.
This guidance is based on the current market conditions and reflects the Company's current and preliminary estimates of market and operating conditions and customer demand, which are all subject to change.
Conference Call
Borun's management will hold a corresponding earnings conference call and live webcast at 8:00 a.m. EST on Friday, November 7, 2014 (9:00 p.m. Beijing time on Friday, November 7, 2014) to discuss the results and highlights from the third quarter and answer questions from investors. A webcast of the call will be available at http://ir.chinanewborun.com. Listeners may access the call by dialing:
United States Toll Free: | 1-866-519-4004 |
US Toll/International: | 1-845-675-0437 |
Hong Kong Toll Free: | 800-906-601 |
Hong Kong Toll: | 852-3018-6771 |
China Toll Free: | 800-819-0121 |
China Toll Free (Mobile): | 400-620-8038 |
Conference ID: | 25155387 |
A replay of the webcast will be accessible through November 15, 2014 on http://ir.chinanewborun.com or by dialing:
United States toll free: | 1-855-452-5696 |
International: | 61-2-8199-0299 |
Passcode | 25155387 |
About China New Borun Corporation
China New Borun Corporation (NYSE: BORN) is a leading producer and distributor of corn-based edible alcohol sold as an ingredient to producers of baijiu, a popular grain-based alcoholic beverage in China. The Company also produces DDGS Feed, liquid carbon dioxide and crude corn oil as by-products of edible alcohol production, and chlorinated polyethylene (CPE) and foam insulation that are widely used in chemical industries. 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.
Contact Information
Asia Bridge Capital Limited
Wendy Sun
Phone: +86-10-8556-9033 (China)
+1-888-870-0798 (U.S.)
Email: wendy.sun@asiabridgegroup.com
[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 period ended September 30, 2014 were made at a rate of RMB6.1525 to USD1.00, the rate published by the People's Bank of China on September 30, 2014. 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. |
CHINA NEW BORUN CORPORATION | |||||
UNAUDITED CONSOLIDATED BALANCE SHEETS | |||||
December 31, 2013 |
September 30, 2014 | ||||
RMB | RMB | US$ | |||
Assets | |||||
Cash | 521,270,799 | 586,860,324 | 95,385,668 | ||
Restricted cash | 42,040,667 | 42,000,000 | 6,826,493 | ||
Trade accounts receivable, net of allowance for doubtful accounts of nil and nil, respectively | 358,463,468 | 421,363,480 | 68,486,547 | ||
Available-for-sale securities | 16,783,869 | ———— | ———— | ||
Inventories | 353,206,120 | 547,848,425 | 89,044,848 | ||
Advance to suppliers | 276,245,034 | ———— | ———— | ||
Other receivables | 58,510,165 | 91,653,541 | 14,896,959 | ||
Prepaid expenses | 3,773,980 | 4,262,043 | 692,734 | ||
Deferred income tax assets | 248,712 | ———— | ———— | ||
Total current assets | 1,630,542,814 | 1,693,987,813 | 275,333,250 | ||
Property, plant and equipment, net | 1,143,722,628 | 1,137,825,387 | 184,937,080 | ||
Land use right, net | 138,944,251 | 136,833,504 | 22,240,309 | ||
Intangible assets, net | 9,648,771 | 6,779,089 | 1,101,843 | ||
Other non-current assets | 10,697,712 | 6,846,536 | 1,112,806 | ||
Total assets | 2,933,556,176 | 2,982,272,329 | 484,725,288 | ||
Liabilities and shareholders' equity | |||||
Trade accounts payable | 29,272,232 | 14,251,446 | 2,316,367 | ||
Accrued expenses and other payables | 106,574,084 | 166,905,027 | 27,128,001 | ||
Income taxes payable | 9,119,258 | 2,847,906 | 462,886 | ||
Short-term borrowings | 620,200,000 | 581,000,000 | 94,433,157 | ||
Current portion of long-term borrowings | 24,000,000 | 24,000,000 | 3,900,853 | ||
Total current liabilities | 789,165,574 | 789,004,379 | 128,241,265 | ||
Long-term borrowings | 48,000,000 | 30,000,000 | 4,876,067 | ||
Bonds Payable
| 500,000,000 | 500,000,000 | 81,267,777 | ||
Total liabilities | 1,337,165,574 | 1,319,004,379 | 214,385,109 | ||
Shareholders' equity | |||||
Ordinary share - (December 31, 2013 and September 30, 2014: par value of RMB0.0068259, 25,725,000 shares issued and outstanding) | 175,596 | 175,596 | 25,725 | ||
Additional paid-in capital | 468,132,187 | 468,132,187 | 76,088,125 | ||
Retained earnings - appropriated | 126,356,029 | 126,356,029 | 20,537,347 | ||
Retained earnings - unappropriated | 1,002,921,340 | 1,069,059,159 | 173,760,123 | ||
Accumulated other comprehensive loss | (1,194,550) | (455,021) | (71,141) | ||
Total shareholders' equity | 1,596,390,602 | 1,663,267,950 | 270,340,179 | ||
Total liabilities and shareholders' equity | 2,933,556,176 | 2,982,272,329 | 484,725,288 | ||
CHINA NEW BORUN CORPORATION | |||||||||||
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME | |||||||||||
For the three-month period ended, | |||||||||||
September 30, 2013 | June 30, 2014 | September 30, 2014 | |||||||||
(RMB) | (RMB) | (RMB) | (US$) | ||||||||
Revenues | 518,001,425 | 668,887,775 | 529,187,562 | 86,011,794 | |||||||
Cost of goods sold | 469,332,820 | 601,348,437 | 483,683,441 | 78,615,756 | |||||||
Gross profit | 48,668,605 | 67,539,338 | 45,504,121 | 7,396,038 | |||||||
Operating expenses: | |||||||||||
Selling | 1,213,777 | 1,534,527 | 1,085,428 | 176,421 | |||||||
General and administrative | 10,298,164 | 10,703,722 | 10,705,813 | 1,740,075 | |||||||
Total operating expenses | 11,511,941 | 12,238,249 | 11,791,241 | 1,916,496 | |||||||
Operating income | 37,156,664 | 55,301,089 | 33,712,880 | 5,479,542 | |||||||
Other (income) expenses: | |||||||||||
Interest income | (1,296,587) | (637,612) | (469,678) | (76,339) | |||||||
Interest expense | 24,076,289 | 26,695,034 | 25,407,558 | 4,129,632 | |||||||
Others, net | (23,410) | 1,273,848 | 983,190 | 159,803 | |||||||
Total other expense, net | 22,756,292 | 27,331,270 | 25,912,070 | 4,213,095 | |||||||
Income before income taxes | 14,400,372 | 27,969,819 | 7,791,810 | 1,266,446 | |||||||
Income tax expense | 3,600,094 | 6,992,455 | 1,947,952 | 316,611 | |||||||
Net income | 10,800,278 | 20,977,364 | 5,843,858 | 949,835 | |||||||
Earnings per share: | |||||||||||
Basic and diluted | 0.42 | 0.82 | 0.23 | 0.04 | |||||||
Weighted average ordinary shares outstanding: | |||||||||||
Basic and diluted | 25,725,000 | 25,725,000 | 25,725,000 | 25,725,000 | |||||||
CHINA NEW BORUN CORPORATION | |||||
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME | |||||
For the nine-month period ended, | |||||
September 30, 2013 | September 30, 2014 | ||||
(RMB) | (RMB) | (US$) | |||
Revenues | 1,597,187,463 | 1,823,806,418 | 296,433,388 | ||
Cost of goods sold | 1,430,022,882 | 1,620,279,819 | 263,353,079 | ||
Gross profit | 167,164,581 | 203,526,599 | 33,080,309 | ||
Operating expenses: | |||||
Selling | 3,772,527 | 3,834,906 | 623,309 | ||
General and administrative | 30,019,934 | 31,900,401 | 5,184,949 | ||
Total operating expenses | 33,792,461 | 35,735,307 | 5,808,258 | ||
Operating income | 133,372,120 | 167,791,292 | 27,272,051 | ||
Other (income) expenses: | |||||
Interest income | (2,912,684) | (1,632,625) | (265,360) | ||
Interest expense | 70,374,422 | 78,127,550 | 12,698,505 | ||
Others, net | (154,564) | 3,112,608 | 505,909 | ||
Total other expense, net | 67,307,174 | 79,607,533 | 12,939,054 | ||
Income before income taxes | 66,064,946 | 88,183,759 | 14,332,997 | ||
Income tax expense | 16,993,680 | 22,045,940 | 3,583,249 | ||
Net income | 49,071,266 | 66,137,819 | 10,749,748 | ||
Earnings per share: | |||||
Basic and diluted | 1.91 | 2.57 | 0.42 | ||
Weighted average ordinary shares outstanding: | |||||
Basic and diluted | 25,725,000 | 25,725,000 | 25,725,000 | ||
