Net Income increased 225.7% year-over-year to $2.3 million or 11 cents per share
TAI'AN CITY, Shandong, China, Nov. 15 /Xinhua-PRNewswire-FirstCall/ -- China Biologic Products, Inc. (Pink Sheets: CBPO) ("CBP", "the Company"), one of the leading plasma-based pharmaceutical companies in the People's Republic of China ("PRC"), today reported record financial results for the third quarter ended on September 30, 2007.
Third Quarter 2007 Highlights
-- Revenues increased 48.8% year-over-year to a record $8.9 million
-- Gross profits increased 79.7% to $6.7 million over the third quarter
of 2006
-- Operating income totaled $3.6 million, up 106.9% over the third
quarter of 2006
-- Net income was up 225.7% year-over-year to $2.3 million or $0.11 per
share
"During the quarter we continued to see strong demand for our plasma based products due to increased purchasing power and health consciousness of Chinese consumers although unit prices have increased greatly," said Mr. Stanley Wong, CEO of China Biologic Products, "In addition, we have taken advantage of the favorable industry environment to improve our production facilities and to accelerate the pace of developing new drugs."
Third Quarter 2007 Results
Revenues for the three months ended September 30, 2007 were $8.9 million, up 48.8% as compared to $6.0 million for the same period of 2006. The increase was primarily due to the rise in unit prices of plasma based products, although the Company's unit sales volumes declined. During the third quarter of 2007, unit prices of the Company's main products experienced growth ranging from 8.1% to 424.5% year over year. The situation of unit prices rising combined with the drop in volumes was a result of the PRC government's stringent controls on quality in the plasma based production industry. The Company is expected to adjust its production plans and to utilize all plasma resources that are available to provide products with higher profit margins.
Human albumin, Human Immunoglobulin for Intravenous Injection and Human Rabies Immunoglobulin contributed 61.9%, 11.1% and 15.2% to the revenues, respectively.
Cost of revenues for the three months ended September 30, 2007 remained unchanged and stood at $2.3 million, accounting for 25.5% of the revenues, compared to 38.3% for the comparable period of 2006.
Gross profit was up 79.7% to $6.7 million with gross margins of 74.5% for the third quarter of 2007 compared with approximately $3.7 million and 61.7% in the third quarter of 2006, respectively. The increase of gross margin was mainly due to the rapid growth in unit sale prices.
Total operating expenses for the three months ended September 30, 2007 were $3.1 million, up 55.9% from the same period in 2006, which was primarily attributable to increased selling expenses. During this quarter, the Company incurred more marketing and sales expenses, including bonuses to salespersons, holding sales conferences, and travel related expenses. Research and development expenses were $0.2 million for the third quarter of 2007, representing 2.4% of the revenues.
Income from operations grew 106.9% to $3.6 million in the third quarter of 2007, representing operating margins of 40.0%, as compared to $1.7 million and 28.7% in the same period of 2006.
In the third quarter of 2007, the Company recorded $0.56 million and $0.61 million for provision for income taxes and minority interest, respectively.
Net income for the third quarter of 2007 was $2.3 million or $0.11 per basic and diluted share, an increase of 225.7% and 219.1% from $0.7 million and $0.03 per share, respectively for the comparable period of 2006.
Nine Months Results
Revenue for the first nine months of 2007 increased 68.8% over the comparable period in 2006 to $25.4 million. Gross profits rose 99.7% in the same period to $17.1 million, representing gross margins of 67.4%. Operating expenses in the first nine months of 2007 increased 85.0% to $5.7 million as a result of the increased selling expenses. Operating profits in the first nine months of 2007 rose 107.9% over the comparable period in 2006 to $11.4 million, representing operating margins of 44.9%. Net income for the nine months ended September 30, 2007 was $7.6 million or $0.35 per basic and diluted share, up 124.7% and 107.9% respectively.
Cash flow from operations for the nine months ended September 30, 2007 totaled $10.8 million, a huge increase compared to $0.02 million in the comparable period in 2006. Net cash used in investing activities in the first nine months of 2007 totaled $7.2 million, most of which was incurred to build the new production line.
Financial Condition
As of September 30, 2007, CBP had $6.1 million in cash, approximately $9.6 million in working capital. Shareholder's equity at the end of the third quarter stood at $21.1 million compared to $12.7 million at the end of 2006.
Business Outlook
In recent years, the biopharmaceutical industry and the plasma-based product market have outperformed the pharmaceutical industry. According to http://www.pharmnet.com.cn, sales of blood and plasma-based drugs in China had an average growth rate of 15% in the last 5 years, reaching $372 million in 2005, and accounting for 11.7% of prescription drug sales. China's plasma-based products market remains underserved with limited availability of products, offering substantial opportunities for China Biologic to grow its business.
The PRC government is limiting the number of companies in this industry and is not expected to issue new licenses in the foreseeable future. Besides, import of foreign plasma-based products is severely restricted, creating a relatively closed market for domestic suppliers. The overall effect of recent government regulatory reform has been to reduce competition and increase the barriers to entry, creating a favorable industry structure for China Biologic Products.
"We are very pleased to be operating in a more regulated market for plasma based products after recent reforms launched by the government," said Mr. Stanley Wong, CEO of China Biologic Products. "We are going to continue our efforts to achieve more market share and improve our products mix."
About China Biologic Products, Inc.
China Biologic Products, Inc., through its indirect majority-owned subsidiary Shandong Taibang, is currently the only plasma-based biopharmaceutical company approved by the government of Shandong Province, the second largest province with a population of 93 million. The company is engaged primarily in research, manufacturing, and sale of plasma-based biopharmaceutical products to hospitals and other health care facilities in China. Plasma-based Human Albumin is used mainly to increase blood volume while Immunoglobulin is used for disease prevention and treatment.
Safe Harbor Statement
This release contains certain "forward-looking statements" relating to the business of the Company and its subsidiary companies. These forward-looking statements are often identified by the use of forward-looking terminology such as "believes, expects" or similar expressions. Such forward looking statements involve known and unknown risks and uncertainties that may cause actual results to be materially different from those described herein as anticipated, believed, estimated or expected. Investors should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. The Company's actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including those discussed in the Company's periodic reports that are filed with the Securities and Exchange Commission and available on its website (http://www.sec.gov). All forward-looking statements attributable to the Company or to persons acting on its behalf are expressly qualified in their entirety by these factors other than as required under the securities laws. The Company does not assume a duty to update these forward-looking statements.
-FINANCIAL TABLES FOLLOW-
China Biologic Products, Inc. and Subsidiaries
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(US$ - Unaudited)
Three months ended Nine months ended
30-Sep 30-Sep
2007 2006 2007 2006
REVENUES $8,938,186 $6,006,917 $25,442,097 $15,074,618
COST OF SALES 2,281,280 2,301,768 8,293,628 6,487,373
GROSS PROFIT 6,656,906 3,705,149 17,148,469 8,587,245
OPERATING EXPENSES
Selling expenses 1,741,829 397,226 2,444,297 689,895
General and
administrative
expenses 1,129,785 1,322,509 2,838,126 1,960,169
Research and
development expenses 213,865 259,506 435,500 440,140
TOTAL OPERATING EXPENSES 3,085,479 1,979,241 5,717,923 3,090,204
INCOME FROM OPERATIONS 3,571,427 1,725,908 11,430,546 5,497,041
OTHER EXPENSES
Finance expense 66,413 34,652 112,637 130,154
Other expense 72,556 30,118 95,598 60,323
TOTAL OTHER EXPENSES 138,969 64,770 208,235 190,477
INCOME BEFORE PROVISION
FOR INCOME TAXES AND
MINORITY INTEREST 3,432,458 1,661,138 11,222,311 5,306,564
PROVISION FOR INCOME
TAXES 560,030 470,907 1,858,992 954,538
NET INCOME BEFORE
MINORITY INTEREST 2,872,428 1,190,231 9,363,319 4,352,026
LESS MINORITY INTEREST 613,914 496,691 1,762,462 969,167
NET INCOME 2,258,514 693,540 7,600,857 3,382,859
FOREIGN CURRENCY
TRANSLATION GAIN 336,137 116,354 799,229 323,132
OTHER COMPREHENSIVE
INCOME $2,594,651 $809,894 $8,400,086 $3,705,991
WEIGHTED AVERAGE NUMBER
OF SHARES, BASIC AND
DILUTED 21,434,942 21,004,507 21,434,942 19,831,279
EARNING PER SHARE, BASIC
AND DILUTED $0.11 $0.03 $0.35 $0.17
China Biologic Products, Inc. and Subsidiaries
CONSOLIDATED CONDENSED BALANCE SHEET
(US$)
A S S E T S
30-Sep 31-Dec
2007 2006
(Unaudited) (Audited)
CURRENT ASSETS:
Cash $6,123,713 $4,268,220
Accounts receivable, net of
allowance for doubtful accounts of
$1,177,093 and $1,131,209 as of
September 30, 2007 and December
31, 2006, respectively 2,405,173 3,775,387
Notes receivable 6,670 81,407
Other receivables 1,225,748 584,931
Other receivables - shareholders 136,928 -
Inventories 8,068,122 6,117,361
Advances on inventory purchases 511,217 713,194
Deferred expense 3,945 -
Total current assets 18,481,516 15,540,500
PLANT AND EQUIPMENT, net 13,610,736 7,437,768
OTHER ASSETS:
Advances on equipment purchases 1,444,668 778,364
Intangible assets 920,083 718,011
Long term deferred assets 727 -
Total other assets 2,365,478 1,496,375
Total assets $34,457,730 $24,474,643
L I A B I L I T I E S A N D S H A R E H O L D E R S' E Q U I T Y
CURRENT LIABILITIES:
Accounts payable $2,793,333 $2,412,440
Other payables and accrued
liabilities 2,062,683 1,874,973
Short term loans - bank 1,334,000 2,564,000
Short term loan - minority
shareholder 703,171 675,761
Other payable - land use right 297,672 287,045
Distributions to minority
shareholder 212,719 476,597
Customer deposits 590,392 370,297
Taxes payable 884,783 138,203
Total current liabilities 8,878,753 8,799,316
Long term liabilities 400,200 641,000
Total liabilities 9,278,953 9,440,316
COMMITMENTS AND CONTINGENCIES 75,593 --
MINORITY INTEREST 3,977,258 2,308,487
SHAREHOLDERS' EQUITY:
Common stock, $0.0001 par value,
100,000,000 shares authorized,
21,434,942 shares issued and
outstanding at September 30, 2007
and December 31, 2006,
respectively 2,143 2,143
Paid-in-capital 9,388,305 9,388,305
Statutory reserves 4,301,940 2,199,580
Retained earnings 5,515,924 17,427
Accumulated other comprehensive
income 1,917,614 1,118,385
Total shareholders' equity 21,125,926 12,725,840
Total liabilities and
shareholders' equity $34,457,730 $24,474,643
China Biologic Products, Inc. and Subsidiaries
CASH FLOW STATEMENT
(US$ - Unaudited)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2007 AND 2006
2007 2006
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $7,600,857 $3,382,859
Adjustments to reconcile net income
to cash provided by operating
activities:
Minority interest 1,762,462 969,167
Depreciation 611,020 313,436
Amortization 64,168 34,890
Loss on disposal of equipment 6,077 --
Change in operating assets and
liabilities:
Accounts receivable 1,491,832 (1,285,459)
Notes receivable 76,424 (136,899)
Other receivables (604,324) (1,482,103)
Other receivables -
shareholders (134,095) --
Inventories (1,667,404) (1,701,492)
Advance on inventory purchase 226,128 341,315
Deferred expenses (3,863) --
Long term deferred expenses (712) --
Accounts payable 277,185 51,932
Other payables and accruals 183,946 (317,413)
Customer deposits 200,832 (304,606)
Taxes payable 725,644 158,892
Net cash provided
by operating
activities 10,816,177 24,519
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to plant and equipment (6,377,620) (594,927)
Additions to intangible assets (233,537) (30,674)
Proceeds from sale of equipment 26,199 -
Advances on equipment and
intangible assets purchases (621,600) (573,234)
Net cash used in investing
activities (7,206,558) (1,198,835)
CASH FLOWS FROM FINANCING ACTIVITIES:
Restricted cash -- 1,874,700
Proceeds from stock issuance -- 3,752,100
Payments on notes payable - banks -- (1,874,700)
Proceeds from short term loans -
bank 1,292,000 624,900
Payments on short term loans -
banks (2,593,000) (2,499,600)
Proceeds from short term loans -
shareholders -- 2,728,612
Payments on short term loans -
shareholders -- (735,523)
Payments on long term debt (261,280) (499,921)
Dividend paid to minority
shareholder (476,597) --
Net cash (used in) provided by
financing activities (2,038,877) 3,370,568
EFFECTS OF EXCHANGE RATE CHANGE IN
CASH 284,751 208,678
INCREASE IN CASH 1,855,493 2,404,930
CASH, beginning of period 4,268,220 607,376
CASH, end of period $6,123,713 $3,012,306
